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GROWING your small biz?

If you’re reading this, you likely own a small business that’s been operating for two years or more. To take your small business to the next level, the strategies and skills that launched your venture must now change.

No doubt you’ve learned a lot since you started out as an entrepreneur. You’ve established a brand in the marketplace, secured some customers, developed internal systems and perhaps hired some employees. You’ve also likely survived a few scary moments! Now, you’re anxious to build on your success and grow your operation so you can earn more, work less and reduce stress. You may even be ready to duplicate your business model by opening more locations or franchising.

This section of our site will help you to answer some of the more common questions that business people ask. If you have a specific question, feel free to contact us anytime.

How do I grow my business?

How do I grow my business?

You’ll know your small business is growing when you see revenue increase, add employees or suppliers and get a sense your brand is being accepted in the marketplace. You’ll likely have more customers to serve and be less worried about day to day cash flow.

The Launch Phase of a new business usually consumes two years, but individual situations may vary. By Year 3, your small business should be getting on its feet financially. Because so many businesses fail within the first three years, those that survive that milestone are usually around for many years to come.

While there’s a lot to discuss about growing your small business, here are some key recommendations:

• Delegate non-essential functions. You should spend more time working on your business rather than in it. As the business owner, it’s your job to manage operations, not to do the day to day work. Your time should spent supervising the work of others, pursuing new customers, creating new opportunities for growth and perfecting your small business systems. That means letting go of routine tasks to other people or suppliers, such as bookkeeping (EZ-AS-ABC), maintenance, ordering, production and administration.
• Develop relationships. Too often, a business owner gets so bogged down with day to day business operations he or she neglects to spend time with important customers or suppliers. While your staff may handle ongoing customer service, it’s your job to ensure your customers are happy with your business. Make phone calls, arrange lunches and schedule coffee with them. Strengthening relationships requires a commitment of your time. You may also unearth some new business opportunities.
• Analyze your financial statements. A bookkeeper or accountant may take care of your record keeping and generate financial reports, but it’s your job to manage your company’s financial performance. Financial ratios help to monitor key performance indicators, such as your Current Ratio, used to quickly determine your company’s ability to meet its short term debt obligations. Work with your accountant or a business coach to learn which numbers and ratios are most important.
• Create systems. As we’ve said earlier, systems are the backbone of any business. Look for ways to improve how your business performs various processes and procedures. A good system will perform a set of tasks faster, save you money and be easily managed by someone other than you.
• Always be marketing. Your sales team will handle ongoing sales and serve existing customers, but you should always be working to improve your business marketing. Look at your brand, revamp your brochures, research advertising choices, and embrace media opportunities for free publicity. If you’ve hired professional marketers or agencies to handle those areas, spend more time with them.

When should I incorporate?

When should I incorporate?

There are several reasons to incorporate your business, either federally or provincially. First, you’ll usually enjoy tax savings. Sole Proprietorships and Partnerships pay more tax because their rates are higher. We advise any entrepreneur with revenues approaching $60,000 a year to consider incorporating in order to save money on taxes.

A second reason to incorporate is the protection it offers. A corporation is a separate legal and accounting entity, controlled by its shareholders. It’s like an artificial person. If a Sole Proprietor or Partnership gets sued, the business owner is also in the hot seat because, legally, the business and the owner are the same. Assess your risk exposure based on the nature of your work. Is it dangerous? Does your business use complex machinery? Are you giving advice to your customers? Do you sell a product that could potentially hurt someone? Talk to your lawyer about the advantages of incorporation in your particular business situation.

Finally, a corporation can raise cash easier than a Sole Proprietorship or Partnership because it can offer shares in exchange for investment. While it’s important to retain majority control of your corporation by hanging on to at least 51% of your shares, you may decide to let go of some shares to get some expansion money.

Most lawyers can do incorporation work for you, or, you can incorporate yourself online at Cyberbahn.

I'm ready to hire. What should I know?

I'm ready to hire. What should I know?

There’s no faster way to grow your business than to hire new people. As we’ve said earlier, you must let go of certain functions to others, so you can spend your time working on the business and less in it. A successful business is one that makes you money while you’re not there, because your finely tuned systems allow your employees to run the show without you.

