Financing Your Business

1. About the Canada/New Brunswick Business Service Centre

2. Financial assistance programs

2.1 Business start-ups and existing businesses
2.1.1  Canada Small Business Financing (CSBF) Program
2.1.2  Aboriginal Business Canada
2.1.3  Community Business Development Corporations (CBDC's)
2.1.4  Farm Credit Corporation
2.1.5  Spring Credit Advance Program (SCAP) and Advance Payment Program (APP)
2.1.6  Business Development Program (ACOA)
2.1.7  Seed Capital Program
2.1.8  Financial Assistance to Industry Program (FAIP)

2.2 Business start-ups
2.2.1  Employer Wage Reimbursement
2.2.2  Self Employment Benefit
2.2.3  Entrepreneur Program
2.2.4  Student Entrepreneurship

2.3 Existing businesses
2.3.1  Term Financing Solution
2.3.2  Venture Capital
2.3.3  New Brunswick Innovation Foundation
2.3.4  Industrial Research Assistance Program - IRAP

3. Alternative Sources of Financing

3.1  Introduction
3.2  Financial Institutions
3.3  Credit Cards
3.4  Floor Financing
3.5  Venture Capitalists
3.6  Foundations
3.7  Seller Financing
3.8  Franchises
3.9  Personal Contacts
3.10  Equity Placement
3.11  Other Equity
3.12  Cost Reductions Techniques
3.13  Internal Resources
3.14  Key Financing - Suggestions & Hints

4. Protection of Personal Information: Your Responsibilities

1.  About the Canada/New Brunswick Business Service Centre

The Canada / New Brunswick Business Service Centre is an innovative partnership of federal and provincial government departments. Both levels of government work with key private-sector organizations to create a seamless information network for entrepreneurs.

Our mission is to improve the start-up, survival and growth rates of small and medium sized enterprises by giving business people in every part of New Brunswick access to accurate, timely and relevant information and referrals.

What can we do for you? We can guide you in the right direction! We can give you the information you need! We are your best source of comprehensive business information!

The Canada / New Brunswick Business Service Centre is accessible province-wide and free of charge. You may reach us through our toll-free number or visit us with your questions. Our office is open from 8:30 a.m. to 5:00 p.m. , Monday to Friday. We also provide a 24-hour business information service, seven days a week, through our Web site.

Here's how to reach us:

Canada/New Brunswick Business Service Centre
Ground Floor, Barker House
570 Queen Street
Fredericton, New Brunswick  E3B 6Z6
Telephone: 506-444-6140
Fax: 506-444-6172
Toll-free (information): 1-800-668-1010 (Atlantic region only)
TTY Toll-free (hearing impaired): 1-800-457-8466
E-mail: cbscnb@cbsc.ic.gc.ca
Web site: http://www.cbsc.org/nb
Hours of operation: 8:30 am to 5:00 pm Monday thru Friday - except Government holidays

2.  Financial assistance programs

2.1  Business start-ups and existing businesses

2.1.1  Canada Small Business Financing (CSBF) Program
The CSBF Program, under the Canada Small Business Financing Act, can assist businesses in obtaining term loans and capital leases of up to $250 000 to help finance fixed asset needs. The loans are made directly by a qualified lender (chartered banks, caisses populaires, most credit unions, many trust, loan and insurance companies) and the leases are issued by participating lessors.

Most small businesses starting up or operating in Canada are eligible -- excluding farming, charitable and religious enterprises -- as long as their estimated annual gross revenues do not exceed $5 million during the fiscal year in which they apply for a loan or a lease. Businesses may be operated as sole proprietorships, partnerships or incorporated companies.

For further information, see the document Canada Small Business Financing (CSBF) Program or contact a local participating chartered bank, trust or loan company for the necessary application forms.

2.1.2  Aboriginal Business Canada
Aboriginal Business Canada provides financial assistance, information, resource materials and referrals to other possible sources of financing or business support. Clients must be individuals of Canadian Indian (on or off-reserve), Métis or Inuit heritage, or majority-owned Aboriginal organizations or development corporations.

For further information, see the document  Aboriginal Business Canada or call 902- 426-2018 .

