The startup phase of your new business is likely the most exciting and exasperating time you'll experience over the life of your new enterprise. Nothing beats the magic of creating something new from scratch, overcoming the naysayers and obstacles in your way. But equally, nothing is as frustrating as running headfirst into a wall – which, some days, it feels like you're doing repeatedly when all you want to do is move ahead. From the vantage point of someone who's been through the startup stage several times, here's what everyone contemplating their own business startup should know.
1) The playing field is never level.
Known quantities, people with pull, guys with deep pockets, entrepreneurs with proven track records, members of prominent local families – the list of people who would find it easier than you to get support (and money) for a new business could be longer than your arm, depending on how connected you are. If you're not, it's wise to partner with someone with connections or at least find out who matters and canvas their support.
(If you do decide to enter a partnership with someone, be sure to set up a formal written agreement; see 10 Questions Partnership Agreements Need to Answer.)
2) People will not be keen to give you money.
Particular types of startups are considered to be better risks than others. Banks and other traditional financial institutions are notoriously reluctant to loan money to retail or service startups.
There are not a lot of business grants out there to begin with, and very few of those available are for startups. Find out about available Canadian business loans and grants here.
If your startup is suitable, participating in a business startup accelerator program such as Extreme Startups, or a government funding program such as FedDev Ontario's Investing in Business Innovation initiative, can be your best route to successful capitalization.
3) It's a really good idea to keep your day job, if you have one.
You won’t make any money right away. In some cases, you won't make enough from your new business to pay your personal monthly bills for an entire year – and it could even be longer!
The Two Main Problems of Starting a Small Business provides a more in-depth discussion of the problem of having to wait for the money to start coming in when you’re first starting a business and what you might do about it.
In 7 Financial Strategies for Going From Salaried to Solo, Nina Ham suggests ways you can keep the money coming in while getting your startup off the ground.
4) Plan first, do second.
A seat of the pants approach is a terrible way to try to start a business. There are a lot of things that need to be done for you to successfully launch a new business, and just haphazardly deciding to do this or that is a great recipe for disaster. Follow a startup checklist, such as my Steps to Starting a Business in Canada, meticulously. Don't skip steps/items because they're tedious. Grunt work now equals success later.
I also highly recommend Writing a Business Plan.
5) No matter how hard you try, you will never have all the expertise you need.
At one point in my Small Business Success Program (a free ecourse I offer), I write that running a small business isn't a job; it's twelve jobs - or more. I'm sure that you, just like me, know people who border on superhuman and seem to be able to spin that many plates at a time while feeding a baby and dictating the next literary blockbuster, but most people have a hard enough time doing two things well, let alone three or more.
So save yourself a lot of grief and bring a bookkeeper, an accountant, a receptionist, an answering service, a social media manager, a manager or whatever other specialist you need right from the start. Outsource and hire as necessary. Here's what you need to know about Hiring Employees in Canada.
6) A good idea is not enough.
If it was, people such as Nikola Tesla, who invented fluorescent lighting, the Tesla induction motor and the Tesla coil among other things, and is credited with inventing modern radio, would have died rich, rather than destitute. (Read more about famous inventors who died poor (The Jamaica Gleaner)).
It's not the idea, but how the idea is developed and marketed that makes the money.
7) So every small business owner has to be a marketer/salesperson.
What I'm saying is you have to pay attention to marketing, even or especially in the startup stage. Prepare a marketing plan and implement it.
And be personally able and ready to talk about your business to whoever at any time. If I asked you what you did, would you be able to tell me in two or three sentences that told me not only about your business but why it might interest or matter to me? (Need help? Read this piece by Irene Brooks: How To Tell Prospective Clients What You Do.)
8) Set it up right from the start.
First make it legal. Be sure your business is properly registered with your municipality and your province. Be absolutely certain that you are complying with all government taxes and regulations.
If you have a Canadian small business, you'll find all the information you need on topics such as corporate tax, GST, HST and payroll taxes in the Tax Information section of this website. For industry specific permits and licensing specific to your area, use BizPaL.)
And make sure that you think ahead and choose the right business structure for your business activities and get all the coverage you need. Special liability insurance such as Errors and Omissions Insurance, Home-Based Business Insurance, Buy-Sell Insurance to protect your partnership – there are all kinds of eventualities that your business will need to be protected from right from the get-go.
Skimping will cost you in the end. For instance, if you're going around cleaning people's gutters and don't have Workers' Compensation Insurance and one of your workers gets injured, the resulting financial fallout could ruin not just your business, but you personally.
Startup to Succeed, Not to Fail
Starting a business takes so much time and investment of a person's financial, mental and physical resources that I hate to see anyone go through the process and fail. If this article saves you some time or energy during the startup phase of your new business or some future grief because you were forewarned and did what you needed to do, it’s served its purpose.