BDC - Starting a Business, Marie Bruno


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  • Personal skills Determination Ability to take decisions Coordination skills: Ability to juggle several jobs Organization skills: Organize all resources to make the business run efficiently Ability to deal with stress Self-confidence Business knowledge Know your product / service / market Know what the competition offers Know what you ’re talking about! Ability to manage yourself and eventually other people Ability to manage money: Cash flow, credit line, financing and to negotiate with clients / suppliers Start-up money Savings - Love-money - Banks - Personal credit - Associate - Silent investors Support Surround yourself with a strong support system :Family, Friends, Professionals Get involved in community associations: Network with local business groups
  • Which Structure is for You? Sole Proprietorship : Unincorporated business owned by one person, called a "proprietor." The owner does not have separate legal status from the business (although the business name itself may have to be registered) and pays personal income tax on the net taxable income generated by the business. ADVANTAGES Simplest and least expensive to set up, minimal registration requirements Inexpensive to maintain Proprietor owns the profits and runs the business Possible tax benefits: e.g. losses may be applied against other income of proprietor DISADVANTAGES You’re on your own You assume all the risk of the business. You are responsible for payment of all business debts. Creditors can seize your personal assets Possible tax disadvantages e.g. profits must be added to personal income. Partnership : An association or relationship between two or more individuals or corporations that join together to operate a trade or business for profit. Partners include their share of income or losses on personal or corporate income tax returns. ADVANTAGES Easy to set up and very flexible Partners provide additional capital and skills DISADVANTAGES If disagreements arise, business can suffer Partners assume personal liability for debts of the business   Incorporation : A separate legal entity which can enter into contracts and own property, separately and distinctly from its owners who are the shareholders. A corporation has to pay tax on its net taxable income and file its own income tax return. A corporation can be federally or provincially incorporated. ADVANTAGES Limited liability of the owner(s) – liabilities generally limited to individual's personal investment in the business Money for the business can be raised by selling shares (equity) or by issuing debt (a promise to pay) DISADVANTAGES Paperwork required to meet regulations can be onerous Tax rules can be complex More expensive and complicated to set up and maintain
  • Tips for an effective proposal Written simply : Put yourself in your reader’ shoes. Long complicated words and sentences won’t impress your banker as much as the right information. Work with a professional if writing isn’t your force , BDC Consulting can help you put a good proposal together. Back-up any statements with facts. Don’t write a novel. It must be complete , but concise . Image counts . If you’re not particularly talented in page layout, work with a professional. Your proposal must show your company at is best and convince the reader that your are uniquely qualified to make your project succeed. Sell yourself!
  • What your business plan says about your company: A business plan conveys: Your business goals Strategies you'll use to meet them Potential problems that may confront your business and ways to solve them Organizational structure of your business (including titles and responsibilities) States the amount of capital required to finance your venture and keep it going until it breaks even. It needs to be constructed somewhat like a story…. Needs to answer what, who, where, when, why, as well as how.
  • 1) A good executive summary is, above all, short . It should briefly describe: • Your industry • The products and services you offer or plan to offer • Your competitive advantage • The amount of financing required and why • Your company or your credentials (in 50 words or less) TIP: Executive summary should be done last . 2) Description of your company , this section provides details about your company and should include: • Company name • Address • Legal status (sole proprietorship, Partnership, Corp., Coop.) • Date company founded • Mission, objectives and vision, industry 3) Description of your management team : Sell yourself and your management team. Include information such as: Your respective roles (such as President, Chief Financial Officer, Marketing and Sales, Research and Development, Technology…) Your experience and competence (be sure to highlight similar or related projects) Your education
  • Include the following sections: Product or services : A description of what you offer and explanation of how your clients will benefit (why your products or services will sell) Market Potential : Include information about the future of your market or industry. Economics : facts about your industry (market size, market share, current demand, trends, consumer preferences, trends in product development. How to overcome barriers such as: high capital costs, production costs, marketing costs, brand recognition, training & skills, unique technology & patents, shipping costs, etc… 3. Your Competition: Offer proof that you know your competition well, marketing efforts, future prospects. Show your competitive advantage and how you will stand out; analyze the possible reactions of your competitors to your presence and indicate how your plan takes this into account. 4. Your Marketing Strategy: An overview of your marketing plan: Addresses the previous 3 sections and includes proof of effectiveness as well as information on the media chosen, partners, etc. Be specific ; give statistics, numbers & sources. Marketing plan will be the basis, later on, of the all-important sales projection.
