At the heart of every successful business is a dream. The most vivid and exciting dreams are those of a special type of business leader — the entrepreneur.
Entrepreneurs are always looking forward, deep into the future. And yet, for an entrepreneur to create a mature business that will survive for years or even generations, financial details can be equally important.
Clinton Orr, Senior Wealth Advisor and Senior Portfolio Manager with Canaccord Genuity Corp, understands the needs of big-picture thinkers. Since 2003 he has partnered with some of the brightest minds in business today, helping them fine-tune financial management systems to create wealth for the long term.
Clinton’s financial guidance ensures that no detail is overlooked, and no financial issue will stand in your way. As much as great entrepreneurs love imagining the future, Clinton relishes the chance to scan a spreadsheet, calculate an equation, and immerse himself in markets.
He recently shared his time and insights with us, in a conversation that many young, ambitious professionals will find worthwhile. Below, we’ve reprinted the interview.
What do you feel is the biggest financial consideration young entrepreneurs need to think about before starting a business venture?
Clinton Orr: In my view, you have to consider how much money you’re going to need in every aspect of your startup. I would suggest making a list of everything you would realistically need and getting a concrete number down on paper. What equipment or technology will you need, and how often will you have to replace it? Are you going to have a physical location or are you going to be a remote business? How much money do you need to pay other employees?
The next question I would ask is how you plan to pay for all of these things. There are a lot of options out there but not every option is going to be suited for you. Bank loans are very common for small and medium businesses, while others may explore the route of seeking out investors. I would explore these questions thoroughly before making a decision and would advise anyone to check in with a financial professional before taking the plunge.
A lot of young entrepreneurs strongly consider going into debt in order to start a business. What would you say to that?
Clinton Orr: It’s unrealistic to think you’re going to start a business without sacrifices. However, what I wouldn’t advise is that someone who is already entrenched in debt goes further into it. You need to do a careful risk analysis and develop a sturdy financial plan before you incur any additional debts. Having poor credit is going to negatively impact your ability to get loans if you need them. I think it’s also worth considering whether or not you feel your business provides the needs of a specific market.
For those just getting started, what are some of the basics when it comes to understanding how to manage finance?
Clinton Orr: I already offered some in terms of understanding your cost structure and doing risk analysis. But going forward, you’re going to want to find banking solutions that are going to work for you. Look for banking solutions that help reduce your borrowing costs and try to earn the best returns on your investments. I’d also suggest you try to find tax efficiencies to help you lower the cost associated with running a business. I would say that’s a good starting point for most young entrepreneurs.
How necessary would you say it is for a young prospective business owner to receive financial advice in the early stages?
Clinton Orr: It is never going to hurt you to get the advice of a professional. Financial professionals live and breathe finance and could provide valuable insight when it comes to getting your business off the ground with cost in mind. Having that advice is going to be invaluable, especially if you aren’t very finance-savvy.
What are some of the pitfalls you think young entrepreneurs could face?
Clinton Orr: I would say mixing personal finance and business finance together. As soon as you set up a business, you need to open a separate bank account specifically for your business. You’ll also want to consider applying for a business credit card to help keep track of your business expenses. I’d suggest you not use your personal accounts or funds for business transactions. Failing to do so can cause issues with balancing accounts, managing profits, filing taxes, and setting clear financial goals.
There are concerns about whether or not the economy is strong enough for young people to start new business ventures – would you agree or disagree?
Clinton Orr: Starting a small business is going to be hard work regardless of the environment, but it’s going to be more challenging in a difficult economy. When credit markets are tight, it can be hard to get the needed financing. However, if you hone your business plan down to the penny to make sure you understand the level of risk required, you’re more likely to be successful. Explore the resources available for funding and have someone review your business plan, such as an accountant, to make sure that you have your ducks in a row.
CANACCORD GENUITY WEALTH MANAGEMENT IS A DIVISION OF CANACCORD GENUITY CORP., MEMBER-CANADIAN INVESTOR PROTECTION FUND AND THE INVESTMENT INDUSTRY REGULATORY ORGANIZATION OF CANADA
The comments and opinions expressed in this article are solely the work of Clinton Orr, not an official publication of Canaccord Genuity Corp., and may differ from the opinion of Canaccord Genuity Corp’s. Research Department. Accordingly, they should not be considered as representative of Canaccord Genuity Corp’s. beliefs, opinions or recommendations. All information is given as of the date appearing in this article, is for general information only, does not constitute legal or tax advice, and the author Clinton Orr does not assume any obligation to update it or to advise on further developments related. All information included herein has been compiled from sources believed to be reliable, but its accuracy and completeness is not guaranteed, nor in providing it do the author or Canaccord Genuity Corp. assume any liability.
Tax & Estate advice offered through Canaccord Genuity Wealth & Estate Planning