One of the main causes of reluctance to enter into entrepreneurship is the lack of access to capital.
By now, we are all well aware of the systemic issues that target visible minorities, particularly black entrepreneurs.
Although the events of the last few months have triggered a wave of changes in favor of disadvantaged communities, lack of funding remains a barrier for entrepreneurs belonging to under-represented groups.
How does one raise the necessary funds?
To begin, fix your budget. Your business plan defines the operations for starting and expanding your business. It must include a budget which, on the one hand, details the financing necessary to launch your business and on the other hand the steps that will ensure its sustainability.
Then, find out about the different forms of financing that may be available to you.
Bank loan
The Small Business Loan (SBL) is typically the first financing option an entrepreneur will think of. The SBL is provided by a financial institution and the rates vary from one institution to the other. To put all odds on your side, prepare a detailed and promising business plan and consider investing an initial amount as collateral.
You could also use a personal loan which, unlike the SBL, is obtained based on your personal credit rating.
Use your personal funds
If you have funds available - and you are able to invest them in your business - self-financing is a very low risk option. You could use your savings or even a guarantee on your assets, among other things to finance your project.
Government grants
Various government grants are available to entrepreneurs in order to promote the local economy. They are generally categorized by industry or group of entrepreneurs and well-defined eligibility criteria apply. They usually aim to start, grow or relaunch your business.
In Canada, opportunities are offered by both the federal and provincial governments. Find out about the grant that best applies to you. These grants are obviously very popular, so make sure you put together a clean record.
Crowdfunding
Crownfunding allows you to raise funds through contributions from the population. There are several crowdfunding sites, and each one with a different scope. Among those relevant to the entrepreneurial project are GoFundMe, LaRuche, KickStarter or Indiegogo.
Start by creating your project and detailing your activities and needs, then share your link across all social platforms and to your network.
Obviously, keep in mind that the competition is tough, and often the most innovative projects or those with a touching mission are usually the ones to reach their goals the fastest.
Business partners
In making your business plan, you may identify the need for one or more business partners. If so, consider partnering with an individual who is not only knowledgeable in their field but who would be able to invest financially in your project.
You could also use outside investors. Think of the show Shark Tank, in which entrepreneurs present their products or services to potential investors in the hopes of obtaining financing in exchange for shares of the company.
Incubators and accelerators
Support structures for entrepreneurs are available. The incubator, usually for a startup, helps you materialize your entrepreneurial idea. The accelerator aims to support companies that generally already have a few months, or even years, of activity and a defined turnover.
In both cases, the entrepreneur benefits from mentoring as well as access to financial support.
Competitions
More and more competitions are organized with the aim to promote entrepreneurship. There is a great interest in sales pitch competitions during which entrepreneurs compete by delivering their sales pitch in front of a jury. The prize awarded to the winner is generally a non-refundable and interest-free sum of money (be careful, sometimes taxable!)
Why reach out to a communication specialist?
Depending on the form(s) of funding selected, calling on a communications specialist may be the key element that will secure your request. Expressing yourself with confidence, highlighting the innovation and anticipating questions will allow you to assert your expertise as well as your confidence in your project.
Finally, know that often times benefiting from various sources of funding can be a great way to prepare for the unexpected. Remember, however, that financial management needs to be all the more rigorous.