Starting a Business Under 30

More and more these days we see young people being entrepreneurial minded. Starting a business at a young age has many advantages and disadvantages. Here are a few things to keep in mind if you are considering starting a business in your 20’s.

You can substitute experience – Lack of experience may be your biggest weakness when you’re starting out. You won’t have as much experience as other people in your field and investors or potential partners may question if you can pull it off. But don’t get discouraged; consider learning from a mentor willing to share their expertise or even partnering with someone who has the experience you lack.

Your credit matters – In order to build credit for your business, you have to have your personal credit in good standings. Unfortunately, good credit isn’t something most 20 year olds have. If you have little to no credit, you will have to do some work before you start a business, especially if you need start-up funds.

Take more risks – In investing, in business and in life generally, young people favour risk-taking. You have fewer assets, meaning you can be more flexible and adaptable to challenges and surprises that may arise. Taking risks and failing is seen as inexperience and enthusiasm, rather than a reflection of your character and abilities. So take risks while you’re young!

You have plenty of time – Being a young entrepreneur, you generally have more positive energy, higher productivity levels and genuinely enjoy what you do. But with that being said, young people often act without thinking. So slow down and take the time to plan everything through. This will in turn lead to a better chance at long-term success.

Remember, there’s no perfect time to start a business, but the more prepared you are, the better your chance is to succeed.

Take advantage of resources available, such as the Cornwall Business Enterprise Centre!

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How to Find a Profitable Business Idea

Many people like to brainstorm ideas, but don’t find an idea that they like enough to execute. All businesses, whether it is a service or product, online or offline, are a direct response to a problem. The purpose of a business is to solve a problem. If you are an entrepreneur, you have to change the way you look at the world and seek opportunities to serve people and be paid in return.

With that in mind, here are 4 ways to find a profitable business idea;

  1. Hobbies/Skills you are good at.

Everyone has something they are good at, the problem is most of us take our skills for granted. We don’t always appreciate the knowledge and ability we have that could be valued by someone else that doesn’t have those skills.

Often times people are more than happy to pay in order to get what they want quicker than they would trying to accomplish it on their own. So put the skills that you have developed through school, as an apprentice, as a hobby or a recreational activity to work.

  1. Things you’ve learned from work experience.

If you have ever had a job, that is proof that you have at least one skill or idea somebody is willing to pay money for. Skills you have learned at work are a great place to look when you are fishing for a profitable business idea. The skills you have acquired along the way are yours to use, at a price that you think is fair.

  1. Things people ask you for.

We lean on experts to help us figure things out, and if people are asking for your help, advice or insight in a particular area, there’s a good chance that others look at you as an expert or a go-to in their circle. So assess whether your expertise is something that could become profitable when these situations arise.

  1. Things you want to learn.

Find a skill or idea that you are a beginner in, but that you want to become better at. Gradually improve that skill set and find customers who are willing to pay you as you learn. What could be better than paying yourself to learn about something you are interested in? You don’t have to start as an expert but you can get there over time.

Like a lot of good things in life, it is hiding in plain view.

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Sole Proprietorship, Partnership & Corporation

Which legal structure is right for your business?

Each form of business ownership has advantages and disadvantages that should be considered before choosing a legal structure for your business.

Sole Proprietorship

A sole proprietorship is a business owned and operated by one individual.

Advantages

  • It is inexpensive to register your business as a sole proprietorship in Ontario.
  • It only has to be renewed every five years.
  • Operating as a sole proprietorship means you own 100% of the business.

Disadvantages

  • You are legally responsible for the business; it is considered an extension of yourself.
  • You are personally responsible for any debts and liabilities your business incurred.
  • Your personal assets can be seized and used t o discharge the liability you’ve incurred if your business fails.

Partnership

There are three types of partnerships in Canada;

General Partnership – Each partner is jointly liable for the debts of the business.

Limited Partnership – Liability is limited to the amount you invest into the business.

Limited Liability Partnership – Is available to groups of professionals such as; lawyers, accountants, and doctors.

Advantages

  • Eases some of the liability burdens a sole proprietorship would bear.
  • Has the same tax simplicity as a sole proprietorship.

Disadvantages

  • One partner can be held responsible for debts incurred in the name of the business by another partner.
  • Without a partnership agreement, your partner could make you responsible for debts incurred.

Corporation

A corporation is a legal entity separate from its owners or shareholders.

Advantages

  • No member of the business can be held personally liable for debts, obligations or acts incurred.

Disadvantages

  • This legal structure is expensive and can be difficult to set up and operate.

Pick a form of business ownership that is right for your current circumstance, it can be altered, then review as your business grows.

 

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Hit 2017 Running

Putting a plan in place before January 1st is the best way to get started on the right foot in the New Year. Here are a few ways to prepare your business for 2017!

Crunch numbers – Take a look at your expenses and see what works and what needs to go. Decide whether any of your goods or services are lacking in profitability. Assess your competition to see if you are losing ground on customers. Evaluate any obstacles stopping your business from growth and find solutions to improve.

