Starting a Successful Business in Canada Kit

This book tells small-business owners and entrepreneurs everything they need to know about turning their good ideas into profitable businesses in Canada.

PREFACE xv
1 WHY GO INTO BUSINESS FOR YOURSELF? 1
2 SETTING YOUR MONEY GOAL AND ATTAINING IT 5
1. Money versus Your Personal Life 5
2. Attaining Your Financial Goal 6
3 WHAT KIND OF BUSINESS IS BEST FOR YOU? 9
4 HOW TO GET STARTED 13
1. What Type of Business Structure Should You Choose? 13
1.1 A proprietorship 13
1.2 A partnership 14
1.3 A corporation 16
1.4 What to do if it is a husband/wife business 21
2. Federal Requirements and Regulations You Should Know About 22
2.1 Goods and services tax (GST) 22
2.2 Federal excise tax 23
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2.3 Customs duties 23
2.4 Federal income tax 24
2.5 Employment insurance 24
2.6 Canada Pension Plan 24
2.7 Privacy Acts 25
3. Provincial Government Requirements and Regulations You Should Know About 26
3.1 Licensing 26
3.2 Sales tax 26
4. Municipal Government Requirements and Regulations You Should Know About 26
4.1 Licensing 26
4.2 Municipal taxes 27
4.3 Building requirements 27
4.4 Hospitalization 27
5. Miscellaneous Information You Should Be Aware Of 28
5.1 Weights and measures 28
5.2 Packaging and labelling 28
5.3 Patents, copyright, trademarks, and industrial designs 28
5.4 Product standards 30
5.5 Immigration and citizenship 31
5.6 Foreign investment 31
5.7 Consumer protection 31
5 FINANCIAL FORECASTING FOR A NEW BUSINESS 33
1. Major Items to Consider 33
1.1 The market 34
1.2 Prices 34
1.3 Materials 34
1.4 Competition 34
1.5 Facilities and equipment 34
1.6 Employees 35
1.7 Production costs 35
1.8 Financial considerations 35
1.9 Working capital 35
2. Be Sure of Your Sources 36
3. What Forecasts Do You Need and How Do You Prepare Them? 37
3.1 Income and expense forecast 37
3.2 Cash flow budget 38
3.3 Break-even analysis 38
6 HOW TO GET MONEY 43
1. What Financing Alternatives Do You Have? 44
1.1 Equity 44
1.2 Borrowed money 45
2. Plan Your Financial Requirements 47
3. Where Do You Go to Rent Money? 48
3.1 Personal sources 49
3.2 Banks 50
3.3 Institutional term lenders 54
3.4 Credit unions 54
4. Using Your Home to Raise Money 54
5. Other Sources of Money 55
5.1 Leasing 55
5.2 Accounts receivable (factoring) 55
5.3 Venture capital 55
5.4 Angel investors 56
5.5 Private placement (minimum $500,000) 57
5.6 Franchising 57
5.7 Going public (minimum $1 million) 58
6. More Tips on Approaching Your Lender 58
7. Government Help 60
7.1 Business Development Bank of Canada 60
7.2 Industry Canada 61
7.3 Specialized federal programs to help you 61
7.4 Provincial programs 63
7.5 Confused? Call your local Canada Business Service Centre 63
8. Employment Incentives 63
8.1 New jobs 64
8.2 Skills development 64
8.3 Hard-to-employ persons 64
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7 WHAT ABOUT FRANCHISING? 67
1. What Is Franchising? 68
2. Advantages and Disadvantages 69
3. Beware the Hard Sell 70
4. Where Do You Start? 70
5. Check out the Franchsisor 71
6. The Franchise Contract 71
8 WHAT ABOUT BUYING A BUSINESS? 73
1. Advantages of Buying 74
2. Locating and Purchasing a Business 74
2.1 Select carefully 74
2.2 Seek opportunities 74
2.3 Properly evaluate each opportunity 75
2.4 Establish a fair price 75
2.5 Location is important 77
2.6 Ensure that the transaction is handled properly 77
