Having burned through your personal savings and explored the friends and family round, most entrepreneurs will wonder what’s next on the start-up financing front. Depending on your business and the success, or lack thereof, that you may have at this stage, you might think that an angel investment or even venture capital could be secured.
My initial advice would be to take stock of where you are and seriously consider whether or not you are really ready to begin managing independent investors as part of your overall mix of daily obligations. It is hard enough to run a business based on your own objections. Are you really at the stage where you are prepared to march to the beat of another drummer? Remember loss of independence is one of the biggest dampers that can be placed on an entrepreneur’s enthusiasm.
Here are some questions you should ask before going down that path:
- Have you developed a business plan that holds together and provides three to five years of financial forecasts?
- Have you carefully considered each of the assumptions upon which that forecast has been prepared? I often advise clients to prepare a worst-case and a best case scenario and effectively scrutinize those numbers. Once completed, adopt a forecast that falls somewhere in between where you have a strong degree of assurance that you can achieve or even over achieve your numbers.
- Have you been emphasizing the marketing and sales of your products or services sufficiently to generate the most cash flow out of your business? After all, demonstrating revenue growth (not necessarily profitability at an early stage) and the ability to capture market share is what most angel investors and venture capitalist will want to see.
- Have you taken advantage of all the grants and loans that may be available from government and other sources? Start up businesses are often surprised to learn of the various programs that are available to help get your offering to the market. Do some research in this area.
- Have you contacted the Business Development Bank of Canada? Even if you don’t qualify, their advisers have a wealth of experience that that they will impart free of charge. It makes it well worth the visit.
- Have you contacted the Regional Innovation Centres in your area? There are a number of them in Ontario alone that provide excellent guidance free of charge. See below:
- RIC Centre (Mississauga)
- Communitech (Waterloo)
- HalTech (Oakville)
- iiON (North Bay)
- Innovation Factory (Hamilton)
- Innovation Guelph (Guelph)
- Invest Ottawa (Ottawa)
- Launch Lab (Kingston)
- MaRS (Toronto)
- Innovate Niagara (Niagara)
- NORCAT (Sudbury)
- NWOIC (Thunder Bay)
- Spark Centre (Oshawa)
- SSMIC (Sault St. Marie)
- Techalliance (London)
- Venture Lab (Markham)
- Have you looked into the Community Futures Development Corporations? Community Futures organizations offer a wide variety of programs and services supporting community economic development and small business growth:
- Strategic community planning and socio-economic development;
- Support for community-based projects;
- Business information and planning services;
- Access to capital for small- and medium-sized businesses and social enterprises.
Many of these steps will make your business stronger and help you prepare for the next round of financing.