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LAUNCHING your new biz?

Congratulations - you’ve decided to become an entrepreneur!

At this stage in your business development process, you’ve probably determined you have what it takes to succeed, settled on a business idea, found some partners, secured the support of your family and friends and started on your Business Plan.

What’s next? We believe you should follow three steps to successfully launch your new biz:

• PLAN the next three years of your small business
• PREPARE for business launch.
• ORGANIZE your business operations

Overview

Planning

If you haven’t completed a Business Plan, stop now and invest the time and energy to create one. A Business Plan will help you to think through all aspects of your business, establish strategies and organize your efforts going forward. Most new small businesses fail because owners skipped this critical step. For detailed PLANNING steps, click here...

Preparing

Preparing includes all of the decisions and tasks to be completed before you open up for business. You must decide on a legal structure (Sole Proprietorship, Partnership or Corporation), register your Business Name, hire an accountant or bookkeeper, set up bank accounts, obtain a Merchant Account to take credit card payments, raise financing, create a brandÉand the list goes on. For detailed PREPARING steps:

• Business Structure, Name Registration & Legal Issues
• Accounting & Finance Issues
• Marketing Your Small Biz

Organizing

You’re in business the minute you have one customer, so you’ve got get things organized now. In this step, it’s important to set up your physical working space, create file, design forms, establish systems and perhaps train your staff. Invest time and resources now to organize your business to ensure a smooth opening and first operating year. For detailed ORGANIZING steps, click here...

Plan

Plan

Your roadmap to success lies in your Business Plan. Completing a plan forces you to organize your thoughts in logical order, helps to identify potential flaws in your model and assists you in making decisions. Most importantly, a Business Plan becomes your working action plan. It’s also essential if you want to raise money from investors or obtain bank financing.

Certain sites offer free business plan templates (try www.bdc.ca or www.cbsc.org) or ask about our BizTOOLS CD, but it’s what goes into your plan that matters. Here are the steps to developing a Business Plan:

• Prepare a professional looking title page & Table of Contents.
• Prepare an Executive Summary (do it last but leave space now). Highlights the Òwho, what, where and whyÓ of your small business.
• Write a Business Description. Tell your readers about your product(s)/services(s), your industry, what makes your business unique and why you believe it will succeed. Write a Mission Statement and include your Business Vision.
• Marketing Plan. The most important section of your plan presents your sales objectives, strategies to achieve them and tactics to be engaged. It should also include your Market Research work.
• Staff & Management Team. Who’s running your show? Share a bit of your resume with readers, highlighting your relevant experience and that of your business partners. Identify key staff positions you’ll fill during the first few years and the functions those people will perform. Draw an Organizational Chart.
• Financial Plan. Identifies how much money you’ll need to start up and operate your business month to month. You must also figure out your pricing, margins and cost of goods sold. It’s best to prepare two years of projected financial statements for Cash Flow, Income Statement & Balance Sheet.
• Operating Plan. How will your business function day to day? Explain how you will acquire or manufacture products, perform services and serve your customers. You must also identify where your business will locate and what type of premises you will require (ie. Storefront, studio, warehouse, office or home office).
• Technology. Figure out your technology requirements and list them in your plan, including computer systems, fax machines, software, websites, telephones, mobile communications devices and servers. Be sure to establish a technology budget and identify who will maintain your equipment.
• Attach any supporting documents, charts or graphs in your Appendices Section. It’s always easier to refer to accompanying items then to stuff them in the body of your Business Plan.
• Go back and write your Executive Summary, extracting highlights from sections 3 - 8.
• Prepare and attach a Non-Disclosure Agreement (NDA), to prevent anyone reading your plan from divulging its contents.
• Ask a qualified professional to review your plan and make suggestions to improve it. Find a banker, lawyer, accountant or business coach willing to look it over.

Prepare - Business Structure, Registration & Legal Issues

Business Structure, Registration & Legal Issues

How do I decide on a business structure?

The three basic types of business structure are Sole Proprietorship, Partnership and Corporation. Most businesses start out as Sole Proprietorships, meaning the business and you are the same. Partnerships are basically two sole proprietors operating under one name. Corporations can be provincial or federal, and create a separate legal and accounting entity.

The right business structure for you depends on a number of factors, including the amount of risk in your business, whether or not you want to sell shares to raise capital and if you’re flying solo or working with someone else.

