session 3: financing or funding

When it comes to finance, many entrepreneurs may shy away. The technical aspects of accounting may be beyond your realm of expertise, but all new business owners have to acknowledge and understand the basics for their business to thrive.

The first question Craig posed to the group last night was "how much money do I need?" He cautioned against underestimating this amount and this is a huge planning failure.

When writing your business plan, addressing finances could be incorporated throughout. You may even want to discuss it in the executive summary or offering.

Next we discussed debt versus equity. Debt is money you borrow, equity is your retained earnings.
There are many characteristics to debt: secured/unsecured, short-/long-term, variable/fixed rates, etc.

Craig told the group that when you're trying to get money from a bank, they aren't necessarily looking for someone to pay the money back "right away". Banks are more interested in hearing that you can service the debt and support the payments regularly (that's how banks make their money, and that's what they love to hear).

We talked about different sources of financing. You may have options within your own portfolio like savings, home equity, lines of credit, or friends and family sources ("love money"). Entrepreneurs are encouraged to talk to family and friends about their business idea, it's a great way to practice and source some funds but make sure that you're clear on the expectations of both parties - dot the I's and cross the T's.
Venture capital and angel investors are options as well. Venture capital is typically technology-driven, they look for a quicker return on investment but there are social venture groups out there who look to improve the environment or society. Angels are harder to come by. These are wealthy groups or individuals who can come in and take an active role in the early stages, but be aware Angel investors are rare and there are a lot of scams out there. The best way to meet these people is through networking – join Chambers of Commerce, make contacts, find them face-to-face. These opportunities can fluctuate with industries and markets.
The last two options we reviewed were incubators and government. Incubators aren’t considered financial investment but can result money saved. It’s generally a shared space to help new businesses grow, but after a couple of years you are expected to move on to make room for new enterprise.
Government provides a few options. There are lending services like Community Futures, Business Development Bank of Canada, etc, and there are grants. The lending services are an excellent option if you are not a “desirable” candidate with the banks or have other circumstances. Grants are rare, lengthy and highly competitive, however they can be hugely beneficial. There’s more information available at http://www.cflethbridge.com/faq.php (scroll down partly to “Government Grants”).

Then we were on to Presenting. Another aspect you may shy away. No fear. The key to making a great presentation is knowledge and LOTS of practice.
Craig offered great tips. He said keep it simple, 1-3 (max. 5) points that you want to get across. Go with a standard format – intro, body, and conclusion. Think about it as romancing the listener into your concept. Keep track of transitions, which could be as simple as putting a page-turning break in your notes. Be prepared. Tie everything in together, a common theme. And don’t forget to enjoy the moment – you’re enthusiasm and confidence will shine through.
Craig also noted the energy-time graph where, as the presenter you want to get the energy up as high as you can early in the presentation and try to sustain without losing the interest of the audience.

HOMEWORK: practice the elevator pitch. As hard as it may be, think of how you would talk about your business as though you only had the time you’d spend in an elevator.

At this point, I'm sure most participants have a business idea in mind. I encourage you to start developing your business plan – even if it's as simple as starting a document on your computer or a file on your desk.

MENTORS
All of those who requested mentors please watch for a brief questionnaire. (The deadline has passed to request a mentor).