Starting A Successful Businesses & Canadian Legal Guide
Beautiful Woman store
Do You Have the Right Stuff ?
In This Chapter Knowing the pros and cons of becoming a small business owner
Finding the right business opportunity
Assessing your entrepreneurial spirit Looking at timing and resources
Deciding if you should keep your day job So you’re thinking of starting your own business! Every year, lots of people get the entrepreneurial urge and start businesses.
Some of those businesses become very successful.
But every year lots of new businesses fail. Business success or failure isn’t the result of fate, or random chance, or (usually) acts of God.
A business does well for good reasons — like a great product or service, a solid marketing plan, and the owner’s good management skills.
Likewise, when a business goes under, you can often identify the reasons — lack of money to get properly started, poor timing or location for entering the market, or a wipeout on the customer service front.
Whatever the reason for a business failure, it usually boils down to this:
The business owner didn’t look carefully before leaping.
The business owner didn’t look carefully before leaping.
This chapter and the others in this section of the book help you think about going into business before you hit the ignition button and blast off.
Think of this first section as “countdown.” Weighing the Pros and the Cons People start up their own businesses for different reasons.
One of the best reasons is that they’ve found a business opportunity that’s too
attractive to pass up.
A good reason is that they want to work for themselves rather than for someone else.
attractive to pass up.
A good reason is that they want to work for themselves rather than for someone else.
A depressing — but still valid — reason is that their other job options are poor (the number of small business start-ups always rises when the economy sinks).
Whatever your reason is for wanting to become an entrepreneur, you should know that life as an entrepreneur is a mixed bag. Running your own business has some great advantages, but it also has some hefty disadvantages.
The pros Here are some of the advantages of going into business for yourself: You’re free! You’ll have the freedom to • Make your own decisions — you’re in charge now.
Only investors (see Chapter 9), customers and clients (see Chapter 13), government regulators (see Chapter 6), and so on will tell you what to do.
• Choose your own work hours — in theory, anyway.
You may not be able to get away with sleeping in until noon or concentrating your productive hours around 3 a.m. But you’re more likely to be able to pick up the kids from school at 3 p.m., or exercise from 10 a.m. to 11 a.m., or grocery shop during normal office hours.
• Create your own work environment (see Chapters 7 and 8) — surround yourself with dirty coffee cups and overflowing ashtrays if you feel like it. You can be creative !
You can build your business from scratch following your own ideas rather than following someone else’s master plan. (See Chapter 3.) You’ll face new challenges! Every day.
And twice as many on days that end in a y. You’ll never be able to say that work is always the same old boring routine. Your job will be secure . . . as long as you have a business !
Your business may fail — but no one can fire you. (You can ask yourself to resign, though.) (See Chapter 18 for information about the depressing prospect of running out of money.) You’ll have increased financial opportunities! If your business is successful, you have the potential to make more than you could as an employee.
You’ll have tax advantages ! This is especially true if your business is not incorporated (a sole proprietorship or a partnership), but it’s also true in a different way if your business is incorporated (see Chapter 6).
The cons Do you think we used enough exclamation marks in the exuberant Pros section? Bet they got you all enthused and excited about entrepreneurship.
But calm down for a minute — being an entrepreneur has plenty of disadvantages, too.
For some people, they outweigh the advantages.
You may not make a lot of money.
You may make enough money to live on, but it may not come in regularly like an employment paycheque, so you’ll have budgeting problems.
Or you may not make enough money to live on.
You may not even make any money at all.
You may go bankrupt and lose not only your business, but most of your personal possessions as well. See Chapter 18 for comfort (or failing comfort, at least for information).
You lose easy and inexpensive access to employment benefits if you don’t hang on to employment elsewhere.
These may be benefits that you have come to count on — extended health and dental benefits, disability insurance, life insurance, a pension plan, and so on.
You’ll have to work really hard. That is, if you want to succeed — and you won’t just be working at the business your business is about. You’ll also have to do stuff you may not be trained to do, such as accounting, sales, and collection work.
(But see Chapters 13 and 17 for some help.)
You may not have a lot of free time.
You may see less of your friends, family, and pets (even if you’re working at home) and have less time for your favourite activities. Getting a business up and running takes more than hard work; it also takes your time and commitment.
Don’t scoff that you won’t let that happen to you, at least not until you’ve put in hours filling out government paperwork (GST/HST for example — see Chapter 16) on a beautiful sunny day that would be perfect for, well, almost anything else.
By the way, you don’t get paid for your sacrificed time, either. You may have to put a lot of your own money into starting up the business.
And even if you can borrow the money, unless the lender is your mother and your mother is a sweet, trusting soul rather than a financial shark, you’ll have to give personal guarantees that the money will be repaid (with interest) within a certain time.
The pressure is building! (For more on borrowing, see Chapter 9.)
By the way, not to add to the pressure or anything, but you should know that you might
lose your own money or not be able to repay borrowed money because of factors
beyond your control.
You could get sick (and now you probably don’t have disability insurance), be flattened by a competitor, squashed by a nose-diving economy, or whacked by a partner who pulls out on you. (See Chapter 18 for advice on how to deal with some of these problems).
You are the bottom line. No excuses — success is up to you, and failure is your fault.
You’ll have to keep on top of changes in your field, the impact of new technology, economic fluctuations. . . . Your personal life can stick its nose into your business life in a major way.
If you and your spouse split up, your spouse may be able to claim a share of your business under equalization provisions in the family law of some provinces.
You might have to sell your business or your business assets (property) to pay off your spouse. (Chapter 20 looks at selling your business.) Choosing Your Business After you’re aware of the upside and the downside to running your own business, start considering how people choose a business to go into.
Five main kinds of businesses exist: Service: Doing things for others, including the professions (doctors, lawyers, dentists, architects, accountants, pilots); skilled trades (plumbers, electricians, carpet installers, bookkeepers, renovators, truckers, carpenters, landscapers); and a huge range of other things for which you might need a lot of training and skill, or at least some talent and willingness.
We’re talking about music teachers, financial planners, real estate agents, painters, insurance brokers, management consultants, taxi drivers, travel agents, dry cleaners, caterers, event planners, hairdressers, equipment repairers, commercial printers, photographers, gardeners, snow removers . . . this list could go on.
Retail: Selling things to the general public, such as jewellery, groceries, clothing, appliances, books, furniture, antiques and collectibles, toys, hardware, cards and knick-knacks, garden accessories, plants, cars . . . this list could also go on.
Wholesale: Buying large quantities of goods from manufacturers at a discount and selling in smaller quantities to others — usually retailers — for a higher price.
For example, you could buy nails in bulk from a manufacturer and resell them to hardware stores. Wholesalers sometimes also sell to the general public, usually without the frills of a retail establishment (for example, bulk food, carpets, and clothing).
Manufacturing: Making things from scratch — from designing and sewing baby clothes for sale through a local children’s clothing store to making furniture in a workshop to manufacturing steel ingots in a mammoth industrial plant.
Extraction: Harvesting natural resources, including agriculture, fishing, logging, and mining.
Note that e-commerce is not a new and separate kind of business — that kind of thinking
got it into trouble in the first place and caused the dot-coms to crash in the first years
of this century.
E-commerce is simply a tool to use in business.
Small businesses are most likely to concentrate in service and retail.
Service, in particular, is usually the cheapest business to start up, so it attracts a lot of entrepreneurs.
Now, most people don’t look at a list of the five kinds of businesses and wonder,
“Service or extraction ?
Retail or manufacturing ?
What best expresses my personality ?”
Instead, they have an idea that happens to fit into one of the five categories.
At least, having an idea helps.
And most people do, but others don’t.
Those who have a clue Most people who are thinking seriously about going into business for themselves have an idea about what they want to do before they start thinking seriously.
Many people get their idea from a job they’ve held and decide to develop a new product or service similar to a former employer’s, or become a consultant in the field.
If you’re going into the same field as your previous employer, be careful not to breach any confidentiality agreement or noncompetition agreement you may have entered into.
And do not infringe your previous employer’s copyright or trademark (see Chapter 3).
The idea may come from your skills:
If you have professional training or training in a skilled trade, you can set up your own business instead of joining a firm.
If you have a hobby, you may be able to expand it into a business.
If you invent something, you may be able to create a business around it.
If you have always wanted to start a particular kind of business, maybe now is the time.
Or you may have become aware of an excellent business opportunity. It may or may not be related to your training or a hobby or your “dream” business.
Or in your travels, you may have seen a good idea that hasn’t hit your hometown yet. (Starbucks was once confined to one city on the West Coast, believe it or not.
Years ago, one of the authors was taken from Vancouver to Seattle by a friend to try a cup of Starbucks coffee but remained oblivious to the business opportunities !)
Those who are clueless Some people are serious about going into business but haven’t decided on the business yet.
If you’re one of these people and you’re looking for ideas . . . you probably need to look further than this chapter, or even this book. So here are some suggestions about where to look for an appealing business start-up idea.
To get a business idea in the first place, you can Look around the field in which you have work experience to see if any opportunities are waiting to be explored.
Maybe you’ve noticed that customers would be delighted if they could get a specific product or service that no one’s offering right now.
Look around a field in which you have play experience to scope out opportunities — a few thousand people’s hobby could become one person’s successful business.
Parlay your love of mountain climbing into an outfitting or guiding business, for example.
Take out your pet peeves and look them over.
You may not be the only person who wishes someone would make/import/distribute a better pair of dog boots. Read newspapers and magazines, trade publications, newsletters and online publications to find out what’s going on in the business world.
Visit trade shows, inventors’ shows, conventions, or conferences to find out what’s going on in a particular field. Go on field trips (in your own city or town or in the wide world) to see what businesses exist and how they’re doing.
Look for government or other lists of licensing opportunities.
Ask friends and acquaintances for ideas.
After you have an idea, you need to evaluate it by considering the following factors.
What to look for in a business start-up To begin with, try to aim toward something
you’ll enjoy doing.
Starting a business is hard enough without choosing a business that you’re pretty sure
you’ll loathe, even if you think it could make a lot of money.
Next, look for something people want . . . as opposed to something they don’t want, or that they’ll have to be carefully educated to want. It should also be something they’ll want tomorrow and next week as well as today — in other words, don’t base your business on a product or service that’s going out of use or out of style.
Ideally, your product or service is something that people want often, rather than
occasionally or only once.
Especially in Canada, consider offering a product or service that isn’t completely
seasonal like skate sharpening or outdoor ice cream stands.
Choose something with a good distribution and advertising system in place:
For example, a product you manufacture should be one that established retailers will be happy to carry; a product you sell should be one that already benefits from a national marketing campaign by the manufacturer; a service you offer should be positioned within a network that will bring you lots of referrals.
Look for a business with a high profit margin.