2.1.3  Community Business Development Corporations (CBDC's)
The CBDC's are autonomous, not-for-profit corporations which serve most rural regions of Atlantic Canada supported by the Atlantic Canada Opportunities Agency (ACOA). They assist in the creation of small businesses and in the expansion, modernization and stabilization of existing businesses. They offer both technical and financial services for entrepreneurs in their respective regions.

Technical assistance usually takes the form of information, counselling and advice on small business related matters. Financial assistance is usually in the form of a loan but may include equity or loan guarantees. These financial services are targeted to entrepreneurs who have difficulty securing capital through traditional sources of funding. They do not compete with financial institutions.

All the loans are repayable. For qualifying clients, the maximum loan amount is $150 000. Investment decisions are made by an independent local board of directors sensitive to the needs of community.

For more information, see the document Community Business Development Corporations (CBDCs). For a list of the CBDC's offices in New Brunswick, you can  visit the ACOA Web site at:http://www.acoa.ca/e/financial/community.shtml, contact the CBDC's toll free at 1-888-303-2232 , access the CBDC's Web site at: http://www.cbdc.ca/english/index.php or call the Canada/New Brunswick Business Service Centre toll free at 1-800-668-1010.

2.1.4  Farm Credit Canada
Farm Credit Canada (FCC) is mandated to lend money for any agriculture-related purpose -- land, buildings, equipment, land improvements, quota, livestock, agribusiness or value-added enterprises and diversification initiatives. FCC can lend to new and established farmers with or without off-farm income, for any size of operation, provided the borrower is of legal age and a Canadian citizen (or permanent resident). FCC also finances agricultural-related businesses that benefit agriculture, including those that are not farmer owned.

FCC works closely with Canadian producers and agribusiness operators to create financing solutions for each stage of their business life cycle. They consulted with organizations like the Canadian Young Farmers Forum (CYFF) and the Canadian Federation of Agriculture (CFA) about the challenges facing start-up farmers and then tailored AgriStart products to meet them.

For more information, call the toll free number 1-888-332-3301 for referral to the FCC office in your area. Visit the Farm Credit Canada 's Web site at: http://fcc-sca.ca/en/index.asp, or see the document Farm Credit Canada - Loans and Services.

2.1.5  Spring Credit Advance Program (SCAP) and Advance Payment Program (APP)            
The objective of the Spring Credit Advance Program is to provide those in short-term cash flow difficulties with the funds needed to plant their crops. The Spring Credit Advance Program operates under terms and conditions similar to those of the Advance Payments Program (APP) (Note: see the document Advance Payments Program (APP) ). As with the APP, guarantee agreements with the producer organizations administering the program and their lenders will include a repayment guarantee to the lender for the advances issued by an organization and a commitment that the government will pay the interest on the $50,000 of advances issued to each producer.

For more information, see the document  Spring Credit Advance Program (SCAP), or visit the Web site at:http://www.agr.ca/misb/nmp/nmp_e.html.

2.1.6  Business Development Program (ACOA)
The Business Development Program (BDP) is designed to assist with the financing of your project. Focusing on small and medium enterprises (SMEs), the program offers access to interest-free, unsecured loans. For some types of projects, repayment may be contingent on the success of the project.

Most business sectors are eligible except retail/wholesale, real estate, government services, and services of a personal or social nature. Both commercial and not-for-profit applicants are eligible.

For further information, see the document Business Development Program, contact the ACOA office at 1-800-561-4030 , or the Canada / New Brunswick Business Service Centre at 1-800-668-1010 , or your local Enterprise Agency, (for a list of Agencies, see the document Community Economic Development Agencies (CEDAs). You may also visit the ACOA Web site at the following address: http://www.acoa.ca/e/financial/business.shtml.

2.1.7  Seed Capital Program
The program will provide access to a maximum of $20,000 in the form of a repayable, unsecured personal loan, with flexible interest and repayment terms, as well as pay for business counseling or training costs, up to a maximum of $2 000.

For more information, see the document  Seed Capital Program  or call the Canada / New Brunswick Business Service Centre toll free at : 1-800-668-1010 or visit the Web site: http://www.acoa.ca/e/financial/capital.shtml

2.1.8  Financial Assistance to Industry Program (FAIP)
The Financial Assistance to Industry Program (FAIP) supports start-up or expansion projects throught direct loans or loan guarantees resulting in job creation.  Also supports "job maintenance" for firms with temporary working capital problems.  

