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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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Quotes to Get You Inspired

Being a small business owner can be rewarding, but it can also be a challenge. Are you feeling a little overwhelmed or stressed? Read through these inspiring quotes that highlight what it means to be successful.

“If you’re going to run a small business, you need to know what everyone is doing, be the first one in and the last one out.” – Glen Mazzara

“Happiness lies in the joy of achievement and the thrill of creative efforts.” – Franklin D. Roosevelt

“Ideas in secret die. They need light and air or they starve to death.” – Seth Godin

“The critical ingredient is getting off your butt and doing something. It’s as simple as that. A lot of people have ideas, but there are few who decide to do something about them now. Not tomorrow. Not next week. But today. The true entrepreneur is a doer, not a dreamer.” – Nolan Bushnell

“The price of success is hard work, dedication to the job at hand, and the determination that whether we win or lose, we have applied the best of ourselves to the task at hand.” – Vince Lombardi

“Strive not to be a success, but rather be of value.” – Albert Einstein

“You have brains in your head. You have feet in your shoes. You can steer yourself, any direction you choose.” – Dr. Seuss

“Creativity involves breaking out of established patterns in order to look at things in a different way.” – Edward de Bono

“The only place success comes before work, is in the dictionary.” – unknown

“The Golden Rule for every business is this:  put yourself in your customers place.” – Orison Swett Marden

“The only way to do great work, is to love what you do.” – Steve Jobs

“If opportunity doesn’t knock, build a door.”  – Milton Berle

“Handle your business without people knowing your business.” – unknown

“Quality means doing it right when no one is looking.” – Henry Ford

Feeling more inspired? Good. Get back to building your bigger, stronger, more successful small business!

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