start-up

Starting A Small Business Part 1

Okanagan Valley Marketing - British Columbia

Thinking of starting a small business? Great! make sure you know what to expect. (Image Source photospin.com © 2001)

Small Business On The Move.

With the changing of the economy, we are seeing more professionals seeking to be their own boss. While some seek entrepreneurial freedom off of a new idea or innovation, many seek to begin a business within the industries they are most familiar with. It can be a difficult road to pursue, yet extraordinarily rewarding.

Success and failure often seem to balanced precariously on a knives edge at times. Many factors come into play, some within our power – many outside of it. The fact is that no sure-fire way to succeed exists, and beginning a business will always represent a risk.

That said, there are certain means and methods one can take to increase the odds. Understanding some of the rules, and knowing the tools that exist can help reduce the headaches, and the failures.

Below we will dive into the first of a two part series examining tips and resources for start-ups.

Make A Plan.

1. Fulfillment.

First, decide what business type makes the most practical sense, given your temperament, abilities, background and passions, for you to pursue. While many start-ups begin as a result of a passion for a specific business, others begin due to a desire for freedom. It is important to truly contemplate what it is you want to do.

Much of small businesses long term success is determined by the level of fulfillment it gives the owner.

2. Finances – Breaking Even?

Create a budget vs start-up costs analysis and be honest! If you will not be breaking even immediately, how long? Determine your long term plan. How long can you survive without making the necessary sales? Remember that it may take a while to generate profit and you need to be able to sustain not only your business, but yourself, your family etc.

3. Finance – Sales & Profits.

Simple, but easy to miss. Making sales is great, but making profits is better. Determine within your plan, how long it may be before you not only break even, but generate increased cash flow.

4. Goals – Make Them.

Set three or four key goals for your business, in relation to your costs, budget and sales plan. Keep them simple, keep them achievable but keep them relevant.

  • What promotional materials need to be in place before you open your doors?
  • By what date do you intend on making x number of dollars?
  • How many customers do you intend to have contacted within your first month?

5. Business Plan.

Okanagan Small Business Marketing and Business Plans

Devising a proper and well laid out business plan at the start, will save loads of work later on.

Write a business plan – many resources exist online and at career institutes to assist you. Include your budget vs cost comparison, your profit forecast or cash-flow analysis and the goals you have set.

6. Search Out Business Financing Resources.

There are people who will finance your business. Government grants, financial institutions…Grandma.

Ok maybe not Grandma, but a quick search can turn up some surprising cash oriented resources that can make or break you efforts early on.

7. A Marketing Plan.

  • How will your promote you business in the beginning?
  • What type of materials will you use?
  • Who will you target?
  • What message will you target with?
  • How does this fit into your budget?
  • What will give your business the most bang for your buck?
  • What is the timeline for your business cards? your website? your vehicle decals? etc etc.

Decide On A Legal Structure For Your Business.

8. Consider The Various Forms Of Business Structures.

Explore the pros and cons. Here are a few of the ownership types you will come across:

  • Sole proprietorship (single owner)
  • Partnership (multiple owners)
  • Co-operative
  • Corporation

9. Key Factors That Affect Business Structures:

  • What is the simplest business format for your industry?
  • Does this structure fit for future needs?
  • How many owners will be involved?
  • What type of start-up capital will you need?
  • What are the personal pros and cons regarding liability and limited liability?
  • Do you stand to gain from selling stock?
  • How should your business be taxed?

10. Discuss Your Business Structure with a Lawyer.

Answer the necessary questions for yourself first. Devise a business plan and ensure you have done adequate research to reduce any legal consulting time needed. There are numerous resources available for this, search online or check with local career centre. Once you have done what leg work you can, consider discussing your plans with a lawyer.

We explore the pro’s and cons related to the business structure options in depth in our posting on Canadian Business Structures

Transition Marketing Services Okanagan Small Business Solutions

Make a list of potential names then check the availability.

Name Your Business.

11. When Naming Your Business Consider:

  • What service or industry are you in?
  • Does your name make sense for this industry?
  • What are some of your competitors names?
  • What will grab attention?
  • Is the name similar to others out there? It may impact availability, and your ranking in phones books and even search engines.
  • What will work with slogans, marketing and promotions?

Consider names that make use of standard industry terms, of your geography and your brand promise, also consider creativity and fun.

12. Are Your Considered Names Available?

The name may be awesome, but it may also be taken. Business name availability will depend on a number of variables:

  • The industry: An industrial plastics business will have less existing businesses then a hipster coffee shop.
  • The location: Including location terms like “Western Canadian, British Columbia, Okanagan” etc. can reduce availability – so double check.

You need to also consider where you will be doing business. Verify all the key areas for availability including:

  • Online: Check to see if your business name is available as a website domain. (Hint: You can try purchasing the domain rights from the owner, however that can be expensive – if it is already taken, consider a minor deviation to the name).
  • Local Community: Verify with the local authorities to see if your proposed name has been taken. It may be used by a genuine business, or even a fictitious one. Either way if it is taken, it is taken. (Hint: Here again you may be able to purchase the rights, or may want to consider a minor deviation to the name – Example: Spelling etc).
  • Provincially & Federally: Run a trademark search on the considered names on your list. Keep in mind that using a name that is trademarked elsewhere could simply confuse the customer.

13. Choose A Name.

Use the above tips to slowly eliminate names from your list. Choose one of the remaining that fits well with your business, desired image and personal preference.

