Small Business Unplugged

Solo-entrepreneurs often get started with $5,000 of self-funding and never employ anyone other than themselves. Whereas, many of the startups I see typically use an average of $50,000-$250,000 to start their business. The majority self fund from savings, corporate assets, or self-directed RRSP's and the remaining will use Banks and other financial institutions.

For example, research shows that 49% of the small- and medium-sized businesses in Canada rely on banks and other financial institutions to provide them with business debt financing (whether for start-up, expansion or ongoing funding). Other sources of financing include:

• retained earnings (31%)
• supplier credit (39%)
• personal savings (35%)
• personal lines of credit (37%)
• personal credit cards (33%)
• leasing (16%)
• personal loans (14%)
• business credit cards (26%)
• government lending agencies/grants (7%)
• loans from employees, friends and relatives (10%)
• non-related private loans (5%)
• public equity (2%)
• venture capital (2%)*
• * Angel Investment = 4% according to Statistics Canada Survey 2000. Venture Capital = 1% according to Statistics Canada, Survey of Suppliers of business financing, 2002.

Source: Statistics Canada, Survey of Financing of Small- and Medium-Sized Businesses, 2002.

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This entry was posted on Friday, July 28th, 2006 at 8:26 am and is filed under Startup. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.