You’d like your direct cost of performing the work or supplying the product to be a small percentage of what you charge the client or customer.
(The service industry is good for high profit margins; manufacturing and extraction aren’t.) What to avoid in a business start-up While you’re searching for a business with lots of advantages, you also have to avoid a business with too many disadvantages.
You’ll probably be happier if you stay away from a business that will be immediately overwhelmed by the existing competition.
If the field is competitive (as are most fields worth going into), look for a niche where you have a competitive advantage (say, because you have a lot of natural talent or you’ve acquired great skills and experience;
or because you have exclusive manufacturing or distribution rights).
Don’t go head-to-head with the established players and imagine you’ll knock them down !
You also don’t want a business that will be overwhelmed by regulation — by the federal, provincial, or municipal government — or by the governing body of a professional or skilled trade. You’ll find regulation in any type of business, but it’s worse in some than in others.
For example, food and drug manufacturing are heavily regulated by the federal
government, as are telecommunications and commercial aviation.
If you open a restaurant or bar, municipal food inspectors and provincial liquor
inspectors will visit you regularly.
Look into the extent of regulation when you research the area of business in which
you are interested. We tell you about getting information geared to your specific business in
You might prefer to avoid a business that will require expensive insurance from the start (this describes most of the professions, and the manufacture of products that are potentially harmful). (See Chapter 12 for more about insurance.)
Helpful hints for aimless entrepreneurs
Think about these trendy areas for business start-ups:
Become an alter-ego for people who have money but no time.
Be a concierge or personal assistant (do chores for people, like picking up dry cleaning or getting tickets to a show); personal shopper; closet organizer; handyman-for-hire; drop-in cook (shop for ingredients, go to the client’s home and spend a few hours cooking meals for the entire week); or personal dating service operator or matchmaker.
Sell the promise of health, youth, and beauty to an aging population.
Be a personal trainer; spa service provider (massage, manicure, pedicure, makeup, facials);
a plastic surgery consultant or coordinator;
a tattoo artist or tattoo removal specialist or body piercer.
Or be a manufacturer of exercise equipment, comfortable furniture, sun-protection clothing,
or sports clothing. Be an outsource for other people’s businesses.
Provide telephone and e-mail surveys, market surveys, data processing, technical support, secretarial support, bookkeeping, Web site design, or help in using social media sites.
Go the eco-entrepreneur route. Manufacture, distribute, or sell ecologically sound cleaning products, recycling systems, or energy sources that are environmentally friendly or recyclable.
Provide specialty travel arrangements. Organize seniors’ tours, educational tours, eco-tours, or singles’ tours. Look after other people’s kids, parents, or pets.
Provide a chauffeur service for kids (to get them to school, practices and games, after-school lessons, or appointments); offer dog walking, house-sitting, babysitting (rent-a-parent),
or health-care coordination for the elderly; provide tutoring, keyboarding/typing, music lessons, computer lessons, or test preparation help;
or provide sports coaching, a summer camp program, party planning and preparation,
or a party place.
Unless you’ve got guaranteed access to a big wad of cash, you’ll certainly also want to avoid a business with high start-up costs.
You may think you can build a better steel mill, but you can’t do it on a $25,000 loan.
Consider how much you have to invest in starting up a business, or how much you can
raise by borrowing.
If you have almost nothing to invest and realistically don’t expect anyone else will want to invest a lot in you and your business, choose a business that requires almost no initial investment (that’s usually service).
You’ll probably also want to steer clear of a business with immediate high labour needs. Paying employees isn’t just a matter of cash flow (although that’s pretty important).
As an employer, you’ll also have to deal with a lot of regulations and paperwork — such as income tax, Employment Insurance,
Canada or Quebec Pension Plan, provincial workers’ compensation, and occupational health and safety rules — and you may already have enough on your plate.
(See Chapter 15 for more about the responsibilities of being an employer.)
Determining If You Have the Small Business Personality Whatever your reason for wanting to go into business for yourself, and whatever the business you decide to go into, stop and check whether you have the right personality for the adventure before you start.
This is true whether you really want to go into business for yourself or whether you think
you have no choice but to do so.
And it will give you an excuse to put off figuring out your finances.
Realizing that you don’t have the right stuff to run your own business is better done before you sink a lot of time and effort, and maybe even money, into a business.
You can always pursue other options.
And if you find you’re not going to be the perfect entrepreneur, but you’re determined to go ahead anyway, then a self-assessment will tell you where your weaknesses lie and show you where you need to improve or get outside help.
An entrepreneur needs most of the following qualities — whether you were born with them,
or developed them, or are about to get working on them now:
Self-confidence: You have to believe in yourself and your abilities . . . no matter what other people might think.
You have to believe that your success depends on the good work you know you can
do and not on matters beyond your control.
However, your self-confidence should be realistic and not induced by whatever weird thing they put in the coffee at your current workplace.
Goal-orientation: You have to know what you want, whether it’s to revolutionize a particular industry or to be home when your children return from school.
However, if your main goals are money, power, and prestige, you probably need to reorient yourself toward something a little more attainable in the small business sector.
Drive to be your own boss:
The burning desire and the ability to be your own boss — if you need or even want direction about what to do next, you won’t make it in your own business.
You have to be able to make your own plans and carry them out. Independence:
The ability to work independently rather than as part of a team.
You’ve probably had propaganda pounded into your head since you were a kid that teamwork is really important, and maybe even better than working on your own.
It isn’t if you’re an entrepreneur.
Survival skills: The ability to survive without a social group is handy. When you start up your own business, you’ll probably be working by yourself for some time.
If you need people around you to chat with, or else you start to go crazy . . . then you may go crazy. People skills: Even though you have to be able to get along without being surrounded by people all the time, you still have to get along with people.
You’ll be dealing directly with customers and clients (see Chapter 13), investors
(see Chapter 9), suppliers (see Chapter 14), associates (see Chapter 6), and employees
(see Chapter 15), and you need their willing cooperation.
Determination and persistence: You have to want to succeed, and you have to plan to succeed and keep working at succeeding.
It’s that “fire in the belly” stuff you hear about from people who look like they haven’t slept in the past eight months. Self-discipline: You can’t let yourself be distracted from your work by nice weather, phone calls from family and friends, earthquakes, or wrestling matches on TV.
Reliability: You’ll build most of your important business relationships by always meaning
what you say and doing what you promise.
Versatility: You have to be prepared to do many different things in short periods of time, probably constantly switching from task to task. Creativity: You have to want to do something new or something old in a new way.
If copying what someone else is already doing is the best you can manage, you may not go far. Resourcefulness: Creativity’s country cousin, resourcefulness, means being prepared to try different ways of doing things if the first way doesn’t work.
Organizational talents: You’ll be plunged into chaos if you can’t organize your goals, your time, or your accounts, to name just a few things. Risk-management instincts:
You have to be able to spot risks, weigh them, and come up with a plan to steer around them or soften their impact in case of a collision. (See Chapter 12 for some help in managing risk.) Nerves of steel in a crisis: Nerves of granite, titanium, oak, and so on are acceptable.
Nerves of rubber, talc, or pasta al dente are not.
Crises won’t necessarily be frequent, but they will occur.
Don’t count on gin or prescription drugs to stiffen your spine during a crisis.
And you can’t collapse until the crisis is over.
Pick-yourself-up-itiveness — a combination of optimism and grit:
You’re going to have failures, some of them caused by your own mistakes; and you have to see failures as valuable experiences rather than as signs that you and your business are doomed. Opportunism: You need to not only recognize opportunities when they come along, but you also need to seek them out — and even create them yourself.
Success-management instincts: You can’t let yourself be bowled over or lulled by success. You have to be able to see each success as a platform on which you can build your next success. (See Chapter 19.)
Objectivity: For a business owner, it’s always reality-check time. You have to have the courage to stare down reality’s throat and acknowledge your own mistakes.
You also have to corner reality by getting feedback about your business and how you
run it from customers and clients, suppliers, professional advisors, competitors,
employees, and even your mother-in-law.
Then you have to have the strength to make necessary changes.
That’s a long list! And you’ll also need a Zen-like calm about not having a regular paycheque.
Not only will you not get a bank deposit once a month, but you won’t get paid for sick days, personal days off, or days when you show up at the office but are too zonked to work.
In addition, it helps if your parents (or close relatives or close friends) are or were in business for themselves. You may have absorbed some business know-how from them, plus you may have easy access to advice.
And to finish you off, good health and physical stamina can do an entrepreneur no harm.
The small business personality aptitude test When you know what an entrepreneur is supposed to look like, hold the mirror up to yourself.
After years of laboratory and field research, we have created the Kerr & Kurtz Not-Particularly Standard Scale of Aptitude for Entrepreneurship and a test to peg you on the scale.
Take the test now.
Scoring: Unless scoring is otherwise indicated in the question, award yourself 0 points
(a) you choose; 1 point for each
(b); 2 points for each
(c); and 3 points for each
(d). The total number of points you can score is 49.
1. At school, when you were urged to show team spirit and join a team or production,
you a) Enthusiastically tried out for everything because you loved working on a team
or in a group.
b) Tried out for a couple of teams or productions that you really wanted to be on.
c) Tried out for something to avoid being harassed by the team-spirit police.
d) Made gagging noises and said you’d rather eat bugs.
(Give yourself an extra point if your answer is “none of the above,” but you offered to
manage one or more teams or productions on the condition that you received
a percentage of any revenues.)
2. You’ve arranged to meet a friend to see a movie.
You a) Wouldn’t hesitate to cancel at the last minute if something better came up.
b) Would show up but wouldn’t worry about being on time.
c) Wouldn’t worry obsessively about being on time, but if you were late, you’d try to have a good excuse ready (whether true or not).
d) Would show up at exactly the appointed time, if not earlier . . .
unless the friend is someone who would choose (b) — sometimes choosing realism over reliability is okay.
3. You’re preparing for a dinner party.
At practically the last minute you go to the grocery store, armed with a list of necessary ingredients. Because you’re in a hurry and aren’t paying enough attention, you buy some wrong ingredients. In fact, they’re so wrong that you won’t be able to make the main course you had carefully planned.
You a) Are filled with despair at your own incompetence and stupidity, so you call up your guests and tell them the party’s cancelled.
b) Serve dinner without a main course and hope no one will notice.
c) Assume everyone’s coming for your company rather than your food, and replace the main course with tinned spaghetti from the back of your cupboard.
d) Create a new main course from whatever ingredients you have on hand, refuse to admit even to yourself that it tastes funny, and keep the wine flowing.
4. You’re in your kitchen. Just as you see that a pot on the stove is about to boil over, the phone rings, the doorbell chimes, and in another room your printer starts making noises that signal a monumental paper jam.
