May 17, 2016
What can we do?
March 04, 2016
Congratulations. You have a great idea for a business or for a business expansion. Or, you may have found a business that you want to purchase or identified a franchise opportunity that is the perfect opportunity for you. All that seems to separate you from your dream business is the financing required to grow it or get it going.
Did you know that your local Community Futures office can help?
Community Futures have been helping small businesses to start or expand for over 25 years. In fact, the businesses assisted by Community Futures have been shown to outperform a comparable group of non-CF assisted firms in terms of growth, survival rate and revenue growth. What a great reason to contact us to discuss your business idea and learn about the types of supports we can offer your business.
When entrepreneurs first approach Community Futures, they almost always ask what Community Futures looks for in a small business loan application. This is such a great question, that we decided to share the answer with you in this post.
Community Futures looks for:
1) A great business idea with the potential for growth and commercial viability;
2) A strong management team. The management team can be comprised of the owners of the business and key management employees and/or contractors. Successful businesses put into place the team that will achieve the key business milestones required for the business to be successful;
3) Demonstrated commitment to the project by the owners of the business. Commitment is demonstrated through the following:
- Demonstration of quality research and development of the Business Plan by the owners of the business; and
- Demonstration of financial commitment to the business by the business owner(s). Equity contributions to any successful loan project vary based upon the project application. However, Community Futures normally looks for a minimum financial commitment of 10% of total project costs.
4) A well-researched Business Plan. This doesn’t mean your Plan has to be developed by a business planning professional or consultant. It does not mean that the Plan has to be typed and bound. What we look for is a Business Plan that provides the following key information:
- Description of the project requiring financing
- Definition of the size of the market and the estimate of the business’s expected share of that market
- Description of the marketing strategy to be implemented
- Projections of Income and Expenses for the first 1-3 years of the business
- Projected Cash Flow for the first year of operations or for a period of 12-months beyond the month where the business projects to start and carry on the positive flow of canh in the business. For most businesses, positive cash flow should be achieved no later than by the third or fourth month.
5)Proven history of good credit by the owner(s) of the business. Where the business is already established, a sound credit history for the business must be demonstrated as well.
6) Community Futures is a developmental lender. As a developmental lender, we partner rather than compete with conventional lenders. Accordingly, Community Futures will require evidence that the business has sought project financing from a conventional lender before a Community Futures loan can be considered.
One final thing to remember. When you approach your bank of your local Community Futures office for a business loan, you are not asking for a favour. A business loan is like any other business deal - it’s something you must professionally convince the lender to approve. Knowing what your Community Futures office looks for in a business loan application will help you to prepare your professional business case in support of your loan request.
“I would borrow money all day long, if the cost of borrowing is less than the expected return.”
- Brad Schneider
Jon founded the Community Futures Network of Alberta. In this role he provided strategic leadership, expertise and support as well as added-value to the Boards, Management and Staff serving rural Alberta through each of the 27 Community Futures organizations in the province of Alberta. On a macro-level, his role was also to partner in the provision of leadership and support the CF program as it operates across Canada. From 1988 until 1996, Jon was the founding General Manager of a highly successful Community Futures organization based in Medicine Hat, Alberta and serving the south-east region of the province. The role involved providing community economic development leadership and support to communities within the region. As part of that role, the 20 person operation provided access to capital for SMEs, business coaching/training, as well as support with business planning. Jon is now fully-engaged as Principal and Co-Founder of UpClose Team where he leverages his experience and skills as a communicator, trainer and coach to adding value and support to individuals, companies and groups. His focus is on personal, board and leader development.
December 10, 2015
Want to become a rural entrepreneur? 20 questions to ponder
No quiz can actually tell you whether or not you’ve got what it takes to run your own business. Our goal with this series of questions is to highlight some of the characteristics and abilities it takes to be a successful entrepreneur and give you some useful information to work with. We’ve also focused on some of the specific challenges faced by entrepreneurs in a rural setting. We hope it will give you food for thought as you start along the path to entrepreneurship.
Did you ever have a lemonade stand when you were a kid?
