Starting your business
Meet your new partners - me, myself and I.
The decision to make the leap into entrepreneurship is a big one. Every year thousands of new businesses are created and according to Industry Canada, only 70% are still in business five years later. Each one began with a dream. Beyond passion and enthusiasm, the 70% achieved success by making a plan and paying attention to details. Before you begin, here are ten things you'll need to think about.
1. You're not alone. Small business is big in BC.
- 98% of all businesses in BC have less than 50 employees.
- Small businesses employ about 1 million people; almost 41% were self-employed.
- Women in BC represent over 37% of all business owners.
- Nearly one third of all wages in B.C. are paid to workers of a small business, the highest share in Canada.
Source: Small Business Profile 2016 - BC STATS
2. The buck now stops - and starts - with you. Are you ready for that?
Hard work, dedication and passion all go into creating and operating a business. It isn't for the faint of heart. You'll need to be ready to make sacrifices and shoulder the responsibility for solving problems. So before you get on the path, make sure you have the fortitude to stay on it.
3. Make your elevator pitch.
In the dot com years, the elevator pitch was the length of time it took after buttonholing a potential investor to pitch your idea – usually within the 30-second elevator ride up to their floor. Elevators aside, you'll need to be able to describe your business, define your market, demonstrate why you're better and explain exactly how you'll make money. Make it simple, because you'll need to repeat it…a lot.
4. Do your research.
No matter what type of business you're starting, you'll need to know the industry you're in and the competition you're facing. Above all, you need to be absolutely certain there is a market for your business or service. Then think about how you'll operate. If you're a consultant, will you need an office and can it be in your home? If you're going into retail, investigate locations. If you're going to manufacture a product, how will you do it and where?
5. Assemble a support team.
Whether you're going solo or you're in a partnership, you'll need help making the right choices. Our business advisors are a great source of practical information and advice. They'll be able to help you set up a solid financial framework and establish financing options like loans or lines of credit as well as assembling a business advisory team to help with insurance and other issues you'll need to consider. They can also help you find an accountant and a lawyer (you'll need them, too). And one last thing – you should develop a mentor network of seasoned people in your line of business who can answer industry-specific questions.
6. Decide your organizational structure.
Will you be a one-person show or have employees? Will you be a sole-proprietorship (100% yours, all earnings taxed as personal income), a partnership (share the wealth, share the pain), a limited or incorporated company (liability protection, lower tax rate and more control on taking money out of the company) or a co-operative. You should think carefully about incorporating; depending on your situation, it may not be to your advantage. Get advice on all the implications, particularly tax.
7. Choose and register your name.
It's important. Take the time to think about it. Make sure it doesn't conflict with an existing trademark. Online government services can help you register the name and help you acquire a CRA Business Number. Make sure you get the legal paperwork straight for any permits or licenses you might need. If a web presence is important to your new business, secure the domain name.
8. Write a business plan.
This is a crucial step and should actually begin as soon as possible. In fact, if you've worked through steps 1-7, you're already well on your way. Depending on the type of business you're starting, it may be very detailed. Several online resources can provide examples of various types of plan. In general, it should provide an overview of your business, describe its products or services and provide an industry overview to identify target markets. It needs to demonstrate viability, outline an operations plan and provide a comprehensive financial plan. This is where your business advisor can add value, helping you with expense and revenue estimates. Don't overlook government grants and tax breaks you may qualify for. The Government of Canada offers a Small Business Financing Program and you may be eligible.
9. Run the numbers.
If Canada Revenue considers you to be self-employed, you'll enjoy more tax breaks and write-offs. That means you don't have to pay EI premiums. But you will pay more CPP and you'll have to collect, calculate and remit HST and well as income tax. You'll have to be disciplined to stay on top of it all or face a cash crunch at year-end and tax time. Your business advisor can help you plan to stay ahead and on track.
10. Insure your success.
Don't shortchange yourself or your family by ignoring insurance. Your business advisor can help you investigate coverage that protects, at the very minimum, property, liability and business interruption. Our insurance specialists can become part of your business advisory team.
While this isn't an exhaustive list of everything you need to do to start a business, it's a beginning. And it – plus the help of expert advisors – will help ensure you are one of the 70% in five years, with a thriving business.
Links to Resources
For your reference, we've compiled links to a few key resource centres.