When we first meet with new entrepreneurs, one question almost always comes up: Where can I get the money to start my business?
While this is an important question, there is another more important question you need to ask first. The question is not where, but how much?. If you don’t know how much you need, how can you know where to look for the money?
This is an integral part of the planning process. Identify all the items required to start and operate your business. Writing out this list can be exhaustive and time consuming; however, it will pay large dividends in the long run. This will also help you develop your business plan.
Start with a worksheet like this one: Start-up Costs.
Once you have your list, you can then consider the debt financing required based on your equity in the venture. If you do not have the personal equity (funds) to start and operate, you can look at various sources of financing. Financing can come from:
- personal lines of credit (LOC),
- term bank loans which are traditional sources,
- non-traditional sources such as Government sponsored programs.
If you are considering non-traditional sources, understand that items such as good will, working capital and wages may not be eligible for non-traditional financing. You may have to be creative and use a mix of financing instruments to cover all of the costs.
The bottom line? Before asking where the money is, take some time to identify how much you need and then look at the resources available.
The Halton Region Small Business Centre provides one-on-one consultations to entrepreneurs at various stages of their operating business, including start up.Call us at 905-825-6000 ext. 7900 to book your free appointment. You can also review our online resources, or consider attending one of our upcoming seminars. For more tips, follow us on Twitter!