You a) Black out from stress.
b) Answer the phone and ignore the door, the stove, and the printer.
c) Go to the door and ask whoever’s there to take the pot off the stove and answer the phone while you take care of the printer.
d) Take the pot off the stove, take the phone with you as far as it will extend toward the printer, stop the printer from destroying itself, and then open the window, stick your head out, and yell “Who is it?” to the person at the door.
5. In your household, a dishwasher storm trooper insists that the dishes always be loaded in a particular way. You a) Obey the storm trooper’s orders to the letter.
b) Assure the storm trooper that you load the dishwasher according to the rules, but always make a point of putting some of the silverware in the wrong way up.
c) Get into constant arguments with the storm trooper about the correct way to load the dishwasher.
d) Are the storm trooper.
6. When a home appliance you’re using for a necessary job breaks down, your reaction is to a) Head for the nearest coffee bar for a double-double-mocha-java.
b) Kick the darn thing to terrorize it into working again.
c) Ignore the “CAUTION! OPENING THIS PANEL WILL LEAD TO RISK OF ELECTROCUTION!” label, insulate yourself, and poke around in the hope you can get it going.
d) Take it in for repairs, but use all your skill to negotiate a one-hour turnaround time or a free replacement while the repairs are being carried out.
7. You’re driving in heavy traffic on the highway and your exit comes up suddenly.
You’re not in the exit lane.
You a) Quickly pull into the exit lane without checking, assuming that all other drivers are on alert for idiots like you and will be able to react in time to avoid crashing into you.
b) Go on to the next exit, even though you’ll end up driving some distance out of your way.
c) Quickly check the lane you want and calculate that you can safely change lanes if you accelerate through the change instead of braking or maintaining your present speed, and as long as no one in the exit lane changes speed.
d) Were already aware of traffic all around you because you habitually keep a 360-degree watch when driving, and you calculate that you can change lines safely if you slow down and pull in behind the car currently beside you in the exit lane.
8. You’re in a store on a major shopping spree.
When you hand your credit card over to the sales clerk, he runs it through the machine and says, “Sorry, the machine isn’t accepting this card, you’re over your credit limit.” You give the clerk a different card and it gets rejected, too.
You a) Abandon your purchases and flee the store, terrified you’ll be arrested for a criminal offence.
b) Ask, in a dignified way, if the store will put the items away for 24 hours while you get the matter straightened out — and then never return.
c) Ask to use the store’s phone to call up one of the credit card companies and see if you can get your limit raised.
d) Offer to write a cheque, using your credit cards as ID.
9. On a shopping expedition, you find two similar products, except one is on “special” and considerably less expensive than the other.
You a) Buy the cheaper one because the store says it’s a good deal.
b) Buy the more expensive one because things that cost more must be better.
c) Snag a passing sales clerk and ask if he can tell you about any difference between the two products, and base your decision on that information.
d) Don’t trust a salesclerk to know the product line he or she sells, so you carefully compare the two products for quality, manufacturer’s reputation, and (as applicable) fit, range of use, warranty, and so on, and then base your decision on all of these factors.
10. If a service person is nasty to you without provocation when you’re trying to buy something you really need right now, you say,
a) “Forget you; I don’t need to take this,” and leave without making the purchase.
b) “I want to talk to your manager, buster.”
c) “Hey, whatever’s eating you isn’t my fault; can’t you be a little more pleasant ?”
d) “Looks like you’re having a bad day; I hope I’m not doing anything to make it worse.”
11. If we asked you to drop by next Tuesday to organize a DVD collection gone wild,
a) Immediately call up your dental surgeon to make a Tuesday appointment for that
root canal she said you needed.
b) Show up, square the piles of DVDs, and maybe blow some of the dust off the cases.
c) Come and line up the DVDs against the wall in alphabetical order.
d) Arrive early, your eyes glowing with enthusiasm, sort the collection into drama, horror, musical, comedy, and classics, sort each category alphabetically by director, lead actor,
or title, and then by release date.
12. You’re working on a project.
The radio is playing quietly in the background.
At what point are you distracted from your work ?
a) As soon as you sit down.
You immediately get up and change stations — why wait for a distraction to happen
when you can distract yourself ?
b) When you hear a song you really like.
c) When the news comes on, and the announcer says that police have surrounded
your immediate neighbourhood because of a bomb threat.
d) When the radio suddenly explodes.
13. You make a request based on a plan you’ve thought out, and are refused.
When you don’t instantly vanish, the person to whom you made the request says,
“What part of ‘No’ don’t you understand ?”
Your automatic response is to
a) Burst into tears.
b) Apologize politely for taking up the person’s time.
c) Go and ask someone else.
d) Explain your request again, leaving out the big words.
14. On Monday morning, you
a) Look back fondly on the weekend, which you spent with your pals from work.
b) Look forward to getting in to work so you can chat with your co-workers whom you haven’t seen since Friday.
c) Exchange civil conversation with your co-workers for a few minutes about how the weekend went.
d) Politely answer “Fine, thanks” to anyone who asks about your weekend, and then
get down to business as quickly as possible.
15. One minute before you are to start an important presentation in front of several dozen people, you bend over to pick up your notes that fell on the floor, and your pants split up the back seam. You don’t have a jacket with you, your shirt isn’t long enough to cover the rip, and you don’t have time to look for a concealing garment. So you
a) Sidle out of the building and later mail in a letter saying you quit your job.
b) Persuade someone you meet while hiding out in the washroom to go and say that the presentation is cancelled.
c) Enter the room, keeping your back to a wall, and deliver the presentation sitting down.
d) Begin your presentation by cheerfully announcing that you’ve ripped out the seat
of your pants.
(If you would then turn around and flash your underwear at the audience,
deduct a point — you’ve gone beyond self-confidence to exhibitionism . . .
and this is especially true if you’re not wearing underwear.)
16. You’ve been ordered to travel to another city on business.
This trip is the last thing in the world you need or want to do, but you have no choice.
So you go, but a) Sulk before, during, and after the trip, and swear you’ll make them all pay for sending you. b) Resign yourself and do the best job you can. c)
Look on the trip as a break from your routine — when you get back, your daily grind will seem great in comparison. d) Investigate what personally rewarding activity of your own you can work into the trip — such as a meal at a good restaurant, a visit to a museum or spa,
or a reunion with an old friend.
So after taking the test, how did you do ?
In case you’re feeling shy, we’ll encourage you by telling you what we got on the test.
One of us got 36, and the other got 28 and 39 (she’s a Gemini and she took the test twice; once for each side of her business personality).
We’re not revealing which one of us got what.
Some cosmic mysteries must persist, even in business.
Our scoring system, as you might guess, is completely unscientific; but use these ranges to interpret your score: 48 (or 49) points: You’re kind of scary.
A year from now you’ll probably send us a terse e-mail telling us where we got this book right and where we got it wrong, and mentioning as an afterthought that the business you started after taking our questionnaire is now worth $1.7 billion! 40 to 47 points: You probably won’t get around to sending us the e-mail we discuss in the previous bullet for two years.
30 to 39 points: You’ve got a bit of work to do on some aspects of your business personality, but being an entrepreneur for a while should take care of that — you learn pretty quickly when your livelihood depends on it !
20 to 29 points: You’ve got potential — but think entrepreneurship over very carefully before you take the leap! 10 to 19 points: Keep your day job. 0 to 9 points: You may actually be a small furry rodent, and you should be nibbling this book, not reading it.
As for our scores, we’ve both run small businesses on and off for the past 25 years.
Either this means we shouldn’t be in business, or it means you don’t have to score high on our test to do okay in the business world.
Or else it means that tests don’t mean much.
Or at least this one doesn’t. If you’d like to try a more serious test, have a look at the free online entrepreneurial assessment provided by the Business Development Bank of Canada.
(www.bdc.ca); select Tools, then Entrepreneurial Assessment.
Considering Other Factors before Starting Your Business Even if you’re a potential paragon of entrepreneurship, think about the following before leaping into business for yourself: Would your personal life allow you to take the entrepreneurial plunge right now ?
Do you have the practical resources to go into the particular business you have
your heart set on ?
Is this a good time (for economic and market reasons) for anyone to go into
this particular business ?
Your personal life What’s going on in your personal life right now ?
Starting a small business makes more sense at some times than at others.
Think about the following questions: Do you need a steady income right now — maybe because you have small children and your spouse has given up paid employment to stay home with them, or because you have debts to repay ?
Do you need a steady and conventional lifestyle right now because all hell is breaking
loose in the rest of your life ?
Do you need to be physically present in your home more (maybe because you want to spend time with your young children after school or you have to look after an elderly parent), so a home-based business makes more sense than working outside your home ?
Do you have some money to throw around right now, perhaps from an inheritance
or a buyout package from your employer ?
Would you have trouble raising the necessary cash to start a business — say, because you’ve just gone bankrupt ?
If you have a spouse, or someone who depends on your income or companionship, ask him or her to list the pros and cons of your going into business for yourself right now — from his or her own point of view.
You might as well get it all out in the open.
Your practical resources Do you really have what it takes to start this business ?
Ask yourself now, before you invest time, money, and effort and maybe pass up other
work or opportunities for which you’re better suited.
For starters, if you go into any business, you’ll have to Find customers; identify customer needs; develop new product and service ideas; decide on prices; and develop promotional strategies. (This is marketing — see Chapters 4 and 11.) Persuade customers to buy. (This is sales — see Chapter 13.) Do good work so customers will (a) be more likely to pay you and (b) come back to you. (This is commitment to excellence — see Chapter 13 again.) Enter into contracts to buy and provide goods and services — you need to know what has to go into the contract, even if you don’t draft it yourself.
(This is business law — see Chapters 13 and 14.) Have a working knowledge of the law so you don’t break it and it doesn’t break you (for example, you need to know about different kinds of taxes and levies; see Chapter 16), nondiscrimination in providing goods and services (Chapter 13) or in hiring (see Chapter 15), breach of the Competition Act in your advertising (see Chapter 11), and arrest of shoplifters (see Chapter 12). Understand the financial side of your business and keep proper accounts (payable and receivable) (see Chapter 17), collect and pay taxes (see Chapter 16), borrow money, manage cash flow, handle credit, and create and stick to a budget (see Chapter 9).
(This is accounting and money management.) Keep track of the product or service you provide or sell (if it’s a service, you provide your time) and purchase supplies and materials on time. (This is inventory management.) Buy and use a computer and software.
(This is computer literacy.) Get money owed to you by deadbeat customers and clients.
(This is collections — see Chapter 13.) Eventually hire, supervise, train, motivate, and evaluate employees. (This is human resources management — see Chapter 15.)
If you don’t have these skills, you’ll have to fill in the blanks.
We give you some ideas about that in Chapter 2.
