Are you ready to make the jump from being an employee to being fully self-employed?
If your dream of owning your own business is beginning to become a reality, there are a few steps you can take to set yourself up for success.
Let’s review our top five tips for starting a new business in Canada.
Have a Plan.
Whether it’s a full business plan, marketing plan, or plan of action, having a clear idea of some basics about your new venture can be extremely helpful.
- How much time per week will I commit to the business?
- How much start-up capital do I need?
- Do I have enough cash or do I need to borrow, or will I have to find investors?
- How do I measure the success of the business?
Set goals with a timeline to meet each. For example, if you’re starting a pet-sitting business, commit to adding a certain amount of new clients each week. If you’re in the direct sales business, aim for a rise in sales. Then review your goals and adjust as needed.
Do you need a vendor’s permit to sell your handmade sweaters at the community centre’s market? Is an inspection of your kitchen required to start a catering business or bakery from your home? If you’re thinking about earning extra cash from ride-sharing, do you need extra insurance on your vehicle? If you name your coffee shop, TImportants, and put it beside a Starbucks, do you stand a chance of surviving longer than a couple of weeks? Likely not.
Doing your research before starting your business can save you a bundle. Breaking city/county bylaws can result in hefty fines. Consult your local government offices to ensure you’re complying with all municipal, provincial and federal rules.
Open a bank account to use solely for your business.
One of the biggest mistakes new business owners make is mixing personal and business funds. By co-mingling your money, you’re making it almost impossible to tell how well your business is doing overall. Having a separate bank account for only business activities makes gauging your business’s success much easier. It also opens up the possibility in the eyes of the CRA that you might be putting business income into your personal account to avoid paying taxes. Not good. Especially considering that banking fees for your business account are tax-deductible.
Establish a record-keeping routine from day one – and stick to it!
Along with keeping a tidier office and being able to track your income and expenses easily, having a good record-keeping system is a significant time saver at tax time. Instead of having to sort through dozens (or hundreds) or receipts next spring, total your expenses periodically – based on the amount of paperwork you have. If you sell goods every day to multiple clients, recording daily income expenses might work best for you. If you have fewer clients and few expense receipts, just a weekly or monthly record on your business activities might be more appropriate.
Regardless of how often you track your income and expenses, the important thing is that you do it regularly. QuickBooks Self-Employed is a wonderful product created just for self-Employed Canadians and make record-keeping simple.
Set realistic expectations.
Small business owners hope that their business venture is profitable right away, but the harsh reality is that many businesses take years to turn a profit. Are your expectations realistic?
- How many hours a week are you willing to devote to your business?
- Is that number realistic based on your other obligations?
- Should you start small and keep your 9-5 or jump in with both feet?
- If your 9-5 provides insurance that covers your child’s medications, perhaps easing your way into self-employment is a better choice.
- If the business doesn’t take off as you’d hoped right away, do you have a backup plan?
- Do you have additional funds available if needed?
- When it comes to being profitable, how long is too long to wait?
One last, but very important, piece of advice – don’t be afraid to ask questions!
Reach out to your local Chamber of Commerce, small business development centre, banker, or friends and family for input. Network with other small business owners. When it comes to starting your own business, knowledge really is power.