Starting Your Business

Get To Know Yourself

Evaluate whether or not you are ready for entrepreneurship.

You need to explore whether or not you have the necessary passion, skills, and experience to run a business and if you do not, learn how to get these skills. One way to evaluate your readiness is to do a self-assessment.

A self-assessment is an inventory of your previous education, training, experience, skills, knowledge, and interests. It helps you discover what you are good at, what you need to improve on, and what kind of business might be a good fit for you.

Successful entrepreneurs make an effort to recognize their abilities and weaknesses. Will your business allow you to make the best use of your skills? Do you know how to improve your weaker skills or how to hire people who are strong in your weak areas? Can your business afford to pay another person?

If you think you would like to open a business, it is important to consider:

• What you like
• What you do not like
• What you are good at
• Areas you need to work on

Business Ideas

Several factors influence the success of your business including you as the entrepreneur, your finances, and factors outside of your control. However, one of the most important factors is your business idea.

• You have an innovative product or service that does not already exist in the marketplace
• The product or service already exists, but you wish to deliver it in a different way
• The business already exists, and you want to purchase it and expand on the existing idea
• Each of the above ideas has value, and potential for success based on your passion, skills, and experience. You need to decide which is right for you.

The Fit Between You and Your Idea

A good business idea must be suitable for you to make it work. Success in business requires a combination of desire, ability, and a good market for your product or service.

• If you have desire and ability, but find your market is too small to turn a profit, consider changing your business idea to a hobby rather than a primary source of income
• If you have the desire and a great market but lack business skills, consider that you may need to train or to hire people who have the skills you need
• If you have the ability and a market but no desire or motivation to run your business, your business may fail

As you generate business ideas, do not limit yourself. An idea that seems impossible may eventually lead you to a good opportunity. So as you generate ideas, keep your mind open to all possibilities. Individuals often start businesses in a field that they know well. It is good to explore alternate ideas and perspectives as you determine the right opportunity for you. Once you have decided on a few ideas, use market research techniques to evaluate them.

Some Questions to Ask Yourself Before You Start Your Business

• Is your business a new idea?
• If others are already operating similar businesses, what is different about yours?
• Do you have any cultural experiences that are an advantage to your business?
• How do you best set up your business to generate the most profit possible?
• Is there a way to ‘test market’ your business?
• What do you need to do to make your idea a reality?
• Is there an existing business available for sale that matches your idea?

Your business plan is a living document. Think of it as a map for starting and running a successful business. Start your business plan as soon as you decide to go into business. Do not expect to complete it entirely until much later on.

Below is a guide to help you create your own business plan.

How Long Should a Business Plan Be?

In general the document is 20 to 30 pages long

• Add a cover that contains your business name, your name, contact information, and date
• Make it long enough to provide a solid overview of everything you intend to do, why you want to do it, how you are going to do it, and what you expect the outcome to be.

What Kind of Language Should I Use?

Use formal language in your business plan. For example:

• Refer to both yourself and your business in the third person as “the owner” and “the business” (avoid the pronouns I and we in the plan)
• Use subheadings in each section to help organize your thoughts and to make the plan easier for other people to understand
• Ensure your business plan is free of spelling, grammatical, and punctuation mistakes

Have someone else review it before you begin to use it. Even the best writers need editors to look over their work.

Business Plan sections

Executive Summary

This section gives a brief overview of your whole plan. Even though it is the first section in a business plan, it is easiest to write it last. It summarizes your entire plan. This section should be no longer than one page.

Table of Contents

The table of contents is a separate page after the cover page and executive summary. It lists all
headings and subheadings and the page on which the reader can find each.

Project Costs and Funding

This section demonstrates specific dollar amounts on how much:

• You expect to spend
• Funding you have now
• You think you will need in the future

Products or Services

• Your products and services
• What makes it special
• Why people will buy from you
• Whether you offer guarantees or warranties on your products or services
• Patent and licensing information as well as any other intellectual property (IP) you may have

Market Share

The market share section states how many people will be interested in your product or service as well as details on your competition and how they will react to your business. It shows how many people might buy your product or service.

• Your clients’ or customers’ needs
• How you intend to catch clients’ attention (for example, through packaging, location, advertising, or a combination)
• Your research into pricing
• Your prices and profit margins

Operational Requirements

This is where you outline what assets you require to operate your business. Identify:

• The type of space your business needs (for example, a storefront, or online)
• Any special requirements such as extra electricity, air conditioning or drainage
• The permits and licenses required to operate your business. For information on what licenses and permits you need, go to BizPal. You should attach copies of the required documents you have obtained in an appendix to your business plan.