(Don’t get into a funk! You may be surprised at how many of the skills you’ve already acquired through courses at school, jobs you’ve held, participation in clubs or organizations, and even just from running your own life.)
You’ll also need a set of skills to run the particular kind of business you have in mind.
Ask yourself these questions: Do I need particular skills, talents, years of experience, expertise, or connections to succeed in this business ?
Or, in some cases, do I need all this just to get my foot in the door of this business ?
Is this business heavily regulated ?
Do I need particular education, training, or other official qualifications before I start ?
Do I need government approval that may not be automatic ?
Is this business expensive ?
Do I need a lot of money to get set up ?
(For example, will it cost a lot to develop the product or service, to manufacture the product, or to find customers or develop a distribution system ?)
If you don’t know the answers to these questions, you need to do your homework.
Speak to people who are already in this business, read trade papers or publications about the business, or contact government offices and professional or trade associations.
We help you out with some of this in Chapter 2.
Hey, kids, try this at home !
After you have a good idea of what you need to get into and run the business of your choice, do this exercise to put off doing really useful work for a while.
First, write a job description for starting this business.
What education, background, and skills are required to do the job now and as it grows ?
What experience would be useful? What personal characteristics should the owner have ?
Be objective. Forget that you’re the only person to whom you’re going to offer the job.
Then apply for the job by writing your own curriculum vitae (CV): Detail your formal education. List the jobs you’ve held and tasks you performed in those jobs. (You can include jobs that aren’t normally considered paid employment, such as running a household.)
List the skills you’ve acquired through formal education and training, jobs, and personal interests and activities (hobbies, sports, membership in organizations, and so on) and through life experience. Finish up with your character by listing your strengths and weaknesses. Compare your CV with the job description.
Are you up to the job? Would you hire yourself ?
If you think the job applicant is on kind of shaky ground, maybe you’re heading into the wrong business. But don’t despair.
If you don’t qualify for the job yet, ask yourself what reasonable steps you could take to improve your qualifications.
Maybe you can get some training or experience, even as you start to set up the business. The economy and the market Your personal life and practical resources may be in just the right shape for you to start your own business, but the business world will chew up and spit out a navel-gazer.
You also need to look at the economy generally, and at the market for your proposed product or service in particular.
If the economy’s tanking, the time probably isn’t right to launch a luxury business . . . but the time may be exactly right to start a business that will appeal to penny-pinchers.
If the market for your product is jammed with competitors or if demand has started to dry up, you’re headed for trouble if you stay on course.
But if the market is just about to expand in a big way, you may have hit on a surefire success.Beautiful Woman store
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Complete Canadian Small Businesses Guide
Starting a Small Business Enthusiasm finds the opportunities, and energy makes the most of them. — Henry S. Haskins There are many reasons why you might be reading this book. Maybe you have always dreamed about having your own business, and the timing is now right for you to consider it more seriously.
Possibly you have been recently laid off or have just retired. Friends of yours may have started up a business part-time or out of their home, and have been talking to you about it.
It may be you are just frustrated at the insecurity, lack of challenge, or potential for advancement in working for a large institution. Possibly you already own your own business and want to be better informed in areas that are important to you.
The decision to go into your own business may be one of the most important career decisions you make, with implications affecting all aspects of your life. Many people are impeded from proceeding any further than the dream by fear of failure, risk,
Fear of failure is a legitimate concern, as studies indicate that over 75% of all new firms will fail within 3 years of start-up. One of the main reasons is lack of knowledge.
This book will therefore provide you with that survival edge. Small business in Canada is a vital part of the economy and fabric of our society. The small business sector accounts for a massive portion of the country’s gross national product (GNP), and creates the majority of all new jobs. Approximately 85% of all employment is created by small business.
On average, over 350,000 small businesses register for the first time every year.
This number, of course, varies depending on the economy and other factors, and includes proprietorships, partnerships, and corporations.
The estimate is based on statistics from provincial government proprietorship and partnership registrations, as well as provincial and federal new incorporations.
In many cases, the small business person does not show up in provincial or federal statistics because he or she is self-employed and has no employees, or has not registered the business. At the same time, there are a substantial number of businesses that cease to operate every year, many of which do not show up in statistics.
The small business sector is a dynamic, innovative, and growing force that provides challenge, fulfillment, and financial security to over one million small business owners in Canada. Studies show that over 75% of these small businesses have fewer than five employees.
There are many definitions of what constitutes a small business.
The Canadian Federation of Independent Business (CFIB) generally uses the number of employees as a yardstick, with independently owned firms with up to twenty employees considered as small businesses.
This book has attempted to minimize the potential risk in starting up a small business.
It will not only be a practical guide for you, but a reference source for future needs as your business grows. Not all the chapters may be appropriate for your needs at this stage, and the chapters do not have to be read in sequence.
Other parts of the book are designed to provide you with further practical assistance, including the appendices, glossary, samples, and checklists.
At the very back of the book, there is a section entitled “Reader Input.” Our contact numbers, e-mail, and address are noted, as is our website.
We would appreciate any feedback you have for improvement.
You also might like more information about our seminars or consulting services.
This chapter will cover: the advantages and disadvantages of small business ownership the traits of successful entrepreneurs self-assessment recognizing consumer and business trends sources and types of business opportunities evaluating business opportunities choosing a business women in business
home-based businesses dealing with growth and expansion of your business.
ADVANTAGES AND DISADVANTAGES OF SMALL BUSINESS OWNERSHIP
Many people have an idealized picture of the rewards of running your own business.
There are benefits, of course, but there are also risks and frustrations.
It is important to objectively look at both sides in order to make realistic decisions.
Advantages of Going into Business You have the opportunity of making more money working for yourself than by being an employee. You have no ceiling on your potential income, as it is limited only by your energy, management skill, and good judgment.
However, studies show that making money is not one of the main motivating factors of small business owners.
You have the opportunity to satisfy your creative drive. Studies show that small businesses are more creative, productive, and responsive to changing conditions in the marketplace than are large corporations.
You can’t be laid off. In that sense, you have job security as long as your business is successful. You have definite tax advantages over people who are not self-employed. You set your own priorities as the decision-maker.
You have control over your own destiny, as you are the only person responsible
for the success of your company.
Your workday will not be routine, as you are constantly faced with a variety of challenges.
You have the opportunity to see your ideas through to completion.
You have the opportunity to control the nature and direction of your own future.
You have flexible work hours that can accommodate your personal and lifestyle needs.
You can determine your own style of work environment. You will receive prestige, status, and recognition if your business is successful. Disadvantages of Going into Business Your income may be irregular, depending on the nature of the business, the economy, competition, and other variables.
Your involvement with the business is generally very time-consuming, especially during the early start-up years. This tends to have the effect of reducing time with friends or family, and recreation time.
You will be under pressure to succeed from family, friends, investors, and creditors, because you have invested so much time, energy, and money. In most cases, you must commit considerable financial resources towards the operation of your business.
This could vary, of course, depending on partnership or investor involvement or bank financing. Home-based businesses tend to require less start-up capital.
You are faced with the risk of losing all your money in the business venture due to circumstances outside your control.
Factors such as health, family, marital and partnership issues, and competition problems may not always be avoidable or predictable.
You must be conversant and deal effectively with various management areas at the same time, in order to maintain proper control over the business, especially in the early stages. Considerable paperwork may be required by various levels of government, which represents non-revenue-generating time and expense.
TRAITS OF A SUCCESSFUL ENTREPRENEUR
What kind of person becomes an entrepreneur ?
What characteristics must a successful entrepreneur have ?
Whether people are born with these traits or learn them is material for good debate, but what we do know from numerous studies is that successful entrepreneurs tend to have several important personality characteristics in common.
They are often strong individualists—optimistic and resourceful—and they usually have a high degree of problem-solving ability. There are many other traits that describe an entrepreneur, some of which are listed below. Strong goal orientation.
Ability to set clear goals that are challenging but attainable; ability to continually re-evaluate and adjust goals to make sure they are consistent with one’s interests, talents, and values, as well as personal or business needs.
Rather than being content with the attainment of goals, successful entrepreneurs enjoy the challenge that setting new goals brings.
Persistence. Steadfast pursuit of an aim; constant perseverance; continuing to strive for a goal despite obstacles; strong determination to reach goals regardless of personal sacrifice. Ability to withstand business reversals without quitting.
Though perhaps disappointed, not discouraged by failure; ability to use failures as learning experiences so that similar problems can be avoided in the future; attitude that setbacks are only temporary barriers to goals; strong capacity to build on successes. Business and product/service knowledge.
The entrepreneur must understand basic principles by which a business survives and prospers. That means comprehending the roles of management and responsibilities of employees to maintain a viable business. Although the entrepreneur must be in control of overall goals, he or she can’t perform each task without help.
Awareness of the functions of marketing, accounting, tax, financing, planning, and management, and how to deal with them, is therefore required.
Must have a good level of understanding of the product or service.
Willingness to accept calculated risks.
Ability to identify risks and weigh their relative dangers; preference for taking calculated risks to achieve goals that are high but realistic.
(Contrary to the stereotype that entrepreneurs are gamblers or high–risk-takers, the risks involved are often moderate, due to the amount of planning behind them.) Strong desire for independence.
Genuine desire to be your own boss, free from external direction and control; sincere willingness and proven ability to be self-disciplined in sometimes isolated working conditions; ability to organize activities to reach personal goals.
Successful entrepreneurs are not usually joiners by nature.
They often join only to network; that is, to make business contacts, further their ventures, or obtain useful information to solve problems. Studies have shown that reliance on social interaction and friendship may inhibit entrepreneurial behaviour.
Ability to handle uncertainty well.
An entrepreneur must have an ability to live with the uncertainty of job security.
He or she must face many crises, take risks, and allow for temporary failures
without panic. Successful entrepreneurs accept uncertainty as an integral part
of being in business.
Self-confidence and self-reliance. Strong but realistic belief in self and ability to achieve personal or business goals. Successful entrepreneurs have an enduring
faith in themselves that gives them the capacity to recover from serious defeat
Versatility and resourcefulness.
Capable of dealing effectively with many subjects or tasks at the same time; can assume different roles and switch back and forth as required. During the early stages of the business, the entrepreneur will assume numerous and diverse business responsibilities, including marketing, sales, credit and collection, finances, employee selection, accounting, planning, and negotiating.
The habit of seeking and using feedback.
The skill to seek and use feedback from employees, the management team, and professional advisors on personal performance and goals for the business; the skill to take any remedial action required.
Physical health, with high degree of stamina and energy.
Staying healthy is essential to the intense demands and ongoing pressures of one’s own business, especially during its early years.
The long hours and pressures of business demand emotional and mental well-being.