BizLaunch Coaching or Training will help you to understand each business structure and select the right option for your venture. Or, you can consult with a lawyer, accountant or banker for some advice. You can learn more at www.cbsc.org.

Where do I register my Business Name and what should I know?

There’s a difference between registering your business name and owning it. Any one can register a name with the government and start operations, however, you don’t own that name because you haven’t searched the government’s database for conflicting name use.

Registering a business name requires a business name search to make sure no one else is using it, or that no business is using a similar name. Business name searches are usually done as part of incorporation and it’s easiest to conduct your search at www.cyberbahn.ca. We also recommend that you speak to a lawyer to review your business name search results.

Should I seek legal advice?

A lawyer will help you to set up your new business properly. He or she can assist you with incorporation, business name searches, trademarks, patents, copyrights, partnership agreements, shareholder agreements, government filings, leases, employment contracts, sales contracts and much more.

While a lawyer will certainly charge for their services, it’s usually money well spent to avoid legal problems down the road.

Visit our BizDirectory to find entrepreneur-friendly lawyers approved by BizLaunch.

Where do I set up my government accounts? (GST, PST, Employer & Income Tax)

In Canada, you are required to set up certain accounts with the government. Those typically include a Business Number for income tax purposes, a GST account, a provincial sales tax account and an employer account. A Business Number (BN) will be assigned to your business once you receive your Master Business Licence, available at www.cbsc.org or www.cyberbahn.ca. Your BN is used to open additional accounts with the government such as GST.

BizTIP: Although you aren’t required to collect and remit GST until your sales hit $30,000 per year, it’s to your advantage to register for GST now. You’ll be able to claim GST on expenses paid to build our business.

Do I need to get a licence or permit?

Certain types of new businesses require different licences or permits, as directed by municipal or provincial governments. For example, if your new business will prepare food, supervise children, manufacture a product or sell to the public you should investigate required permits and licences.

Visit your local city hall, government-run Enterprise Centre or www.cbsc.org for details.

Prepare - Accounting & Finance Issues

Accounting & Finance Issues

What can an accountant or bookkeeper do for me?

You may set up and maintain your “books” (expenses, invoicing & banking) using small business accounting software. Or, you may hire a professional bookkeeper or accountant to manage your accounting records and prepare your tax return. It’s important to note that incorporated companies must use the services of a professional accountant to at least verify the records before submitting them to Revenue Canada.

Here are a few reasons to outsource your bookkeeping:

• You’re not an Accountant. Professional Accountants know their stuff – that’s their job. They know the rules and regulations imposed by Canada Revenue Agency. What you don’t know could cost you.
• Missed Write-offs. It’s every business owner’s job to reduce the amount of taxes they pay by embracing every legal write-off available. You’ll recoup the fees charged by a good bookkeeper or Accountant from the write-offs they discover for you. (For example, under certain circumstances, did you know you can write-off haircuts?)
• It’s all about your cash in the bank. It’s cash flow that matters most for the first three years of business, not profits or losses. Pay attention to your bank account and hire others to worry about your financial statements.
• You should be out selling. Too many small business owners get comfortable behind their desk crunching numbers, when they should be out drumming up business. A new small business owner should spend 70 percent of their time on marketing and sales. There won’t be much money to track if you don’t have any customers.

One our BizLaunch BizPartners is EZ-AS-ABC, and they offer an amazing all-in-one bookkeeping and accounting package specifically designed for small businesses.

How do I keep good records?

In business, it all boils down to the numbers. Good bookkeeping records will help you to monitor your business’s performance, track expenses and manage operations. Plus, you’ll need audited financial statements (verified by an Accountant) if you’re seeking bank financing or investors. Bottom line, keeping good records is crucial to the life of your small business.

Keep a separate file for your expense receipts, your invoices, your bank statements and your deposit slips. It’s best to bundle these files by GST reporting period, such as monthly or quarterly.

Get in the habit of inserting your receipts and invoices into those files every day. If you’re managing your own accounting records, set a time each week or month to enter your income and expenses into your accounting software. Or, if you’re using a bookkeeper or accountant, send over your file at the end of the month.

Remember: You’re required by law to keep all of your financial records (invoices, receipts, bank deposit slips) for 6 years in case Revenue Canada audits your business.

What expenses can I deduct from my revenue?

