Nine Steps to Starting your Small Business

Starting a small business is a fairly simple process. If you are using your own given name, all you really need is a product or service that people want to buy.  Maintaining a business that is successful and meets your long term goals can be a little more challenging.  Current technology including artificial intelligence, data analytics and cloud computing has resulted in a multitude of tools and apps to help you succeed which some time can be a bit overwhelming.  You are a Google search away from being bombarded with search results, many pages deep, that provide insight, tips, tricks, small business mistakes and guidance on how to run a business.  The difficulty arises when you have to implement them, since every small business owner’s circumstances and business goals are unique. Additionally most business owners, particularly in the startup stages, have tight budgets.   With that in mind, below are the steps businesses should follow when they are first getting off the ground:

Related Post: Items you need for your new small business

1.       Create a business plan

There are numerous opinions on whether you need to set up a business plan and how much value this adds to your business.  The answer is that even if you don’t need an official business plan (for financing etc.) it helps you to set goals for your business and give you a realistic and thoughtful understanding of the challenges, obstacles, competition and how you are going to differentiate your business from your competitors.  Additionally, a financial forecast will give you a sense of your cash flow requirements and profitability (among other important financial metrics that might relate to your business).

2.       Register your business

Whether you should register as a sole proprietorship, partnership or incorporate can be a difficult one.  Often if you are small and just starting out it might make sense to just register your business rather than incorporate to keep costs down. However it is important to consider whether you want brand protection, limited liability, or if incorporating might seem more professional to your customers.  Tax deferral opportunities are also available with corporations, however, usually this is if you plan to leave funds in the corporation.  If you are a startup and need an equity structure for future funding, it might also make sense to incorporate. It is also important to ensure that you are aware of any potential regulatory requirements that might apply to your business.

3.       Decide if you need to register for sales taxes

Even though you don’t have to register for GST/HST/QST in Canada until you reach $30k in annual sales (for most businesses),  it makes a lot of sense to register immediately if you have high start-up costs since you can claim back the sales taxes paid on expenses relating to the business. If your customers are primarily other businesses (B2B) then they can usually claim back the sales taxes on their side and therefore there is no financial impact to them. Also, retail and non business customers generally expect to pay GST, HST and QST. If you don’t charge GST up front and have to register for sales taxes down the line since your sales have exceeded $30k, your customers will be exposed to a price increase of between 5% and 15% depending on the sales tax rates in your province.

4.       Set up separate business bank and credit card accounts

Once you have registered your business, setting up a separate business bank account as well as a separate credit card before you start processing business transactions significantly facilitates future accounting.  Also, most accounting software (both online and desktop) allows for downloading of transactions which can be a great time saver.

5.       Build a website

Once you have dealt with the administrative issues above, you can start focusing on making your business known to your many potential customers.  Building a website is an important step as even though it will take some time to actually appear meaningfully in google results, it is the face of your business.  You can send a link to your website to potential customers and link to it in your social media profiles (see below) which increases the perception of your professionalism.  Your website should focus on your target market, which should be outlined in your business plan, and include keywords for which you want to rank, although the writing should seem natural (it can be very offputting to see websites stuff keywords into their content in the hopes of ranking). Local businesses often rank more quickly and have less competition. You should also set up a google business account. This is free and remarkably effective in bringing in customers particularly for local businesses. Remember that the more specific you make your keywords the easier it is to rank.  There are numerous tools, both free and paid, that can help you with your website as well as commerce add-ons that will allow you to sell products and services directly.

6.       Set up social media profiles

There are numerous social media sites not all of which are suitable for all businesses.  It is important to focus on the ones that make most sense for your business and ensure that you are able to provide updates regularly. If you are a design studio it might make sense to have an Instagram account whereas a consulting services provider might be more active on LinkedIn.   Your social media posts shouldn’t only focus on your own business but should provide useful information about your niche to potential and current customers.

7.       Set up a marketing plan

In addition to your website and social media, you should have a plan to market and advertise your business.  You will have to do some research to see what is best suited to your business. There are various types of social media marketing including Facebook, Google, Instagram, Pinterest advertising. Networking can be one of the best ways to spread the word and get potential customers and investors to know you better. A website, as discussed above, which targets specific keywords and where you maintain a blog showcasing your expertise can be very helpful.

8.       Determine how you are going to do your accounting

There has been a proliferation of accounting software that you can use either on your desktop or in the cloud.  Most offer free trials, allow for downloading of bank statements, sales tax reporting and payroll as well as essential accounting features like tracking your customer receivables and supplier payables, inventory and banking.  In addition to these features, an accounting system provides you with a picture of how your business is doing in real time (assuming that transactions have been entered and allocated) which allows you to focus on key financial metrics, assess profitability, determine your breakeven point, ensure your cash flow is adequate and analyze your return on investment.

9.       Consider other administrative aspects of your business

In the early stages of your business, you as the business owner will be wearing many hats.  However there are services that need to be outsourced depending on your own competencies and how much available time you have.  Some of these include IT, legal and accounting. While some functions might be easier for the business owner to take on in the early stages, there are other services, such as legal advice, which may not be worth trying to do yourself

Successful small business owners tend to be patient and persistent in the face of adversity.  Adequate preparation, outlined in the steps above, can be the difference between success and failure. 

For everything you need to know about starting your business, check out our Starting Your Sole Proprietorship or Starting Your Corporation Ebooks. Save time, avoid costly errors and reduce overwhelm by learning all the steps you need to follow when starting your business. Use discount code “special” to save 20% on any book.