Also, a high level of stamina and energy is important to meet the intense demands of running a business. One needs the ability to work hard for long hours, often with less sleep than one is accustomed to. One must be prepared to make personal sacrifices.
Because the pressures may be great, the success of a business may be determined
by whether or not one’s spouse, family, and friends can pull together and provide emotional support and understanding. Self-determination.
Belief that one controls one’s success or failure, and that it is not decided by luck, circumstance, or external events.
Objectivity and realism.
Ability to distinguish between oneself and the business, so that when a mistake occurs, one has the strength to admit it and take corrective action; desire to deal with business decisions rationally and logically rather than emotionally and subjectively. Openness to change. Receptivity to change; ability to adjust perceptions, goals, or action on the basis of an assessment of new information.
Ability to apply ideas in creative ways. Strong desire to originate an idea or product; to develop something new; to be innovative; to make something happen; to imprint personality, dreams, and ideas on a concept in a unique and different way; powers of both observation and imagination to foresee possible marketable ideas.
Sense of purpose. A feeling of mission must motivate the person to go into business; the activity must have meaning. The mission may be to make an attractive profit, to sell some necessary and unique product or service, or to develop ideas or skills without the constraints of others’ expectations. Human relations ability.
Ability to understand and interact well with people of varying personalities and values.
This is important when dealing with employees, bankers, investors, partners, suppliers, or customers, and is reflected in characteristics such as sociability, consideration, cheerfulness, cooperation, and tact.
Desire to take on challenges and test abilities to the limit.
Successful entrepreneurs are not ambivalent about success.
They concentrate on ways to succeed, not on what will happen if they fail.
Because they are objective, though, they build a “what if” scenario into the business plan, so that they anticipate problems and develop strategies to surmount
obstacles in advance.
Successful entrepreneurs adopt the attitude that if they do chance upon unexpected obstacles, they will find resourceful and effective ways to overcome them.
It is unrealistic to suggest that successful entrepreneurs possess all of the traits outlined. Many of the characteristics are interrelated, and not all are necessary for business success, so do not be overly concerned if you feel you do not possess every one of these qualities.
The key question is how significant the missing traits are to your type of business and your business goals. Once you understand your personal strengths and weaknesses, you are then in a much better position to compensate for them by hiring employees, bringing in partners, or taking further training.
Most people start a business without ever completing an honest, thorough personal assessment. Without this self-appraisal, your personal success in business could be limited. This section is intended to assist you in focusing on your strong points, identifying your weaknesses, and dealing with areas that need improvement.
This will enable you to clarify your personal and business goals. In the following categories, expand as fully as you like on your answers.
To get the most out of your self-assessment, you should be free from distractions and take as much time as necessary. Rank your answers to indicate the degree of importance or impact on your future business.
Autobiography. Summarize your own life history. Review and detail all aspects of your past, including credentials you have obtained, education, special projects, leisure time activities (including sports and hobbies), and travel experiences.
List the work you have done, including all full-time, part-time, and summer jobs.
Beside each job list all the roles you assumed or tasks you performed
(e.g., coordinating, supervising, writing).
Start with the most current time period and work backward. Skills. List all your skills.
These are your developed or acquired abilities, such as researching, administering, instructing, problem-solving, selling, etc.
Once you have identified your skills, rank them by frequency of use.
This will give you a good indication of how important these are in your activities.
Which skills do you believe will assist you in attaining your business goals ?
You may wish to refer to the book What Color Is Your Parachute?
by Richard N. Bolles for a detailed list of skill areas to stimulate your awareness.
Personality attributes. List all your personality attributes.
Attributes are inherent characteristics, such as having an analytical, inquiring, or insightful mind, being compassionate or sociable, etc.
Consider the common characteristics of entrepreneurs discussed earlier in this chapter. Accomplishments. List your most important job-related accomplishments.
Examples may include negotiating a major contract for your employer, coordinating a major conference, or exceeding sales quotas.
Then list your most significant non—job-related accomplishments: for instance, being elected as president of a club, organizing a fundraising event, or running a marathon. Rank your accomplishments from the most important to the least important.
Then identify and write down all the skills used, talents demonstrated, and attributes shown which were needed to attain each accomplishment.
Personal and recreational interests. Identify your personal interests
(e.g., business, science, politics, health, environment, sports).
List those activities (personal and business) that provide you with the greatest amount of personal enjoyment and satisfaction. Community involvement.
List community or social activities you have participated in (e.g., church, hospital, clubs, volunteer organizations).
Hobbies. List all your current and past hobbies (e.g., reading, painting, photography, gardening, cooking). Things you like and dislike. Think of the activities or circumstances that you like or dislike the most (work or personal).
List the events that cause you the greatest amount of satisfaction and happiness and the events that cause you the greatest amount of anxiety, frustration, or unhappiness. Strengths and weaknesses. List your personal strengths and weaknesses.
Rank them in order of intensity.
Can you eliminate, reduce, or compensate for your weaknesses?
Ask someone who knows you well (e.g., a relative, a friend, your spouse) to list what they perceive to be your strengths and weaknesses and to rank them.
Do others see you as you see yourself ?
The present. Think about your present situation under various headings: social, career, family, marital, physical, emotional, financial.
List the strong and weak points in each category. What impact will self-employment have on each of these categories ?
Ask your spouse the same questions. Is his or her assessment similar to yours ?
The future. List the personal goals that you wish to attain in 1, 3, 5, and 10 years.
Will your business ambitions assist you in attaining these, and if so,
in what manner ?
By carefully focusing on your previous experiences and recognizing hidden talents and abilities, you will be better able to identify your personal and business needs.
Any business or career you select should address and satisfy those needs.
Know your strengths and capitalize on them. Identify your weaknesses and reflect upon how you can minimize their effect on your business activities.
Be confident of your abilities, because in business when you are selling a service or product, you are selling yourself.
If others believe in you and trust you, they will want to do business with you.
This self-assessment process will probably be an enlightening experience.
A close match between your attributes and personality style, and the type of business you choose, will make a difference in the fulfillment you receive from the business and the degree of success you attain.
Trends are creating growth markets throughout Canada and the United States for certain types of businesses. Some of these trends are occurring nationally and internationally, while others are felt only on a provincial, regional, or local level.
A trend is an event which lasts a minimum of a decade.
A fad, on the other hand, is short-lived and may last for only a few months.
There are several ways of learning what opportunities lie in future trends. One way is to read business-oriented newspapers and magazines in print or online.
The national Canadian newspapers are:
The Globe and Mail (Report on Business magazine) and the National Post.
Of course, read your local newspaper and magazines to keep current on local trends. National business-oriented magazines in Canada are Profit, Canadian Business, ROB (Report On Business), and National Post.
There are also provincial and local business magazines at your local newsstand and public library and online. In addition, you can become aware of many trends before they reach Canada by reading American business magazines and newspapers.
Some of the recommended magazines include Entrepreneur, Small Business Opportunities, Income Opportunities, Venture, and Inc.
Other ways to anticipate or be aware of trends is to subscribe to trade magazines
or newsletters in your field of interest and attend association or business networking meetings. Speak to suppliers and customers to find out which products and services are in greatest demand.
Another way of doing your research is to do a Google search—putting in keywords
of interest to you for business opportunities or trends—to find articles and website information.
Some examples of current trends which could impact on the business you are considering include:
Rapid expansion of computer technology, Internet use, and e-commerce.
As you are well aware, the technology revolution has completely changed the way of doing business. No matter what type of business you are considering, you need to embrace technology in a way that maximizes your business opportunities and profit.
You also need to understand how computer hardware and software can enhance your business image, give you a competitive edge, reduce stress, improve your management skills, and optimize efficiencies.
Not only are most businesses using computer technology for their own operation,
they are using their computer skills to actually create business opportunities.
For more information, refer to the book by Douglas Gray, Start and Run a Profitable Business Using Your Computer, published by International Self-Counsel Press.
An increase in leisure time.
Due to shorter work weeks, flexible workdays, compressed work schedules, and people working at home (employed or self-employed), people have more time available for leisure activities.
This will result in increased travel, adult education and self-development courses,
and an overall interest in recreation. General aging of the population.
Studies show that by the year 2017, approximately 40% of the population will be over 50 years of age. This will create an interest in travel (especially group or package tours), products for the aged, retirement and investment planning, and assistance in home renovations and repairs.
Downsizing from a home to a condominium or townhouse and an increase in the purchase or rental of retirement homes in a warmer climate will occur. We can expect to see an increase in sales of recreational vehicles (mobile homes) and any products to do with security (fire, medical, burglary, etc.).
Baby boomers. Many baby boomers who have held off having a family (especially
two-career couples) will now have their families.
Therefore, products and services for children will be in demand, especially by parents who have a high disposable income, and therefore have higher expectations of quality and uniqueness in the products they buy.
As the baby boomers buy older homes being sold by the senior population
(for the reasons referred to in the previous point), there will be an increase in home renovations. Baby boomers have an appreciation of and desire for nature and the outdoors, in terms of their adventure trips and leisure activities, perhaps as an antidote to the pressures of urban living.
An increase in personalized services, such as investment and consulting advice will be in demand. In the case of two-income families, with or without children, demand for services and products (child care, housecleaning, etc.) which make life easier will increase. An increase in health concerns.
The majority of the population is aging, and there is an increased interest in looking good, feeling good, and being healthy.
This takes the form of participation in fitness and recreation, the purchase of cosmetics, and a desire to learn about the aging process through courses and publications. In addition, an increased awareness of the need for healthy eating habits is also occurring.
This takes the form of better attention to diet and food preparation.
Especially with a product or service trend, being in the right place at the right time could result in huge financial rewards through uniqueness and volume sales.
A word of caution, though: the trick to succeeding with business trends is much like the sport of surfing. You must get in at the start of the swell, ride through its buildup, and get out while riding at its peak. To stay in a trend beyond its lifespan may turn the business into a financial disaster.
FINDING BUSINESS IDEAS AND OPPORTUNITIES
There is a distinction between an idea and an opportunity. Many people have a good business idea, but the idea may not be a viable business opportunity with potential for success. Careful research, evaluation, and preparation of a business plan will separate the real opportunities from casual ideas.
There are many innovative techniques for finding business ideas and opportunities, but before you start your search, make sure that you have completed the
self-assessment (discussed earlier), which will help you to find opportunities
suited to your lifestyle needs.
Many of the sources below are also accessible on the Internet;
for example, newspapers, public libraries, and the Yellow Pages and other online directories. Check out all the other sources for their Internet addresses at your public library, online, and through Google searches.
The Internet makes all your preliminary research so much easier. However, be careful to check the accuracy of Internet sources. You need to apply more caution than with other sources of information, in terms of accuracy and objectivity. Here are some sources of information. Internet.