For further information, see the document BNB-Financial Assistance to Industry Program (FAIP).  To obtain an application form, contact your local Enterprise Agency or the Department of Business New Brunswick at (506) 453-3890 . To obtain a list of the Agencies, see the document Community Economic Development Agencies (CEDAs) or call the Canada / New Brunswick Business Service Centre toll free at:  1-800-668-1010.

2.2  Business start-ups

2.2.1  Employer Wage Reimbursement
The Employer Wage Subsidy is a component of the PSETL-Workforce Expansion. The hiring of new employees can be expensive for new and expanding businesses. Because of this, Post-Secondary Education, Training and Labour has in place a wage subsidy component that helps employers create new and additional permanent year-round and seasonal jobs.

For further information, see the document  PSETL-Employer Wage Reimbursement or contact the provincial Department of Post-Secondary Education, Training and Labour, Employment Programs Branch at 506- 453-3818 or the nearest regional office.

You can also visit their Web site at:http://www.gnb.ca/0311/3ae.htm

2.2.2  Self Employment Benefits
The Self Employment Benefits is a component of the PSETL-Workforce Expansion. It can offer you various types of assistance during the start-up period of your business. Assistance can include coaching, ongoing technical advice and financial support. A Self Employment Benefits Coordinator  will help you develop a business plan and guide you through the necessary steps to get your business up and running.

For more information on the program and a list of self employment benefit coordinators, see the document  PSETL-Self Employment Benefits, contact the provincial Department of Post-Secondary Education, Training and Labour, Employment Programs Branch at 506- 453-3818 or the nearest regional office. Or visit the Web site: http://www.gnb.ca/0311/2de.htm.

2.2.3  Entrepreneur Program
The Entrepreneur Program is designed to help unemployed persons create their own job by starting a business. The program provides a Loan Guarantee of up to $10 000. To be eligible, you must reside in New Brunswick , be over the age of 19 and currently unemployed.

Most industry sectors qualify. Seasonal businesses do not qualify. The loan is guaranteed by the government of New Brunswick for two years and is interest-free to the borrower for the first year.

For more information, see the document BNB-Entrepreneur Program or call 1-800-668-1010.

2.2.4  Student Entrepreneurship
The best summer job experience can be the one you create for yourself. Through Student Entrepreneurship, Post-Secondary Education, Training and Labour can offer you a loan guarantee up to $3,000 and pay the interest on your business loan for the summer. In addition, should you repay the loan on time, you will receive a rebate of one-third of the value of the loan. If you are a student of at least 16 years of age and planning to return to school in the fall, you are eligible. If you have an idea for a business - try us!! You can pick up an application booklet at the Post-Secondary Education, Training and Labour Office closest to you, any Service New Brunswick Centre or your local Enterprise Agency (for a list of Agencies, see the document Community Economic Development Agencies (CEDAs) ). This booklet provides detailed information regarding Student Entrepreneurship as well as directions on how to prepare your business plan and advice on the steps to take to form a business.

For additional information, call the Department of Post-Secondary Education, Training and Labour at 506- 453-3818 or visit the Web site: http://www.gnb.ca/0311/1ce.htm.

2.3  Existing businesses

2.3.1  Term Financing Solution
BDC offers flexible term financing for a variety of commercially viable projects, including expansion projects, plant overhauls, the purchase of existing businesses and the acquisition of fixed assets. In some cases, the financing may be used to reconstitute working capital depleted by capital expenditures or to finance sales growth.

For further information, see the document Term Financing Solution, contact the Business Development Bank of Canada (BDC) at 1-877-BDC BANX (1-877-232-2269) or visit the BDC's Web site at: http://www.bdc.ca/en/home.htm .

2.3.2   Venture Capital
BDC Venture Capital is a major venture capital investor in Canada , active at every stage of a company's development cycle, from start-up through expansion. Its focus is on technology-based businesses with high growth potential that are positioned to become dominant players in their markets. BDC gets involved right at the beginning of a business venture - the seed stage and stays involved to later stage situations, such as pre-IPO mezzanine rounds.  The typical initial investments range from $500,000 to $3,000,000 as part of a financing round in the $1,000,000 to $10,000,000 range.

