Fundamentals of Financing Your Business Geordan Robertson, Director, Small Business, Meridian

Transcription

1 Fundamentals of Financing Your Business Geordan Robertson, Director, Small Business, Meridian

2 Overview Introduction Identifying potential sources of funding Preparing for your meeting with the bank / potential investor(s) Setting yourself up for success Common mistakes to avoid Q&A & Wrap Up 2

3 About Meridian Ontario s largest credit union, helping more than 250,000 Members grow their lives and businesses. We are owned by our Members, work only for them, and return profits to our Members in the form of the best products and services we can offer. We get to know our Members so that we can proactively advise them on ways to save money, how to invest for the future and what financial solutions are in their best interest. Our Members know that we have their backs. We can make decisions locally. We combine exceptional Member service with a full range of products and services: telephone, mobile & online banking services that allow Members to securely access their money anywhere, anytime. 3

4 Sources of Money Savings Credit Cards/Lines of Credit (LOCs) Friends and Family Business Partners Financial Institutions Government Non-profit Angel Investors CrowdFunding 4

5 Savings Cash Investments Home Equity Credit Cards and Lines of Credit (LOCs) 5

6 Friends and Family Put it in Writing What it is for? How and when will it be repaid? What happens in the event of default? Get Advice from an Accountant and Lawyer Incorporate and sell Shares Becomes a strict business deal 6

7 Business Partners Get it in Writing with a Partnership Agreement Who is responsible for what? Ownership Dispute resolution Exit Strategy Look for a shared vision Complementary Skills 7

8 Governments & Associations CSBL (Canada Small Business Loans) Contact the Business Finance Centre Government supported / funding to groups such as Futurpreneur and Business Development Bank of Canada 8

9 Angel Investors Wealthy People who want to invest Found through Networking Venture Capital Groups Can Act as Mentors Finance Early Stage Business 9

10 Crowdfunding/P2P Lending Also called crowdsourcing Hard and complicated work Kickstarter.com Fundlocal.com OnDeck GroupLend 10

11 Financial Institutions Common perception is that Banks are risk averse Ø Small Business can be Risky Banks are there for the shareholders, not to give money away or to do favours. Credit unions can be viable alternatives to banks as they are not accountable to shareholder and have more flexibility 11

12 What do FIs look for? Cash flow (this is #1) Security Management Experience Background Business Plans/Forecast 12

13 Preparing for the Meeting with an FI Develop a Business Plan: Know your Industry You need to be the Expert Know your Numbers Is the Business Viable? Financial Performance to date/forecasts Be Conservative and Realistic Justify your Numbers Plan to Grow Money Required Repayment Method/Period 13

14 Business Plan Marketing Plan What Differentiates you from the others Management Experience SWOT Make sure the Plan is complete and prepared in a professional manner 14

15 What does a strong application include? 5 Cs: Character, Collateral, Conditions, Capital, Capacity History of the Business/Industry Registration Documents (Articles/MBL) Financial Statements or Forecasts History of the Management/Owners Credit Reports; Personal Net Worth Statement; Tax Returns, Notice of Assessment (NOAs) Conditions Appraisals; Debt payments 15

16 Setting Yourself Up for Success When meeting with a financial institution: Elevator pitch Showcase your passion Go through your plan at a high level Closing: Why should an FI invest in you / in your business? Give you a loan of line of credit? 16

17 How to avoid Roadblocks and Pitfalls Be prepared Have ALL the paperwork available Your credit history Knowing where you stand with your personal credit Any RED FLAGS that you may have to explain? Not staying up-to-date on ALL debt obligations Loans; LOCs, A/P, Gov t remittances, Taxes 17

18 If at first you don t succeed What if your application is not approved? Don t lose faith Work with your bank or credit union to improve your financing application Fill in the gaps in your business plan, your credit history, etc Continue to network Take the decline as your next steps of action 18

19 And, if you did get financing approved Consider the following: Application Fees Annual Renewal Fees Monthly Fees Non-Compliant Fees Interest Costs Legal Fees Registration Fees Goodwill 19

20 Summary Be Prepared when you are looking for Financing Have a strategy on which approach fits your objectives Your Business Plan Have a professional review your plan Visit Meridian s Small Business Resource Centre for advice and tips 20

21 21 Questions?

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