As you are undoubtedly aware, this form of research is a veritable gold mine of information. By typing keywords into your search engine, you will find numerous Canadian and U.S. sites with information; for example: franchises, business opportunities, specific types of businesses, etc.
Also refer to Appendix C for a list of popular small business websites. Books.
There are numerous books available which detail business opportunities that can be started with minimal financing (i.e., about $500 to $10,000).
Check with your public library and local bookstores. Publications. The key publications you should be aware of are referred to in Appendix B. National magazines which are oriented more towards the home-based business and small businesses are Profit, Small Business Opportunities, Entrepreneur, Income Opportunities, Inc., and Venture. Trade and business associations.
Almost every type of business has a professional or trade association which
you may wish to check.
The association could be local, provincial, national, or international in scope.
Look in the Yellow Pages print version or online, or do Google searches under “Associations.” In addition, check your local library, as well as well as Google online, for directories that list associations in Canada and the United States.
The main directories are Directory of Associations in Canada and Encyclopedia of Associations. Trade publications and newsletters.
There are thousands of trade publications covering every type of business interest. Consult with the business resource librarian at your local library and ask to see the various directories of trade publications in Canada and the United States.
Also, do a Google search online.
The best-known directories are: Gale Directory of Publications and Broadcast Media Business Periodicals Index Canadian Advertising Rates & Data Canadian Almanac & Directory Canadian Business Periodicals Index Gale’s Encyclopedia of Business Information Sources Standard Rates and Data (http://next.srds.com) Ulrich’s International Periodicals Directory.
Foreign trade publications. There are many foreign trade publications which list import and export opportunities. Check with your local library or provincial government small business resource centre. The Yellow Pages. These telephone directories list many products and services relating to small business.
As you know, there is an online version, and most people do their research online using Google. If you have a print version, turn to the cross-referenced index and methodically work your way through the listings. Look for the types of businesses that supply products or services that interest you.
For example, if you are interested in gardening, you would look up all the cross-referenced classifications associated with gardening. That would include florists, nurseries, and landscape architects. Trade shows/conventions.
Trade shows can be an excellent way to examine the products and services of many of your potential competitors. You will meet distributors and sales representatives, learn of product and market trends, and identify potential products or services for your business venture.
You will find trade show information in the trade magazines servicing your particular field. Also look at the annual directories that publish a listing of Canadian, the U.S., and international trade shows.
The main directories, can be found in your public library and/or provincial government resource centre as well as online through “keyword” Google searches. Conventions also offer an excellent opportunity to stimulate creative thinking.
At a convention you are exposed to speakers, panelists, films, and displays. You also have an opportunity to exchange ideas with other entrepreneurs.
Seminars/courses. There are many seminars, workshops, and courses available on small business—including home-based business—offered through government agencies (the Business Development Bank of Canada and provincial government small business departments), school board and community college adult-education programs, and enterprise development centres.
Contact these agencies or organizations and ask to be put on their mailing lists for upcoming programs. Seminars offer an excellent opportunity to meet other people with interests similar to yours. Franchises/licences.
There are many business franchises and distributorships available.
The range of types of product and service businesses include bookkeeping/accounting, interior decorating, housecleaning, lawn maintenance, restaurants, auto painting,
Statistically, the survival rate of franchises is high, because of the formalized and tested business plans and support systems offered by franchisers, including training, advertising and promotion, computer and/or other management and administrative systems, and ongoing monitoring of performance. Licensing means having the right to distribute or manufacture a product within agreed-upon stipulations.
The owner of the licence retains ownership of all product or service rights, then receives a royalty or fixed fee from the licensee. There are good, bad, and mediocre franchises and licences, and any potential investor should be cautious.
Obtain the advice of your banker, lawyer, and accountant before committing yourself
to any contractual arrangement.
Check the reputation of the franchiser through the Canadian Franchise Association (Toronto), provincial franchise associations, and the Better Business Bureau.
You can obtain contact information about these franchise associations by referring to the “Sources of Further Information” section in Appendix B. For more information, refer to Chapter 8 on franchising.
For a comprehensive coverage of franchising in Canada, read So You Want To Buy a Franchise (by Douglas Gray and Norm Friend), published by McGraw-Hill Ryerson, as well as The Complete Canadian Franchise Guide, written by the same authors. Examination of existing products or services for improvement.
There are many excellent products, but few people know about them because of ineffective marketing. Investigate products you think have a possibility of success. Find out the marketing methods that were used.
You might be able to obtain that product’s distribution rights at a low price.
There are innovative ways of modifying or repackaging an existing product to appeal to new markets.
For example, there could be an industrial version of a consumer product, or vice versa. There could also be foreign-market possibilities that have never been explored. For example, if a product is seasonal, you could locate a country in the southern hemisphere which has opposite seasons.
By exporting your product during your own off-season, you would be able to sell the product throughout the year. Look for modifications to a product or service that would improve its marketability and profit.
Ask yourself the following questions:
How can I: make it safer, cleaner, slower, or faster ?
make it at home and save overhead expense ?
contract out to have other people make the product or perform the service in their homes? make it more convenient or inexpensive ?
cut costs of material and labour ?
combine it with other products or services ?
make it easier to package, store, or transport ?
condense or enlarge its size ?
make it easier to use ?
make it less expensive to replace, repair, or reuse ?
make it more attractive and appealing ?
make it lighter, stronger, adjustable, thinner, or foldable ?
make it quieter or louder? minimize its potential hazards ?
add new features ?
improve its availability or distribution ?
improve its production ?
improve its design? improve its marketing ?
improve it in other ways ?
If you are interested in selling or distributing a product, contact the manufacturer to inquire if a sales territory is available in your area.
There may be an opening, or possibly a dissatisfaction with one of the present distributors who may not be effectively performing in the territory. Distributors and wholesalers have an extensive knowledge of the strong and weak points of existing products, and the types of product improvements that are needed by their customers.
Distributors can be located in the Yellow Pages, in the classified ad sections of business newspapers and magazines, as well as at business opportunity trade shows. Of course, do Google searches on the Internet using keywords of interest to you. Travel and hobbies.
Whenever you travel, look for business ideas and opportunities.
Many services and products may not have been introduced into Canada. You may be able to negotiate exclusive or nonexclusive Canadian distribution rights for a product.
Alternatively, you may wish to duplicate, with modifications and improvements, the product or service. This is assuming that your efforts don’t infringe upon any legal rights that the originator of the product or service might have.
Think of the areas relating to your hobbies or leisure activities in which you believe a need exists. You might be able to devise creative ways of meeting those needs.
In summary, when you are looking for potentially profitable opportunities,
it is helpful to review some of the main categories of business opportunities:
providing an information or consulting service identifying new opportunities arising from your current business becoming an agent, supplier,
or distributor for someone else’s service or product taking existing local products to new markets within Canada transferring concepts from one industry to another buying an existing business for franchise imitating successful services or products becoming an agent or distributor for a product imported into Canada inventing a new product capitalizing on a growth trend solving someone else’s problem rebuilding, repairing,
or adding to an existing product or service identifying specific target groups and customizing services or products for their needs exporting Canadian products to other countries finding productive uses for waste material.
catering to a market that is no longer being serviced replacing imported products targeting a small portion of a large market.
Creativity is an important attribute in successfully operating a business and will ensure that you are always alert for new opportunities, new products, new techniques, etc. Creativity is useful when you are at the idea-generating stage of selecting a business and at every other stage throughout the lifespan of your business.
For example, you will need to be creative when searching out a suitable name for your business, sources of financing, potential customers, low-cost raw materials, etc.
Many people find “brainstorming” an effective means of generating creative ideas.
A small group of people (usually from three to seven) meets in a round table discussion group format with an objective of identifying as many creative ideas as they can in the above categories.
One person records on a flipchart or chalkboard all ideas suggested. Some ideas may sound impractical, zany, or impossible, but the task is to list as many as possible without being judgmental as to their appropriateness.
In this way, inhibitions are removed and ideas are free-flowing.
Relax and have fun with it! Once the ideas have stopped flowing (you may have anywhere from thirty to eighty suggestions), you start the task of evaluating each of them for their merits.
With the assistance of your group members, discuss each of the suggestions.
You may find that parts of an idea may be workable in specific situations.
Others may not work under any circumstances.
Eliminate those ideas that would be impossible. Once you have identified the most workable solutions, attach a priority ranking to indicate which ones you should try first.
Brainstorming may assist you in shortlisting the businesses which have the most potential. The following section will help you to develop a list of factors to use in the evaluation process.
EVALUATING BUSINESS OPPORTUNITIES
Creativity goes hand in hand with evaluation. If you have a lot of creative ideas, but do not evaluate them, you could be destined for failure from the outset.
Many business failures are the result of starting into business too quickly, without prior research, evaluation, and planning — usually because of excitement, enthusiasm, and over-optimism.
On the other hand, if you only evaluate a few initial ideas, you may overlook untapped opportunities for true success and fulfillment in your business venture. Reflect on the business ideas that have appealed to you at this point.
Think about the personality traits required to succeed in that type of business.
Do these match up with your own personal skills, talents, interests, and aptitudes,
as discussed in other sections of this chapter?
Develop a set of criteria on which you can evaluate and rate each of your business ideas. Your criteria will be based upon many factors, including your lifestyle needs, financial status and needs, personal needs, business needs,
background experience, etc.
For instance, you may want to start up a part-time or full-time business out of your home. If your reason for going into a home-based business is that you want to supplement the family income while caring for your preschool children, factors that will influence your decision will include: Can the hours worked be modified to suit the children’s schedule ?
Is the business still viable if only handled on a part-time basis until the children reach school age, when more time may be available ?
Will travel be necessary to pick up or deliver products? Will you be able to use a telephone answering service or machine to take calls when you are not available to the business ?
You may find the following evaluation format useful.
Start off by listing at the top of a sheet of paper your financial, lifestyle, personal, and business needs. List down the left-hand side of the page the various factors that will influence your decision.
Once you have filled the page, make a sufficient number of photocopies of this form so that you can use one for each of the business ideas that you wish to evaluate.
Then start to complete the centre column of the form with answers to each of your evaluation factors. Some responses may be considered to be favourable (pro), while others may present some difficulties for you (con).
In the far right-hand column, indicate whether the factor has a pro, con, or neutral influence. You may need to do some preliminary research to fill in some of the answers.
(If you are considering a home-based business and want to avoid various work-at-home schemes and scams, refer to our book, Home Inc.: The Canadian Home-Based Business Guide, Second Edition, published by McGraw-Hill Ryerson.)
Once you have completed this process for each of your business ideas, compare the businesses to identify which ones may be most profitable and appropriate for your specific needs. You will begin to see clearly how some business ideas may show great prospects, while others may involve a lot of hard work but little reward after your diligent efforts. You are now one step closer to making your final decision.