2.7 Tax considerations in buying a business or franchise 78
3. Financing the Transaction 79
9 LOCATION - HOME OR OFFICE? 81
1. Rented Premises 82
2. Operating at Home 83
3. Taxes and Your Home 83
4. Your Personal Life Versus Your Business Life 84
10 SALES AND MARKETING 85
1. Product or Service - Which Do You Sell? 85
2. Marketing Techniques 86
2.1 What is the right product? 86
2.2 What is the right price? 86
2.3 What is the right place? 86
2.4 What is the right promotion? 86
3. Satisfying Your Customers through Services 86
4. How to Attract Customers 87
4.1 Are you reaching the customers? 88
4.2 Do-it-yourself advertising 88
4.3 Get free advertising or publicity through news releases 88
4.4 Add something - and multiply sales 89
4.5 What's in a name? Plenty! 90
4.6 Dramatize differences 90
5. The Importance of Your Sales Staff 90
6. Using Persuasive Pricing 91
6.1 Help a customer unload 91
6.2 When you cut the price, say why 91
7. The Big One-Time Order - Do You Take It? 92
8. The Giant Customer 92
9. You Needn't Be Best 92
10. How to Select New Products 92
10.1 The "ideal" product for a small business 93
10.2 Product life 93
10.3 Make product appraisal a continual practice 93
11. Wrong Location? Capitalize on It 93
12. Move Your Merchandise to Where the Customers Are 93
11 WINNING THE WAR ON PAPER 95
1. Don't Be a Paper Collector 95
2. Keep Your Desk Organized 95
3. Bunch for Efficiency 96
4. Cut It Off at the Source 97
5. Take Shortcuts 97
6. What Records Should You Keep? 97
7. Use Technology That Will Help You 98
12 KEEPING THE BOOKS 99
1. Finding an Accountant 99
2. Tips on Keeping Your Books (and Staying out of Trouble) 101
2.1 Employee pay records 101
2.2 Accounts receivable 102
2.3 Accounts payable 103
2.4 Other requirements 104
2.5 What you should know about financial statements 104
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13 WHAT ABOUT COMPUTERS? 109
1. Plan 109
2. Hardware and Software 111
2.1 Software applications 111
2.2 Operating systems 114
2.3 Hardware 115
3. Networking 118
4. The Internet 118
4.1 Business on the Internet 118
4.2 Connection options 120
5. Security 122
5.1 Virus and malware protection 122
5.2 Backup systems 124
5.3 Powerline conditioning 124
5.4 Office security 125
6. Ergonomics and Your Environment 126
6.1 Ergonomics are important 126
6.2 What files? 127
6.3 Other considerations 127
7. Choosing a Supplier 128
8. Training 129
9. Administration 129
10. Rules 130
11. Conclusion 130
14 USING TAX LAWS TO YOUR ADVANTAGE 131
1. Introduction 131
2. Income and Taxes in Canada 132
3. Maximize Deductible Expenses 132
3.1 Keep every receipt 133
3.2 Accounting and legal expenses 133
3.3 Advertising and promotion expenses 134
3.4 Business entertaining and meals 134
3.5 Business tax, fees, and licences 135
3.6 Depreciation 136
3.7 Car or truck expenses 136
3.8 Convention expenses and holiday trips 137
3.9 Cost of goods sold 138
3.10 Delivery, express, and freight 138
3.11 Interest, exchange, and bank charges 139
3.12 Maintenance and repairs 139
3.13 Office expenses, petty cash, postage, and stationery 139
3.14 Medical and dental expenses 140
3.15 Office expenses (in the home) 140
3.16 Property taxes 140
3.17 Rent 141
3.18 Salaries, wages, allowances, and bonuses 141
3.19 Supplies and materials 141
3.20 Telephone, light, heat, and water 141
3.21 Travel expenses 142
3.22 New product development 142
4. Where Does the Money at the Bottom Line Go? 142
