When it comes to financing your new business, you cannot rely on just one source. It would be like putting all the eggs in one basket, which is never a smart idea. Instead, an entrepreneur or a small business owner should get funding from various sources and diversify as much as they can. Here are some tips on how to get funding for your start-up. A combination of two or more of these options should be the goal.
1.
Personal Assets
This one is obvious. You can invest your
personal assets like cash into the business when you start a business. It is
usually done to prove to the investors that you are making a long-term
commitment and want to take the risk for the project.
2.
Bank Loans
You can also take a bank loan if you need money
quickly. The bank you choose must meet your specific needs and offer you
options like personalized services or customized repayment plans. Banks usually
invest in companies with excellent credit and a good track record. They also
need you to provide a detailed business plan and personal guarantee as an
entrepreneur.
3.
Love Money
This is the money lent to you by a loved one
like your family, parents, spouse, colleagues, etc. This is considered patient
capital as this money will be repaid to your loved ones when you start having a
good profit.
4.
Angel Investors
Angel investors are wealthy people who invest
in small businesses. As they risk their business, they get the right to reserve
the right to supervise your company’s management. They usually keep a low
profile, so you can find one through The
National Angel Capital Organization (NACO) who is in your region.
5.
Venture Capital
Venture capital is the right choice for you if
your start-up is in a sector with high growth potential like communications,
information technology, and biotechnology. Venture capitalists will take an
equity position in a company and help it carry out high-risk projects. So, make
sure you pick investors who have ample experience and ask yourself if you are
willing to give up some ownership to an external party.
6.
Business Incubators
Incubators invite future businesses to share
their premises and some resources to grow and get adequate support. You can
easily find an incubator for top sectors like IT, multimedia, industrial
technology, or biotechnology. Find the details of business incubators in Canada
at MaRS – an innovation hub in Toronto.
7.
Government Grants and Assistance
The government of Canada also offers numerous
grants and other assistance for start-ups in all cities and states. For
instance, in British Columbia, the government has set up a Coast Funds Economic
Development Fund and has initiated a Tale’awtxw Aboriginal Capital Corporation
(TACC) Business Equity Program (BEP). There are more than 80 grants and other
sources of start-up funding in Canada. Get the complete list here.
For more about business grants and financing options offered by the government,
click here.
Sources:
https://www.bdc.ca/en/articles-tools/start-buy-business/start-business/start-up-financing-sources
https://techcrunch.com/2022/01/19/if-you-want-startup-funding-dont-make-vcs-feel-ignorant/
https://www.canada.ca/en/services/business/grants.html
https://www.opendigits.co/blog/81-grants-other-sources-of-startup-funding-in-canada