Your final step is, of course, developing a full business plan, as discussed in Chapter 2 and as shown in Sample 4, “Business Plan Outline.” Review your completed business plan(s) with your spouse, lawyer, accountant, advisors, business associates, and friends for their input and advice.
CHOOSING A BUSINESS
You may have an idea what business or industry sector you are interested in—manufacturing, wholesale, retail, or service. These sectors are each unique in their mode of operation, financing, management, and potential risk. Refer to Appendix C, “Website Resources.” he next chapter, on “Business Planning,” will assist you further in the selection process. There are many other issues you have to consider.
Is your business to be a part-time or full-time business ?
Is your business to be operated out of the home, an office, or a plant ?
Another consideration is whether you are starting your business from scratch,
buying a business, or buying a franchise.
The advantages of starting a business from scratch may include: the ability to start off the way you want personal ego satisfaction from the challenge of building your own business the ability to select a location of your own choice the ability to staff the business as you choose the ability to equip and decorate the premises to suit your own tastes and needs the ability to rent or build a business facility that meets your requirements exactly the ability to add on to the business in a graduated fashion the ability to access possible government financial incentives.
The disadvantages of starting from scratch may include the following: the inability to find a suitable site or business premises the inability to find and employ qualified personnel for your needs the longer time it will take to get the business ready to start, the longer time and additional expense it will take to become known by the public and establish a customer base the longer time it will take to gain momentum and obtain business growth and profit the difficulty in establishing the necessary cash flow.
The advantages and disadvantages of buying a business or franchise are covered in separate chapters.
Large numbers of people have chosen to market their skills and talents from home. Current studies estimate that more than 50% of new small business enterprises are operated out of the owner’s home, and this trend is rapidly growing.
The natural starting place for many of these businesses is the den, spare room, basement, or garage. Many home-based businesses are started on a part-time basis and expand into a full-time business at a later date.
The significant majority of them are started by women. People are attracted to home enterprises for many different reasons and from many different groups, including homemakers, single parents, the disabled, the unemployed, hobbyists, and people interested in a second income.
The same group of people could also be potential employees of a home-based business operation. Studies show that over 70% of the work force in North America is employed in service and information-related industries, and this percentage is increasing. Recent surveys have projected that more than two million Canadians have some form of home-based business.
Management of a home-based business is similar to any other business in most respects, in terms of the issues, options, and risks that have to be considered.
There are special considerations, however, that are unique to a home-based business and require research and specific professional advice. Some of these considerations include managing a family business, marketing and selling techniques, and insurance, tax, legal, and employee matters.
To obtain further information on these matters and others, you may wish to join an association for networking and educational benefits.
Look in the Yellow Pages under “Associations” or contact your provincial small business department. There are numerous recently published books related to starting and running a successful home-based business.
Also refer to Appendix C, “Website Resources,” and do Google searches with keywords of interest to you. Our book, Home Inc., will help you.
Advantages and Disadvantages Running a home-based business is not for everyone.
What may be an advantage to one person may be a disadvantage to another.
Often, though, there are practical solutions for dealing with the disadvantages.
Advantages of a home-based business can be started on a part-time basis start-up costs and operating costs are much lower commuting time and expense are reduced or eliminated increased tax benefits and write-offs lifestyle can be flexible spouse and family members can be employed by the business flexible working hours more opportunities for the business to grow because of fewer financial constraints stress is reduced because of a more relaxed working environment.
Disadvantages of a home-based business isolation from the companionship and interaction with colleagues or fellow workers potential risk of working too hard because of a lack of separation from the work and home environments space may be cramped or inappropriate for ideal working environment or growth purposes discipline is required to establish and maintain productive work habits personal or family lifestyle patterns or priorities may be disrupted or set aside distractions and disruptions from family or friends may interfere with concentration business and family privacy may be impaired tensions and frustrations could potentially develop because of preoccupation with work blending into family relationship business may not be taken seriously by others due to lack of a professional business image it may be difficult to hire employees to work due to limited or inappropriate space business activity could create difficulties with neighbours.
Types of Home-Based Businesses There are numerous types of home-based businesses that you may wish to consider.
Here is a sampling of ideas to stimulate your imagination:
Service businesses agent (manufacturer’s, distributor’s, literary, sales, insurance) beautician, hairdresser, barber calligrapher catering, baking chimney cleaning clipping service (articles, ads, coupons) commercial graphics computer-related business (see section below) coordinator (projects, special events) consulting (management, financial, public relations) contracting—general, specialty (painting, carpentry) courier/messenger day care provider exporting/importing interior decorating instructor (music, art, dance lessons) janitorial/maintenance landscaping/gardening locksmith mover (furniture, equipment) photography (commercial, portrait, wedding) producer (shows, plays) professional services (accounting, bookkeeping, legal, dental, architectural, engineering) public speaker (seminars, workshops, keynote addresses) real estate repair work (auto, equipment, furniture, home) researcher sitter (house, pets, plants, elderly, disabled) tailoring/dressmaking telephone answering, wake-up calls translations tutoring videos (training, wedding, insurance, security) washing, ironing. Computer-related businesses accounts payable and payroll system service annual report writing anonymous re-mailer service architectural and computer-aided design bid and grant proposal writing billing service bookkeeping bulletin board service business form, stationery, booklet, vanity publication, annual report and menu design and layout business plan writing client database service clip art service collection service computer accessory sales computer and online training for children computer cleaning, repair and maintenance, setup and training computer consulting for people with disabilities copywriting customized gift and promotional product creation data and archiving backup service data conversion data security consulting database creation, conversion, and management desktop video editing direct-mail marketing electronic clipping service electronic mail service electronic mailbox service employer online hiring training ergonomics consulting estate management expense analysis fax time rental fax-on-demand service financial planning and management foreign-language word processing freelance editing freelance writing garden and landscape design genealogy research graphic design home inventory cataloguing image and document scanning, enhancing and digitizing information broker interior design intranet administration inventory service investment analysis job hunting training junk e-mail filter service laser printer time rental mail-order sales mailing list service multimedia business presentation design multimedia genealogy publishing multimedia kiosk design and consulting network consulting newsletter, magazine, and catalogue design and layout occupational therapy online catalogue creation online form design online magazine writing and editing online research training online setup and training online teaching and tutoring people tracing print and pre-press consulting product and service tracing property management résumé writing sales and statistical analysis sign, banner, and poster design specialty magazine writing and editing system security consulting tax preparation technical editing technical writing telecommute consulting transcribing translating used PC sales utility bill auditing video conference consulting Web and business presentation clip art service Web sound and video clip service website design and administration word processing. Common products and services made in and/or sold from the home artwork clothing cosmetics crafts door-to-door sales housewares insurance jewellery pottery toys woodwork.
One should be wary of advertisements for work-at-home schemes.
While the media have an ethical responsibility to inquire about the legitimacy of the money-making offer before accepting the advertisement for publication, in practical terms this control procedure is not 100% successful.
Some of the examples of the ads that frequently appear, primarily in the help wanted and business opportunities sections of newspapers and magazines, include “$1,500 weekly guaranteed,” “Work two hours daily at home,” “$590 for every 1,000 envelopes you mail, postage paid.
Ask for free brochure; write….” If you have reason to be concerned about the credibility of the company, contact the Better Business Bureau and ask if any complaints have been made. Also do an online Google search for any complaints made against the company.
You should be very skeptical and cautious in responding to any work-at-home schemes if: money is sought before a start can be made in the at-home business the promotional material says there is unlimited demand for the product or service there is no mention of the total cost involved promises are made that a lot of money can be made with very little work or on a part-time basis the promoter agrees to buy back the merchandise at higher than retail selling price—the catch may be “if the work is up to standard” which may be subject to very subjective and arbitrary criteria.
In short, be wary that a work-at-home scheme could be a scam.
WOMEN IN BUSINESS
In Canada, women are going into business at a greater rate than men, almost three to one. Studies show that twice as many female small business owners are still in business 5 years later, compared with male small business owners. In surveys conducted regionally and nationally, the same underlying factors are repeated on the success of women in business.
They include the following: Women Do Their Research Before starting a business, a woman typically spends from 6 to 10 months researching the product or service, the best location for the business, and many other considerations.
This compares with less than 4 months on average spent by her male counterpart. Women Plan Ahead While small business instructors extol the benefits of having a written business plan, women are the ones most often to heed this advice.
As a follow-through on the research they have done, the preparation of the written business plan becomes an easier task. By the time this stage is completed, they have a fully developed concept and can see clearly the stepping stones they need to follow to lead them to their ultimate goal.
A sample business plan is shown in Sample 4. Even after the business has been launched, the need for planning continues. Events may occur outside your control that may cause you to periodically revise your plan.
Women in general tend to have an ability to be in control of the global aspects of the business, yet at the same time continue to look ahead to tomorrow, next week, and next year. Women Take Courses and Seek Advice Women tend to readily accept the fact that they may not have all the necessary skills or business know-how.
Consequently, they will enroll in courses that teach them how to read financial statements or prepare a marketing plan, for instance. Also, women tend to act more cautiously in an area in which they have little expertise, and seek the advice of others. Women Have Realistic Expectations In looking ahead to the profit potential, women tend to set conservative and realistic expectations.
They tend to be less impulsive. Their practicality prevails, rather than their enthusiasm distorting their vision. They will write into their plan an anticipated slow period for the concept to catch on, for example. Women tend to be conservative in the decor and the spaciousness of their office or store facility—they will not overextend themselves financially with the hopes of making large sales tomorrow.
This is a critical aspect of building a solid foundation from the outset, and gaining the trust and respect of your banker, suppliers, and staff. Women tend to take less money out of their businesses in the critical growth years.
Studies show they take out less than half of the money taken by male entrepreneurs.
Women Are Committed to the Business Because many women are not in business just for the money, they tend to persevere longer during hardships.
Theirs is often a “lifestyle” business. At stake is their determination to succeed, which at times outlives the financial viability of the business.
However, such determination is usually accompanied by an openness to new ideas and approaches.
In leaving no stone unturned in their attempts to succeed, they usually do.
When it is stated that women tend to be more successful in business than men, it is most often the case that the word “success” refers to surviving in business longer.
Because of her commitment and realistic expectations, a woman is more likely to “hang in there” during the slow growth of a business.
While statistics are lacking in the area of overall profits made by men and women in business, it is perceived that men are far more successful than women.
A man is likely to take greater risks, have greater access to finances, and therefore be able to generate larger amounts of money.
These factors naturally relate to a higher “success” profile in the media and the business world.
DEALING WITH BUSINESS GROWTH
To grow or not to grow ?
The day may come when the owner of a healthy business thinks about expanding.
