During this week’s edition of The Breakfast Club For Women Entrepreneurs, Senior Business Development Manager Maria-Luisa Goyo from Futurpreneur provided us with the tips, tricks, and golden nuggets of business financing.
UNDERSTANDING OUR BUSINESS SUPPORT ECOSYSTEM
Compared to previous generations, the business community in Quebec (and Canada) has access to over 2000 organizations available to support entrepreneurs at any stage of their business and in any industry. The key is to reach out in the first place. Although each organization’s mandate is different, reaching out will start you in the right direction to where you need to be. For example, Futurpreneur’s mandate is to assist startups whose owners are under the age of 39. Even if you wind up reaching out at them but you are over the age of 39 and several years into your business, they will refer you to the right organization to assist you.
KEY FACTORS LENDERS CONSIDER
In order to qualify for a business loan, you need to ensure that your credit score is up to par. A higher credit score will help open doors of lending options at much better rates than those whose credit scores are low.
Your business plan is key. It is your CV of your business. You must take it seriously. A business plan must be clear in its approach, provide realistic projections, and convince the lender you understand that business financing has a cost and isn’t free money.
A proper business plan will show your organization’s strength, weaknesses, where there is room for opportunity, and the threats. This is called a SWOT analysis.
A business without a plan is just an idea.
You can find a business plan template on the BDC website by clicking here.
TAILORING YOUR PITCH
While your business plan is like the CV of your business, your pitch is similar to a cover letter. Some business loans have specific mandates for specific demographics. If applicable, it is important to highlight key elements of your business such as diversity, gender, or age-based tags that will match a funder’s mandate.
Pitches must convey problems financing solves and returns earned to secure backing.
YOUR KEY BUSINESS YEARS
Having a business plan with two to three year projections – and sticking to the plan – is instrumental in your business growth. The majority of small businesses fail at this stage and the majority of the time, it’s because they failed to follow the basics of business ownership.
While you may think you have the best business idea, there is no business if there are no clients. And if there are no clients, there is no revenue.
As you progress in your business, showing past performance and viable growth plans reassures later-stage funders.
DUE DILIGENCE IN FINANCING DECISIONS
It is not advisable to seek business loans without clear purposes, as repayment is still due no matter what. We understand this when it comes to personal finances but when is comes to business, the amounts can be much greater and the impact can be stronger.
Thoroughly assessing needs prevents wasting funds without returns. Strategic, profitable spending alone merits financing.
You can connect with Maria-Luisa Goyo on LinkedIn by clicking here.
You can view the full video recap here.
ATTENDEE Q&A
- What would be the main costs to consider in a business plan? It depends on the business. Some businesses have larger overhead costs than others but no matter what that is, you need to have a clear list of both your fixed and variable expenses.
- What about those who have been in business for 10 years and are not in the startup phase? There are other organizations available to help those in the growth stage of their business. The list includes PME Mtl, BDC, and Evol just to name a few. You can reach out to one of these organizations as a starting point, and each of them is full of resources available to help support you grow and scale your business.
- Do you know a professional who can update my business plan? Unless you are requesting a large amount of financing, it isn’t necessary to hire someone to update your business plan. You may hire someone to make it look nice but the core of the plan is still you. You understand the mission of your business, you know the nitty gritty numbers of your business, you know where you want to take your business. Blindly asking a third party to create your business plan is usually costly, unnecessary, and won’t convey the same message that you would.
- What about service-based businesses with low overhead costs? Again, leveraging is about using other people’s money to make money. If you take a loan, it still needs to be repaid. If you take a loan and don’t have a plan to leverage the money – it’s no longer an investment, it’s an expense. Nothing says as a small service-based business you can’t leverage, but the idea of leveraging is to grow and scale your business to eventually generate more revenue.