How to start a business. Staring a business is an awesome experience. Before starting a business, you need to gather information, and you need to organize that information. You need to ask questions, and these have to be the correct questions. Remember business is about competition, as well as meeting your customer's needs. If your competition can do it better or cheaper than you can, then they get the customers instead of you, providing that the potential customers know about you (which often they do not).
Stop to consider for a moment, that most types of business are dominated by large chains. Think for example of coffee shops in Canada. Once there were many 'doughnut shops' that sold coffee, now, generally speaking all coffee shops in most parts of Canada are Tim Hortons, and that now doughnuts are only a small part of their sales. So how did that happen? Near as I can tell, that happened over a period of years due to advertising / marketing.
How to start a business in Ontario. Another example in Canada is submarine shops. Mr. Submarine (now called Mr Sub) seem like it had the market. Then an American chain called Subway came in and quickly captured most of the market. How did they do that? Again, as near as I can tell, it was by advertising / marketing, plus they offered fresher bread etc.
Another example, this time an American one. There was a guy who bought a small hamburger joint, and decided to try to grow it through advertising / marketing using a clown and his friends. Many said it would never amount to anything, and laughed. You may have heard of the company, McDonald's! The clown did very well, and while I think he is retired now, the chain seems to be doing OK – in most countries!
The reason for the above examples, is that if you try to start a small business, you need to know the market you are trying to break into, and get market share in it. If your plan (we call that a 'business plan' ) is to go 'head to head' with a huge chain, you will likely not stand a chance. At best they might buy you out (and you might or might not like the price offered), but most likely you will simply go out of business, perhaps at huge personal financial loss. Try to offer something that others do not offer, or do not offer in your area (though they might after you do). Think of what people spend their money on, and who meets those needs now. You likely need to find a gap in the market, or in your local area.
Another option is a franchise, For example instead of trying to compete with McDonald's, you could try to get a franchise from them. No matter the type of business, even franchises can fail, or be closed by head office for various reasons. Or they may open up more locations nearer to you that you may have wished. Franchises do though seem to have a much higher survival rate than opening up your own small business. The trade off is that you have to do what head office says, as that is how you succeed, that and a lot of hard work on your part! A franchise means that they have worked out the formula for success of that type of business, so you do not have to figure it out by (very expensive) trial and error, in exchange you will need to invest into the franchise and perhaps even pay a franchise fee or something. (Look into the details before signing up for one, and they will have a lot of questions for you as well!)
This blog post is some free advice, intended to be genuinely helpful, for anyone who is thinking of starting a business. First off please note that many sources that you will read online are offering advice and guidance, in hopes of selling you something. There is an old saying that 'if there is no product, and something is free, then likely you are the product!' So perhaps they will not selling you anything but they may sell your info etc to someone who then hopes to sell you something, so this is not necessarily bad, but please always understand what is motivating the people who are offering you advice. Everyone is motivated by something, and a good part of running any business successfully, no matter what you are selling, is knowing what is motivating people, or to say it another way 'what do they want?' In the case of me the guys writing this blog post, I am writing on behalf of WRS Web Solutions Inc. with a couple of goals in mind:
That should be a complete and honest disclosure to you, so now onto that advice that was promised!
You need a business plan. Do not get hung up on the format of the business plan, basically you need a 'plan' that answers the 5 Ws, Who, What, Where, When, Why, and also How, plus any other questions that you can think of! Ask yourself why do you want to start a business. The answer does not have to be long, a sentence or two can be enough, but be honest with yourself. Is it to be independent? Is it to make money? Is it for the challenge? Starting a business can be hard work.
Customers are always looking for the best price (ideally free). They do not have loyalty to a business, (much as they might think that they do, or tell you that they do), if a newer business opens up next door at a lower price, then that is where you customers will then be found. This is especially so for small family owned restaurants! Most business do not survives the first 12 months, and of those that do, most of those are gone within 3 to 5 years.
For your business to be successful, you need it to offer something that the big chains do not offer. (Note, if you do that they might also just copy that idea and add it to their offerings). A partial example of this is a flower shop. Then local grocery stores (chain owned) added fresh flowers to their offerings on key dates, such as Valentines, and Mother's Day, etc, not long afterwards the flower shop closed its doors. Some would argue (simplified example) that The Mart of Wal, likely does this with a range of stuff, perhaps cherry picking the top selling items in very category, and then the smaller shops close out, then they continuously review what they sell, adding and removing items based on sales and profit margins (as any good business should). Another example of that, is that I read recently that Samsung started out selling noodles, and not they don't seem to sell a lot of noodles, nut they seem to have done very well in other areas like electronics, laptops, phones, and such (but I don't like their clothes dryers).
