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The Most Common Business Plan Mistakes

Creating a business plan before diving into your new business head first will give you a much better chance of success. Here are some of the most common mistakes entrepreneurs make.

  1. Not writing a business plan

Not bothering to write a business plan is the most common mistake. Entrepreneurs tend to get too excited about their business idea and miss this important step in start-up. Maybe you are familiar with the saying, “He who fails to plan plans to fail.” Failure is the fate of almost every business someone starts without a business plan. You don’t need a full-scale formal business plan, but it is important that you have one.

  1. Not being clear about the purpose of your business plan

A business plan is your solution to the problem being how you are going to turn your business into a reality. Ask yourself why you are preparing a business plan. Is it to persuade a potential lender for a loan? To attract investors or to figure out if your idea could be a viable business? Or is your plan a blueprint for your start-up? The purpose of your plan will affect everything from the amount of research you do to what the finished plan will look like.

  1. Not doing enough research

Your business plan is only going to be as good as the research you put into it. You have to answer questions like; what are the trends in the industry? How will you counter what your competitors are doing? The more complete the answer is, the better prepared you will be. Every section of your business plan will involve research, which in most cases can be found online.

  1. Ignoring market realities

You can have the best product or service in the world but it’s not going to sell if there is no market for it. It is very important to market test your product or service. If you have a product, try selling at local venues or give out free samples to gather feedback. If you have a service, surveys and focus groups are effective ways you research your target market. Also examine what your competition is doing and explain how you are going to counter to win market share.

5. Not doing a thorough preparation of financials

There are two common mistakes people make when writing the financial section of their business plan. The first is not being realistic about expenses, people often underestimate costs. The second is being overly optimistic about your business prospects. Never let your optimism lead you to create an overly rosy cash flow. Meticulous research will prevent this mistake.

Perseverance and determination are great traits for entrepreneurs to possess, until those traits keep you from accomplishing what you should. That may be the worst business plan mistake of all.

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Steps to Calculate Start-up Costs

Whether you are trying to secure funding or you are trying to figure out what it will take to get your business up and running, an accurate estimate of start-up costs is necessary to predict financial performance for the first year or few years.

Every business has different cost requirements, but these steps will help you gather some numbers to start.

  1. Determine your start-up cost structure.

Here are six cost categories for new businesses;

  • Cost of sales
  • Professional fees
  • Technology costs
  • Administration costs
  • Sales and marketing costs
  • Wages and benefits

Think about these cost categories, how they affect your business and how they will be weighted across your business.

  1. Develop comparables

Compare industry leaders with your business’s costs. Some aspects like your revenue numbers will be different, but it will help you break down how much you should be spending on each cost category.

  1. Project start-up costs conservatively.

When calculating start-up costs, keep in mind you may need to cover expenses for a few months before you even open for business. And once you are operating, it will take time to become self-sustaining. Be conservative in the early stages with your cost projections and estimated revenue.

  1. Separate one-time costs from reoccurring costs.

Distinguish which costs you will have year-to-year like salaries and rent from one-time costs like furniture and equipment. This will allow you to establish a budget for after the start-up period.

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Choosing a Legal Structure for your Business

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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GST/HST for Small Business

Do you need a GST/HST number for your business?

For most businesses registering for GST (Goods and Services Tax) and/or HST (Harmonized Sales Tax) is mandatory.

However, businesses that are deemed Small Suppliers do not have to register. The Canada Revenue Agency defines a GST Small Supplier as a sole proprietorship, partnership, or corporation whose total taxable revenue before expenses are $30,000 or less annually.

Even if your business qualifies as a GST Small Supplier, you will want to register anyway. By registering for GST/HST you can ‘reclaim’ the GST/HST that you have paid on purchases for the business through GST/HST Input Tax Credits.

How does GST/HST work?

Once you have registered and have a GST number, you are responsible to charge your clients/customers GST/HST on taxable goods and/or services you supply.

The GST/HST you collect is remitted to the Canada Revenue Agency by completing a GST/HST return either quarterly or annually.

How do you get a GST/HST number?

To get a GST/HST number, you have to apply to the Canada Revenue Agency one of the following three ways;

  1. Online – http://www.cra-arc.gc.ca/tx/bsnss/tpcs/bn-ne/bro-ide/menu-eng.html
  2. Phone – 1-800-959-5525
  3. Mail or Fax – To your local tax centre

For more information on GST visit: http://www.cra-arc.gc.ca/tx/bsnss/tpcs/gst-tps/menu-eng.html

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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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Step-by-step Guide to Creating a Facebook Ad (Part 2)

Schedule

You have the option to run your ad from a specific start and end date or you can have your ad run immediately and continuously. You can also set your ad to run for specific hours and days of the week.

Optimization & Pricing

The next step is to choose whether or not you want to bid for your objective, clicks, or impressions. If you choose to do so, Facebook will control your maximum bid and your ad will be shown to people within your target audience that are more likely to complete your desired action. You also have the option for manual bidding, allowing you to have full control of how much you’re willing to pay per action completed.

Delivery

Standard delivery will show your ad throughout the day, whereas accelerated delivery will help you reach your audience quickly for time-sensitive ads. Keep in mind, this option is only available if you choose to use manual bidding.

Create your ad

If you’re looking to increase the number of clicks to your website, Facebook’s Ad Manager will prompt you to click website ad options. These options are broken down into two categories. Links ad will display a single image you can click on, and Carousel will display three to five images.

L ink ads provide the following design recommendations;

Text – 90 characters

Link Title – 25 characters

Image ratio – 1.91:1

Image size – 1200 pixels x 627 pixels

Carousel ads provide the following design recommendations;

Text – 90 characters

Headline – 40 characters

Link description – 20 characters

Image ratio – 1:1

Image size – 600 pixels x 600 pixels

Keep in mind that these are the consideration options for sending people to you website. Facebook will generate different options for your ad if you choose another objective.

Once you have selected an ad type, you will be prompted to choose how your ad will appear on Facebook. There are three options to choose from; Desktop News Feed, Mobile News Feed, and Desktop Right Column.

Once you’ve decided on how your ad will appear you are ready to run your ad live on Facebook!

 

 

 

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Cross-Promotion Tactics to Boost Business

Partnering with other credible businesses who reach out to the same market can help you reach your customers more efficiently. Cross-promotion has the potential to easily expand your customer base.

Here are some low-risk and high-opportunity ways to kick start your cross-promotion:

  • Print joint promotional messages on your receipts.
  • Add your partner’s business name to your website and social media.
  • Articles or blogs are great free advertising and build positive word-of-mouth for you and your partner.
  • Press releases with newsworthy information.
  • Offering a discount or reward when customers buy from you or your partner.
  • Give your partner’s product to your customers when they buy a large quantity of your product.
  • Hang signs or posters in your business to promote each other.
  • Send promotional emails or postcards to your customers
  • Share an ad in the local paper.

These are just a few of many ways to cross-promote your business with a partner to expand your customer base.

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