We asked Albertans what they’re saving for and received an overwhelming response from across the province. Paying for home renovations, family vacations, children’s education funds and starting a business were the top four reasons to save.
Throughout this four-part series on “What are you saving for?” we’ll provide a few tips and tricks to help you achieve your savings goals.
Having a great idea for a business is only the start. You need to develop a target market profile, put together a solid business plan, work on your cash-flow cycle and consider a million other details.
You’ll also need financing to make the transition from employee to your own boss. This can be one of the trickiest obstacles when becoming an entrepreneur.
The amount you’ll need will depend on your industry and business model. Chances are, you’ll need several, if not tens of, thousands of dollars to get up and running.
Getting hold of financing
For most new entrepreneurs, there are often only a few options available when starting out. Using savings, getting a loan from family and friends, or opening a line of credit are typical ways to finance your start-up.
Most financial institutions and investors want to see your own money invested in your business, as well as a rock-solid business plan or solid sales figures, before they’ll consider investing in you.
Since it isn’t a great idea to start out your business in debt, it makes sense that Albertans consider saving to start up a business to be one of the most important reasons to save.
Tips to help you save faster
Build a comprehensive business plan. As well as including a description of your business, the industry, the market and your strategy, it should also include a detailed financial plan. This will give you the specific savings goal to aim for.
The ATB Entrepreneur’s Guide to Starting and Growing a Business has a ton of helpful information, including a startup-costs template (page 88). Startup costs are a key factor when saving to start a business and are often overlooked when putting together a financial plan. ATB requires this exact list from entrepreneurs who’re applying for a loan, which makes it a great place to start.
You’ll save quicker if you open up an account that’s just for your business. This makes it easier to keep track of your business-related savings and also makes it more difficult to take money out for other purposes.
Another proven technique for success is to make regular, automated payments into your savings account. You’ll save without even thinking about it.
The best ways to save
Depending on your proposed launch date and savings goals, the length of time you’ll need to save up enough launch money could vary from one to five years, or even more.
For flexibility, a Tax-Free Savings Account (TFSA) is a great way to get your savings growing. Any growth within the account is tax-free, so you keep all the gains and your savings grow faster. Plus, you can withdraw money at any time without penalty.
To speed up the growth of your savings, investing in GICs or stocks could be a good move depending on the level of risk you’re willing to take on. ATB Prosper is an online investing tool that can help you build your savings based on your risk tolerance and goals.
Expert help, custom-built for Alberta’s entrepreneurs
Having a trusted resource for advice on business-related matters is priceless when you’re starting out.
The ATB Entrepreneur Centre provides small businesses with valuable advice, mentoring, financial support and networking opportunities. Our small business experts are ready to help you each step of the way as you develop, launch and grow your business.
Getting you started
To find out how to start up a TFSA, build a savings portfolio or get expert advice on starting your business, contact your nearest ATB Entrepreneur Centre. We look forward to helping you become your own boss.