  • HR planning : In many industries, qualified human resources are scarce. You might have to explain how you will have the ability to recruit, retain and develop your human resources. Be sure to mention: What type of HR policies you would privileged to attract qualified employees • Any subcontracting you plan to do • Outside professionals you plan to use (lawyers/accountants, etc.) • An overview of your organizational and development plans (your major divisions, training initiatives, career planning, etc.) Financial planning: This is the section that provides financial forecasts for the next 2 to 3 years and should include: • Balance sheet • Statement of income • Cash flow budget (if possible, 3 scenarios – best-case, realistic and worst-case) Appendices: Appendices do not add any new information – their purpose is to show that your proposal is based on facts. Brief bios of your management team Market studies or other research that supports your conclusions Proof of any calculations or hypotheses such as copies of leases, subcontractor estimates, letters of intent Client testimonials
  • Lenders will also have a high interest in: The amount of personal investment (money and/or equipment) you are investing in your project If there is a risk sharing strategy with a third party (another bank for instance) or If you are counting on your financial institution to take all the risk.
  • BDC Working capital solutions Complement your existing line of credit Help provide you the cash flow to fuel your growth. Offering flexible repayment terms and, Up to $ 1 50,000 long-term financing, BDC can be a winning partner for success. Financing possibilities: Increase inventory to boost sales and receivables; Provide working capital required to develop new markets and products; Pay R&D costs associated with introducing these new products or services; Finance development of e-commerce initiatives, such as Web sites; Implement a marketing plan or growth strategy; Explore new export markets; Adopt quality management standards, such as ISO certifications and HACCP.
  • One of the few financial institution to provide financing as well as consulting solutions across the country Provides financing at every stage of growth Work hand-in-hand with chartered banks and Caisses as we don to offer short term financing and are there to share the risks with them We do not offer grants nor interest-free loans and have eligibility criteria to respect (no loans to businesses operating in industries related to the promotion of alcohol, sex or gaming and to companies that do not respect environmental regulations).
  • Co-Vision Solution is designed to encourage the creation of new businesses that have good prospects of being viable by providing term financing adapted to their needs. Solution offered to most industries with an emphasis on manufacturing, distribution, construction, business services and tourism Home-based businesses: some conditions apply Businesses with store front operations in the house of one of the owner(s) and Businesses with no store front operations, which include the internet businesses. Changes of ownership are not eligible with Co-Vision solution but can be assessed under other type of loan at BDC Maximum total commitment: $150K Restaurant / Retail industries / Home-based business: minimum required credit score. Line of Credit (personal or corporate) is mandatory for cash flow needs (Working capital) Equity: debt to equity ratio: must not exceed 4:1 Repayment period: 6 years including initial postponement period of 12 months. Blended payments are not allowed. Documents needed: Business plan mandatory (including financial forecasts and opening balance sheet) Personal statements of Assets is mandatory (with proofs of declared assets) Signed permission to do an Equifax check on ALL shareholders
  • Possibility of deferred capital payment Guaranteed term: financing cannot be recalled without due cause Your choice of floating or fixed interest rates  Fast track, no penalty repayment options up to 15% of remaining balance per year.
  • CBDC Community Business Development Corporations stimulate private sector employment through business financing, counselling and advisory services to small businesses. Visit www. dbdc .ca to find the CBDC nearest you and view their profile.
