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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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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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