Congratulations, you got your small business off the ground and running! Where are you going? You know the basics now, like strong bookkeeping, the importance of an accountant, and the pros and cons between sole proprietorship and incorporation. As you continue to streamline, your services get a little fancier with your business practices. We’ve got some great tips to help you find the money to do so.
Begin with Budgeting
Balancing your books is only part of the battle to business success. Realistic and emergency budgeting is at least as vital to making it past 5 years. Your budget should include the things you expect like overhead, wages (including yours!), benefits (also including yours!), taxes, and marketing. It should also include things you don’t expect, like downtime and emergencies. Ideally you should reinvest up to 50% of your capital back into the business. After taxes, of course. If your business is growing at the speed of light, it’s not crazy to go ahead and reinvest 100% after taxes.
You might like to set aside a few hundred dollars to support local community events or join the local chamber of commerce. This will help get your name out there and build your professional network. We also advise that you tuck something away to pay for professional development opportunities, either for yourself or employees. And a little something more for awards – if you’re fortunate enough to be nominated for a business award, there’s a very good chance you’ll need to pay for your own dinner at the event ceremony itself.
Then Look at Financing
Those first few years of a new business are astronomically stressful because oftentimes you’re starting from scratch. No office, no equipment, no employees, no street cred, no customers, not even any Facebook followers. Before you bleed your savings dry, look into the many forms of financing available to get you started.
Bank loans are a main staple. Plus you’ve got the Canada Small Business Financing Program, angel investors, and crowdfunding. Both bank loans and the Canada Small Business Financing Program are handled by financial institutions. Angel investors are trickier to attract. However, with some solid online sleuthing, networking, and a solid business model and product, you may find what you’re looking for.
If you’re business is in Waterloo Region, you’re in luck! Check out the Golden Triangle Angel Network. We also recommend watching Dragon’s Den for pointers if you’re brand new to business. Finally, crowdfunding could be exactly what you’re after. Platforms to launch crowdfunding include rewards, donations, equity, and debt-coverage.
Tax Incentives and Grants are Reliable
Although retroactive, there’s no reason why you shouldn’t scope out available tax credits and plan ahead to capitalize on them. In particular, the Scientific Research and Experimental Development tax credit (a.k.a SR&ED pronounced “shred”) is designed to help businesses recoup a percentage of materials and time lost during product development. It’s open to all kinds of manufacturing, as well as some digital industries. Talk to your accountant for advice on how to track your time and materials in preparation.
Applying for grants requires serious budgeting and forward-thinking but the rewards are worthwhile. Government grants change regularly. Although, they’re generally available for expansion, hiring, professional development, capital investment, and research and development. There are consultants for hire to help you apply for grants. The government agencies themselves also tend to provide excellent support so you can apply on your own. However, beware that grants cannot be retroactively applied and often take upwards of 6 months to win approval.
Upside Accounting supports your business beyond the books. Our consulting services cover a wide range of industries and business needs from budgeting, best practices, and customized growth strategy planning. Contact us to find out how we can help your business by calling (226) 214-3233.