5 Small Business Financing Tips for Canadians
Once your business plan is ready, the next step is to obtain the funding you need to get your organization to achieve success.
A business plan is the most important and critical tool you can have when trying to obtain funding for your small business. Whether this funding is coming from friends or family, banks, investors or from the Canadian government, a business plan is essential. Once your business plan is ready and you feel that you have a solid workflow for your business, the next step is to get the funding you need.
Here are just a few tips for obtaining funding for your business in Canada:
Have A LOT of patience: Your business isn’t created overnight and this is true when it comes to obtaining funding. You must be realistic and understand that it will not happen instantly, but it takes time. Don’t jump into business right away with the impression that you need funding immediately, instead try to get our small business onto a solid platform, and test the limited to see what you can do and what you can’t do without funding. At this point you will be ready and more knowledgeable as to what you need funding for.
Consider alternatives to financing: One rule of thumb is to not go into business with zero funding available to invest. If you want your business to succeed, you should have some money saved and invested out of your own pocket before you starting looking for financing help. Credit cards, banks and investors are all the same – you borrow money and they take a percentage, so this in-fact will result in you spending more time trying to figure out who to pay and how much to pay, it will stress you out and have you focus less on business – but it is a necessity almost for growth and for the future. Your alternatives may include the government. The Canadian government has funding programs for small business owners in every province, not just low-interest loans but it has government grant programs for which if you qualify, you don’t need to pay back.
Get legal with your investors: Business is business, and no matter if you are borrowing money from the banks, the government, a private investor, your brother or uncle, you must make sure that any financial dealings are accompanied by a signed contract which lays out all of the guidelines and the terms of the financing. In business you always have to look out for yourself and ensure that you and your business are well protected.
Stay up to date: Once you have a loan, don’t think that your hunt for financing stops there. In-fact it has just began. If it is a loan from the bank that you’ve managed to obtain, know your interest rate, the terms and the payment amounts and constantly compare to what’s out-there. Banks change their interests rate very often, and having a percentage change in the interest rate can mean you saving money to use towards buying new equipment, hiring staff, having better marketing or even paying yourself a bit more.
Prove that your business can grow: If your business is a success, note down all of the changes you’ve done to get to that point, and also map out the future plans for growth. If you are able to show potential investors that your business has the ability to grow and show a higher return on investment, your chances of obtaining more funding for your business will grow rapidly. When a lender is confident that your small business is on the right path for lasting growth and success, the promise of profit will increase your chance of getting funding.
Hopefully these five tips will help you get ahead and obtaining financing for your small business.
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