- ENTREPRENEUR SUPPORT
McHines has been helping Lawyers, Accountants and Entrepreneurs register & incorporate businesses for over 30 years. We know what a new business or Corporation needs to start up, and it doesn't involve a subscription or yearly plan.
In a nutshell, there are three steps to starting your business:
1. Name Clearance: Once you've decided what to start a business, your first step is to come up with a name for your company and get it cleared. This is to make sure there's no-one else using the name you've chosen because, if there is, that business can make you change your name or, worse, sue you. Neither is good-especially if you've been in business for a while and have developed a following. A google search is not a name search (though you should definitely include this as part of your due diligence). A NUANS (see here) is a six page name search report that is required for incorporation, but not mandatory for sole proprietors or partnerships though we still highly recommend you have one done. It's even more possible that a Partnership or Proprietorship be confronted with the aforementioned legal actions by an existing corporation (as by virtue of incorporating, corporations enjoy better "name protection"). (See here for choosing a name).
2. Register/Incorporate: Not sure which is for you? (See here). It may be, in your case, that your accountant or lawyer has already told you that you made too much money last year and you need to incorporate to save on taxes. Good problem to have! (See here how the taxes work.)
3. Organize your company: The definition of organize is to set up an administrative structure...to arrange into a structured whole. Without doing this third step you do not, in fact, have a company. After going to all the trouble of researching and creating your legal entity, is it worth the possible ramifications of scrimping on this third step? For a Sole Proprietorship or Partnership, this process is quite simple...usually just your HST number and maybe a permit depending on your type of business. For a corporation, it's much more complex. Your need to create ledgers and resolutions showing the ownership and "rules" of the company, and you need to issue shares. All of this should be kept in a Minute Book which can be a traditional binder, or in an electronic format. Then, you need to make sure you update this information yearly. We provide you with a check list of future maintenance tasks you need to perform with your corporation summary!
|SOLE PROPRIETORSHIP/PARTNERSHIP||* NUANS NAME SEARCH|
|* REGISTER YOUR BUSINESS|
|* ORGANIZE YOUR BUSNESSS|
|CORPORATION||* NUANS NAME SEARCH|
|* ORGANIZE YOUR CORPORATION|
Your New Business Checklist:
Going in with Eyes Wide Open
Starting a business is daunting, thrilling, nerve racking and fulfilling. There is absolutely nothing like taking an idea and nurturing it until it becomes a viable self-sustaining entity. But to get it there requires work, commitment & significant personal sacrifice. Unfortunately, every year, a great majority of new businesses fail because the entrepreneur(s) weren’t able to accurately consider the challenges, time, energy and resources required. Some of the biggest challenges include:
- The personal Financial requirement and having sufficient funds and cash flow
- Irregular (and sometimes lack of) income
- Risk of Bankruptcy, loss of business investment and loss of savings
- Creating a product or service that people will pay you for
- Number of hours of work that’s required each day (less time for family & social life)
- Paperwork and record keeping
- Underestimation of the number of processes involved with a business
- Finding good employees & Firing not so good employees without incurring legal liability
- Training Employees (it may be harder to get all that know-how out of your head and explain it)
- Rejection from potential customers
Traits of a Successful Entrepreneur (some of these you have, some you’ll have to work on!)
"You can learn just about any of the skills you’ll need. What you’ve got to bring to the table is relentless grit, the determination to never quit, and the ability to keep going no matter how hard, stressful or desperate things become along the way."
There will never be another time like now (we hope)
There are many reasons why you might be thinking of starting a business. Has it already been on your mind or, up until now, the furthest thing from it? You already know that 2020 and the Covid 19 Pandemic has impacted everything. No company has been left untouched and employees at every level have been affected through massive layoffs, business closures and changes to the employment landscape that no one could have predicted.
So what’s the upside to this? Two words: Pivot and Re-set: Because everything is changing, it’s anyones game. With work and kids at home, families are going through a transition which is changing their day-to-day needs. As a small business owner, with remote working, you are no longer constrained by location AND you can attract a lot of good talent that would otherwise be inaccessible. Freelancers can fit the temporary needs of your starting business and, with remote working and the internet, your staff AND your business can be anywhere in the world!