For further information, see the document Venture Capital , contact the Business Development Bank of Canada (BDC) at 1-877-BDC-BANX (1-877-232-2269) or visit the BDC's Web site at: http://www.bdc.ca/en/home.htm.

2.3.3  New Brunswick Innovation Foundation (NBIF)
The NBIF supports targeted and leveraged investments in innovation and in research and development in New Brunswick. By operating three equity based investment funds, the Enterprise Innovation Fund, the Seed Equity Fund and the Venture Capital Fund, the NBIF supports the development and growth of promising, innovation-based start-up and early stage companies in New Brunswick. It provides companies and entrepreneurs with enhanced access to risk capital and value-added support to ultimately allow them to grow and succeed.  

For more information on NBIF and its investment funds, please call 506-452-2884 or toll-free 1-877-554-6668, visit the NBIF's Web site at: http://www.nbif.ca/2007SEPLaunch.html or e-mail: info@nbif.ca.

2.3.4  Industrial Research Assistance Program - IRAP
The NRC Industrial Research Assistance Program (NRC-IRAP) provides a range of both technical and business oriented advisory services along with potential financial support to growth-oriented Canadian small and medium enterprises. The program is delivered by an extensive integrated network of 260 professionals in 100 communities across the country. Working directly with clients, NRC-IRAP supports innovative research and development and commercialization of new products and services.

How IRAP can help
The IRAP portfolio of services has four main components:

• Technology Expertise and Advisory Services
• Financial Assistance for R&D activities
• Networking Opportunities
• Partnerships and Collaborations

For additional information, call toll free 1-877-994-4727 , see the document NRC Industrial Research Assistance Program (NRC-IRAP) or visit the Web site at: http://irap-pari.nrc-cnrc.gc.ca/main_e.html

3.  Alternative Sources of Financing

3.1  Introduction
The ability to attract financing is affected by risk.  It is up to the applicant to reduce those risks when possible. With each reduction in risk, the odds of the business succeeding are increased and the chances for attracting financing improved. Potential lenders and/or investors pay particularly close attention to the applicant's experience in operating a business, personal and financial integrity, and the ability to demonstrate a clear understanding of the market and the business.

Many of the most successful entrepreneurs worldwide and here at home attribute their business success to having a sound business plan from which to work. The role of the business plan is two-fold. First, a properly prepared business plan documents the above information for presentation to potential and interested lenders and investors. Second, the business plan provides a blueprint for the ongoing operation of the business. However, a business plan is not static in that it requires periodic revisions to reflect the changing conditions of the industry, economy and market.

All financing alternatives require serious evaluation to ensure that the option selected is the one that best meets the financing needs of the business. We strongly advise that professional help be sought to ensure that the financing solution selected is the right one for you.

3.2  Financial Institutions
Operating Line of Credit
This option is usually used to finance inventory and accounts receivable. The financial institution issuing the line of credit requires adequate collateral for this type of loan. In addition to inventory and accounts receivable, the financial institution often requires other available assets to be pledged as security. The money that banks lend comes from their customers' deposits and banks must protect these depositors' funds. For that reason, banks lend very conservatively, or where cash flow and security pose the least risk. Be prepared to demonstrate to your bank that you have eliminated, to the greatest extent, all potential risk.

Chattel Mortgage
When most financial institutions lend money they require the borrower to sign a "promise to repay", known as a promissory note. A chattel mortgage is a document used to secure a promissory note against a lien on specific assets other than land and buildings. For example, a car or equipment for your business could be used as a chattel.

Overdraft Protection
Managing your cashflow is crucial to the success of your business. Overdraft protection may help to protect you against the expense and inconvenience of returned cheques, or to bridge those times of late payment by customers. Overdraft protection can also help to avoid rush trips to the bank and last-minute loan arrangements. Overdraft protection carries two limitations. The first limitation is time, in that overdraft is a short-term cash management tool and therefore is required to be paid back within 30 days. The second limitation is amount, in that overdraft protection always has a limit (or ceiling) which is authorized by the financial institution. Please note that overdraft protection can be expensive if not managed properly.

