So, you've got an amazing business idea and you’re ready to jump in with both feet! But wait. Do you have all the money you’ll need?

Calculating your start up costs isn’t enough. You can’t expect to turn a profit immediately, so you’ll need cash for the first 3 to 6 months of operations. To help you assess these cash requirements, get advance quotes for your main overhead expenses and from your principal suppliers. Small businesses frequently fail by underestimating their initial monetary needs. Don’t make that mistake.

Once you've made your calculations, the hunt will be on for financing.

The first place to start is with your own available savings. How much can you afford to invest in your dream? After all, others won’t likely want to contribute if you haven’t done so yourself. Everyone from your banker to your brother-in-law will expect you to invest.

After opening your wallet you’ll want to look for “love money”. This financing is from friends and relatives who believe in your venture. It can be loaned with interest or interest-free. Or it may be given for a share in the business. But there’s one caveat here; Love money can lead to love lost. Be sure to sign a contract outlining the terms of your agreement. A two-cheek kiss is definitely not enough.

Many new entrepreneurs hope to get government or foundation grants. Why not? It’s free money! But the competition here is stiff, and it’s generally targeted to certain industries and groups (youth, women, cultural communities). Jeunes Promoteurs, for instance, targets 18 to 35 year-olds for amounts of up to$6,000. Consider getting professional advice if you want to apply for a grant. Contact www.yesmontreal.ca for more information.

A more probable source of financing will come in the form of government or foundation loans. This funding is not judged as a competition. If your business meets the criteria, your loan will be approved.

But most new business owners simply rely on commercial bank loans or lines of credit to finance their startups. Loans of under $25,000 won’t likely require personal collateral but you’ll need a good credit rating. You can check your credit score by contacting Equifax at www.equifax.ca. For loans over $25,000 be prepared to use your home and/or savings to guarantee the funding. Banks use the 5 C’s to assess applications.

Character; What’s your personal credit score? Do you have business experience?

Capital; What have you invested in your business? Is it sufficiently capitalized?

Capacity; Can you handle the loan payments? What’s your 3-year financial plan?

Conditions; Is this a good environment for your start-up?

Collateral; Do you have enough personal assets to secure the loan?

You've probably spent days, months, or years imagining your business. Your product may be revolutionary; your marketing strategy brilliant. But without proper financing your best-laid plans could crumble. Don’t let that happen. Talk to a YES business coach or register for a workshop on grants & loans at www.yesmontreal.ca. Capitalize on their experience, because money matters.