Perhaps your business has grown so much that you are starting to feel cramped and disorganized. A decision must be made as to whether it is more financially viable to grow larger or to maintain the present size. It is a misperception to assume that expansion and more profit go hand in hand.
Growing larger will probably mean a longer workday, increased stress, additional expense, more debt, increased bookkeeping, higher inventory and supply costs, increased product or service line, the need to hire more employees, expansion into new markets, and more demands on your personal and family life.
In addition, operating a larger enterprise requires greater management skills and operational systems. The changing dynamics of operating a larger business have to be considered seriously.
How will you know if and when it is time to expand ?
The answer is that you will clearly see the signs that it is time for a change;
you will not be able to ignore them.
At this stage you need to carefully review and rewrite your business plan. Consider it from two perspectives: (1) if you stayed the same size, and (2) if you expanded the business. Factors you should consider include:
Your personal and business goals.
Have they been met fully in your home enterprise ?
Have your goals changed ?
How will they be affected by moving ?
Have you reached your maximum potential sales for your existing form of operations?
Will moving to a new location enable you to double or triple production ?
Compare your maximum sales potential in dollar figures.
Space. Is lack of space limiting your growth ?
How much additional space is required for: working area, client visits, storage of materials, supplies, and inventory ?
Time. Do you at present do all the work yourself ?
Are there aspects that can be delegated to staff without risking the quality of service and personal attention to detail ?
Have you weighed the benefits of adding staff along with the cost of salaries and benefits, extra work space, hiring and training skills required, etc.?
Paperwork. Is your present system of invoicing, receivables and payables, and bookkeeping well managed ?
Can it withstand the impact of expansion?
Are you currently computerized ?
If not, computerization will be essential, in practical terms.
With expansion, will you be more of a manager than a salesperson or a doer ?
Does this fit your talents and ambitions ?
How much additional financing will you need for the expansion
and ongoing operating costs ?
Consider salaries, materials, renovations, rent, marketing, and advertising costs.
Will you have easy access to such financing ?
Expanding the Business On the basis of your financial projections, you may have decided that expanding the business operation will increase your profitability.
By hiring additional help for certain aspects of the business, you may be able to double your production while only marginally increasing your overhead costs.
Perhaps increasing and improving your work space will enable you to work more efficiently and to achieve a greater degree of satisfaction.
You may consider increasing staff and space, but this may increase your risk and borrowing and the amount of paperwork. Adding to your home if you have a home office There are many creative ways of modifying unused space in your existing house to convert it into additional space for your business.
You may also want to make additions to your house or construct a separate structure on your property for your business needs, subject to existing municipal bylaws of course. (For more detail, refer to Home Inc.).
Moving to a bigger house if you have a home office You may wish to build, buy, or lease a larger place to live to accommodate your growing business needs.
This could provide you with the added or specialized space for your projected business requirements, and enable you to continue working from home.
Hiring employees to work from their homes This is a very easy way of expanding as quickly as you need to, while keeping the costs to a minimum. Naturally, it depends on the nature of your business as to whether this is a viable option.
For example, you could utilize services of the following types of employees: commissioned salespeople, software developers or programmers, data entry or research personnel, or telemarketers.
You could also consider the use of temporary relief personnel. Renting storage or warehouse space Renting storage or warehouse space may be an option for you if you have an occasional or permanent need for more space.
There are numerous mini-storage areas that you can rent month to month.
Contracting work to other businesses Rather than having to rent additional office space or move your business to a warehouse, you may wish to subcontract out some of the extra work for temporary or occasional projects.
This is commonly done by consultants. Renting a packaged office If your business is operated within an office environment, the most economical route is to rent office space in a shared office facility called a packaged office or executive suite or business suite centre. You can rent on a month-to-month basis or a longer term such as 6 months or 1 year.
For a fixed monthly fee, the features of a packaged office include a fully furnished office; a central reception area and receptionist; a boardroom; a telephone answering service; access to support secretarial and word processing services; and use of fax, photocopier, and other office equipment.
Besides the flexibility of short-term leases, you have no staff, furniture, or equipment costs, and no administrative or set-up time is required. Much time and money is therefore saved, as you do not need to shop around and select and purchase equipment that may only be minimally used.
Subletting space from another company Many companies downsize to save on costs, depending on the economy, increased rent, etc., so there may be numerous opportunities available to sublet suitable office, retail, or warehouse space.
The subletting company may also be willing to share staff, for example, the receptionist, who could answer your phone line for you. The main advantage to subletting is that most of the responsibility for the entire leased space lies with the person from whom you sublet.
The main disadvantage, though, is that the person who holds the lease may decide not to continue at that location, and then you would be required to search for another location for your business. Leasing space When choosing suitable leased space, your options include office, warehouse, retail store, and shopping mall outlet.
The deciding factors will be location, affordability, and risk.
The lease may require a large deposit, personal guarantee, and long-term commitment.
You should recognize, however, that lease clauses can be modified or removed in advance through astute negotiating techniques.
Refer to Chapter 9, “Location and Leases,” for a detailed discussion. It is prudent never to sign a lease (or similar contract) without first having it reviewed by your lawyer. In summary, your detailed revised business plan showing your key options will give you a clear picture of the financial viability of each option.
While you will be able to generate increased sales, will the added costs result in increased profits ?
Will the additional time, risk, and stress be worth the effort ?
Review your revised plan with your professional advisors and get their input.
Talk to others who have expanded in a similar way to hear their perspectives.
our decision will be founded on extensive financial calculations, research,and expert advice. This will enhance your chances for success.
Business Planning Long-range planning does not deal with future decisions, but with the future of present decisions. — Peter F. Drucker A business plan is a written summary of what you hope to accomplish by being in business, and how you intend to organize your resources to meet your goals.
It is a road map of where you want to go in your business, the various routes you will take, stages along the way, and most importantly, where you will be when you have arrived at your destination.
It helps eliminate the misunderstandings that can easily arise if you don’t put your thoughts and research in writing.T he plan outlines your organizational and management skills.
It provides the basis for determining what further information you require.
It is an outline of the company’s availability and use of funds, management and employee personnel, products or services, marketing strategy, production techniques (if a manufacturing company), research and development program, and expansion or diversification program, as well as many other goals and objectives.
It highlights the past, present, and future of the business.
WHY PREPARE A BUSINESS PLAN ?
A business plan is one of the most effective management tools available.
It can help you focus in a logical and organized manner on the future growth of your company. It helps you anticipate and meet the inevitable changes of the future in a pragmatic fashion.
In the business plan you have a device for helping you control the business, allowing you to monitor and assess the progress of your objectives.
A well-prepared business plan provides the following benefits: It helps you identify your customers, your market area, your pricing strategy, and the competitive conditions under which you must operate to succeed.
This process alone may lead you to discover a competitive advantage or new opportunity, as well as deficiencies in your plan.
It helps to set the guidelines, such as the break-even point in profitability and cash flow, and the anticipated return on your investment (ROI).
It encourages realism instead of over-optimism.
When you have to put pen to paper to assess and quantify the various financial and logistical needs of your company,
you have a much clearer picture of the next steps to take.
Committing your plans to paper improves your overall ability to manage the business.
You will be able to concentrate your efforts on correcting alterations from the plan before conditions become critical.
It helps you avoid problems by anticipating them in advance.
It exposes you to the methods and merits of the planning, budgeting, forecasting,
and reporting processes that are so essential.
It provides a budget that will help the lender or investor make an early assessment of your business feasibility and viability.
It establishes the amount and timing of outside investment required.
It establishes the amount and timing of outside investment required.
It helps reduce the time that it takes for a prospective lender or investor to assess and accept or reject your proposal. It creates an important first impression to a lender, investor, or potential partner in assessing you as a competent business manager.
It identifies the number of employees needed, when they are needed, the skills they must have, and the salaries or wages they must be paid. It helps establish the size and location of plants and facilities for office space.
It may very well show that you could do well with a “packaged office” service or could possibly operate out of your home with a telephone answering service.
It helps identify the factors critical to the success of your business concept.
It provides you with the opportunity on a dry-run basis to “operate” your business without financial outlay or risk.
Besides the detailed business plan, other factors that have to be taken into account include your personal goals, your business goals, and your financial projections.
Part of planning is also being able to measure the results to ensure that your business plan is on target and accurate.
You will therefore continue to use your plan to chart the progress and success
of your business. From the point of deciding to go into business, you have started your business plan.
You probably already have a fair idea of the overall concept of the operation, the products you will sell, where you will locate the business, and an approximate time frame for start-up.
Your mind will be overflowing with thoughts of how to set your pricing, how much money you will need, and how much time it will take to build your customer base.
It is at this stage that you need to start mapping these thoughts on paper.
Many people do not venture out on their own because they become overwhelmed with the “what if” syndrome. A comprehensive business plan will enable you to anticipate “what if” problems and develop strategies to overcome them months before you start your business.
This enables you to walk through each stage of your business plan on paper and to make many of your crucial decisions before you have invested any money.
After working through your plan, you may come to the realization that there is little profit in the venture, or that it will require a large amount of start-up capital that you may be unable to raise, or that you will be tied to the business with little free time for yourself and your family.
If this is the case, you may decide either to modify your business concept to build in these missing factors, to operate the business on a part-time basis, or to cancel your plan altogether. If the risk is too great, then your best business decision may be not to start the business.
Your goals, if not clear in your mind before you start your plan, will become more obvious as you go through the planning stages.
Your personal as well as business goals will need to be considered thoroughly and discussed with your support network.
Your network may include your spouse, children, parents, business associates, lawyer, accountant, friends, or relatives—those people who may be directly affected by your decision to go into business and whom you trust to give you honest, candid feedback and to assist you in realizing your goals.
DETERMINING YOUR GOALS
Before working on a plan for your business, it is important to establish your personal goals. These will largely dictate the type of business that you go into, whether it is a part-time or full-time business, whether you work out of your home or an office, whether you travel a lot or stay in one location.
When you are considering your personal goals, it is important to know your present financial net worth. For an example of a net worth statement, see Sample 1 at the back of this book.
You should determine your existing as well as future financial needs.
Sample 2 provides a personal cost-of-living budget form which you may find useful.
Do you have sufficient financial resources to support yourself and your family during the initial stage of your business ?
Sample 3 provides a format for calculating your needs.
Do you have available funds to inject into your business during the start-up phase ?
The sole wage-earner in the family may be faced with the additional stress of unmet family expectations in terms of time spent away from home, if these factors are not discussed openly beforehand. Other goals you may consider are minimizing taxes, having a home, and providing security for your dependents.
Quality-of-life goals include your recreational activities, trips and vacations, challenge and fulfillment, and time spent with your family. Your personal goals may change from time to time throughout your life, and your business goals will have to be modified accordingly, based on changing circumstances.