180 Days Before Launch
Any successful business requires a solid plan and enough capital to get started
Every business starts with an idea, but not all good ideas make for good businesses. The first step is evaluating the viability of your concept. Start by doing market research. Map out who your customers are and develop the characteristics of your target market. Then, look at the competition. Is somebody else already providing the product or service you want to offer? That doesn’t necessarily mean you should toss your idea, but you need to think about how you will provide something better and cheaper. Lastly, look at the trends in the market and industry you’re trying to enter. Are you joining a growing or declining market?
If you’ve gone through this process and your concept seems viable, it’s time to draft a business plan and your financial plan, with the help of an accountant or financial advisor (see sidebar).
Learning from your customers
Airworks Compressors, founded in 2008, provides mobile air compressor units for service trucks and drilling. And it all got started because president and founder Darryl Weflen, who owned another business, listened to customers when they asked for something. “We saw a need evolve in the market. Customers were starting to request different types of equipment that just didn’t exist,” he says.
From there, Airworks was born. The company started manufacturing and distributing their compressors and saw success right from the start. The demand was so great for the products that some of Airworks’ suppliers had trouble meeting the production needs. Weflen recommends sourcing from multiple suppliers to avoid this very problem. “When you don’t have an accurate projection of how much you’re going to sell, it’s pretty hard to know what quantities you’re going to need,” he says. “Multiple suppliers is certainly something I would make sure I had in place beforehand.”
But his best piece of advice for a growing business? Look into the viability of your business before you invest any money. “Make sure there is a need and it’s going to be accepted,” he says. “Talk to your target market. If people need something they’re going to tell you what they need.” Weflen says Airworks grew rapidly because he listened to his customers and made sure that his products were going to fill a need in the market.
Meghan McConnan and Rick Martens, Senior Managers, Grant Thorton LLP
A. You want to look at the size of the organizations you’re dealing with. It goes both ways – if you’re a very small organization and you’re working with a very large accounting firm, you may get a little bit lost amidst some of their bigger clients. You’re looking for a firm where their clientele matches what you are in terms of size and complexity, or where you want to be in two years. You also don’t want to be in a position where you outgrow your advisors.
A. Sometimes it’s not necessary to incorporate a company. There’s two reasons to incorporate: first, if you’re not spending all the money you’re making, and second, if you have exposure to legal liability. When we have someone come to us with a business idea, we ask them some general questions about what they expect to make from the business. If it’s a small amount, you can get all the same tax advantages running it as a proprietorship, through your personal tax return. Where the company benefits you is that it has a lower tax rate for income that’s not spent. Also, if you’re doing construction and something could fall on someone and you could be sued, that’s when you want to have a company, because it provides a separation between your personal assets and the company.
A. In the fiscal quarter in which you go over $30,000 in revenue, you must register for GST. If you have a small business and you’re only going to making $20,000 in revenue, then it’s not necessary. But as soon as you go over $30,000 in a year, or any 12-month period, then you need to register. Often you might as well do it right off the bat. The penalties if you do this incorrectly can be very unpleasant – the CRA will come out and audit you if they think you’ve done something wrong.