Besides the unprecedented availability of unbelievable talent, businesses that were on the fringe pre-covid are enjoying unimaginable success because of it. Look at Zoom, Ubereats and Hello Fresh. There’s never been a time like now where people are looking for solutions, more open to the unconventional AND many of these new suppliers are offering deals to try them out (Trello, Mailchimp, Zoom to name just a few)
So if you`re thinking about starting a business, DO IT NOW. While we wait for things to start opening up, source out what you need to get your business off the ground, negotiate contracts, determine if you require a business loan, take advantage of record low interest rates, develop a sales and marketing plan, create a buzz and watch your customer list grow. When things start to open up, you`ll be able to hit the ground running. Here are the steps you need to follow in order to get ready:
1. Decide what your Business will do, or sell
If you already have an idea or product in mind for your business, then you’re one step ahead. If, however, you`ve decided that starting a small business makes sense, but you have no idea doing what, you have some thinking to do.. Research growing business trends & needs. Short list some potential start-up ideas and then poll your friends, relatives and associates to get in-put. Take a look at this list for some ideas
If you`ve invented a product or service, you need to make sure someone else hasn’t already invented your great new idea.You can conduct the following searches to minimize potential conflict with an existing invention:
- Do a Google search on the keywords associated with your invention.
- Order a NUANS search for the keyword which will show corporations and trademarks
- Conduct a free trademark search with Industry Canada- https://www.ic.gc.ca/app/opic-cipo/trdmrks/srch/home
You can also contact Copyright and Patent agents and/or Law Firm to help with the search
Once you’ve decided what your business will do, its’ time to thoroughly research competitive products or services, and develop a process to keep on top of new developments and announcements by and from your competitors. One way to do this is to set up a Google alert to notify you when any new information about those companies shows up online. The following information is not only important for you to know, but potential creditors and investors to your business will also want to know:
- Who are the company’s principal competitors?
- How long have they been in business & what traction have those competitors obtained?
- What gives your company the competitive advantage?
- Compared to these other companies, how do you compete with respect to price, features, and performance?
- What are the barriers to entry in your market?
2. Come up with a Great Name for Your Business
Once you've decided what your company will do, the next step is selecting the right name for your new business. Give this a great deal of thought. Your name can have a significant impact on your business success!!
- Your name should be memorable and easily identifiable by potential customers
- It should distinctive from your competitors, not misleading, confusing or too vague
- The name should attract customers, be a good fit with your products or service and help build your business image
- In addition to being distinctive, the name should also have a “descriptive” (what you do) element
- Make sure the name you pick isn't limiting as your business grows.
There are names and expressions that you Can’t Use in your business name:
- Words or expressions in any language that could be obscene
- Words that imply your business is an organization, a corporation, college, institute or university unless consent has been obtained
- Words that imply that your business is connected with the Crown or any Government of Canada without their written consent
- Words that are prohibited or restricted under Federal or Provincial Laws
- Some organizations, like the Association of Professional Engineers, will require their consent to use any form of Engineer in the name
As you did with potential business ideas, come up with a short list of names you like and test market the names with prospective employees, partners, investors, and potential customers. Make sure you and your employees will be happy saying the name and once you’re confident you’ve come up with the perfect name:
- Conduct a thorough Internet search on a proposed name.
- Order a NUANS search
- Conduct a thorough trademark search and Domain search
- Get a “.com” domain name (as opposed to “.net” or another variant).