Many successful entrepreneurs were the kids who were constantly looking for ways to make money, with lemonade stands, bake sales, card trades, or other schemes. However, if you weren’t that kid, it doesn’t necessarily mean you aren’t cut out for entrepreneurship: according to a July 2009 study called “The Anatomy of an Entrepreneur” by the Kauffman Foundation in the US, many of the business people they interviewed hadn’t spent their lives dreaming of having their own business.
Are you under the age of 40?
If you are, that’s great. If you aren’t, don’t worry: the Kauffman Foundation report found that the average age for starting a business was 40. Of course some people start young, but many people come to entrepreneurship after years of employment has given them the skills and experience they need to succeed. The classic example is Colonel Harland Sanders, who started Kentucky Fried Chicken when he was 65.
Has anyone ever called you “stubborn as a mule”?
If so, you might not have taken it as a compliment. But as an entrepreneur, stubbornness can be a good thing. Not stubborn as in “never changing your mind about anything,” but stubborn as in “persevering in the face of all odds.” In fact stubbornness – or, if you prefer, perseverance – is one of the most common traits of successful entrepreneurs. Some might say that rural Albertans, with their “get it done” attitude, have a natural advantage in this area.
Can you think of a time when you created your own success?
Is there a story you like to tell about how you took a situation into your own hands and ended up looking like a hero? Maybe it was that time in high school when the grad committee fell apart and you ended up rallying the troops and pulling off the best prom ever. Perhaps your boss dumped a huge project on you and you worked night and day to make it succeed without any support from your peers. Or maybe you come from a family of farmers or ranchers who year after year survive by carefully managing their resources and adapting to circumstances. Creating your own success – or resourcefulness – is what being an entrepreneur is all about.
Is the glass half full, or half empty?
Generally speaking, successful entrepreneurs are optimists. It’s that simple. If you’re the kind of person who gets easily discouraged and tends to focus on the negative side of life, then running your own business and staying positive in the face of challenges is likely going to be difficult for you.
Given the choice at a Christmas party, would you rather be Santa or one of the elves?
Santa is a take-charge kind of guy, and that’s who you’ll have to be if you’re going to run your own business. Santa gets to take centre stage, hand out the presents, and get all the glory – however, he also has to do the tough stuff, like deciding who’s on the naughty list, keeping the elves happy and productive, and making sure the other reindeer aren’t jealous of Rudolf. It may be a silly analogy, but you get the point: being the person in charge is a hard job.
Have you ever gone bungee jumping?
You’re right. Bungee jumping has no direct link with running a business. However, successful entrepreneurs do tend to be comfortable with taking risks. Running a business offers a lot less security than working 9 to 5 and collecting a paycheque. You risk not making any money for a long time; you risk making bad decisions and having to face the consequences. Many of those risks are beyond your control, like the yearly risk a farmer takes at planting time, not knowing what the year’s weather will bring. If you’re a careful person who dislikes having to take risks, then entrepreneurship may not be the right choice for you.
Are you thinking about starting a business because you can’t find regular employment?
This is a situation faced by many workers in today’s economy, particularly those in rural areas where traditional industries are slumping. Starting a business can be a good solution, but studies show that entrepreneurship works best when people are pulled toward it by desire and ambition rather than pushed into it by circumstances. If you’re thinking of starting a business as “employment of last resort,” then it might not work out for you; however, if you’ve thought about starting a business but felt that the time has never been right, this could be the perfect moment.
How would you react if someone threw you a surprise party?
Would you step toward the flashing smart phones with a big smile, or would you shrink back and try to run away? Running a business is full of surprises and chaos. Business owners have to make quick decisions with little information, and stay calm while things go crazy around them – just think of farmers steadfastly working 48 hours straight to bring the crops in before a storm, or a rancher calmly walking through a herd of wild eyed longhorns. If chaos and unpredictability don’t stress you out, then you might well enjoy running your own business.
How do you feel about repetitive, day-to-day routines?
Along with chaos and surprises, running a business also involves a great deal of repetitive work – especially at the beginning when you may be doing everything yourself rather than delegating to employees. Keeping the books, counting inventory, maintaining up-to-date files, even tidying and cleaning your facilities may all be up to you. You’ll need to be consistent and disciplined to make sure that you keep everything in order.