14. Register The Name.

Register your name locally and as a domain etc. Doing so will eliminate any messy legal issues that may arise in the future from others attempting to use the same name. If needs be register it federally or as a trademark as well (this may be unnecessary for start-ups).

That sums up the first of our two part series. We will finish up next week by looking at Business Locations, Permits, Insurance and more! Exciting stuff so stay tuned!

Transition Marketing Services - Small Business Marketing

Transition Marketing Services. Our passion is educating and equipping small business owners with the tools and strategies to succeed. We have made it our priority to know Specialized Marketing. We keep up to date on what is new, what is available and what makes the most sense for businesses of all sizes and backgrounds. We recognize that every Small Business is unique, and their Marketing needs to be as well. Visit us at our website and let us know how were doing or if you have any questions. TRANSITION MARKETING SERVICES – Small Business Marketing Specialists.

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Small Business: Canadian Business Structures Explained

Four Common Canadian Business Structures Explained

When starting a business it is important to adequately explore the options available. Will it be owned and operated by one or by many? Will it be incorporated or not?

The process can be a little unnerving, for that reason we have provided a detailed summary of the various Canadian Business Structures available:

 

Canadian Business Structures Dissected:

1. Sole Proprietorship (Single Owner)

In this structure, you as an individual own 100% of the profits created. However responsibity for all business related obligations including debts, are also yours.  A creditor can issue a claim against not only your business assets, but also your personal assets, in order to fulfill a debt.

Pros:

  • This is the easiest form of business to begin, you simply need to register your business name provincially (note that this does not apply for Newfoundland and Labrador)
  • It is quite inexpensive in comparison to other options.
  • You have sole control over the direction and decisions of the business.
  • The number of regulatory commitments is minimal.
  • The amount of capital required is greatly reduced.
  • All of the profits belong to you.
  • There are tax advantages, including deduction of losses from your personal income and a lower tax bracket.

Cons:

  • No limit to liability, in other words ALL of your assets (including personal) can be taken to pay off your business debts.
  • If your business is profitable you may find yourself in a higher tax bracket (income is taxable at your personal rate).
  • The burden of start-up capital is carried solely by you.
  • As sole owner, vacation time and absenteeism may affect your business.

Partnerships are a second option for business start-ups

2. Partnerships (Two Owners)

Partnerships allow the benefit of multiple owners, without having to incorporate your business. Partnerships allow for combined financial support. Partnerships mean you will be splitting profits. Keep in mind that you may not always see eye to eye and a business agreement is highly recommended.

This business agreement should be drawn up with the aid of a lawyer in order to ensure:

  • First and foremost to ensure you meet the requirements for a partnership.
  • That your interests are protected.
  • The terms surrounding profits, growth, job details and absolving of partnership etc. are clearly defined.

The option exists to form a limited liability partnership, wherein you or your partner can choose to not take part in the control or management, but remain liable for debts.

Pros:

  • Partnerships, again, are relatively easy to start-up.
  • Work load and requirements are split up.
  • Tax advantages in that the income of the business is split between you and your partner when submitting your individual tax return.
  • Financial requirements, including start-up capital are shared.

Cons:

  • As with Sole Proprietorship, your personal assets can still be seized to pay of business debts.
  • There is no legal separation between you and your business.
  • Finding a suitable partner is difficult.
  • Business can result in many conflicts between partners and can result is damaged relationships.
  • You are responsible for your partners business actions. Their broken contracts, unfulfilled orders etc. are your issue as well.

3. Cooperatives (Multiple Owners)

The least common of business types, a cooperative is owned by an association of members.  This type of business is appropriate in situations where three or more people or businesses are determined to pool resources. They may choose to do this in provide access to common needs. Things like product deliveries, services, sales, employment, marketing etc.

Pros:

  • Liability is shared
  • Multiple resources.
  • Work load and requirements are split up.
  • Democratic decision making.

Cons:

  • Member conflicts based on business.
  • Member conflicts based on personalities.
  • Decisions can take time to make.
  • All members my play an equal part to succeed.
  • Thorough records and reports must be kept.
  • Additional capital is less likely to be offered.

More information

Want more information on this? Check out these links:

4. Corporations (Legal Separation Of Personal & Business)

Incorporating your business at either a provincial or federal level  is a third option. By incorporating a business, you are creating a legal separation between it and its owners (or shareholders). This means you are not responsible, personally, for business debts, business obligations, or corporate actions.

This is not a decision to take lightly and should be made only with proper legal counsel.

Pros:

  • Financial liability is limited.
  • The business becomes a separate legal entity.
  • Transferable ownership.
  • Continuous existence.
  • Capital is far easier to raise.
  • Incorporated businesses can be subject to lower taxes.

Cons:

  • High regulations on corporations.
  • Incorporating can be expensive.
  • Paperwork. Corporate records must be kept. This includes shareholder and director. meetings, and annually filed documentation with the government.
  • Issues with residency of director.
  • Shareholders and director conflicts.

More information:

Thinking of incorporating or simply want to know more? Visit Guide to Federal Incorporation

Transition Marketing Services. Our passion is educating and equipping small business owners with the tools and strategies to succeed. We have made it our priority to know Specialized Marketing. We keep up to date on what is new, what is available and what makes the most sense for businesses of all sizes and backgrounds. We recognize that every Small Business is unique, and their Marketing needs to be as well. Visit us at our website and let us know how were doing or if you have any questions. TRANSITION MARKETING SERVICES – Small Business Marketing Specialists.