  • BDC - Starting a Business, Marie Bruno

    1. 2. Are you ready to start? <ul><li>What is an entrepreneur? </li></ul><ul><ul><li>&quot; An entrepreneur is a person who assumes the organization, management and risks involved in a business venture. &quot; </li></ul></ul><ul><li>Qualities that make a successful entrepreneur: </li></ul><ul><ul><li>Decision Maker </li></ul></ul><ul><ul><li>Analytical Ability (problem solving skills) </li></ul></ul><ul><ul><li>Good Interpersonal Skills </li></ul></ul><ul><ul><li>High Drive (highly motivated ) </li></ul></ul><ul><ul><li>Risk Taker </li></ul></ul><ul><li>What you need: </li></ul><ul><li>Personal skills </li></ul><ul><li>Business knowledge </li></ul><ul><li>A good idea! </li></ul><ul><li>Start-up money </li></ul><ul><li>Support </li></ul><ul><li>Good personal credit history </li></ul>
    2. 3. Lets get down to business First steps to start a business: <ul><li>Buy business insurance </li></ul><ul><ul><li>Liability </li></ul></ul><ul><ul><li>Disability </li></ul></ul><ul><ul><li>Key people </li></ul></ul><ul><ul><li>Business interruption </li></ul></ul><ul><li>Prepare to have employees </li></ul><ul><li>Get a business number </li></ul><ul><li>Register for GST and PST </li></ul><ul><li>Choose the form of business: </li></ul><ul><ul><li>Sole proprietor </li></ul></ul><ul><ul><li>Partnership, or </li></ul></ul><ul><ul><li>Incorporation </li></ul></ul><ul><li>Register your form of business </li></ul><ul><li>Get a business licence </li></ul>From an insurance stand point From a fiscal stand point From a legal stand point
    3. 4. Your proposal <ul><li>Your proposal will include your business plan as well as additional documentation such as: </li></ul><ul><ul><li>Market research </li></ul></ul><ul><ul><li>Industry trends </li></ul></ul><ul><ul><li>Other information supporting your project’s viability </li></ul></ul>
    4. 5. Your business plan <ul><li>What is a business plan: </li></ul><ul><li>A business plan can help you detail your goals, and serves as an operational plan for achieving them </li></ul><ul><li>Everyone who is going into business and who is operating a business requires a business plan </li></ul><ul><li>Why a business plan? </li></ul><ul><li>It describes your business </li></ul><ul><li>It conveys your vision to potential investors </li></ul><ul><li>It explains your business goals </li></ul><ul><li>It raises potential problems and ways to solve them </li></ul><ul><li>It states the amount of capital required to finance your venture </li></ul>
    5. 6. Your business plan <ul><li>What it should include: </li></ul><ul><ul><li>An executive summary </li></ul></ul><ul><ul><li>A description of your company </li></ul></ul><ul><ul><li>A description of your management team </li></ul></ul><ul><ul><li>An overview of your marketing plan </li></ul></ul><ul><ul><li>Human resources plan </li></ul></ul><ul><ul><li>Financial planning </li></ul></ul><ul><ul><li>Appendices that boost your credibility </li></ul></ul>
    6. 7. Your business plan <ul><li>What it should include: </li></ul><ul><ul><li>An executive summary </li></ul></ul><ul><ul><ul><li>Your industry, products/services, competitive advantages, amount of financing required </li></ul></ul></ul><ul><ul><li>A description of your company </li></ul></ul><ul><ul><ul><li>Legal status, date company founded, mission, objectives and vision </li></ul></ul></ul><ul><ul><li>A description of your management team </li></ul></ul><ul><ul><ul><li>Roles, experience and competence, education </li></ul></ul></ul>
    7. 8. Your Business plan <ul><li>4. Marketing Plan </li></ul><ul><li>Four sections should be detailed: </li></ul><ul><ul><li>Your product or services </li></ul></ul><ul><ul><ul><li>Why your products/services will sell? </li></ul></ul></ul><ul><ul><li>Your market potential </li></ul></ul><ul><ul><ul><li>Target clients, market size and penetration, demographic factors </li></ul></ul></ul><ul><ul><li>Overview of your competition </li></ul></ul><ul><ul><ul><li>Their strengths and weaknesses </li></ul></ul></ul><ul><ul><li>Marketing strategy </li></ul></ul><ul><ul><ul><li>Overview of your Marketing plan, media chosen, partners, etc. </li></ul></ul></ul><ul><li>Overview of your Marketing plan </li></ul><ul><ul><li>Is there a proven market for your products or services? </li></ul></ul><ul><ul><li>Who are your competitors? </li></ul></ul><ul><ul><li>What is your client profile? </li></ul></ul><ul><ul><li>What will you offer that is better? </li></ul></ul><ul><ul><li>How will you get them to switch? </li></ul></ul>