Before you hire, it’s important to understand your legal obligations as an employer:

• Opening an Employer Account with the federal government. Similar to your GST and Income Tax, you must contact the Government of Canada to open up an Employer Account. Under that account, you’ll be required to remit monthly your employee Source Deductions (the income tax you deduct from their paycheque, and contributions to Canada Pension Plan and Employment Insurance). Contact Canada Revenue Agency at (www.cra-arc.gc.ca) for help.
• Mandatory Employer Related Costs (MERC). As an employer, you must "top up" your employee’s contributions for Canada Pension Plan and Employment Insurance. While the rates may change, for every$1 your employee contributes, you’ll likely contribute another $1.50 from your own pocket. See Canada Revenue Agency (www.cra-arc.gc.ca) for details.
• Paying your employees. Whether it’s once a week or every two, you must pay your employee salaries or wages on time. Cash flow problems are your own, so make sure you can afford to hire and pay people regularly.
• Employment Act. Employees don’t have to work the same crazy hours you do. They’re also entitled to breaks, Vacation Pay, Overtime Pay, a safe work environment and more. Investigate your responsibilities with Human Resources and Social Development Canada (www.hrsdc.gc.ca/en/home.shtml) or Strategis (www.strategis.gc.ca) or contact your local Enterprise Centre (www.cbsc.org).
• Hiring and firing. As an employer, you aren’t allowed to ask certain questions during an employment interview (including questions to do with marital status, religion, sexual orientation). You must also tread carefully when terminating someone’s employment. Find out what you can and cannot do by contacting Human Resources and Social Development Canada (www.hrsdc.gc.ca/en/home.shtml).

How do I franchise?

How do I franchise?

If your business model is profitable and successful, you may want to consider franchising to expand your operations. Franchising involves licensing the use of your business brand and systems (that Operations Manual!) to other people. As a Franchisor, you’ll charge a one-time Franchise Fee and collect ongoing Royalties from your Franchisees.

Almost any type of business can be franchised, but it’s a complicated process that requires some investment and expert counsel from lawyers, accountants, bankers and professional franchisers. For more information about buying or selling a franchise, contact The Franchise Connection (www.frannet.com) or the Canadian Franchise Association (www.cfa.ca)

I need financing to expand. Where do I get the money?

I need financing to expand. Where do I get the money?

Every growing business needs some type of money to expand. You may require capital to purchase equipment, buildings, machinery, vehicles or other hard assets. You may need working capital to pay for softer costs, such as salaries for new employees, advertising, renovations or professional fees.

Here are some common sources of expansion dollars:

• Banks. If your business is credit-worthy and shows a healthy Balance Sheet, you may be able to borrow against your equity or assets. Contact your account manager to investigate loans, overdraft accounts, lines of credit or a VISA Business Card (www.visa.ca/smallbsuiness).
• Investors. Incorporated companies can sell shares to outside investors for some cash. Talk to your lawyer and accountant to set it up.
• Personal investment. Don’t want to go in to debt or sell a piece of your business? Consider investing your own money. But, don’t risk your family’s well being by investing too much of your own cash.
• Leasing. Instead of borrowing money to buy equipment or vehicles, consider leasing them instead. You’ll be able to write-off the lease amounts on your Income Statement.
• Suppliers. As the customer, your vendors want to see your business grow so they can sell more to you. Suppliers may be willing to extend payment terms on good or services to help you expand.
• Government Programs. There are many different programs available to help businesses expand, import, export, hire new people, train people, reduce energy use, protect the environment and more. Go online to Strategis Canada (www.strategis.gc.ca), Business Gateway (www.businessgateway.ca) or visit your local Enterprise Centre (www.cbsc.org) to investigate your options.

Should my marketing focus change?

Should my marketing focus change?

When you’re launching your business, you must focus on attracting new customers in order to generate revenue. As your customer database grows along with your business, your focus should turn to serving existing customers. Too many entrepreneurs ignore their existing customers, the ones who were with them from the beginning, to chase exciting new prospects.

Remember the expression, "a bird in the hand is worth two in the bush". Pay attention to your existing customers by creating loyalty programs, organizing customer appreciation nights, sending them newsletters and simply staying in touch. Never, ever, take your existing customers for granted.

As a growth business, your marketing should embrace two or more of these four strategies:

• Attract new customers. You should always attract new customers, but not at the expense of existing ones. Sales, advertising, publicity and referrals are typical methods to obtain new clients.
• Increase customer buying frequency. Once you land a customer, you want them to buy from you again and again. Look for ways to keep them coming back. (Jiffy Lube places a sticker in your windshield suggesting your next oil change should be within 5000 kilometres.)
• Increase purchase volume. What can your business do to get customers to spend more each time they buy? Convenience stores master this strategy with easy-to-grab items at the point of sale.
• Retain existing customers. It’s a lot less expensive to keep existing customers happy then it is to attract new ones. Make your business irresistible by delivering exceptional customer service, offering rewards or specials to your best customers and simply paying lots of attention to them.

For more advice on marketing, see our list of Recommended Business Books or contact BizLaunch.ca anytime.