Term Loan
A financial institution may issue a term loan to provide financing for working capital or other financial requirements. As the name implies, a term loan commits the borrower to specific terms for repayment of the debt obligation. These debt instruments are interest-bearing and carry specific terms for repayment in time and amount. Term loans are secured by collateral which usually take the form of specific assets, personal guarantees, or both.

3.3  Credit Cards
Credit cards can provide access to smaller amounts of short-term funding. They carry a high rate of interest in comparison to other forms of credit. Using credit cards to assist in business start-ups or expansions may also result in a debt burden which may get out of control. It is important to note that credit cards are not for everyone or every business.

Cash Advances
Cash advances on credit cards can provide access to smaller amounts of cash almost instantly.

Purchases of Inventory and Supplies
Businesses sometimes have difficulty raising immediate funds to purchase required supplies. Credit cards can be used to obtain these necessary materials or to manage cash flow. It can be a convenient way to obtain short-term credit.NOTE: If you won't have the incoming cash flow to pay off those charges, you are best advised to find an alternative financing arrangement.

We recommend against the use of credit cards as a source of business financing where longer-term credit arrangements are more appropriate. Credit cards, as financing vehicles, are only suitable for those situations wherein small amounts of money are required for very short periods of time (usually much less than one month).

Remember: Credit cards are best suited for SHORT-TERM obligations only and are not considered appropriate for longer-term or on-going financing use.

3.4  Floor Financing
Buyer's groups, finance companies, and select financial institutions may provide inventory finance programs covering all the resale stock on the business showroom floor. Under this plan, the business is subject to regular audits from the floor financing company to verify stock.

3.5  Venture Capitalists
Venture capitalists look for businesses demonstrating good management, and seek opportunities which can provide greater-than-average returns. Typically their investments (which are in the form of "sharing in ownership") range from 5-7 years and require a strategy for exit. Venture capitalist firms vary in size, as well as in the size of their individual investment. Some cap their investments at $100,000 while others won't consider investments under $2 million. Some venture capital companies have sector preferences, such as high technology. Choose a venture capitalist firm that meets your specific needs.

3.6  Foundations
Foundations administer financial assistance programs. The funds which they manage are generated from private sector contributions and are distributed in compliance with very stringent guidelines. Foundations allocate their resources very selectively, contributing only to projects which meet their criteria. Criteria may be based on geographic regions, the concerns of the sponsoring body, and the scope of the project. Every foundation is different, catering to their specific areas of key interest. Many are broadly based in subject, with some of the more common areas for investment being research, environment, culture, community, health, public education, visible minorities, gender equality, and entrepreneurship. There are thousands of foundations spread across North America with several hundred right here in Canada .

3.7  Seller Financing
One critical tool used in negotiating the purchase of an existing business is understanding the present owner's motivation for selling. The motivation may be more than just the need for cash. The owner may be selling for reasons related to health, retirement, or just for a change in focus.  In these circumstances, the seller may be persuaded to provide a portion of the financing to make the deal complete. In this situation, the seller will receive some money at the time of ownership change, with the remainder of the money to be paid out over time. The new owner therefore gets to use the remaining portion as part of his/her financing package. There is an obligation to pay the remainder of the money over a period of time, and according to the terms set out in writing in the purchasing agreement.

3.8  Franchises
A franchisor is an established firm which supplies the product, trademark, techniques, materials and expertise to a network of franchisees. In a good franchise system, the franchisee has all the support they need in a head organization while at the same time having the luxury of being one's own boss. Some franchises have financing pre-arranged through financial institutions.  With the growth of franchising world-wide, potential buyers are advised to use extreme caution when investigating and evaluating a franchise opportunity. A good franchise will help you succeed while a less-reputable one can spell failure. Undertake your evaluation carefully and check out all sources of information before you sign.

3.9  Personal Contacts
Family
One of the most obvious, but often overlooked sources of small business start-up capital is family.  Mixing family relationships with business can be risky, particularly if the business falls short of expectations. Terms and conditions of loans should be clearly stated in a written contract. When considering family, it is often beneficial to remember that family can extend well beyond the immediate family to include cousins, uncles, aunts and others.