Do you know where all your money is?
As a business owner you’ll likely work with an accountant, but you’ll do much better if you’re already skilled at managing your money. Do you know how much you have in your bank accounts right now? How much is due on your credit cards? Can you make a budget and stick to it? The good news is that, if you don’t have money management skills, you can learn them. Your local Community Futures office can help you find the help you need to take control of your bottom line.
Have you ever made a 5-year plan?
Some people go through life from day to day never thinking about what will come next. Others are much more strategic, plotting their course and planning for the future. In business, you can’t fly by the seat of your pants; Mark Zuckerberg (founder of Facebook) may come across as relaxed, but in fact he is a very focused long-term strategic thinker. Even if you don’t plan on being a billionaire, it is important for your business that you create strategic documents and revise them regularly. Again, this is something you can learn if it doesn’t come to you naturally (and your local Community Futures can help).
How often do you like to go out for dinner?
Why? Because starting a business means that you may not have any money for little extras like going out for dinner for a long time. You and your family need to be prepared to tighten your belts until the business becomes profitable – and most experts say that you should have the resources to support yourself for the first two years without expecting any business income. That’s where your strategic plan comes in, and where Community Futures can offer concrete assistance in the form of loans and business training.
Have you ever been to a Town Council meeting?
Operating a business often means dealing with local government, so if you’re already interested in municipal affairs you may be one step ahead when in comes to understanding the rules and regulations you’ll have to adhere to. One of the advantages of being in a rural area is that it can be easier to establish relationships with the administrators and politicians you have to deal with as a business owner, since the bureaucracy is much smaller and less anonymous. If you live in an area with an Economic Development Office, so much the better – it’s to your advantage to get to know the people who can support you in your endeavour.
How do you get along with your neighbours?
Heading a business is all about creating relationships, so if you’re the type of person who knows everybody and loves to work a crowd, then you’re already a step ahead. However, as Bill Gates and Steve Jobs have proven, you can still be successful if you’re a bit of an introvert – you just have to find the right people to work with. You don’t necessarily have to be the life of every party, but you do have to value people and know how to create solid ties. This is especially true in a small town, where business is more often based on a handshake and an expectation of mutual collaboration.
How do you feel about mixing work with pleasure?
There’s no getting away from it: the smaller the place you live, the more likely that your clients, stakeholders, and even competitors are going to be the same people that you meet at your kid’s soccer game or the community fall fair. Anybody who lives in a small town knows that maintaining friendly relationships over the years can be a delicate balancing act; this is doubly true if you become the purveyor of an important service or a sought-after employer. It’s important to think about whether becoming an entrepreneur will create any tensions in your personal life, and come up with a strategy to deal with any challenges.
How far do you have to travel to “get into town”?
As in real estate, one of the most important issues in establishing a rural business is location, location, location – transport costs may be higher because of distance from major centres, and it may be hard to reach a critical mass of clients. Your business plan must honestly address any potential challenges created by your location. Hopefully, as a rural entrepreneur, you’ve come up with an idea that will succeed because of your rural location, rather than in spite of it.
Are you prepared to work harder than everybody else?
In Canada, the average workweek is 35 hours (if you grew up on a farm or a ranch, that number will make you laugh). Self-employed people work 40 hours on average, with many putting in upward of 55 hours per week. Are you prepared to put in those extra hours? Can your family manage if you are less available? And most importantly, will you enjoy establishing your business enough to justify all the extra work?
Who is on your support team?
As an entrepreneur you may be owner, operator, and chief bottle washer, but you won’t be on your journey alone. It’s important that you know who supports and believes in you, and that you have people to turn to when times get tough. Your team could include:
- Family and friends
- Business mentors
- Investors and stakeholders
- Local politicians
- Outside experts and teachers
- Government agencies like your local Economic Development Office
- Your local Community Futures
Finally: Is your business idea really filling a local need?