4.1 Incorporate to save tax dollars 142
4.2 Splitting your income 143
4.3 Set up tax shelters 144
4.4 Delay tax payments for a year - or how to choose a fiscal year-end
(Corporations only) 144
4.5 Estate planning benefits 144
4.6 Use salary and bonus accruals to save taxes 144
4.7 Planning for your retirement 145
4.8 Interest-free and low-interest loans to employees and shareholders 145
5. What If You Have Business Losses? 146
15 INSURING YOUR BUSINESS (AND YOURSELF) 147
1. Introduction 147
1.1 Agencies 147
1.2 Direct salespeople 147
1.3 Clubs and associations 148
1.4 Insurance brokers or consultants 148
2. Watch Those Loopholes 148
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3. What Coverage Does Your Firm Need? 149
3.1 Loss of physical assets 149
3.2 Liability to third parties 149
3.3 Business interruption 150
3.4 Loss or sickness of key people 150
3.5 You can afford some self-insurance 150
3.6 All about business life insurance 150
3.7 Taxes and insurance 151
16 WHAT TO DO WHEN YOU ARE SHORT OF CASH 153
1. Have Suppliers Bill You on Your Best Day 154
2. Use Discount Day Payment 154
3. Refinance Fixed Obligations 155
4. Spread Out Major Purchases 155
5. Make Every Day a Billing Day 155
6. Plug Loopholes 156
7. Keep Aware of Past Due Accounts 156
8. Cut Off the Deadbeats 156
9. Develop Short-Term Credit Terms 157
17 HOW TO FIND AND KEEP GOOD EMPLOYEES 159
1. Hire or Contract Out? 159
1.1 Costs 160
1.2 Space 160
1.3 Replacement 160
1.4 Availability 160
1.5 Cross-promotion 160
2. How to Find Employees 160
3. How to Keep Employees 161
3.1 Pride 161
3.2 Consistency 162
3.3 Listen and communicate 162
3.4 What about the person who does not fit in? 163
3.5 Compensation 163
4. How to Evaluate Employees 163
5. Handling Creative People 164
6. What about a Health Benefits Package? 164
7. Use Share Option Plans 164
18 MORE SUCCESS TIPS 165
1. Constantly Review Your Financial Goal 165
2. Never Stop Learning 165
2.1 Use your public library 166
2.2 Know how to read books 166
2.3 Use the Internet 166
3. Your Competition Can Help 166
4. Make Your Own Decisions 168
5. Use Time Effectively 168
6. Keep Expenses Down 168
7. If You Want Something, Ask for It 169
8. Does the Weather Affect Your Business? 170
9. Know How to Protect Your Product 170
10. Know How Much Past-Due Accounts Really Cost You 170
11. Look Before You Cut Prices 171
12. Use Pareto's Law to Advantage 171
13. Know Where to Go for Outside Help 173
13.1 Government programs 174
13.2 Suppliers can help you 174
13.3 Join organizations that can help 175
13.4 Use your banker for credit information 175
13.5 Free student aid 175
14. Discover How to Get Better Telephone Service 175
14.1 Ask your telephone company to help you save money 176
14.2 Telephone options 176
14.3 Consider Interconnect 178
14.4 Consider VOIP 179
15. Do You Need a Buy-Sell Agreement? 180
16. Why Not Export? 182
APPENDIX - PREPARING A BUSINESS PLAN 189
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SAMPLES
1 Income and expense forecast 40
2 Cash flow budget worksheet 41
3 Break-even chart 42
4 Balance sheet (Sole proprietorship) 105
5 Partner's equities (Part of balance sheet for partners) 106
6 Shareholder's equities (Part of balance sheet for a corporation) 106
7 Profit and loss statement 106
8 Buy-sell agreement 183
TABLES
1 Effective annual interest rate 154
2 Short-term credit possibilities 157
3 Sales increase needed when prices cut 172