Management

In this section, provide information on owners and managers:

• Detail the company structure, such as whether it is a sole proprietorship, partnership, or corporation (more on business structures page 47-50)
• Explain who they are and how their education and experience makes them good candidates for their positions
• For a larger business, show the proposed organization chart of the company, and include a brief job description of each position. For a smaller business with three employees or less, you do not usually need to prepare an organization chart.

Personnel

Include this section if you plan to hire employees. Indicate for each position:

• The job descriptions
• Whether the position is full-time or part-time, and seasonal or temporary
• Skills and training needed
• How you will pay employees (for example, hourly wage or commission)

Financial Projections

This section includes:

• A 3-year cash flow (report detailing the total amount of money being transferred into and out of a business)
• Balance sheet (a statement of the assets, liabilities, and capital of a business or other organization at a particular point in time)
• Profit or loss statement (also known as an income statement, this is a financial statement that reports a company’s financial performance over a specific period)

These documents are standard in Canadian financial reporting.

Appendix

In this section, attach any supporting documentation for your business not included elsewhere in the document. For example, most organizations that give loans to businesses in Canada ask for a copy of your résumé, along with a “statement of personal net worth” with any loan application. A statement of personal net worth is a document, which lists the realistic value of the assets you own, and the debts you owe as an individual rather than related to a business. Find example templates online at no cost.

References

This section includes references from people like your accountant, consultant, insurance company, lawyer, and banker.

The structure you choose can affect whether your business attracts investors, partners, and other financial backers, as well as how your business grows in the future. There are three main types of business structures in Canada, each with different features:

• Sole proprietorship
• Partnership
• Corporation

It is a good idea to talk to a lawyer who specializes in small businesses before you make a final decision. A lawyer can help you with partnership contracts and articles of incorporation. They can also help ensure you properly register a corporation.

Sole proprietorship

A sole proprietorship means only one person owns a business. If you are a sole proprietor, Canada Revenue Agency views you and your business as one. Your profits from the business become your income as the owner. Also, you are responsible for all liabilities of the business. If, for example, you cannot pay the business’s debts, you must pay the debts from your personal assets.

The advantages to this business structure are:

• You have a straightforward business structure
• The most freedom from regulation
• It is the least expensive for you to set up and has minimal registration requirements
• You have fewer ongoing administration and annual fees
• As an owner, you earn 100% of the profits
• You may be eligible for tax benefits in limited circumstances
• You are the sole decision maker

The disadvantages to this business structure are:

• You are personally responsible for all business liabilities
• Any profits will be considered your personal income in the calendar year earned
• You have fewer options to pay less tax or delay tax payment
• You may have difficulties raising additional capital

Partnership

A partnership is similar to a sole proprietorship owned by two or more people. If you have a partnership, you and each partner share the responsibilities and profits of the business. You each claim your part of the profit on your personal income tax. Each partner is personally responsible for all liabilities of the business regardless of which partner incurred them.

The advantages to this business structure are:

• It is relatively easy for you to set up
• You have lower start-up costs
• All partners contribute money or skills or both
• Partners may be eligible for tax benefits in limited circumstances

The disadvantages to this business structure are:

• You and your partners share control and authority, and this can cause major conflicts in the business
• You and your partners may disagree on important issues (it is a good idea to hire lawyers to make a Partnership Agreement contract)
• Profits are considered personal income, and you may pay higher income tax
• Partners are each personally responsible for all liabilities of the business
• If one of your partners cannot or does not pay their share of owed amounts, creditors can require full payment from you and the other partners

Corporation

A corporation is the most complex of the three business structures. When you incorporate your business, it becomes its own legal entity. It is separate from its owners (called shareholders). Shareholders of a corporation have limited liability. In most cases, liability is limited to the shareholder’s investment in the company.

