Do you have aspirations to become Canada’s next “great start-up”? There’s a chance you have big ideas knocking around in the back of your head, and some of them are probably aching to come to life. You’re not the only ones: According to BDC (Business Development Bank of Canada) as of 2014, there were over 1.1 million small businesses registered in Canada, and a recent survey found that even 46% of university students might start businesses after they graduate.
This week, we turned to one of FirstOntario’s Small Business Pro’s for some guidance. James Lefebvre is the Director, FirstOntario Business Services working out of the brand new FirstOntario Business Centre in downtown Hamilton. James brings years of experience in financial services with him from B.C. to right here in Hamilton, along with abundant enthusiasm. Named in Hamilton’s 2012 Top 40 Under Forty, he directs FirstOntario’s Business Centre where he and his staff deliver a full suite of banking products and services in a uniquely appealing environment.
James knows what it takes to start your next small business, and in turn has provided us 5 key steps to get started.
What are your plans and the capital requirements? The cost to establish a business varies from business to business. It is imperative to get a better understanding of the cost ahead of time, which will greatly increase your chances at success and ownership. Write down the equipment you’ll need and find real costs. Look at your current assets to see where the gap is. Normally a new business will need 30% more than you originally anticipated at the start-up stage. What do you require for operating capital? Starting a new business with not enough working capital can greatly increase your chance of failure.
Write a Business Plan
Be very detailed, the more you can find out now, the less mistakes you will make and increase your chances at success. How will you market your product? What is your competitive advantage? There are many online examples (BDC provides a template), but remember to make this your own. You can use this as your road map to success, open it regularly and add any new changes to your plan. As your business evolves, so should your business plan.
Financing Your Business
There are multiple options – From a loan, operating line of credit, banking arrangements, to government loans and private financing. If you have a home, do you have equity in it that can be used for security? Depending on what you need, each will require time to apply and close. So be sure to look into this early in the process. If you are a start-up, many financial institutions will require a very detailed business plan for financing.
Location, Location, Location
Find a location to setup your business. What do you need for equipment, inventory, leasehold improvements etc.? Location is everything depending on your business. Research traffic from the city through road counts, this will give you a good idea how many cars pass your location depending on the time of the year. Usually your location plays a key part in the cost of operating your new business. In most cases, a key area to locate will come at a higher cost. Does the space require renovations, or leasehold improvements? Will the owner share some of these cost? How will you finance this?
Keep on Top of Your Financials
Do you have an accountant? Will you hire a book keeper or do this in house? It’s best to know your finances intimately at first, before you go to hire someone to track this for you. This gives you a good idea of your daily break-even point, weekly and monthly. It will allow you to have targets each day for sales. The earlier you start will allow you to input expenses right off the bat, as the longer it takes, the more difficult it will be to catch up. After all, you are running your new business and time will be sparse! How will you structure your company? Sole proprietor or corporation? If you are buying the building, should you have a holding company for the real estate and a separate one for the business? If you ever sell, having the two separate, may make your job easier if you sell the business, the building or both.
If you’re ready to tackle life as an entrepreneur here in Canada – follow these 5 steps, be sure to ask for help and best of luck in your future endeavors!