As a business owner, your goal is to produce a profit yet minimize the amount of tax you pay. That means taking advantage of every allowable business expense to offset your net revenue. Again, a professional bookkeeper or accountant will know write-offs you don’t and save you the hassle of managing your own records and preparing your own income tax return.

Here are some common business expenses you may deduct from your revenue:

• Automobile (lease payments, gasoline, parking, insurance & repairs)
• Rent
• Office supplies
• Vendors
• Interest on loans
• Client meals & entertainment (at 50%)
• Training
• Heat & hydro
• Portion of your home costs for a home office
• Advertising
• Printing
• Business travel

To find out more about allowable expenses, contact Canada Revenue Agency at www.cra-arc.gc.ca

Where do I get my start-up money?

Raising cash for your new small business is an important part of the start-up process. New entrepreneurs typically raise money from five different sources:

• Friends & family. Called “Love Capital”, you may be able to borrow or obtain money from your personal circles. Be professional about it by writing down any agreements to do with terms, repayment or interest. Be careful not to borrow too much.
• Personal savings. You’ve got to belly up some cash of your own, so look to your personal savings to see how much you can safely invest in your new business. Be sure to hold some back.
• Banks. Banks offer different types of financial products for small businesses, including commercial loans, lines of credit, business credit cards and overdrafts. Be prepared to present your Business Plan and to authorize the bank to investigate your credit rating.
• Advance sales. It’s possible to raise some start-up money by pre-selling a customer to collect a deposit, retainer or advance on an order.
• Supplier credit. Talk to your suppliers about extending payment terms to 90 or 120 days while you can get sales rolling.

Prepare - Marketing Your Small Biz

Marketing Your Small Biz

How important is a Marketing Plan?

Your Marketing Plan is the most important section within your Business Plan. After all, it will describe how you to plan to generate revenue.

Your Marketing Plan should be structured to include:

• Objective. A good objective is measurable, clear and time-based. For instance, your objective might be “To generate sales of $150,000 by December 31, 2007” or “To increase product market share by 2% within 24 months”.
• Strategy. Your marketing strategy describes how you will obtain your objective. It’s your approach to reaching your goals, such as “We will develop a national re-seller network of retailers to bring our products to market.”
• Tactics. Tactics include the details of your strategy, across the “Four Ps” of marketing: Product, Price, Promotion & Place.

How do I create an identity?

Beyond mere words, your identity combines three elements: the legal name of your company, a logo and a descriptor.

Your business name should clearly express what you do. Avoid being clever, mysterious or ambiguous when choosing your words. ‘Smith Consulting’ won’t tell your prospective customers very much about your enterprise.

Begin by creating three columns on a piece of paper and list words that best describe your business. Play with word combinations until you generate a short list of three name possibilities. Limit each of your names to three or four words. Test market your short list of names with colleagues and prospective customers. (Legal considerations and how to register your business name will be presented in the next column.)

Next, develop your one-line descriptor. Also known as a slogan or tag line, your descriptor will ideally include a benefit statement relevant to what you do. For years, the identity of BMW included their well-recognized round logo, the acronym ‘BMW’ and their slogan, “The Ultimate Driving Experience.”

Finally, add a visual to your words. Known as your logo, a good graphic will help communicate what you do and contribute to a memorable identity. Hire an experienced graphic designer to produce three different design drafts.

Again, do your homework by soliciting feedback on your draft designs from business people or customers before selecting a final version.

How do I conduct my market research?

There’s one golden rule small business owners should follow: Ask your customers first. Too many new entrepreneurs become over confident in their brilliant business idea and skip the market research step. No matter what your business idea, you must check it out first with the people who will eventually buy from you.

Market research also includes investigating the industry you are proposing to enter, assessing your direct and indirect competition, looking into any applicable government regulations, noting trends, threats and opportunities.

Here are the most important areas to research:

• Your competition. What are their strengths? What are their weaknesses? You should know everything you can about companies going after the same customers.
• Your customers. Collect as much information about your potential customers as you can so you don’t second guess what they want. Who exactly are they? What drives them to buy? Where are they located? How often do they buy? Why do they buy from your competition? Collect information directly from your potential customers by conducting surveys, interviews and focus groups.
• Your industry. Look into the overall business sector to identify industry publications, trade shows, common issues, government regulations and anything else that may indirectly affect your company.
• Your suppliers. Identify who can support your business with products and services, and find out if your potential suppliers also serve your competition.

