Ravy Mehroke: CEO, Bombay Brow Bar Inc.
No one said it was going to be easy. Whether you are starting a new business or growing one, financing is one of the hardest tasks for any entrepreneur. So here are a few tips on improving your chances of securing the financing you need:
Have a written business plan. You need to clearly define your business concept, product/service offering, business model and business strategies supported by sound financial projections. Most lenders and investors want to know exactly how you plan to use the money and when you plan to pay it back.
Know your costs. How much money do you need to start or grow? What are your expenses? Have you included working capital? What will your cash flow look like over the next one, three, five years? It's very common for entrepreneurs to underestimate startup or growth costs and end up spending more than anticipated.
Know your financing options. Are you planning to bootstrap? Maybe equity investment? Or finance with business or personal loan? It's important to know which financing option works best for you. Each option has its pros and cons, so do your research and seek expert advice on making the best decision for you business.
Look into subsidies, grants, incentives and tax breaks. Yup – they exist! To help support small businesses, the provincial and federal governments have programs that help support certain businesses. Do your research.
Don't give up. It's hard when 99% of the investors or lenders you speak with say "no." The truth is that it's 99% hard work and 1% chance. With a little bit of faith and a lot of hard work, you will find people that believe in you and your business and are willing to finance it.
So follow these words of financing wisdom and you'll be on your way to getting the cash injection you need.
Katryn Harris: CEO, VitalityLink
The most important thing I know about seeking financing is that there are a number of different paths, and it's vitally important to find the path that is right for you and your company. If I were to tweet my best learning, I would say: be confident and authentic, explore a variety of options, make sure you have the basics nailed and talk to everyone you know. Be bold!
In a little more detail:
Don't listen to too much advice. Everyone will tell you how to do it differently, but your fundraising needs to reflect your company. Make sure you have the basics covered (how you'll make money, what you're asking for, what sets you apart, what your competition is) but then let your own voice shine through in your presentations and collateral.
Get to the point quickly. Explain how you will make money, how your potential investors will make money and what you are looking for.
Explore the many options for financing. From angel investors to venture capitalists, from crowd-funding to individual investors who might not consider themselves angels, from strategic investors/partnerships to friends and family, to various forms of debt financing. There are so many ways to raise money and what is right for one company might not be the best solution for another, so don't get stuck on just one idea of where the money can come from. Is there a way you can raise money through revenue rather than equity or debt financing?
Be confident and authentic. You want to find the right investors to work with over the long term, not just anyone who will put money into your company.
Talk to everyone you know. Have a short simple description of what you're doing and ask for their help in getting your message out. Be bold!
Betty MacLeod: Sales Manager, Small Business, Vancouver Downtown and West, RBC Royal Bank
There are many ways to raise financing, but here are a few tips on how to approach your bank:
Be prepared for an active discussion. There will be lots of questions – but don't worry, it's not an interrogation. Questions are asked to understand your business and your financing needs, so that your banker can put forward a strong application on your behalf.
Bring your business plan. Your banker needs to understand all components of your business – what makes you different from your competitors, your marketing plans, projections for the coming year, how you are trending against these projections and which mentors you rely on. Even if your business plan isn't finalized, your banker can review your draft and offer some suggestions.
Determine in advance how much financing you need and show how you plan to use the funds. Doing some calculations in advance regarding startup expenses, cost of equipment or your cash-flow needs is helpful.
Be able to articulate the cash-flow cycle of your business. Do you have peak and/or slow periods in your business cycle – and is your request for financing to assist with those slow periods? What terms are in place with your suppliers?
Bring your most recent financial statements and personal income information. You will need to review your financials in advance and be able to speak to your successes, your goals and how the financing required will assist you.
Be forthcoming about any financial challenges. You may have experienced or anticipate financial challenges in either your business or personal situations. Life happens. Be transparent and upfront with your banker, and they can help you determine the best plan for you.