Friends
Another source of overlooked capital are friends and colleagues. These include social and business acquaintances, service club members, neighbours, and other people with whom you may have meetings of one type or another. Similar borrowing etiquette for family applies to friends as well. In all cases, entrepreneurs are advised to keep a distinct separation between business and social.

Active Investors
Active investors are independently wealthy mentors who are candidates for investing in your venture. Consider looking for an active investor in the start-up stage of your business. If possible, select someone who knows the technology, marketing or business you are considering. You will have less explaining or selling of the concept to do. Also there is a possibility that once they have made that investment, they will be looking pro-actively to involve your company in other things that they are aware are happening in the industry. Use your accountant, lawyer or investment banker as a go-between for your venture. Active investors often seem almost impossible to find, however, the actual number is surprising.

3.10  Equity Placement
Equity placements involve raising large amounts of capital by placing your company's stock on the financial market for the public to purchase as investments. An equity placement is also called "going public". It is time consuming, expensive to implement, and means a dilution of ownership. This strategy is most suited to larger companies. It can be a good way to raise capital for expansion, but needs to be evaluated on the pros and cons of the strategy.

3.11  Other Equity
Trade Personal Equity in House, Car or Personal Asset
This is the most common form of the small business start-up financing in practice in New Brunswick. In this situation, entrepreneurs refinance their personal assets, such as their house or car, in order to obtain the necessary funding for their venture.

Advance Against Life Insurance Policy
Some life insurance policies permit the insured individual to borrow money against their policy. While this does not nullify the policy, borrowers are urged to consult with their agent before pursuing this option.

Partnering (Pooling Resources)
Admitting a partner to help get your business off the ground may alleviate some financial burden. Choose your business partnership very carefully. It is often preferable to select a partner who has specific skills they can contribute to the venture. The right business partner can spell lifelong success while a poorly selected one ends in disaster. Remember that a partner involves sharing decisions, responsibilities, profits, and control. Don't jump too quickly into the partnership agreement -- the most successful partnerships are those that are formed with both (or more) parties fully aware of partnership responsibilities before entering into the agreement.

3.12  Cost Reductions Techniques
The following section details some of the cost reductions techniques which new and existing entrepreneurs may wish to consider to alleviate cash flow problems, or enrich business profits.

Home-Based Business
A home office can help to cut down on the operating costs, such as renting space, utilities, maintenance, etc. Entrepreneurs are advised to check zoning regulations and signage laws before actively pursuing this option.

Scale Down Scope of the Venture on Start-up
If start-up finances are not readily available, you may wish to start your business venture on a small-scale or part-time basis and build your business as financial resources become available. Start with what's important. For example, the computer and the photocopier may have to wait.

Request Landlord to do the Leasehold Improvements
If start-up finances are in short supply, you may wish to ask the landlord or property manager to provide leasehold improvements. The landlord will expect compensation for this in the form of higher rent payments, but you gain the benefit of preserving cash flow. This option should be evaluated with your accountant prior to start-up.

Check with Local Accountants, Lawyers, Consultants or Other Professionals
Successful people never hesitate to ask for advice or guidance. Accountants, lawyers, and consultants are excellent sources of business advice. The old adage, "An ounce of prevention is worth a pound of cure" may never be more applicable.

Trade Finance Companies
Trade finance companies support Canadian exporters by offering fixed-rate, medium-term financing to credit-worthy foreign buyers of eligible Canadian goods and services.

Moonlighting
Taking on a second or part-time job can help raise extra cash necessary for your business start-up or expansion. But be careful -- don't let moonlighting interfere with the day to day planning or operation of your new business venture, or with the energy needed to ensure that your new venture is a success.

3.13  Internal Resources
Suppliers - 30 day terms
Suppliers may accept payment terms of longer duration than the standard 30 days. Alternatively, some suppliers offer discount for early payment (for example "2/10", net 30).

Customers - Accounts Receivable
Some strategies encourage accounts to pay more quickly, which conserves cash flow. For example, some businesses offer discounts for payments received in cash, while others accept payment by major credit card. Cash flow management is critical to the success of any small business, and statistics clearly indicate that the longer a debt remains unpaid, the lower the likelihood of collecting.

