Congrats on wanting to start a business! Canada is an interesting landscape where testing your product or service is critical because of market saturation.
While there are many important components to starting a business, these components can be reduced to 7 key steps: personal assessment, the idea, market research, the business plan, obtaining financing, sales, marketing and public relations and registering your business.
1. Personal Assessment
Ask yourself these important questions:
- Why do I want to be an entrepreneur?
- What does having a business look like to me?
- What are my strengths? What are my weaknesses?
- What is my personal brand? What are my values and how are they externalized?
- How do I normally deal with stress?
- How do I stay organized?
- What is my definition of failure?
- Do I have support? How big is my network?
- What are my major distractions?
- What is really important in my life that I cannot live without?
- What can I do to remind myself daily why I am doing what I am doing?
2. The Idea
You have an idea, that’s great! Now ask yourself these 6 questions to asses your idea:
- What is the idea and who are your competitors or substitutes?
- How will it make money and is it realistic?
- What will be your biggest challenge?
- Who is your target market? (Everybody is not your market)
- What is your business vision & mission?
What is your value proposition? In other words, why should your customers buy from you?
A value proposition is a clear statement with three elements:
- An explanation of how your product solves your customers’ problems or offers an improvement.
- An explanation of the specific benefits.
- An explanation of why your ideal customer should buy from you instead of your competition (competitive advantage and unique differentiator).
Examples of good value propositions:
3. Market Research
Market research is the act of gathering information about your ideal and existing customers and their reaction to your product or services and your competitors.
There are two types of market research, primary and secondary.
Primary Market Research: Original information gathered by your own efforts.
- Can use surveys, interviews and focus groups to determine your customer profile, their buying behavior, where they expect to find your product or service, what price they are willing to pay for your product or service and who are your competitors.
Secondary Market Research: Using existing resources like company records, surveys, research studies and books to learn more about your market.
- Gather information about demographics, trends, economic conditions, labor markets & international markets.
4. The Business Plan
A common misconception is that the business plan is a static document that is only done once. Your business plan is dynamic and should be reviewed at least once a year.
Why do you need a business plan?
- Raise capital
- Secure financing from lenders and investors
- Identify potential issues and opportunities.
- Use as a measurement tool
Main Sections in a Business Plan:
- Executive summary
- General Company Description
- Products & Services
- Marketing Plan
- Operational Plan
- Management and Organization
- Financial Plan
5. Obtaining Financing
After you complete your business plan, you will have a better understanding of how much you need to get your business operational. Here are your options:
- Personal Savings (90% of startups are funded this way, StatisticsCanada)
- Loans from friends and family
- Credit Cards
- Bank Loan
- Pitch competitions
- Startup Accelerator
- Venture-capital investors
- Angel Investor
Note: Bartering and trading equity for services is another way to gather the resources that you need to make your business operational.
6. Sales, Marketing & PR
Marketing gives you prospective customers, while sales turn those prospects into customers.
Key Components of a Strong Sales Strategy:
Identification of the decision maker, authenticity, creation of a sense of urgency, social proof and credibility, addressing of potential objections and streamlining the payment process. After selling, keep in touch and stay personable.
Address Marketing through the 4ps:
- Product (or service)
Marketing vs. Public relations (PR):
Marketing is to determine the customers that a company should sell to, while PR is about creating an active dialogue with the target audience. In PR, the image of the business is relayed through stories promoted typically through press and media.
7. Registering Your Business
You’ve done the work, now it’s time to register your business! You have three options: Sole-Proprietorship, Partnership or Corporation.
- Easy & inexpensive, lowest regulatory burden
- All profits go directly to you
- Can deduct your business losses from your personal income
- Difficulty raising capital
- Lack of continuity
- Unlimited liability
Advantages & Disadvantages:
The same advantages and disadvantages a sole-proprietorship, except now the advantages and disadvantages are shared with one or more partners.
Your business is now considered a legal entity that is separate from the shareholders.
- Limited Liability
- Perpetual existence
- Ability to raise capital
- Closely regulated
- More expensive to incorporate than a partnership or sole proprietorship.
- Need to produce corporate records, e.g. shareholder and director meetings.
- Sole Proprietorship & Partnerships costs $60 to register online ($80 by mail) and registration is valid for five years. Register with Service Ontario.
Register your corporation with Corporations Canada online for $200 or $250 by mail. A NUANS Name Search must be done for $21.47 + tax.
Starting a business can be hard and overwhelming. If you have any questions or want to share your insights, please feel free to share by commenting below.