3. Decide on your Business Structure
Forms of Business Ownership: In Canada, the main forms of business ownership are the sole proprietorship, partnership, and corporation. Each form of business ownership has its own liabilities and responsibilities, and affects many aspects of your business' operation including attracting potential clients, supplier relations and filing taxes. It's important that the form of business you create is suitable for the type of business you operate and you may want to seek professional advice (from an accountant or lawyer) to help you decide.
|This business is owned by one person~YOU!||Separate Legal Entity owned by one more people|
|CHARACTERISTICS OF A SOLE PROPRIETORSHIP:||CHARACTERISTICS OF AN INCORPORATION:|
• For an Ontario incorporation, you will have to file an Initial Notice with CRA within 60 days
• Apply for any applicable CRA accounts. Your CRA business account may include RT (if your business collects HST), RP (if you have employees-this is for deductions), RC (Corporate Income Tax), RM (for Import/Export) and RZ for Information Returns such as tax-free savings
For more information, See here https://www.mchines.com/after-incorporating-organizing-your-ontario-corporation/
• Determine Which Permits, Licenses, or Registrations You Will Need for Your Business,
depending on the nature of the business (aviation, agriculture, alcohol, etc.)
5. Secure Capital to Finance Your Business
Here is a summary of the most effective sources of business capital:
• Personal funds
• Lines of Credit
• Credit cards
• Friends and family
• Angel investors (see Angel Investing: 20 Things Entrepreneurs Should Know)
• Crowdsourcing sites such as Indiegogo.com and Kickstarter.com
• Bank loans/Credit
• Venture capitalists
• Equipment loan financing
It take anywhere from 1-3 years before your business starts making money. One of the biggest mistakes made by entrepreneurs is not raising sufficient capital. Your Business Plan (see below) will help you to identify the long term need for additional financing.
6. Your Business Plan
Developing a Business Plan is probably one of the most important tools you can create. The plan will:
• assist you in identifying customers, market area, pricing strategy and competitive conditions
• helps you set break-even points, cash flow needs and Return on Investment (ROI)
• Identifies size and location for plants and facilities and number of employees needed
• Allow you to entertain multiple “what if” scenarios and develop robust solution strategies
• Enables you develop the essential process of planning, budgeting, forecasting & reporting
• Provides a potential lender or investor with an assessment of your business viability. This will help reduce the amount of time the lender or investor may require to access, accept or reject your application.
Your Business Plan is a fluid document and will change constantly as your business grows.
6. Get your Product out there!
Years ago, I heard about a piece of advice that Michelle Romanow was offering to budding Entrepreneurs~ ``Just do it!`` and I was aghast. What about all the organizing and planning and process instigations? But then then I realized, she is right. You are never going to be 100% ready to take the leap. There comes a point where you just have to do it, and let all the other pieces fall into place. When starting out, your product or service has to be at least good if not great. It must be differentiated in some meaningful and important way from the offerings of your competition. Everything else follows from this key principle. Don’t drag your feet on getting your product out to market, since early customer feedback is one of the best ways to help improve your product.
As Sheryl Sandberg, COO of Facebook has said, “Done is better than perfect.”!
- Develop an “elevator” pitch, a concise, compelling introduction to your business or product which no longer than 60 seconds. Some tips for a great elevator pitch
- Be confident, strong, positive and enthusiastic in your delivery
- Get to the point quickly-convey why the product/service is unique
- Avoid using industry jargon
- Be ready for questions!
- Constantly practice your sales pitch so that it sounds natural and not forced or rehearsed. If you consider yourself an extrovert, you may not feel comfortable presenting in front of others, but practice makes perfect and soon you’ll be making your pitch, following up, asking for the sale and Closing the Deal!
People will not find you if they don’t know about you! You need to be continually attracting, building, and even educating your target market. You need to have a robust marketing strategy that covers a variety of platforms. At the very least you should:
- Learn the fundamentals of SEO (search engine optimization) so people searching for your products and services find you near the top of search results.
- Use social media to promote your business (LinkedIn, Facebook, Twitter, Pinterest, Instagram, etc.).
- Engage in content marketing by writing guest articles for relevant websites.
- Issue press releases for any significant events.
- Network continually
It is a lot of work-and takes a LOT of time, but you should absolutely dedicate the required time and effort to building a great website for your business. This is the window to your business. Prospective investors, customers, and potential partners and employees are going to check out your site. You want them to see a professional product. Here are some tips for building a great company website:
- Check out competitor sites.
