Going into business with little savings, is it possible? Absolutely! Quebec has great stories of entrepreneurs starting from scratch who built their little empire. If you think you have the business bump and have always dreamed of being your own boss, here are some tips that can help you get started.
Where to start?
Small sum aside or not, it always starts with the numbers. And if we do not have savings, it will take some funding. But long before seeking financing, a sound business plan is essential to ensure the project’s viability (and your financial security) and to guide your actions in a timely manner. In addition, a well-crafted business plan, demonstrating the potential of the investment, will help convince potential investors looking for good investments. In this regard, local development centers, banks and local employment centers are excellent starting points to help you build your business plan and, as a second step, tell you what financing options might be available. to suit your type of business.
When asked about corporate financing, Nathaly Riverin, Executive Director of the Beauce School of Entrepreneurship , explains that, for a service company, “it is better to look for clients before seeking financing. It will be less long! ”
Kim Auclair , passionate entrepreneur and well-known blogger, agrees. “Looking for funding for a service business is a lot of expense and months of spending, canvassing, travel, while we do not yet know all the beacons of our market. That’s why it’s important to focus on sales first. It also keeps you in control of your business and its evolution. ”
The theory of small steps or how to get to know each other better
When you have little business knowledge, it is better to start small and self-finance as much as possible by avoiding big, complex financing projects. This is what Nathaly Riverin calls “the theory of small steps”.
Kim Auclair is also a strong believer in this approach and recommends taking her time before seeking outside funding. “I made the mistake of starting too quickly in partnership with someone I did not know. After 4 months, I had to spend a lot of legal fees that were not planned. It can also be expensive in emotions, “she says. “The first six months provide a better understanding of one’s market, services and needs.”
Since your partners or funders will not necessarily have the same values as you and the same corporate vision, it deserves some thought before engaging with others. Especially since these partners will probably have some power over your company and the decisions that will be made.
Different financing options such as grants, angels and private investors are great ways to get you going faster. Do not put all your eggs in one basket could be a good idea: it is even desirable to diversify its funding methods to have more flexibility.
To better understand the form of partnership that suits us and be able to negotiate better when the time comes, taking time to know its market at your fingertips can be very useful.
To be creative
Many are followers of what is known as “bootstrapping”, or rather the art of coping. “I have people around me who do not have the funds to start their business. They decided to share the risk with three. While two continued to work to raise funds for the creation of the company, the last one was devoted full-time to the project. It’s a great example of creativity that got them started, “says Nathaly Riverin.
Obviously, surrounding yourself with people who have experience starting a business will prove to be a sure asset, if not the key to success. “They will recognize your audacity and give you good advice,” she adds.
If you do not want to resort to external financing, but you need a little extra cushion, you can always opt for love money, that is to say, to solicit people around you to finance you without suffering the stricter constraints that banks or private investors sometimes impose on you. By cons, we must not forget that money and family do not always do good together!
And on a personal level?
On average, a contractor needs about 24 months to reach a certain profitability. It is therefore safer to have a good game plan beforehand and accept from the start that it will not be easy.
A lot of patience and discipline can lead far; Kim Auclair is the proof. “Before starting my business,” she explains, “I calculated for a month what I needed to live for a month. This helped me to set my hourly rate, to which I added a small surplus. I then opened two bank accounts: one for the company and the other in a personal capacity. For one year, I paid myself the minimum wage that I set for myself from the start and made sure to keep the surplus in the “business” account. That’s how I built a cash flow. ”
According to Nathaly Riverin, great entrepreneurs are often the ones who have managed to take the first steps by being well supported, either by their spouse, colleagues or associates. Kim Auclair, however, adds a caveat to this reflection: “It’s good to keep those around you informed of what you’re doing, but at the same time, it’s sometimes a good thing to keep a small distance. That way, you can win at the end of the day! ”
The lack of funding does not absolutely mean the death of your entrepreneurs dreams. The road will probably be full of pitfalls, but with a little patience and creativity, you can get there!
Once we have a better idea of our financial needs and the management style that is right for us, we can look at the various funding formulas that exist. For example, an entrepreneur may prefer a method that allows him to maintain control of his business, while another may seek the help and involvement of private investors.