Leasing versus Purchasing Fixed Assets
Leasing can be an effective medium and long-term financing option when acquiring fixed assets. While lease payments are usually tax-deductible, leasing provides an effective means of freeing capital for investment in other areas which may provide greater return. While leasing continues to gain in popularity, it may not be the answer in all cases. Businesses are advised to consult with their accountants about the suitability of leasing versus purchasing fixed assets.

Barter Trade
Sometimes businesses are willing to trade their products or services for the products and services they require. This can have a very positive effect on cash flow.

Improved Inventory Control
There are various techniques that may be used to improve inventory control. Some of the more common forms include: getting rid of slow moving goods, eliminating dead stock items from inventory, increasing inventory turn-around, and monitoring theft.

Financing Through Employees
In some businesses, employees take an active ownership role in the business as stockholders. Often employees are interested in investing in the company they work for since they understand its products and know and trust its management. In the best situation, employees take genuine interest in the company and it is reflected in their work quality and work ethic. Remember though, as investors, your employees will also have a legal right to monitor business operations and review the financial reports. In addition, this strategy dilutes ownership.

Factoring
A factor, as a factoring company is called, purchases accounts receivable for a discounted price, with the discount based on the quality of the accounts being purchased. Factoring may be arranged through your financial institution. This differs from an operating line of credit in that the factor actually purchases the accounts receivable portfolio and assumes responsibility for collection and the bad debts therein.

Employee Stock Option Plan
Stock option are useful for companies that want to encourage employees to invest in the companies growth. Since stock options are a form of compensation, it helps to preserve cash flow during the early stages of a company's development. A stock option gives the option's owner or holder the opportunity to purchase stocks in the company for a pre-established price, before a prescribed date. If the company is successful, those options generate substantial money for those who have contributed to its success.

Subcontracting
Your business may wish to consider subcontracting certain aspects of production. For example, a company may subcontract the finishing paint work to a local company instead of investing in capital, training and staff.

Contracting Out for Specialized Functions
Sometimes there are certain business functions that fall outside of the entrepreneurs area of knowledge. By contracting these functions, such as financial management or marketing, to experts in the field, entrepreneurs can spend their time and money doing the business functions that are most familiar to them.

Cost Control
Monitor and analyze your business expenses regularly. If expenses are not necessary or strategic to the on-going operation of the business, look for ways to reduce or eliminate them. Consider what methods may be available to minimize all unnecessary costs, as it cannot be stressed enough how important it is to regularly monitor your business expenses, adjusting where necessary or appropriate.

Renegotiating Existing Loans and Obligations
Sometimes businesses may wish to review their loans and obligations to look for opportunities to renegotiate for longer terms, reduced interest rates and in special cases partial forgiveness.

Business Organization Type
(Sole proprietorship, Partnership, Corporation)
Tax implications vary by the type of business organization. Legal and financial responsibilities also vary by organizational type. Seek assistance from professionals before you start.

Sell Seldom Used Assets
If your business is not using expensive specialty equipment on a regular basis, consider selling the equipment and contracting that occasional work to be done.

3.14  Key Financing - Suggestions & Hints
The business plan is the most important document for acquiring financing for your business and for achieving success in your business venture. A business plan is not static, however, and requires periodic revisions to reflect the changing of the industry, economy and market.

• Don't try to snowball lenders and investors. Be straight forward. Tell them exactly what you need.
• Be realistic. Know your limits and limitations.
• Shop around for the best borrowing rates and borrowing terms.

4.  Protection of Personal Information: Your Responsibilities

The Guide to Canada 's Personal Information Protection and Electronic Documents Act   (PIPEDA) helps businesses understand their obligations and comply to the Act. Since January 1, 2004 , the PIPED Act covers the collection, use or disclosure of personal information in the course of all commercial activities in Canada , except in provinces which have enacted legislation that is deemed to be substantially similar to the federal law.

For more information, see the document Protection of Personal Information - Your Responsibilities Your Responsibilities, call toll-free 1-800-282-1376 or visit the Web site: www.privcom.gc.ca/information/guide_e.asp