Written By: Geordan Robertson, Director of Small Business, Meridian
It’s hard to believe that the Airbnbs, Facebooks and Twitters of the world were once considered start-ups. Prior to their cemented spot in the marketplace, these three companies began with one thing in common — a unique idea. Increasingly, people are drawn into a start-up’s ability to evolve from a no frills cocoon into a polished butterfly ready for flight.
Imagine being able to build an entire empire based on one disrupting idea. While the glamour of a start-ups is appealing, this magic tends to fade away when confronted with the reality of start-up costs. Financial asks are never easy, particularly when they are based on a single idea, however there are many resources available to assist in maximizing your company’s financial security. Here’s how your start-up can avoid running on empty:
Create a business plan – A well-crafted business plan is vital for securing financing. Your business plan should outline the following: your business idea, how it fits in with the current market landscape, how you plan to make profit, and what your start up budget is. It’s essential that your business plan outline how much financing is required, what the funds would be used for and when the loan will be repaid.
Look for a variety of financing sources – Do your research! Funding sources are not just limited to financial institutions. There are a variety of government grants and programs in place that can help a small business get off the ground. A listing of government grants and loans can be found via the federal government’s Canada Business Network at www.canadabusiness.ca. Increasingly, start-ups are reliant on venture capitalist for financial support and guidance to reach their goals. These groups provide mentorship and capital, but come with their own requirements and guarantees. Start-ups working with venture capitalists require a degree of flexibility from the start. For start-ups that are less willing to budge on their project goals and ideas, an Angel investor may be most appealing. Angel investors often consist of smaller teams than venture capitalists and often seek larger company ownership.
Be creative – In a world where crowdfunding is the norm, why not look to the public for funding. This is a free way to test public interest in your product or service. If there isn’t significant traffic and interest right away, test a few branding techniques and messaging online before formally launching your product or service. Consider using Kickstarter or InvestNexDoor to have the public invest in a new and exciting idea.
Get organized – When meeting with a financial institution to discuss potential lending options for your small business be prepared to bring a lot of financial paperwork with you. In addition to your business plan, you should also bring copies of your personal banking records and statements in order for the financial institution to determine your ability to pay back the loan. There are a number of resources available for small business owners available online through smallbusiness.meridiancu.ca
Determine your lending needs – There is a wide range of lending products available to small businesses from operating lines of credits and credit cards to commercial mortgages. A small business advisor can help you navigate your options to ensure you pick the right lending product suited to your needs.
Don’t lose hope if you’re declined – Work with your small business advisor to fully understand why your proposal was declined and they can advise you on how to strengthen your proposal. In some cases, the financial institution may require you to request or smaller loan amount or invest more of your own capital into the business.
Meridian Credit Union is the presenting partner of the Action Entrepreneurship Canadian Summit happening on May 30th and 31st. Register today to attend!