Without money, financing small business and your entrepreneurship ideas will go nowhere. And it can be difficult to find financing for a business start-up. As you launch your venture, you’ll encounter obstacles to securing capital. Learn more about those barriers now so you’ll be better prepared to face them on your road to financing your small business.
STARTING YOUR OWN BUSINESS: THE HUNT FOR FINANCING
Sometimes, obtaining capital can be a struggle because of your industry or the type of business you want to start. For example, you want to start a tree service company. That’s a business with a high financial barrier to entry, because you need expensive equipment, staff with specialized training, and a large amount of insurance coverage. In some markets, legislative regulations make it even more difficult to open a tree service company.
The financial barriers to entering an industry or field might not be the only hurdle. Let’s say you also have a poor credit history. Traditional lenders such as banks believe you’ll default on business loans because you have a mountain of personal debt.
FUNDING YOUR ENTREPRENEUR IDEAS (IN SPITE OF BARRIERS)
Given these stumbling blocks, you might think you’ll never launch your tree service company. However, tenacity in the face of adversity will make your dream a reality.
A bank might not lend you money because of your poor credit history, and/or because of the high costs associated with starting a tree service firm. You need to look for alternative lenders and investors, and you need to prove that you can pay back loans as well as provide a high return on investment (ROI).
Before you start looking at lenders and investors, focus on creating a solid business plan. Think of your business plan as a chance to tell lenders and investors why your company offers them a great opportunity. Explain how there’s a strong demand for a tree service company in your local market. Discuss the strength of the management team and staff you’ve assembled. Many lenders and investors want to know what kind of a marketing strategy you’ve developed to attract customers. Don’t forget to provide realistic cost and revenue figures. These numbers show you’ve done your research on what it takes to start a tree service firm. If you pull data out of thin air, you appear untrustworthy and unprepared to launch a business.
APPLY FOR SMALL BUSINESS GRANTS
Part of your business planning should definitely include applying for small business grants. These grants could help you launch your tree service company.
Federal, provincial, and municipal governments in Canada offer grants for small businesses. Applying for grants can be a good way to secure capital, because you don’t need perfect credit. You can’t rely solely on grants to finance your business, though. Firstly, many grants in Canada are region-specific. If you live in BC, you might be eligible for a grant that covers the cost of employee training, whereas if you’re a resident of Quebec, you can’t apply. Secondly, governments tend to designate grants for certain groups. Women and Aboriginals will have an easier time of finding grants. Thirdly, governments prioritize some industries and business categories over others. A tree service business might not be as attractive as a software development firm with a ground-breaking app that stands to make a fortune.
Making your entrepreneurial dream a reality requires hard work, passion, and pragmatism. Yes, barriers to financing exist. You can overcome them, though. Be creative about finding financing sources. Prove to investors and lenders that you can satisfy loan requirements or generate ROI. Slowly, your vision will come to life.