Options for Financing Your Small Business Growth

Have you ever been in a situation where your company is in a growth cycle? Notice how the cash flow becomes such a challenge? If you don't have the cash to purchase the goods up front, or cash to make payroll prior to getting the job completed and paid for, what do you do? If you don't do the project, how do you grow. It can be pretty stressful and tough to get through.

There are options out there. I know because I have been in this situation.

What was that? You say the banks turned you down because they wanted security... in cash? If we had the cash, we wouldn't need the bank!

There is nothing wrong with getting the help you need to get some working capital - as long as the funds are used for the purpose you are borrowing them for.

Resources are available through your local branches of CBDC and BDC. Their interest rates might be a tad higher than a bank, however they are the easiest people to deal with on repayment plans, longer amortization periods and, if you need to take a break for a month, they are just a phone call away.

Depending on the relationship, you might also get financing for a single project. Then, when you have been paid for that project, you can pay off the loan; or you can keep making payments and use the extra cash to finance another project.

There are also resources through the federal and provincial governments to assist with employee skills training, and programs to hire Nova Scotians who require work experience (e.g. START, WIPSI, WEI and Skills Online NS. Student employment programs, such as SCEI, are also available.

Here are links to some Province of Nova Scotia financing options:

• http://workplaceinitiatives.novascotia.ca/workplace-eduction/
• http://www.coursepark.com/ns
• http://novascotia.ca/programs/workplace-innovation-productivity-skills-incentive/
• https://novascotia.ca/programs/co-op-education-incentive/

Keep in mind, an updated set of financials is essential when applying for funding. If you need some assistance with updating your records, please get in touch!

It's Risky to Make Decisions without Financial Statements

A common question I’m often asked is, “Why do I need financial statements?” The answer impacts all types of businesses – in an office tower or in a basement.

Financial statements consist of a Balance Sheet and Profit and Loss (or Income) Statement. (And then there’s the dreaded Cash Flow Statement, the thing that really confuses people.)

A Balance Sheet shows you:

• How much cash you have in the bank
• How much money may be owed to you
• How much money may be tied up in Inventory
• Assets of your business
• How much money you may owe vendors
• Liabilities for things like loans or lines of credit
• How much equity you have in your business

A Profit and Loss Statement (my personal favourite) indicates the following:

• A breakdown of revenue streams and how much you are making in each
• The direct cost of goods to sell your products or services
• Costs of the operations of your business: payroll, administrative expenses, general costs

To understand how your business is performing on a month-to-month basis, or even quarterly, you need a set of financial statements. To make decisions, you need financial statements. If you are watching your financials, unpleasant things won’t be surprises.

If you simply want to pass over your shoebox full of receipts each year to have your returns filed, you don’t need financials. But, if you want to understand how to grow your business, financial statements are highly recommended.