Like any great business, it all starts of as an idea, but in order to succeed, you have what it takes to make that idea into a real business. Turning the idea into a business is where a lot of people will give up, simply because it is very overwhelming. This is completely normal behavior, considering that most people are doing it for the very first time. However, starting out in business is actually much easier than you might think.
Like any major home renovation project, or pretty much any big goal, you always break it down into milestones (smaller, easier to achieve goals). This way you are able to build up the courage to get one thing done at a time, no matter how difficult it may seem. So to help you figure out the steps to starting a small business we have compiled a list with some details to help you.
Here are the 5 Simple Steps To Starting a Small Business:
Step #1: Your Business Plan
Considering that you already have a business idea in mind, a business plan is the first step to any startup. It’s not a mandatory step, however it is one that is highly recommended and proven to be effective when creating a business.
The business plan truly is the key to success of a small business, especially in the startup stages. It is very important to keep everything as simple as possible, and of course plan everything in details as best as you can. Planning will save you money and time down the road if done correctly.
Many small business owners who startup without a business plan fall into the trap of not having a plan in time (or at the right time). Depending on the purpose of your plan, a one pager plan may be sufficient. However depending on the complexity of your business and the need for funding, you may want to ensure you provide a much detail as possible in your plan.
Now be sure to keep in mind that unless you have the time and the knowledge how to write a business plan, you may want to get help. Help is available through templates, tools, software and professional business plan writers.
Remember that not any plan is a good plan. This is your business so be sure to pick the right option for you. So to get started with minimalist business plan, let’s say a one page business plan, these are the sections you’ll want to cover:
- What is your vision? Explain what you wish for your business to accomplish.
- What is your mission? Explain the reason for your vision. Why do it?
- What is your objective? What are you going to do? What are your goals?
- What is your strategy? How are you going to achieve your goals?
- Your action plan. Write out the step by step process to success.
Okay so it probably won’t be just one page, but it is the key to your success, so remember to do it.
To save some money, you can do the business plan yourself, but if you really want to get it done with ease, try the Business Plan Builder Tool provided here by CanadaStartups. Our tool will actually guide you through each step of the business plan, in a simple to do, fill in the blanks style method.
Step #2: Determine “the money”
Money is always the factor that affects business startups. Maybe you don’t have any, maybe you have some…maybe you will need to borrow? Determining how much money you have and how much money you will need is the next big step of starting a small business.
It is very important when deciding on starting a small business to determine how much you have (personally) to invest into the business. Keep in mind that there are two options that you have to be comfortable with. The first option, how much funding do you personally have that you wish to allocate to the startup of your business. This money doesn’t come from “borrowing”, so no credit cards, no lines of credit no loans – just think, cash. Why? If you borrow money that isn’t yours, if all fails you will have to pay it back and you put yourself in a difficult situation. So the best thing to do is to count the money you have personally (that you didn’t borrow). The second option is, borrowed money. As mentioned, money that comes from loans, lines of credit and your credit cards is the borrowed money. Sure it can be used, just be sure to know how to.
Keeping costs low in everything you do is a must when starting out on a budget. So be sure to determine how much money you have to play with. From there on, stay under budget but plan for the unexpected. It is often recommended that at any time (in business), you should have 20% of your operating costs saved in case of emergencies.
So let’s say that it will take you $5,000 to start your small business with all of the things you need to set-up and startup. At any time, you should have an extra $1,000 for the “just in case” situations. So if, $5 to $6k is your budget, try everything you can to maintain under that amount. And remember, as much as you are excited to get going and buy everything you need for your business, it is often recommended to do it in stages.
Step #3: What is Your Business Type?
By business type, what we really mean is what is the legal entity going to be?
The costs and options vary province to province but the commonalities are sole proprietorship, partnership, corporation, charity…
Now depending on your location, your industry and the type of business you want to startup, there may be more or less paperwork required, licencing costs and fees that you will have to know in order to include in your business plan and overall budget. These costs are something you research about prior to, or during your business plan creation stage.
Most entrepreneurs jump the gun and register the business type right away and seal the deal “forever”. However it is a standard pracrice to register the business as a sole proprietorship or a partnership, and run it for 3 to 6 months to ensure that everything is on track (in order to keep costs low). After you’ve got a handle on things, registering a corporation could be the next step.
If you’re nervous about the entire process, consider becoming a member of CanadaStartups and using the Small Business Startup Portal to get started. It gives you the step by step process to starting your small business, writing your business plan and even searching for funding.
Step #4: The Funding
The funding step is different than the money step from above. Why? The funding step determines how much money you can get from 3rd parties in order to get your business of the ground. Third parties can be anyone from family, friends, business partners, private investors, banks and the Canadian government.
So how do you know if you need funding?
Once you’ve had a chance to complete your business plan, you should see a clear picture of where you stand with your “personal” and “borrowed” money, and where you need to be. How much money do you have, versus how much do you need to successfully startup and operate? Are there costs you need to cover but don’t have the funds? Would your life be easier if you had extra money from a third party? If it looks like you need money, and if it would make it easier to run your business with more money, yes you need funding.
The big questions are, how much funding do you need?; who will give you the funding?; how will you use the funding?; and what happens if you can’t get it?
There is a lot of information of small business funding sources in our business resources section of the site here, which I highly recommend you take a look into. But if you really want to jump to business and look for funding right away, we highly recommend using our Small Business Funding Database. Starting your funding search is a very time consuming process, but what we’ve done is simplified it for you.
If you are able to get money from your family, friends, banks or potential business partners, great. However if you are looking for more money, consider private investors and the Canadian government. Currently our Funding Database has over 1,500 funding sources for you to look through and apply to in the form of government grants, government loans as well as private investment options.
This is the way to get funded without wasting all that time looking around.
Step #5: Getting Out-There
The next part, and the last part of starting your small business by following these easy steps is to get out there.
What does that mean exactly?
Well, depending on the business and industry you are in, getting out there can be as simple as registering a website, joining social media sites and paying for advertising. If your business isn’t “online” much, it probably should be, but in any case, there are many marketing tactics you can do to get your business out there. And to help, in our Funding Database you will find funding programs offered by the government of Canada to help you pay for certain marketing and advertising campaigns.
As you can see, starting a small business isn’t difficult at all. However it does require time, patience, some money and a good platform to work with. Try the Small Business Startup Portal and see if you have what it takes to get your business going.
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