There are so many reasons to become an entrepreneur: to follow a dream, to provide for your family, to be your own boss, to have a more flexible lifestyle, to get rich. But no matter how much passion and idealism you bring to your business, it cannot succeed unless it is truly answering a need. Sometimes it’s a need we don’t yet realize we have (who knew that we actually couldn’t do without Post-It Notes?) – in which case your business plan better include a lot of resources for marketing. Sometimes it’s a very clear need that nobody has managed to fill locally – in which case you’ll need to make it clear why you can do it when nobody else could. Perhaps it’s a need that is a perfect fit with your skills and experience.
- Have you found a need that you believe you can fill?
- Do you think you have what it takes to be a rural entrepreneur?
- Rural Alberta needs your energy and ideas. Contact your local Community Futures to find out about the tools, resources, and expertise we have to help you on your way.
December 10, 2015
Transitioning your business is an emotional process. That’s why you need a methodical, unemotional approach.
Lawyer Lisa Collins specializes in working with entrepreneurs to create solid, sustainable business transition plans. Making a successful transition happen can take years; not only must a successor be found, but both the owner and the business must be prepared and ready. Working through the process in an objective and disciplined manner can reduce stress and worry, and help ensure that, instead of simply being an ending, the transition of the business is seen as the next logical step in a rewarding entrepreneurial career.
Lisa Collins, QC, TEP, has practiced as a lawyer for over 30 years. Now she is principal at Luminira Business Transition and Wealth Strategies, a Victoria, BC company that offers strategic support to business owners during their business transition process.
Originally from a small farming community in southern Manitoba, Lisa grew up in an entrepreneurial family, and has personal experience with the particular challenges and opportunities of running a business in a rural area.
Community Futures Alberta interviewed Lisa from her office in Victoria.
CF Alberta: Lisa, there are all kinds of checklists and articles on the Internet that explain how a business transition should take place, but what is it actually like for individuals and families as they’re going through it?
Lisa Collins: Well, it’s a very big change for people – and most humans just don’t like change! It can take a long time for them to adjust; after all, this is a process. A change like this generally doesn’t happen from one day to the next. It’s almost like there are different stages of emotional reaction, just like the stages of grief. It can be very trying and stressful.
That said, if it goes well it can be an extremely positive event in their lives. It can be seen as the final realization of all of their hard work. Transitioning a healthy, successful and well-run business to a family member or a buyer is a real testament to all they’ve accomplished.
CFA: What are some of the common areas of difficulty that you encounter?
LC: The most common struggle is with giving up control. After all, entrepreneurs often get into running their own businesses because they don’t do well answering to other people! Also, for many of them their sense of identity is intrinsically connected to their company; stepping away from the business means a big loss of who they are.
In a family business, or in small, more casual businesses, there may also have been a tendency to avoid assigning clear roles and responsibilities – everybody just “pitched in” and did what needed to be done. But when it comes to transitioning, everyone needs to know where they stand and what they can expect. Clarity is important.
CFA: Do specific issues arise when it’s a family business?
LC: Oh, of course. For one thing, business owners worry about their kids, just as any parent does. Is this the best thing for them? Can they pull it off? There can also be generational differences; I’ve certainly seen very big contrasts between Boomer parents and Millennial kids. Boomers tended to just work like crazy, but Millennials don’t always consider that to be a necessary part of running a business. They have different ideas about work/life balance. So parents may struggle to accept the next generation’s way of doing things.
A family transition is especially difficult when there are a number of children but not all of them are involved in the business. Most parents want things to be fair, and that can be tricky. How do you compensate everyone? Doing some diversified investing early on, to create some wealth that’s outside the business, can be very helpful.
CFA: How do business owners feel once the transition is all over and done with?
LC: For many people it’s as if a light has gone on for them – they suddenly realize what a big burden running the business has been, and now that it’s lifted they see what the next phase of their life can look like. Some people find it very hard, but once they extricate themselves from the business it’s usually not so bad.
I recently worked with a client who transferred the ownership of his business to his daughter and son-in-law. He knew it was the right time to step away, but he was really struggling with losing control of everything he had worked so hard to achieve. However, I saw him fairly soon after the transfer, and he was already a whole new person! After all the work that had gone into the transition process, he was finally ready for it.
That’s why planning is so very important. When a transition has to happen very suddenly – like in the case of a death or illness – it’s much more difficult.
