YOUR COMPANY IS LOOKING FOR START UP FINANCIAL SOLUTIONS!
High Growth Expectations In New Business Start Up Financing ?
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Financing & Cash flow are the biggest issues facing business today
ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?
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EMAIL - sprokop@7parkavenuefinancial.com
New business start up financing in Canada; the Canadian business owner and entrepreneur wants and needs some solid advice and information that firms financed by larger VC firms already have. Many say the system isn’t working when it comes to financing a new venture. Do we agree? Yes... and No! Solutions do exist.
In the case of the start-up its all about the traction you need to get to a cash flow positive and profit situation. The challenge is of course getting there when it comes to the often larger capital investment you need to make to ' bootstrap ' the business.
IT'S ALL ABOUT BUSINESS CREDIT
Let's look at the basic challenge of new and small businesses, which is simply the inability of the entrepreneur to obtain business credit. We're often amazed at clients speaking about financing they have received at the inception of their business; who believe they have been awarded some real ' business credit '.
PERSONAL CREDIT HISTORY IS A PART OF THE BUSINESS CREDIT STARTUP CHALLENGE
The reality? The bank or other institution, perhaps a leasing company or other commercial finance firm is placed a 100% emphasis on your own net worth and collateral and personal assets. You have of course provided the proverbial ' PG ' - personal guarantee on your ' business financing ‘.
Trust us on that one, no business credit has been granted! Business loans for new startups are heavily reliant on the credit profile of the owner/owners. A good credit score is always required for a business loan if you are starting a business. Your ability to demonstrate business experience and a solid management team go a long way in any new loan funding.
SUPPLIER RELATIONSHIPS / VENDOR FINANCING
Vendors and suppliers are a large part of the challenge. They can be forgiven for wanting to ensure they can get paid. In some cases, one of the solutions to the ' supplier credit ' scenario is a purchase order financing arrangement. This allows your supplier to be paid and ship the product you need, with the collateral being the inventory, receivables and sales that are generated out of that arrangement. That type of financing is expensive, but if you have solid gross margins that can withstand that cost supply chain/PO financing is a great solution for the business start-up.
ARE BUSINESS CREDITS THE SOLUTION - SPOILER ALERT - PROBABLY NOT!
Business credit cards certainly are frequently used in the start-up phase, and we’re not talking about the ' miscellaneous' purchases, as we have run into many clients that are financing a large part of their start up on the credit card concept. The problem with this? First of all their personal credit might be at risk, given they are more often than not making maximum usage of their card facilities. Secondly, as an overall strategy, it's recommended by experts that you separate your business and personal life when it comes to financing. Need help on that one... ask your spouse for an opinion!
UNDERSTANDING THE CASH FLOW / OPERATING CYCLE IN YOUR STARTUP
Important in new business start-up financing is your ability to fundamentally understand the cash flow cycle and how you can address each component of it. The cash flow cycle is pretty simple - its understanding of how a dollar flows through your company from the timing around operations, production, shipment, and collection of your sales into your business bank account. The shortfalls you experience along the way need to be addressed with working capital solutions.
REAL-WORLD BUSINESS FINANCE SOLUTIONS
Some of those solutions:
A/R Financing
Inventory Loans
Access to Canadian bank credit/line of credit solutions
Non-bank asset-based lines of credit
SR&ED Tax credit financing
Equipment / fixed asset financing
Cash flow loans
Royalty finance solutions
Government Of Canada Small Business Loan Program - The Guaranteed federal business loan financing program ( This program covers real estate, leasehold improvements and equipment needs)
While many entrepreneurs focus on angel investors, venture capital and government business grants the reality is that type of funding is limited to the smallest percentage of new companies. As we have noted the Canada Small Business Financing Program is the best type of government funding you can achieve.
CONCLUSION
So, is the challenge of financing a start up in Canada there? Absolutely, but at the same time solid solutions are available also. You are in a position, with the right assistance, to leapfrog those barriers and get the working capital and funding you need to succeed.
Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist your start up to mature into a great business story.
Click here for the business finance track record of 7 Park Avenue Financial
Stan Prokop
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