The advantages to this business structure are:

• As a shareholder, you have limited liability which provides personal protection from creditors
• It may give you greater credibility with customers, suppliers, and lenders
• You gain substantial tax advantages
• Ownership is transferable and survives the death of shareholders (easier for estate planning)

The disadvantages to this business structure are:

• It is more complicated to set up and maintain
• You will need the help of a lawyer or someone with legal expertise
• Its tax rules are more complex, and you will need to access professional accounting services
• There are greater regulatory guidelines which require additional accounting, banking, and administration costs

Other

A co-operative is another legal incorporation structure. In a co-operative, you and a group of people start a business together to meet a common need or to maximize a common opportunity. You must operate on the same principles as any other business structure. A co-operative is democratically controlled (based on one member, one vote), has an open and voluntary membership, and distributes profits as patronage dividends.

There are 3 types of organizations you can use with the intention to achieve something other than profit:

1. A charity is an organization that must use their resources for specific charitable activities, such as to support those who live in poverty
2. A not-for-profit, or non-profit, is an organization which exists to serve a purpose other than generating profit although it may do so as part of its activities. These are often community initiatives, such as an organization formed to manage a local community center
3. A social enterprise is a revenue-generating business with primarily social objectives. The enterprise reinvests surpluses for its primary social objectives in the business or the community, rather than by the need to deliver profit to shareholders and owners. Another name for a social enterprise is a Community Interest Company or CIC.

As you prepare to open your business, you must choose a unique name. A business name consists of three main parts:

• A distinctive element (something memorable that helps your business name stand out from others)
• A descriptive element (so that people can tell from your name what the company does)
• A corporate designation (only if your company is incorporated, e.g. Ltd.)

Create a list of business names. The name you want to use may already be registered. Note: a company name may differ from the product name(s).

Tips to choose a business name

• Your name should be easy to pronounce in the language of your target market
• Your business name should describe the services you offer
• Choose a short name that is easy for people to remember
• Your name should distinguish you from your competitors
• Canadians do not always name businesses after themselves or their family members (check to see what the standard is for your type of business)

Once you decide on your business name, contact the Registry of Joint Stock Companies (RJSC) to register your business. You must conduct a name search at this point to make sure that no one else uses the name you selected.

Apply to reserve a name here:

https://beta.novascotia.ca/reserve-name-your-business-or-non-profit If the Registry of Joint Stock Companies approves the name for your use, you can register or incorporate your business.

Registration takes a couple of days. If your name is not accepted, you have to choose a different name and go through a name search again.

If your name is accepted, continue with your registration: fill out the forms provided by the RJSC (they are available online), submit them, and pay the fees. The RJSC will mail you a Certificate of Registration.

Once you have chosen an available name for your business, you should register it with the government. When you register your business, you receive a nine-digit Business Number. You require this number to pay taxes, apply for licenses, and import or export goods.

If you plan to have other Canadian business locations outside Nova Scotia, follow the procedures to register your business in that region.

Every type of business in Nova Scotia has its requirements for permits and licenses. Ensure that you are adequately prepared to deal with the government, other businesses, and the Canadian public.

Early in the business development process, discover which permits and licenses you require for your business. BizPal is an online, searchable directory for business permits and licenses. BizPal takes you through a series of questions about the nature of your business, and provides a complete and personalized list of permits and licenses you may need to obtain, based on your responses. For more information, visit www.bizpal.ca

Business Navigators is a service provided by the Provincial Government of Nova Scotia that can also provide information about permits and licenses.

https://novascotia.ca/regulatoryopportunity/business-navigators.asp

BusNavigation@novascotia.ca or 1-844-628-7347

Municipalities process zoning requirements, signage regulations, occupancy permits, development permits, and fire prevention inspections.

https://www.halifax.ca/home-property/building-development-permits

Halifax Regional Municipality:

contactus@311.halifax.ca or Dial 311 or 1-800-835-6428

First Aid training Workplace Hazardous Materials Information System (WHMIS) training information on violence in the workplace and, smoke-free places to name a few

https://novascotia.ca/just/regulations/regs/ohsworkplace.htm,

If you intend to have 3 or more employees, it is mandatory to register your business with the Workers' Compensation Board of Nova Scotia and pay premiums. If you are interested in coverage for yourself, contact the General Inquiry Line at 1-800-870-3331 to discuss your options.

http://wcb.ns.ca/Workplace-Injury-Insurance/Do-I-Need-to-Register.aspx

The Nova Scotia Labour Standards Code sets minimum employment standards for most provincially regulated businesses in Nova Scotia. There are a number of topics included in the Guide to the Nova Scotia Labour Standards Code and how they might relate to you.

http://www.novascotia.ca/lae/employmentrights/docs/labourstandardscodeguide.pdf