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Improving Your Business With Value Added

One of the buzz words we hear on a regular basis is Value-Added.  One of the questions we hear on a regular basis is – what does that mean?

Basically, Value-Added simply means providing a service or product that current customers will pay money for that is connected in some way to what they are already purchasing from you.  For example; a company that provides carpet cleaning services, also sells spot remover or a store selling kitchen utensils and supplies also selling cooking lessons. 

Do you have space in your location that could be used for seminars or demonstrations?  Do you have employees who have a skill that customers would enjoy seeing or that they could learn from?

Brainstorm with your staff or do a survey of your customers to determine what they might be interested in that you could provide and make profit on.  Typically these will be products or services that are related to what you are already selling and that are of interest to current customers.  However, these could bring in new customers as well.

Be careful that you price these out so that there is profit and of course you want to make it convenient for your customers.  With the busy schedules that we all seem to experience these days, convenience is often the reason for purchases.

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Where Do I Find Clients?

This topic can be the most stressful part of opening and operating a small business.  Particularly for a service oriented business.

You simply cannot sit and wait for customers to find you.  Be pro-active and go out and get them !

Business Organizations

Consider joining and participating in a business or social organization in your community.   But simply joining is not enough, you have to be active and make connections with other members.  It is these personal connections and relationships that will pay off with new customers and referrals.  At the same time, you will be giving back to your community!

Friends and Family

Enough cannot be said about the importance of the support new businesses reap from friends and family.  Yes, they are often the first paying customers and clients a business will see.  But it is the support they provide in spreading the word and helping to create a personality for your business.  Be sure to help them in helping you.  Give them a few business cards that they can hand out, tell them how much you appreciate their help, host a special “Friends & Family Only” celebration opening.  They will always be your strongest supporters.

On Line Advertising

New businesses do not always have significant dollars to advertise, but there are many ways to get the word out for a reasonable cost.  Not advertising is not an option.

In this day and age being on-line is a no brainer.  Applications such as facebook, instagram and even a basic website can be done with little to no cash outlay.  They will however, cost you in time.  But it will be time well spent.  Choose the platforms that your target customers are using.  Choose a couple of platforms and do them well and consistently.  If you choose too many, you will have to limit your time to such a degree that none will be well done and ultimately your business personality and brand will not be promoted well.

Almost every business needs a website.  Many people use their smart phones and tablets to look up contact information, addresses and even shop before physically going to purchase the product, so be sure that you choose one that will also be mobile friendly.

Traditional Advertising

Don’t forget that even though you are using online methods to advertise you still require traditional advertising as well.  Depending on your target market, newspaper or radio may still be very beneficial for your business.  Having a well rounded advertising and marketing plan is imperative to being successful.

Advertising must be a continual activity for any business owner.  Once you stop advertising, you will start losing ground to your competitors and lost ground is difficult to regain.  Sit down, set up a plan, and then follow it – you’ll be glad you did!

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Entrepreneurial Resiliency

A few years ago an article entitled “SME’s were the light in the recession storm” was published by the Canadian Federation of Independent Business.

In spite of providing interesting insight on the position of small businesses during tough economic times, one term in particular stood out to me when reading the article: “Entrepreneurial Resilience”.

Anyone that has completed research on small business start-up will come across questions such as:

  • Are you adaptable?
  • Do you like to make your own decisions and try your own ideas?
  • Do you make sound judgments?

Having resiliency from the moment of becoming an entrepreneur is key; as you cannot predict what will come your way, whether in the economy or specific to industry.

As a small business owner, you are the manager of every department. As difficult as it may be to separate personal life and business life (which can be a fine line for an entrepreneur, and even employees) tough decisions need to be made with careful consideration.

But according to this article, entrepreneurs have succeeded in making strategic decisions to preserve their goals and mission statements, although noting that some small businesses “did not come out unscathed”.

Resiliency

In the early stages of business start-up you must be sure to control what you can to optimize resiliency:

  •  Stress relief (sleep and eat well, exercise)
  •  Make personal time ( for hobbies or spending time with friends and family)
  •  Set your core goals (your business plan will help you define this)

When doing additional research on entrepreneurial resilience, I came across an interview with Sara Blakely, owner of Spanx. Her personal testimony of resilience discusses how to rise up from challenges, especially in the beginning stages of business start up.

Blakely’s story emphasizes how staying grounded, being persistent and receiving motivation from those around you will allow you to achieve your dreams.

To read both articles, please visit:

SME’s were the light in the recession storm (Canadian Federation of Independent Business)
Sara Blakely on Resilience (Entrepreneur.com)

 

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How to register for a BN and BIN number

There are many steps to complete when opening a small business in Ontario. Two of the steps which solidify your business operation are obtaining a Business Number (BN) and a Business Identification Number (BIN). Depending on a variety of reasons (including your location), registering online for these two numbers may be a more convenient process.

Firstly, you might be thinking “what is the difference between a BN and BIN number?” According to Canada Revenue:

The Business Number (BN) is a 9-digit business identifier used in Canada to which businesses can register program accounts with the Canada Revenue Agency (CRA).

The Business Identification Number (BIN) is a 9-digit number used by the Ontario Ministry of Consumer and Business Services to identify provincial business accounts and should be used for communications with the Ontario government about your business.

Obtaining a BN Number

A BN number is obtained through Canada Revenue. During business start-up, you will most likely need to register with Canada Revenue for either GST/HST registration, and/or as an employer to hire employees. Canada Revenue Agency maintains an online service to register for this number. You may wish to first complete the online checklist to make sure you have all prepared to register for your BIN number.

Obtaining a BIN number

A BIN number is obtained when you register your business name through Service Ontario. Registering a business name is an important step to complete early on. Service Ontario offers an online search and registration function which individuals registering as a sole proprietor or partnership can utilize. Business Name registration costs $68 (including name search). At this time you will receive a Master Business License (MBL), which will have the BIN number. A BIN number can be used as proof of business registration.

For more information on BN and BIN numbers or to register, please visit Service Ontario

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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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