For this blog post, I thought I would outline some ways in which entrepreneurs can find some money if they do not have a source of revenue to start-up or expand. I thought of this topic because quite often one of the first questions I get asked by entrepreneurs or new businesses is, "what financial incentives can you offer us?" I have to tell them that unfortunately municipal governments are prohibited from providing any grants to private business. Section 106 of the Ontario Municipal Act, 2001 prohibits municipalities from directly or indirectly assisting any manufacturing, industrial, or commercial enterprise through “bonusing”. The scope of prohibited “bonusing” extends to the giving or lending of any municipal property, including money, guaranteeing borrowing, leasing or selling any municipal property, or giving a total or partial exemption from any levy, charge, or fee. It doesn't matter if one is looking at opening a business in Toronto, Kingston or Hastings County, the bonusing prohibition exists. There are some exceptions however, such as financial incentives for downtown property and facade improvements (which could be the focus of another blog post).
Fortunately there are other pockets "to pick" to help an entrepreneur get the financing needed to start, grow and thrive. Here is a list:
Senior Government Funding: The Province of Ontario and Canadian Government offer various funding programs that private businesses can apply for. I'm disappointed to say though that there does not exist a grant program to directly help someone open a business. Instead, it is advised that entrepreneurs think about what he/she would like funding to go towards. Is it funding to attend trade shows? Is it funding to help train new or existing employees? Is it funding to help retrofit an older underutilized building? There may be financial programs to support specific actions such as these. Therefore, take a moment to review the links provided on this site. When considering a grant, keep in mind that hiring and innovation projects typically have more access to government funding. For example, simply "opening a craft brewery" may not qualify one for a grant. But I joke that if someone can turn household waste into snow, there's likely a grant for that. Once ready to apply, feel welcome to send us a draft and we can make recommendations on the proposal and wording.
Friends and Family: As reported in the most recent edition of Canadian Business Magazine, University of Ottawa Professor Allan Riding states that friends and family pour $8 billion a year into Canadian businesses. He also reportedly found that there is three times more "love money" than capital from angel investors that gets invested annually. Don't hesitate then to ask your friends and family for support.
Angel Investors / Venture Capitalists: Take time to review companies that focus on startups. Some examples are Real Ventures, AngelList, FundersClub and Gust. Consider search engines such as Fundica and The Funding Portal.
Banks Loans and Community Futures: If the bank turns down the request for a loan, capital may be provided through a federally funded Community Futures Development Corporation. If locating a business in the North Hastings area of our County, the Community Futures office in Bancroft should be contacted. If opening a business in the southern region, contact Trenval Business Development Corporation.
Do-it-yourself: Sometimes taking one's own money and being diligent with budgeting before seeking outside help is the answer. There are many stories about businesses starting out with less than $5,000 and years later reporting sales in the millions of dollars. Choosing to grow organically helps avoid borrowing and debt.
If feeling hesitant after reviewing this post, perhaps consider whether entrepreneurship is the right path to take in the first place.