One can only hope the speakers will not negatively focus on the fact by being enterpreuinuers (sic) that they have three levels of government and the bank doing every thing they can to defeat them during their journey to their bureaucratically infused and over taxed success.

How To Start A Small Business? Buy a big business, and let the government help you run it.

Harbinger, boy are you right about the banks doing everything to prevent small business from succeeding. We were with Scotiabank for years and they did us more harm than good. Now we are with the Bank of Montreal, and while they are still a “big” bank, the service and operating lines are much, much better.

Once upon a time a few years ago, Ottawa told the banks to smarten up and pay attention to small business. Now I believe it is called “lip service”. You have to remember banks are not “venture capatalists”. They have an obligation to their shareholders. If you go into a bank and say you want to buy a motorhome or take a swell vacation, they will supply a wheelbarrow in the vault. Tell them you want to start a business, well that’s another story.

Most small businesses fail in the first five years. Which is one of the reasons there’s a reluctance by the banks to lend to them. So far as individual businesses go, one of the main reasons is lack of financial experience on the part of the owner, and lack of knowledge about your particular business on the part of your Bank. You may be in love with ‘A’ business. Your banker is only in love with business, and the profits you need to generate to amortise the loan.

The ‘first’ bank loan will be the easiest one to get. But woe betide the poor slob who thinks his banker will be impressed with his fiscal conservatism. And give him more favourable consideration for his desire to save un-necessary interest payments by failing to borrow quite enough on that first loan to allow for those unexpected contingencies that are sure to pop up.

Not getting the then needed ‘second’ loan while there’s still an outstanding balance on the ‘first’ loan is usually the kiss of death for most small businesses.

To you, as a struggling small businessman, this seems to be unjustified cruelty on the part of a heartless bank you’ve never missed a loan payment with.

To the banker, however, he views your re-appearance before him cap-in-hand again as an indication that you can’t budget properly, and he’s reluctant to throw any more ‘good’ money after what he now considers the ‘bad’ money he’s already lent you.

The best advice anyone likely to find themselves in this situation could follow is to never short yourself in estimating your costs, borrow as much as you can on that ‘first’ loan if you’re in doubt, (you can always pay it back when you’re sure you won’t need it ~ and any interest on it is cheap insurance compared to losing everything when a needed ‘second’ loan is denied.)

One other mistake is to think you owe any loyalty to one particular bank. If you can’t get a banker who will help you when you need help, change bankers. Quickly.

Those are only SOME of the things that need to be overcome if you’re to succeed in business. But ones that you can still control. The ones you CAN’T control ~ such as a general credit contraction, which will inevitably recur at periodic intervals due to a fundamental flaw in the financial system overall ~ can still do you in. Just remember, whether you go broke for $10,000 or less, or
$ 10,000,000 or more, either way you’re still broke!

Don’t think having partners will help either. They can be your best friend when you plan the business, but if they are ‘business owners’ after you successfully start the business (rather than partners), then when that happens its best if its not your money in the business, no guarantees, limited company. If you are going to have ‘partners’, and your money in the business, than it is an absolute must that you have a good partnership agreement drawn up by your lawyer… no business is so great that one can afford to skip the partnership agreement.

Never underestimate the importance of a human resource plan clearly defining the role of all employees and partners in the on going day to day operations of a business. Often the sole focus is on financial and often that is the mistake that will sink the business more so than the financials.

ie too many chiefs with not enough worker problems… lack of congruency between partners in how future employees will be compensated to grow the business with the talents and perspectives required by the business… ‘business owner’ syndrome (as opposed to working partner relationship)… can other potential good employees work for not only you, but your partners as well… is there a clearly defined hierarchy in the business with defined roles… once anything goes then so will the business shortly afterwards… dignity and the respect of employees that bring value to the company is a must, and if a partner ignores this its a huge red flag IMO.