How to Start a Business in CanadaBrian Jang ON October 16, 2020
Events of this year left many Canadians with much time on their hands. Forced closures of many businesses and changes in operations for many more resulted in countless workers re-evaluating their work lives. Some found that they enjoyed working from home at their own pace or their own schedule, while others realized that they were considered disposable in the eyes of their employer. The disruption to their lives and plenty of time to contemplate what they wanted to do about it gave many the desire to start their own business.
Finding What’s Right for You
Deciding to start your own business can, in some cases, be much easier that determining the actual business to start. If you have not envisioned a particular concept, take some time to learn about business trends and the process of starting a small business. You may also want to take time to review all the businesses that you enjoy visiting on a regular basis. On the other hand, if you have a business in mind already, start by learning as much as you can about the industry and its inner workings.
Ultimately, you want to find something that you can connect with and enjoy. Do you have a hobby or some sort of past-time that you’ve dreamed of doing for a living? What are you passionate about? What skills do you have that would aid you in self-employment? What ones would you need to develop?
The real “sweet spot” lies where your passion and your skills intersect. What can you do for hours on end, enjoying every moment? What talents do you have? It may be worth asking friends and family members to help you recognize your talents if you tend to downplay your own abilities.
Finally, is there a need for a business that can make use of your gifts?
Finding What’s Right for the Market
Being successful comes from finding what people want or need and providing it. Contemplating the things in life that are frustrating to you or others might give you an idea for a product or service that is in demand.
Perhaps there is a popular business that lies an inconvenient distance away. Customers might appreciate having a similar offering closer to home. Meeting this need might help your business gain momentum quickly.
Once you have a product or service in mind, do a bit more research to learn about your audience. Not everyone will be interested in what you plan to offer, so find individuals who would be a good fit for your business and learn all you can about their wants and needs, as well as any problems they have that you might be able to solve. Look to the 5 Ws of your customer:
- What do they need and want? What are they willing to part with their money to have? What can you offer them?
- Why should customers give you their business? Why would they choose you over a competitor? Why are you a better choice for them?
- Who is your ideal customer? What age group do they belong to? Are they male or female? Are they working in a particular profession or possessing a certain level of education?
- Where do you plan on selling to them? Where do they live and work? Where can you reach them?
- When would they be likely to buy your product or service, and would it be a one-time purchase, or do you expect repeat business?
Knowing the answer to these questions will help you build your business plan. This is the time to get feedback and ideas from unbiased target customers, as well as an impartial business advisor before going any further.
The Cost of Startup
It can be hard to predict the exact cost of starting your business, as there are many variables, including differences in cost by location. Having said that, there are certain expenses that you can count on, regardless of industry. You will need to plan accordingly to cover these costs during the infancy of your business until it is able to sustain itself.
Typical expenses that your small business will need to cover include:
- Business registration and licensing fees
- Office space and utilities (phone, internet, etc.)
- Branding, including a logo
- Marketing expenses
- Creating and maintaining a website
Although each business will have unique expenses, they can always be categorized as one-time expenses, ongoing costs (such as utilities), essentials, fixed (such as leasing equipment), variable, and optional.
If you will be renting space and paying for inventory, it is possible to spend $5,000 to $10,000 to get started, while working at home might only require $1,000 or so. Being aware of your startup costs is crucial, as one of the primary reasons for small business failure in the early stages can be attributed to running out of funds.
As a rule of thumb, aim to have about 6 months of savings to cover your needs (including personal needs) to help you reach a point where your business can begin to pay for itself.
The Structure of Your Company
An important part of planning your new business involves choosing its legal structure. Your choices are sole proprietorship, a partnership, or a corporation. You might also create a co-operative if you have a group interested. Each type of structure having its own pros and cons and your decision will have to take into account a number of factors such as tax deductions and personal liability.
There are many decisions to be made when starting your business in Canada, but more Canadians than ever are looking to a future of independence from their current employer and the ability to create their own destiny. Perhaps it is your turn?
Need help with your taxes for your new business? Contact BCJ Group today.
- How to Start a Business in Canada
- Filing 10 Years’ Worth of Personal Tax Returns (Or More)
- Registering for the GST Retroactively
- Which Canadian Business Structure is Right for You?
- The Gig Economy in 2020: Tips for Saving Taxes