CFA: What should business owners do in the case of a sudden transition like that?
LC: Well, ideally there should be a plan in place for that eventuality, so that the business can keep running without too many hitches. For one thing, the business’ systems and processes need to be laid out and explained somewhere; too often they only live in the owner’s head. That’s something that needs to happen for any transition; doing it sooner creates more security in the case of some kind of emergency.
In the case of a sudden transition, an advisory board can be very useful. I recently wrote an article about these boards on my blog. For a smaller business, an advisory board can simply be one or two people who are trusted friends or professionals with whom the owner has a mentoring relationship. It doesn’t necessarily have to be a formal relationship, as with a bigger business, but it’s still a valuable support.
CFA: How does working with an expert like you help the transition process? What are some of the roles you play?
LC: The biggest thing is that it helps business owners make sure that they are taking a business approach to the transition. I have an objective vision and process, and I can help them approach the situation methodically and avoid getting bogged down in relationships and workplace dynamics.
I like to compare myself to an architect. Architects gather information about what the client wants, then draw up a plan that is structurally sound and feasible. After that, they bring in experts like carpenters, plumbers and electricians to actually put the plan in place. In the same way, I work with clients to assess their needs, and then draw up a transition plan that most closely matches their needs while still meeting all the legal, taxation and business requirements. Then I bring in specialists to provide legal and accounting services. I stay involved to oversee and guide things.
My main role – and the one I consider the most important – is that of counsellor. I am the trusted advisor and the shoulder to cry on; I bring an objective sounding board. I help people work through their fears and hesitations, and assist with keeping the various lines of communication open and making sure things stay on track.
CFA: What are some common mistakes that people make when they try to go through the transition process alone?
LC: Possibly the most common is starting with the tax plan. That probably happens because they first consult with their accountant, who is the outside expert they most often work with. The tax plan is important, of course, but it shouldn’t lead the process. It should be part of the implementation phase, not the planning phase.
Also, people often have a hard time taking a business approach to what they see as a family situation – whether it’s actual blood family, or partners and staff that feel like family.
CFA: You’re clearly very passionate about your work. What do you love about it?
LC: Well, I come from an entrepreneurial family; we had a number of businesses in the small town where I grew up, and then my parents turned to farming. In a way, I feel as though this work is ingrained in me!
I really enjoy seeing how people become empowered during the transition process. It puts them in the driver’s seat, instead of just reacting to things. Most of all, I like helping people look after what they’ve worked so hard to build. Their business is one of their greatest achievements; I’m privileged to help them keep it safe.
CFA: Since you come from a small town, can you give us some insight into specific challenges that rural business owners might experience at transition time?
LC: The most obvious one is that they may not have the resources they need in their own community. Sometimes people from small towns prefer to deal with local advisors, who they’ve known for years, but the fact is that they may not have the business expertise to best handle a transition. It’s important to find someone who specifically knows about this area. In this day and age, with email and Skype and so on, that person doesn’t necessarily have to be right next door.
Also, staff in rural areas – whether they’re part of the family running the business, or employees who are in line to take over – may not have had the opportunity to work elsewhere and come back to the community. It’s not an essential component for a successful transition, but it can be helpful to have been exposed to other ideas and ways of operating.
If owners are looking to sell to a third party, there’s no doubt it can be very difficult to attract the right person to a rural area. Many small towns are struggling, and unless the community is making a determined effort to attract investment, small business owners can be left out in the cold. But I do believe that a change is coming, and it may be sooner than later. More people are turning their backs on the big city and heading to small towns as a lifestyle choice. My own hometown is doing a lot of work to make itself more attractive to new residents, and a lot of communities are realizing that they can influence their own future.
CFA: Do rural business owners need a longer timeline for their transition?
LC: If they’re looking to sell to a third party, then they may. But no matter where you are in your business, you need to have some kind of plan in place. As I said earlier, every business needs a plan in case of a sudden emergency transition. And once the owners are in their 50s and 60s, they need to start thinking about what they need to do to make sure that they can someday stop working so hard. Getting ready for transition isn’t just about finding the right person to take over: it’s about making sure that the business is at its very best, that you have maximized its value, and that it’s being run in a way that makes it easily transferable – like, as I said, having all the important information written down somewhere, rather than just in the owner’s head.
