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Posted by Mark Kolody
Leaving No Stone Unturned: Successful Entrepreneurs Take Advantage of Everything
A handful of years ago, we made perhaps one of the smartest hires in our 14 year history. The title was nebulous – “producer” – and the job description was even more so: “to create opportunities for us to create beauty.” Sounds pretty fluffy, right? This individual quickly set about to finding us hundreds of thousands of dollars in opportunities that we didn’t know even existed.
Everyone’s business is different (model, jurisdictions, tax laws, etc.), so blanket advice is challenging. I’ll offer what we did by means of example. We looked at tax credits to counteract 75% of staff salaries for ourprovable experimental research and development hours (SR&ED). Previously, we simply ate losses to keep on the leading edge of the industry, but SR&ED – pronounced “shred” – actually rewards failure (read: the attempts that went awry before things went right). Depending on your business model, this could be six figures.
We also took advantage of employee subsidies when looking to inbound any juniors, provided they came through reputable university or technical college programs. This amounted to a six month subsidy of half the junior’s salary.
Before you go crazy taking advantage of this, realize that juniors are about as useful as a bagful of hammers – for the first half year anyways. They need to be taught standards, culture, and have their skills refined. Also, they soak a ton of time from the project and team leads. Still, we found that it was a benefit when unexpectedly encountering a diamond in the rough. The subsidies took the sting out of the training investment and partially de-risked the hiring process.
Grants (public or private) were another useful avenue for us, especially when creating our own intellectual property. This genre is very competitive, as everyone wants “free money,” but we managed to receive IRAP funding at a few critical junctions. You’ll have to pitch the concept, show the value proposition and business model, and work with an advisor. Each step along the way, you’ll need to prove the work product is matching your proposal. It’s a lot of legwork, but most certainly worth it when you can get the base salaries – but not burn rate – of project resources covered.
The last category – and most certainly the most competitive to win – are forgivable loans. We earned the opportunity to receive $250,000 in marketing funding for Leafcutter from the CMF.
Needless to say, this comes with a lot of prep-work, due diligence, and oversight. Forgivable loans are structured so that when the initiative is in the black, repayments start. These funds are few and far between, but if you’re willing to do the work, have a great initiative, and embrace the incredibly detailed accountability, forgivable loans can be the difference between success and failure.
Even though I’ve been writing about non-standard cash events, the thing I’d encourage people to understand is that nothing comes “free.” We soaked a lot of time (read: tens of thousands of dollars) into the research, applications, and follow through. Add requisite “spec work” and supporting collateral, and it’s a massive business investment per annum.
For us, however, it helped with the transition from a pure-play creative agency into a company that operates in the product space and can afford to run fantastic R&D initiatives. In short, by finding and taking advantage of everything, we gave ourselves the chance to become that which we aspired to on a far shorter timeframe than were it all self-funded.
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