Organize

Organize

How can I organize my business to run smoothly?

A business is simply a set of systems – processes and procedures people running the business follow in order to build a product, perform a service or manage operations. In fact, everything your business does is a system, right down to the smallest task such as the way you answer the phone. Big corporations got that way by perfecting their systems (McDonald’s) or integrating thousands of complex systems (IBM).

Systems ensure your business can do two things: Deliver a consistent experience for your customers and run without your day to day involvement.

Your job is to simply develop, record and perfect your small business systems. How? By documenting all of the steps you take to complete every task

Sound confusing? Here’s a sample system to Invoice a Client...

• Obtain copy of sales contract from salesperson.
• Open a blank Invoice Form on the computer.
• Insert the client’s mailing address.
• Insert the purchase date.
• Enter a description of the client’s purchase.
• Enter the sale amount.
• Add 7% GST.
• Assign an Invoice Number.
• Print 3 copies of the Invoice.
• Print one #10 envelope with the client’s mailing address.
• Fold one copy of the Invoice and insert into the addressed envelope.
• Enter the amount of the Invoice in your accounting software as an Account Receivable by the due date.
• Place one copy of the Invoice in the Client File.
• Place another copy of the Invoice in the Accounts Receivable File.
• Mail the envelope to the client.

As you can see, even the smallest tasks contain many steps. And, many of those steps interrelate with other tasks (such as Sales). By thinking through all of these steps and writing them down – no matter how mundane they may seem – you will create your very own Operations Manual.

Your Operations Manual is critical to your small business, because it will tell new employees and others exactly “how things are done” in your small business. McDonald’s doesn’t let its managers to figure out how to make a burger…that system is meticulously documented in the company’s Operations Manual so no one may deviate from proven methodology.

(Want to learn more? Read “The E-Myth Revisited” by Michael Gerber.)

Why do most new small businesses fail?

Canadian statistics indicate 80% of new small businesses will close within the first five years. Why? Reasons may vary, but the main cause is insufficient cash flow. A new small business owner usually doesn’t take the time to prepare a proper Business Plan, which forces him or her to research costs, project sales, test assumptions and otherwise plan ahead. Operating blindly and without focus, such a business owner becomes reactive, choosing to “wing it” with day to day decisions. There’s no real revenue momentum because there’s no direction to the business, and cash eventually runs dry.

Entrepreneurs can also become over optimistic about their new ventures, telling themselves customers will rush to buy their product or service and riches will soon pour in. Convinced the big money is just months away, a new entrepreneur may decide to “live it up” and spend more than they should on business expenses.

It always takes longer than expected to build small business revenues. If you’re planning your new business, be conservative with your timelines. Over estimate your expenses and under estimate your revenues – and extend the time you think it will take for the money to materialize.

What books are helpful at this stage?

What books are helpful at this stage?

BizFAQ: Frequently Asked Question: What books are helpful at this stage?

Answer: Starting or growing a small business? Head to the bookstore for some BizLaunch recommended reading:

• Guerilla Marketing by Jay Conrad Levinson
• Million Women Next Door by Thomas Stanley
• The One Minute Millionaire by Mark Victor Hansen & Robert Allen
• Small Business Guide - by Douglas Gray & Diana Gray
• Selling Your Services by Robert Bly
• The Aladdin Factor by Jack Canfield & Mark Victor Hansen
• Start Small Finish Big by Fred DeLuca
• Smart Strategies for Growing Your Business by Terri Lonier
• Trading Up - Michael Silverstein & Neil Fiske
• Business for Beginners by Francis McGuckin
• The Wealthy Barber by David Chilton
• The Seven Strategies of Master Presenters McRae and Brooks
• The E-Myth Revisited by Michael Gerber
• The Way of the Guerilla by Jay Conrad Levinson
• Visionary Business by Marc Allen
• 1001 Ideas to create Retail Excitement - Edgar A. Falk
• How to Think Like a CEO - D.A. Benton
• Getting Everything You Can Out Of All You've Got - Jay Abraham
• Beat the Taxman - Stephen Thompson
• The 80% Minority - Joanne Thomas Yaccato
• The Ultimate Sales Letter - Dan S. Kennedy
• The Beermat Entrepreneur by Mike Southon & Chris West
• Secrets of Power Presentations by Peter Urs Bender
• Psychology of the Hero Soul by Sharif Khan