Purrdy Paws Mobile Grooming Spa founder Jayme Montero started with nothing. A teen mom, she had a “crazy” idea—to start a cat grooming mobile service when almost no one thought it would work—not her banker, her friends, no one.
Her plan was to somehow finance and acquire a Mercedes Sprinter cargo van (which is tall enough to stand in—with clear height in the truck bed of 6-feet, more than enough for a tiny 5’4” woman) and upfit it for a pet grooming operation.
The truck cost about $65,000 CAD and the upfit another $45,000 for a total of around $110,000. Her bank just laughed at her request for their assistance. Canadian banks, you need to know, only lend money to people who don’t need it, ie, rich dudes.
Finally, after pushing herself and others, she found one believer—a Mercedes salesman who bought into her dream. But where would she get the 10% downpayment ($11,000) the dealership was looking for?
Entrepreneurs are endlessly creative. Why? Because they are forced to singularly focus on a problem like this until the universe or their subconscious and conscious minds present them with a solution, which is exactly what happened in this case.
Jayme’s cost to acquire the van and its upfit is subject to HST (harmonized sales tax) in Ontario where she lives. That’s 13% in addition to her base cost of $110,000, ie, $14,300. Hence, her total bill from the dealership is actually $124,300 including tax. This meant she needed a 10% deposit of $12,430, not $11,000. Bad news, right?
HST (if you are a business owner) is your friend. It is (or can be) a profit center.
Every dollar of HST you pay as a business owner becomes an ITC, input tax credit, for which you are owed a rebate by government (in this case, CRA, Canada Revenue Agency, Canada’s equivalent to the US’ IRS, Internal Revenue Service). Since, Jayme’s sales and, hence, revenues at that point were zero (meaning she collected no HST from her clients), all of her ITCs would be rebated to her… a process that usually takes 3-months.
Hence, Jayme went back to the dealership and said, “Look, I’ll be getting a government rebate for my HST. If I promise you I’ll come back in 3-months with that check, will you give me the truck now?”
Strangely, they agreed. Trust is a mighty thing and they trusted Jayme would keep her word. So, she ended up putting her deposit down, 90-days after the transaction happened. Now that is creative financing.
ps another “secret” ingredient every entrepreneur needs (in addition to the ones demonstrated above, namely—perseverance, creativity, and finance) is a MMB, magic marketing button, one you “press” et voila, customers appear. If you don’t have a way to cost effectively capture clients, you biz is DOA, dead on arrival. Jayme tried a lot of different things—newspaper ads, internet display ads, flyers, etc—and none of them worked worth a bean. Then two things happened—Spring arrived (during which time, cats get into no end of muddy messes) and she found that simply by parking her van with its total paint job (ie, fully decaled) at shopping plazas, near busy intersections, next to major highways, at country fairs and pet expos/shows… she could draw a crowd with people stopping to ask what she does and, oh by the way, may I have your business card please? Her highboy van was a traveling billboard and, if she used it properly, it was 24/7/365 worth of free advertising.
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Ottawa Senators founder
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