    8. 9. Your Business plan <ul><li>Human resource plan </li></ul><ul><ul><li>Determine how you will recruit, retain and develop employees : </li></ul></ul><ul><ul><ul><li>HR Policy </li></ul></ul></ul><ul><ul><ul><li>Subcontracting and outside professionals </li></ul></ul></ul><ul><ul><ul><li>Organizational and development plan </li></ul></ul></ul><ul><li>Financial planning </li></ul><ul><ul><li>Forecasts, balance sheet, statement of income, cash flow budget </li></ul></ul><ul><li>Appendices that boost your credibility </li></ul><ul><ul><li>Brief bios of your management team, market studies, client testimonials, etc. </li></ul></ul>
    9. 10. Finding financing <ul><li>What lenders look for: </li></ul><ul><li>Proof of experience, skills, determination, and self-confidence to successfully carry out your project </li></ul><ul><li>Your personal credit history – past performance can affect perception about how you will perform in the future </li></ul><ul><li>Your business plan must be clear, structured, and short, but it must cover all elements of your business idea </li></ul>
    10. 11. Finding financing <ul><li>What lenders look for: </li></ul><ul><li>For new and existing companies: </li></ul><ul><ul><li>Forecast for next 2 years </li></ul></ul><ul><ul><li>A cash flow analysis that describes your forecasts: </li></ul></ul><ul><ul><ul><li>Shows the seasonal fluctuations in your business and prescribes the need for capital </li></ul></ul></ul>
    11. 12. Financing to get started Finding initial financing: <ul><li>Proof that you have a long-term commitment to your project </li></ul><ul><li>Personal investment money: Cash/collateral on your assets. </li></ul><ul><li>Bankers consider this asset as “patient capital” </li></ul><ul><li>Gift capital or love money: </li></ul><ul><li>Money loaned by loved one and that will be repaid later. </li></ul><ul><li>Investments from others: </li></ul><ul><li>Money you raise from investors. </li></ul><ul><li>Bankers regard such investment highly </li></ul><ul><li>Proof that your idea is sound but can often diminish the degree of control you have over you own company </li></ul>
    12. 13. Financing to get started Finding initial financing: <ul><li>Policy for paying suppliers based on their payment conditions (often 30 or 60 days after delivery). </li></ul><ul><li>Check with each supplier, since many offer discounts for quick payment. </li></ul><ul><li>Supplier (A/P) Financing: </li></ul><ul><li>You may have access to grants, subsidies or tax credits to help recover expenses such as salaries or equipment. </li></ul><ul><li>Grants, Subsidies and T ax Credits: </li></ul>
    13. 14. Financing to get started <ul><li>Money loaned to you, not your business </li></ul><ul><li>Loan secured by your personal assets </li></ul><ul><li>Many banks offer this type of loan to start-up businesses or those with few assets (land, building or equipment) </li></ul><ul><li>Personal Loan </li></ul>Type of loans: <ul><li>Short term, flexible financing that you manage yourself </li></ul><ul><li>Borrowing as much as you need up to a determined amount </li></ul><ul><li>Secured by your inventory and accounts receivable, and your bank can require full repayment at any time </li></ul><ul><li>Operating Loan - Also called Line of Credit </li></ul>
    14. 15. Financing to get started <ul><li>Long-term financing option for fixed assets such as equipment, land or building </li></ul><ul><li>Term Loan </li></ul>Type of loans: <ul><li>Long-term financing to cover projects such as Growth, Export, Marketing, e-Business, R&D, etc. </li></ul><ul><li>Help provide you the cash flow to fuel your growth </li></ul><ul><li>Complement your existing line of credit </li></ul><ul><li>Working capital Loan </li></ul>
