It should outline your goals, pricing policy and sources of financing
Ray Turchansky
Sun
CREDIT: Ed Kaiser, Edmonton Journal Gordon Meeberg, director of Quickbooks Pay Roll Services, poses with the 2006 product lineup at Intuit Canada in Edmonton.
Starting a small business means having to make a number of decisions never faced before, but people can turn to numerous sources for help.
The preliminary steps include choosing a business structure and registering a trade name, which can be done at your friendly neighbourhood registration office for as little as $30 or $40.
Another key step is developing a business plan, which outlines your goals while detailing your marketplace, pricing policy to be competitive, marketing plan, sources of financing, facility and employee needs, and projects revenue and expense streams over a long period of time.
Such a plan forces you to focus your ideas and put them on paper, while providing a valuable tool to help obtain start-up financing.
Then you have to start implementing the plan. There are business licences to obtain, and perhaps zoning requirements to hurdle. You should consider what business insurance might be needed, to protect property and liability if you’re in a business open to lawsuits.
In fact there’s a battery of professionals you may need to select for advice — lawyer, accountant, banker, business consultant and insurance representative.
Most provinces and cities have departments set up to help entrepreneurs deal with bylaws and licences, including home-based operations.
One of the major causes for failure of a small business is a lack of capital during any of the three phases — start-up, ongoing day-to-day operations, and expansion.
Common sources of financing are bank loans, government loans and grants, venture capital and private investors (some known as “angel investors”) and others such as family.
Start-up costs may include renting or buying a building and equipment, legal and advertising expenses, plus obtaining opening inventory. Banks will make loans for such costs depending on your business plan, and are influenced by how much of your own money you are investing.
Reduced-rate loans may be obtained from the Federal government’s Business Development Bank of Canada (BDC). The federal government also partners with private-sector lenders under the Small Business Loans Act to provide up to $250,000 in loans to companies with less than $5 million gross revenue in a year.
You can find out about federal government business financing through the BDC, Foreign Affairs and International Trade Canada, Industry Canada, and Human Resources Development Canada, in the blue pages of your phone book.
Or your public library may have any of the following directories: Canadian Government Programs and Services, Canadian Small Business Financing and Tax Planning Guide, Industrial Assistance Program in Canada, Guide to Federal Programs and Services, and Canadian Reference Directory on Business Planning and Funding.
You can also check the blue pages of your phone book for information on provincial government loans, grants and subsidies.
Once a business is started, a significant part of the day-to-day and especially fiscal year-end operations is accounting and bookkeeping. This involves billings, plus recording income and expenses.
An Ipsos Reid survey of 1,700 small Canadian businesses showed 36 per cent still manually put pen to paper using ledgers or use computer spreadsheets such as Excel, 20 per cent use government software, and another 14 per cent turn to accountants. The balance of respondents reported “other” or “outsourced.”
Douglas and Diana Gray, in their book The Complete Canadian Small Business Guide, cite accounting fees from $40 to $250 an hour, with cheaper rates for bookkeeping and higher rates for complex tax advice.
Thus, a growing number of small businesses are using computer software programs, such as Quicken or QuickBooks by Intuit Canada, Simply Accounting and MYOB (Mind Your Own Business).
“At the outset when a business is small, there’s a much greater propensity to use an accountant,” said Gordon Meeberg, director of QuickBooks payroll services. “They’re so busy focused on trying to get their business running, they don’t feel confident about their own ability to handle it. They have this notion that bookkeeping is very complex and scary. Virtually all of them outsource their year-end stuff.”
Small Business Report 2005
© The Vancouver Sun 2005