Some companies in Canada did well for many years as they had a monopoly (perhaps even a government granted one) over various geographic areas for various services. For example phone companies and cable TV companies. Nothing sweeter for a business plan to take to the bank, when you have a government granted monopoly, or in slang terms a possible 'license to print money'! Of course those companies are now Canada's big mobile phone companies. (The old copper wire phone networks are now gone or only form a small part of their business, but they adapted to change!) Your business will always need to adapt to change.
In the case of WRS Web Solutions Inc., we began as a web hosting company. Then Facebook became far more popular. It was basically offering 'free websites', and since then most web hosting companies have gone out of business. In our case, we adapted by also offering home internet plans in Canada, and to small business as well.
Imagine that you owned McDonald's (all of the stores), and a new competitor opened up right beside every single one of your chain stores, offering 'free' food, and on top of that they had more staff, and a bigger, and newer, and trendier locations! Ouch! You would have to react or go out of business. That would hurt! That is perhaps the same sort of situation that caused Facebook to buy Instagram!
A guy who started a successful newspaper once told me, do not expect your competition to not react, they will react. The bigger they are, the longer it might take them to react, but if they see you as a threat (rather than expect your business to fail in a little while, which is what happens to most), they will react, so count on that!
What makes a company profitable is not how much money it makes! Rather, it is the difference between how much its expenses are, and how much money it brings in though sales. Do not just focus on having the best prices. Equally focus on having the best expenses! As an example. There are stores about Sam Walton early on, buying 'cheap' land between towns, and building his stores there. It is said, that this gave him lower costs on his buildings vs renting in expensive malls, and generally lower operating expenses that many of his competitors. A smart move on his part! It may have been one of the keys to his company's success, paying smart attention not just to retail prices but also every expense.
If you incorporate your business, before you start in business, then (generally speaking) if the business goes under, you do not, unless you have given a 'personal guarantee' to the bank, etc. In Canada you can incorporate online through Corporations Canada for about $200 plus a few dollars for the name search. Depending on the province that you live in (for example Ontario), they will also register the company provincially on your behalf. Something to seriously consider. If in doubt, get professional advice, it is worth the money.
You might wish to use QuickBooks. (start with the lowest cost plan that they offer). It will help you to track your expenses and sales etc, and for year end tax purposes etc, it will generate two reports that you will need. The 'Balance Sheet' (which is a summary of where your company is at) and the “Profit and Loss Statement” (which says how much you made or lost). It can help you to look after any sales taxes that you might need to collect and remit. If you need to do Corporate Taxes in Canada, then I would recommend Ufile T2, and use a copy of your 'Balance Sheet' to manually enter the info into Ufile T2.
As a note. If you want a credit card from a Canadian Bank, in the name of an incorporated company, generally speaking that's not going to happen, unless you sign a personal guarantee with the bank for the card balance, then it is possible. It can be handy, to help keep your perosnal fiajnces seapte formt eh compahy's finances.
In your business plan, expect that you will have to collect sales tax(es), and later remit (pay) them to the government, annually, or quarterly, etc. See the CRA (or equivalent) website for details.
In conclusion the way to start a business is to do so very carefully and very well! Take into account everything that you possibly can, and then also know that likely you have missed something. Take into account expenses, as well as retail prices, and wholesale costs for what you plan to sell. There has to be a profit margin. If there is no hope of a profit margin, and no hope of making money, then you will loose your shirt, and perhaps a lot more besides.
There are many sources of advice on starting a business out there. Take the time to read a lot of different sources. Note that some things may vary by country, or the region, state or province within a country, even sometimes by city. Look for free resources, and read, read, read. Drive around and look at your competition. Look at franchises offered in that line of business, and study them. They might be a better option, if you can afford one. Even if you do not go the franchise route you may gain a lot of intelligence on how hey do things just by watching and taking notes! Lastly if after doing your business plan, and it does not look like it will work out, then do not do it. Rather file that business plan away, and consider a new business plan for a different line of business, one that seem to have a reasonable degree of profitable success, then look for weaknesses in that good business plan, so you can improve it. I sincerely hope that this bog post was helpful to you. Best wishes. Warren