    15. 16. Financing to get started <ul><li>About BDC: </li></ul><ul><li>BDC is a Crown corporation with a mission to help Canadian entrepreneurs start and grow their companies </li></ul><ul><li>BDC acts as a complementary lender in the market and operates on a commercial basis (must be financially sustainable) </li></ul><ul><li>Building tomorrow's businesses : </li></ul><ul><li>For over 60 years, BDC has provided flexible financing and consulting solutions that are tailored to the needs of entrepreneurs and designed to help their business prosper </li></ul>
    16. 17. Why choose BDC <ul><li>BDC can provide support to entrepreneurs who : </li></ul><ul><ul><li>Are in the start-up or early growth phase (first 12 months of sales) </li></ul></ul><ul><ul><li>Can demonstrate realistic market and sales potential </li></ul></ul><ul><ul><li>Possess experience or expertise in their chosen field </li></ul></ul><ul><ul><li>Demonstrate key personal characteristics of a successful entrepreneur </li></ul></ul><ul><ul><li>Have assembled a competent management team </li></ul></ul><ul><ul><li>Have invested reasonable financial resources in the enterprise </li></ul></ul><ul><ul><li>Can provide personal and credit references </li></ul></ul>
    17. 18. Why choose BDC BDC start-up solutions at a glance: <ul><li>For a variety of commercially viable projects such as: </li></ul><ul><ul><li>expansion </li></ul></ul><ul><ul><li>plant overhauls </li></ul></ul><ul><ul><li>purchase of existing businesses </li></ul></ul><ul><ul><li>acquisition of fixed assets </li></ul></ul><ul><li>In some cases, may be used to reconstitute working capital depleted by capital expenditures or to finance sales growth </li></ul><ul><li>Customized term financing up to $150,000 </li></ul><ul><li>For new businesses demonstrating long-term viability </li></ul><ul><li>BDC can provide personalized management support </li></ul><ul><li>Can not be used for change of ownership </li></ul>Term Financing (Flexible long-term financing) Co-Vision (Start-up financing program)
    18. 19. Why choose BDC <ul><li>BDC start-up solutions offer a total solution for entrepreneurs </li></ul><ul><ul><li>BDC may be able to offer: </li></ul></ul><ul><ul><ul><li>Up to $150,000 in financing </li></ul></ul></ul><ul><ul><ul><li>Up to a 6-year repayment period </li></ul></ul></ul><ul><ul><ul><li>Progressive or seasonal repayment options tailored to your business’s cash flow </li></ul></ul></ul><ul><ul><ul><li>Consulting and mentoring solutions </li></ul></ul></ul>
    19. 20. Good to know… <ul><li>Insights on investors and lenders </li></ul><ul><ul><li>Many entrepreneurs are intuitive and rely on their experience, industry knowledge, and gut feelings to tell them whether a project “makes sense” </li></ul></ul><ul><ul><li>Most bankers are methodical, and won’t draw conclusions quickly- especially if they don’t have all the facts before them </li></ul></ul><ul><ul><li>Given that they don’t have your technical knowledge, they will want to see that you have thoroughly analyzed and planned your project </li></ul></ul><ul><ul><li>A thought out business plan is key to your success </li></ul></ul>
    20. 21. Useful resources <ul><li>To help you get started: </li></ul><ul><ul><li>Strategis (Industry Canada): www. strategis . ic . gc .ca </li></ul></ul><ul><ul><ul><li>Useful resource to find industry-related information and tons of information on what you need to do to get your business started </li></ul></ul></ul><ul><ul><li>Canada Business Service Centre: www. cbsc .org </li></ul></ul><ul><ul><ul><li>Excellent resource centre to help in writing business plans, determining types of loans and other resources that may be applicable to your business </li></ul></ul></ul><ul><ul><li>BDC: www. bdc .ca/ startup or 1-800 INFO BDC </li></ul></ul><ul><ul><ul><li># 1 resource for all your financing and consulting needs. Templates of business plans available and lots of pertinent info. </li></ul></ul></ul>
    21. 22. Thank you! To find out more about BDC Contact: Marie Bruno, Senior Manager 153 Great Northern Road Phone: (705) 941-3039 [email_address]