- Outline your ideas –collect images, develop content , sketch out a template
- find several sites to show web site developer that conveys what you like.
- Be sure the site is search engine optimized optimized for mobile devices.
- Keep it clean and simple & visually interesting, but not cluttered
- Obtain and use a memorable “.com” domain name.
- Make sure it’s easy for site visitors to contact you or buy your product.
10. Drive Traffic to Your Website
People will not randomly find your site unless the internet shows them your address. Some ways to drive traffic to your website include:
- Pay Google, Bing, Yahoo, or other search engines to send you traffic (such as through the Google Adwords program).
- Build a great site with lots of high-quality, original content that is search engine optimized.
- Have a smart social media plan to drive traffic from Facebook, Twitter, LinkedIn, and other free social media sites.
- Get links to your site from high-quality sites.
- Companies such as Zappos and Virgin America became hugely successful because they focused on providing excellent customer service and support.
- You want your early customers to give referrals and sing your praises to their friends and colleagues.
- Thank your customers personally by email. Go the extra mile to show your appreciation.
- Set Up Appropriate Books and Records for Your Business
- You will need to keep multiple books and records for your business, including:
- Financial statements (P&L, balance sheet, cash flow)
- Employee records
- Board and stockholder minutes and consents
- Stock and options ledger
- Tax filings and records (federal, state & local income, sales and property taxes)
- Secretary of State filings (Certificate of Incorporation, annual filings, etc.)
- Invoices & contracts
- Bank accounts
- Creditor records
13. Understand Financial Statements and Budgets
It’s important to keep on top of your expenses and learn how to thoroughly understand financial statements and budgeting. Many startups fail because the entrepreneur isn’t able to adjust their spending to avoid running out of cash. Establishing a detailed, month-by-month budget is crucial, and this budget must be reviewed regularly.
Understanding your financial statements will also help you answer questions from prospective investors. Here are some financial statement questions you can expect to get from investors:
- What are the company’s three-year projections?
- What are the key assumptions underlying your projections?
- How much equity and debt has the company raised, and what is the capitalization structure?
- What future equity or debt financing will be necessary?
- How much of a stock option pool is being set aside for employees?
- When will the company get to profitability?
- How much “burn” (losses) will occur until the company gets to profitability?
- What are your unit economics?
- What are the factors that limit faster growth?
- What are the key metrics that the management team focuses on?
14. Your Professional Partners
• Draw up contracts with any co-founders
• Prepare key agreements for the business
• Set up a stock option plan for employees
• Guide you through potential HR landmines
• Prepare protective offer letters to prospective employees
• Help you negotiate terms with prospective investors
• Limit your potential legal liabilities
• Protect your ideas and inventions (through copyrights, patents, and non-disclosure agreements)
In a misguided effort to save on expenses, startup businesses often hire inexperienced legal counsel. Rather than spending the money necessary to hire competent legal counsel, founders will often hire lawyers who are friends, relatives, or others who offer large fee discounts. In doing so, the founders deny themselves the advice of experienced legal counsel who could potentially help them avoid many serious legal problems.
Your first order of business should be to determine your specific insurance needs based on the nature of your business. Ask yourself what risks must be covered and how much coverage will be sufficient. Then find and evaluate insurance providers or insurance brokers to determine which companies handle the types of coverage that suits your needs.
While shopping for insurance, you will want answers to these types of key questions:
- What are the deductibles?
- Are the coverage limits high enough?
- What items or occurrences are excluded from coverage?
- Are there any gaps in the coverage?
Here is a list of the types of insurance that may be appropriate for your business:
- General liability insurance
- Product liability insurance
- Professional liability insurance
- Property insurance
- Worker’s compensation insurance
- D&O (directors & officers) insurance
- Health insurance for employees
- Business interruption insurance
- Commercial auto insurance
- Data breach/cybersecurity insurance
- • Key man life insurance