Building a small business from scratch can be an exciting endeavour that poses some significant challenges. With the right resources and support, entrepreneurs can turn their dreams into successful businesses.
According to Innovation Science and Economic Development Canada, there were 1.2 million small businesses in Canada in 2019. Add that to the roughly 33 million small businesses in the United States, and it’s clear to see how small businesses dominate the economic landscape.
The Small Business Administration identifies small businesses as those having fewer than 500 employees, while the Government of Canada lists SMEs (small and medium-sized enterprises) as small (having one to 99 paid employees) or medium (100 to 499 paid employees).
The process of starting a small business varies depending on the industry, location and other factors, but here’s a generalized look at the steps to be expected early on.
- Figure out your idea and research it: Coming up with a successful idea is one of the first steps to take when starting a business. It’s possible to take an existing type of business and customize it for a given community, or to create something new and innovative.
After the idea is put on paper, it’s important to research the potential competition and decide if the business will have a competitive advantage to survive. Market research is crucial.
- Write a business plan: A business plan helps formalize the ideas of the business and lists the necessary steps to take. By thinking through the process methodically, a potential business owner can figure out where problems may turn up and where to devote the most attention to help make the business profitable. It also helps if one thinks through how he or she will secure the capital for starting the company.
- Choose the right time: Prospective business owners need to assess whether the time is right for starting a business. While there may never be a perfect time, it’s best to engage when there are fewer obstacles in the way. You want to devote full attention to the business. If that’s not possible, then it’s likely best to delay. Times when starting a business may not be ideal include when battling an illness, during a family move or right after the death of a loved one. Economic factors beyond your control, such as a downturn or recession, also may affect the potential success of a business venture.
- Pick a business structure: Involving a business attorney in this process would be in a person’s best interests. A business can be legally structured in certain ways, and how it is structured will affect registration requirements as well as how much a business owner pays in taxes. The structure also can affect personal liability. Speaking with a lawyer will highlight the pros and cons of structuring and help a person make the best decision possible.
- Speak to other business owners: A potential entrepreneur can pick the brains of small business owners to figure out what worked and what didn’t when they were first starting out. This can help entrepreneurs avoid certain pitfalls and uncover proven paths to success.
Starting a business can be a worthwhile undertaking, especially when entrepreneurs consider a variety of factors before getting started.