Establish goals – Before the New Year begins, establish short and long-term goals, and how you will achieve them in 2017. Set SMART goals; Specific, Measurable, Action-oriented, Realistic, and Trackable goals. Make sure the goals you set contribute to your vision for your business.

Update your online presence – We often start to neglect our social media profiles or let the business’ SEO slip over time. Update any out-of-date information and refresh your accounts. If you find your accounts are too much to keep up with, delete them completely.

Clean up your workspace – According to studies, clutter can lower your productivity levels, so take some time to clean up your workspace. Get rid of any unneeded supplies, broken or unnecessary equipment, and anything else that contributes to the clutter. Get digitally organized as well. Clean up your inbox, back-up and secure files.

Take time to reflect on the past year, celebrate your successes, and plan for the New Year before December comes to a close. This way you will finish 2016 on a positive note and be ready to hit the ground running come January 1st!

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Product & Price

Pricing your product right isn’t an easy task. Your budget, goals, and what the customer wants are all important points to take into consideration. Here are three questions you should ask yourself when you are deciding prices.

  1. What is your operating budget?

Once you have your budget in place, try out different scenarios. Decide whether you will charge more and sell fewer products, or lower the price and have more to sell. Keep in mind you need to know how much you have to sell to keep your business a float. Find out what works best for your business as far as profit on each sale.

  1. What are your business goals?

Low prices will work if you are trying to build market shares quickly. Be cautious starting at a low price if you plan to gradually raise the price in the future, unless you are adding value or benefits to your product.

  1. What does the customer want?

It is always important to take into consideration what your customer wants when it comes to pricing your product. If your price is too low customers may think it is cheap, where as if you price it too high they may not see the value. Try to find the happy median.

Keep in mind the price of your product can always be adjusted over time, just make sure you will still break even to keep your lights on.

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6 Financial Mistakes Small Businesses Make

Budget is a key factor when it comes to starting a business. Maintaining a healthy bottom line is an important factor to your business’s success and growth.

Business owners often make a variety of financial mistakes and let their hard-earned money leak away. Here are common mistakes and how to fix them.

  1. Overpaying at Tax Time

Every business has a responsibility to pay tax, but often overpay. Misunderstanding tax deductions or mismanaging expenses can lead to paying more than you have to. Keep track of receipts and expenses to take advantage of tax deductions at year end.

  1. Being Blinded by the Top Line

It is easy to compare your business to the competition but don’t get caught up by their top line when your bottom line is much more important.

  1. Impulse Buying During the Start-Up Phase

When starting up, it can be easy to get carried away with unnecessary expenses that can eat into your bottom line. Focus on expenses that are necessary to start, then when your business is more profitable think about buying that new desk or replacing old technology.

  1. Diversifying Prematurely

After generating some significant income, some business owners look into diversifying their product or service before investing back into the business. Before making changes to your business plan, ask yourself if it is a good idea and why you are doing it.

  1. Confusing Being Busy with Being Productive

Money is earned by working effectively with the resources you have, not running yourself into the ground to turn a profit. Identify what areas need improvement to be more efficient and profitable and set goals to improve.

  1. Not Keeping a Safety Net

Running your own business means your cash flow may not be consistent for the first little while. Without a safety net, your business could fail your first dry spell. Saving and maintaining at least two months of operating costs is a great way to give your business a chance during the first few rough patches.

By avoiding these common financial mistakes, you can protect your business’s future and transform it for the better!

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2016 Year End Checklist

This year end checklist for small businesses will help you get your income tax in order and your business planning off to a good start.

1. Get your financial books in order.

Doing your income tax may be easier for some more than others. In most cases, entrepreneurs hire a bookkeeper to keep it all in order. Most business owners consider record keeping to be tedious but good not only to makes things easier, but also to give you real stress relief at tax time. Either way, getting your financial books in order has to be done before anything else.

2. Determine you’re position.

The next step is to figure out where your business stands. There are two areas you need to look over.

Finances – Examine your financial documents.

  • Balance Sheet – Shows your businesses assets, liabilities and equity.
  • Income Statement – Itemizes your revenue expenses, resulting in a profit or loss.
  • Cash Flow Statement – Reconciles your opening cash with your closing cash for a period of time, to show where your money has gone.

Goals – Evaluate your goals from the past year.

Pull out your business plan and review last year’s goals. Did your business accomplish what you set out to do? Make notes on your thoughts about your successful accomplishment of your goals, or lack of. This will come in handy when you are planning for the new year.

3. Plan for the years to come.

Now that you know where your business stands, set goals for the year to come. Planning often gets pushed aside because you’re hard-pressed for time, but it doesn’t have to be time consuming. Set goals that are relevant and achievable. Prepare an action plan and start implementing your plan.

4. Get your tax documents prepared.

Whether you prepare them yourself or turn them over to an accountant, this is the last step for your small business year end checklist.

Hopefully this year end checklist has you inspired and has made your business planning easier.

 

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