CFA: Finally, do you have a success story that you feel really exemplifies what a good transition process looks like?
LC: I do! I’m thinking of a family business that I started working with about 10 years ago. There are two children: a daughter who isn’t directly involved with the business, and a son, who stepped in as the next owner. He originally went away to get experience elsewhere, then came back about five years ago and started in the lower echelons of the company. Over the years he worked his way up, mentored not only by his father but by other senior managers. About three years ago, when it was clear that he was ready and capable of taking over, the transition process was accelerated.
First the father had the business valued, so that the son knew what he was starting with and what he was expected to maintain. Then the son actually started running operations; his parents stepped back a lot, but were still very available for advice and mentorship when needed. I’m happy to say that the son is absolutely loving the challenge and that the business is doing very well.
This plan was put in place over time, beginning before the son had even come back to work for the company. To create the best possible plan, you have to get the big picture, and that takes time. Then you can fit all the pieces together one by one, like a jigsaw puzzle, and create something solid and lasting.
CFA: Thank you so much for your time Lisa. We’ve learned a lot.
LC: My pleasure!
For more information about Lisa Collins and her company, please visit her website at www.luminira.ca
December 10, 2015
Work Locally, Learn Globally: The Best of the Web
Community Futures offers the best in local, person-to-person, specialized assistance for business owners and entrepreneurs. No online checklist or generalizing blog entry can take the place of the specific expertise we offer.
But when it comes to thought leadership in the field of entrepreneurship and small business, the Internet is a treasure trove of ideas and inspiration. In this age of global information, all business owners should be taking advantage of the incredible array of articles, blogs, talks, podcasts, success stories and cautionary tales available on the Web.
Here are our suggestions for five of the best places to start:
According to its manifesto, Foundr exists “to show you what it takes to be a successful entrepreneur.” Rather than focusing on the businesses themselves, the site tells the stories of what highly successful people have done to get to where they are. Endorsed by entrepreneurial giants like Richard Branson, Arianna Huffington and Seth Godin, the site offers a blog, business guides, a weekly podcast, technology reviews, training courses, and a monthly magazine.
Perhaps an obvious choice, but there’s a reason why this site shows up on pretty much every list of top websites for entrepreneurs: well-written and well-organized content on a wide range of useful topics. This site is a rabbit hole that you can easily lose yourself in for hours.
You have to pay to join this site, but the advantage is that you’ll be able to connect with a wide range of entrepreneurs with the same challenges and concerns that you have. Resources include exclusive content, user forums, and a team of experts who actually answer questions and share their knowledge. Also check out co-founder Dr. Jeff Cornwall’s blog site for interviews that explore how entrepreneurs got their start and built their business.
Not every female entrepreneur wants a website written from a woman’s point of view, but there is no question that women in business do face challenges that men don’t have to face. The site does focus a great deal on the technology sector, but much of the content is useful for any entrepreneur. The organization also hosts conferences, and Google hangouts.
You certainly don’t need to be under 30 to use this site, but you will find that its language and content are geared to a younger crowd looking to create business success before they settle down with marriage and kids. With article titles like “Do Sh*t You Love,” “Build Your Dynasty Like Jay-Z,” and “How To Escape Your Quarterlife Crisis,” this site is aimed directly at 20-something Millennials.
And don’t forget the obvious:
- TED Talks offer an endless supply of interesting, educational, and inspirational talks. Try searching under keywords such as “entrepreneur,” “success,” “goal-setting,” “personal growth,” “decision making,” “productivity,” “innovation,” “happiness.”
- Twitter: If you’re not following your favourite business leaders and entrepreneurial thinkers on Twitter, then you may be missing out on some really useful advice and inspiration. This is also a great place to get some Albertan content: if you don’t know where to start, try Alberta Innovates (@ABInnovates), entrepreneur Dean Heuman (@dheuman), Startup Canada (@Startup_Canada), and/or business strategist Rosemary Malowany (@RoMalow) and build from there.