It is easy to come up with an idea to start a business, but not so easy to actually launch and build a profitable business. Eighty per cent of businesses fail in the first five years.
Starting a business is a challenging step in everyone life. Business is easy to start however it is not easy to grow, sustain and then sell. The following are the 10 steps that any entrepreneur or business owner must consider before starting or as early as possible after start a business. So, what is the definition of a business? Business is defined as “a person’s regular occupation, profession, or trade.”OR “the practice of making one’s living by engaging in commerce.” I would like to define business is “the process to build and maintain a self sustainable operation that generates revenues or benefits to the owners or the stakeholders.” This definition is general to include all forms of operation such as for-profit, or not-for-profit (i.e. for social cause or community activities) business. It is specific enough to focus on the self-sustainability aspect. In other words, a business has to generate revenues to cover and exceed its expenses. It is obvious that at the initial phase of a business, you will need money till the operation will generate revenue large enough to sustain the operation. However, you must have a plan to cover and exceed the initial investment and make profit beyond the cost of operation and growth. This is plan is exact answer of the question“How will you make money?” Nevertheless, Most entrepreneurs do not have a clear answer for this question or can not even answer this question.
In this article, the first 8 steps to start a successful business are revealed.
- Plan for WIN. You must first define your WIN. What is the meaning of a WIN for you in your business? Do not be surprized, if ask business owners, you will quickly realise that most of them do not have an answer. After you define what is in it for you, you must develop plan. A plan to help you to examine a set of important aspects of your new business. The aspects will change with time and with stage of your business. These aspects can start with simple set of questions. Who are your customers? What is your market potential? How will you promote your new business? What are the initial costs? What are the possible incomes and expenses in the first few years? Who else does offer similar service/products? What does make your service/products more desirable or unique? When your income will exceed your expenses? More questions i.e. aspects will show up with the growing of your business.
- Select the Right form of a business. There are many forms of business such as Sole proprietorship, Partnership, Corporation, Provincial or territorial incorporation etc. each one of these forms has its advantages and disadvantages. Stay tune for the next articles that will explain each form in a great details.
- Register your business. This step will vary if you select a federal corporation or provincial corporation. It also varies from province to province.
- Inquire about a business license? Contact your municipality about the requirement of a business license. Many home-based services/businesses (such as massage therapist or hair dresser) may require as law as $50/year license and some may have specific requirements (such as catering and food service, or fire safety requirement etc.). This step will save you lots of troubles. Many businesses in particular when you do not have customer coming to your home may not require any license. However, when you will operate from industrial or commercial premises, you will have a license after possible compliance steps. Many software companies and desk-based business services may not require any license in many municipalities.
- Business number registration with Canada Revenue Agency “CRA” You must have a CRA registration to open a bank account. Your business may also subject to other provincial taxes. In Canada, almost all business and services are required to collect the Goods and Services Tax (GST) and Retail or Provincial Sales Tax (PST). Several provinces combine these two taxes into a single tax known as the Harmonized Sales Tax (HST) however, there are some unusual exceptions.
CRA will assign a Business Number when you set-up one of the four following accounts:
- Goods and Services Tax (GST)
- Corporate Income Tax
- Payroll Deductions
- Import Export
Note that you may not be required to charge the GST immediately, However, there are advantages to registering immediately. Such as, if you purchase $5,000 in goods, you won’t be able to claim back the GST spent unless you are registered to collect the GST.
- Business insurance. Running a business carries some risks. You shall consider different types of insurance that offer protection. In addition to insuring your property and business assets, a Liability and Loss of Business insurance is highly recommended. It offers a specialized protection. You should shop around for commercial insurance to meet the needs of your business and notice that rates and plans can vary.
- Human Resources responsibilities. Hiring a staff, contractor or being yourself, you shall understand your obligations that may include Payroll obligations, Labour laws, and Workers’ Compensation Board (WCB).
- Keep records. Running a business is like paper keeper. You are required to keep records and book of almost all transactions. This record shall be held for usually six years from the end of the last taxation year. Records of all income, earnings, and money transactions shall be kept such as receipts, invoices, vouchers, and cancelled cheques. Importers are required to keep extra record related to the goods they import. It is not bad because recently an electronic record is acceptable. So you can use your phone to take images of your record. In the same time you can call me if you need more information.
The author: Dr. Wael Badawy of Calgary, Alberta (Business Leader of Tomorrow, Top 40 Under 40 in Business) is a serial entrepreneur, international speaker, author, educator, innovator, and trainer. Internationally, he successfully built seven multi-million dollar sustainable businesses within periods of six months or less. As a multilingual speaker, he lectured to more than 1.5 million entrepreneurs, business leaders, students, and scientists intechnology, innovation, business, and entrepreneurship. Wael has founded 23 international companies and operations, ranging in size from $1 Million to $128 Million, and has led eight national entrepreneurship initiatives and programs.