Resources for starting a small business in Canada?
November 21, 2012 8:18 PM   Subscribe

You started a small business in Canada. What books, websites etc. taught you how to do it? Are there any resources that you particularly recommend? What did you learn along the way that you wish you knew when you started? What techniques and software do you use to track expenses, hours worked, inventory, sales etc? Is there any common advice on running a small business that you strongly disagree with? (I'm tentatively planning to make and sell festival clothes and accessories.)
posted by fullerenedream to Work & Money (6 answers total) 13 users marked this as a favorite
My wife and I ran a small business part time for many years. We didn't really spend a lot of time reading books on running small businesses, partially because I think you can get bogged down with a lot of this motivational, tips and tricks stuff and lose sight of what actually matters in your business; but also, in my real job is as an accountant with a CA firm I see a lot of small business issues day in/day out.

I'm not sure what you're after when you ask for books and websites on "how to do it"? The answer will really depend on what it is you want to learn to do. I'm assuming you already know how to make the clothes you plan on selling. With some basic tools, the rest really can just fall into place.

I would start by making sure you're clear on who your target market is, why they will buy your product over somebody elses, what price they will pay, what your costs will be, financial goals, etc. As I'm sure you're aware, this is a very specialized market so make sure your goals are attainable and realistic.

If you're happy with your thoughts on the above, than getting going really won't take a ton more than purchasing an accounting software program (Or if you're handy with Excel; design a simple spreadsheet). I personally like "Simply Accounting". Taking a night course for Simply at your local college would probably be a tremendous benefit. Once you're comfortable with Simply (or whatever program you choose) than make sure you use it. Simply can track payroll, but if it's just you it's probably easier and cheaper to get the version without and just track your hours in excel; they won't really matter for tax purposes since you will pay yourself in dividends or advances rather than an hourly wage. Besides, for the first little bit you really won't want to know what you're making on an hourly basis!

Make sure you keep seperate bank accounts for your business and personal life; this is a MUST. If CRA audits you, they won't be too harsh over sloppy accounting provided you can show what's a business expense and what's a personal expense. If you use the same bank account(s) for both that becomes exponentially more difficult to show.

Track EVERYTHING you do for the business. If you have to run to the store to get some fabric, log those kilometers.

Don't play tax avoidance games. When you're still small enough to not need/want a professional accountant helping with the books, you won't save a really worthwhile amount of money trying to cheat the government and the penalties you will face if you get caught can be pretty severe. If you're big enough to be talking about serious money, there are lots of legit ways and legal tax planning strategies to minimize your taxes.

Depending on your amount of business, look into GST/HST registration sooner rather than later. The mandatory threshold (off the top of my head) is $30K/year, but the advantage to registering as soon as practical is that you can claim GST paid. Even if you only sell $500 and collect $25 in GST, if you spent $10,000 on supplies, travel, etc. to get that $500 you can claim a refund of 5% on that $10,000. Of course you may not be in business for long with those kind of margins but you get the point!

As far as common advice/attitudes I might disagree with... I think the big one is the DIY for everything attitude. The most successful people I deal with on a day to day basis all have at least this one thing in common; they all know what they don't know. I'm assuming you're good at making clothes and accessories... that doesn't necessarily make you great at marketing, or accounting. Be realistic about your abilities and limits. If doing the book-keeping isn't your thing, as soon as you can afford it contact an accounting firm and have them take over the bookkeeping. That will free you up for the things you're good at, avoid mistakes that might cost you tax dollars, and make you that much happier and more productive. Learn to recognize when paying extra for outside expertise is worth it.

Final piece of starting out advice... the minute you start to think about bringing another individual into the business, be it a spouse, family member, BFF, whatever, talk to an accountant and lawyer about how to bring them in and maintain appropriate controls. I just had a very awkward client meeting with a partnership in which the two (former) best friends since childhood had a successful seasonal business. Over the winter, responsible partner went out and worked while not so responsible partner helped himself to the entire company savings account for a very lavish week in vegas. We had to break the news to responsible partner at the meeting - that they were broke... awkward. A simple control such as needing two signatures on all cheques and a very limited debit card withdrawl limit would've prevented it. Again, see above regarding when paying for expertise comes in handy!

Hope at least some of this essay was helpful!

Good luck
posted by Beacon Inbound at 9:27 PM on November 21, 2012 [3 favorites]

Where are you in Canada?

In Toronto, one of my local heroes writes a column for various news publications, often focusing on small businesses, issues and offering advice and interviews with other successful entrepreneurs, such as How to Write Persuasive Press Releases. Her store will offer classes from time to time, such as Product Photography 101. She's mentioned the book the $100 Startup. I went looking for a good link to Craft Inc. - a book I picked up second-hand at one of her fundraising sales (though I never started a craft business after all) - and found this blog post that mentions a few other good resources.

I have run a small business for an owner in the past, and spent years working for small business owners and would recommend the Science of Shopping, by Paco Underhill. Even if you don't have a retail storefront, understanding why and how people buy is the other biggest part of running a profitable business.

I learned most of what I know by "apprenticing" and gaining practical experience by working alongside people who did exactly what I aspired to. For my own side income of selling antiques and renting things to movie sets, all I need now is an accountant who can work with our family's creative finances and whom we trust, a spreadsheet and copies of my invoices. But I don't pay myself hourly.

The common advice to "pay yourself first" is something you can't always do. And it's too easy to get bogged down with busywork as part of a business, when you should always be advancing your sales and your brand, so if that's what you're paying yourself for, that's not the part that generates income.

When I worked for a major jewellery store here in Toronto, we were required to take proactive selling courses, and the tips listed on this page are pretty much what they did, and they worked. For example, set definite selling times, treat it as sacred, get in the mode and treat it as a numbers game. But also, know your clients, and know what's happening. For example, we'd look at the schedule for conferences in town, knowing when lots of business people were around and likely to buy a little something. I'd look up a few conversational topics and look at inventory to see what would likely sell and put it forward. Or, if I sold a wedding band, I'd make a note of the date and call to offer to have the rings cleaned and polished for the first anniversary, and would suggest an anniversary present. If you sell festival clothes or accessories, keep a client book, keep track of when other festivals are occurring, and contact them with suggestions proactively and develop a relationship. "Hey there - I've just come out with a new twill doublet that will go well with your courtly pants just in time for the Minnesota Renaissance Festival!"

I learned along the way that as the face of any business, you kind of always have to be "on." This came from when I was sixteen and waiting tables at an ice cream and sandwich shop. I received a $20 tip for a cup of coffee because I was the only person that had smiled at that man that day. Your reputation is your most valuable asset. When things go wrong, and they do, clients may not always be right, but they want to be heard and they want to feel good in the end. You never know if that client will be the key or the connection that you need to grow your business a little bit - or will tank it. Resist the urge to respond as yourself, but instead take care to respond as your brand. So Govern yourself accordingly!
posted by peagood at 9:41 PM on November 21, 2012 [1 favorite]

I'm not sure what stage you are at, but if you still at the stage where you testing the viability of the market, I am fan of a methodology called 'lean startup'.

Lean is more commonly these days applied to tech start ups looking to research the market for an unproven idea, but I have used the method successfully to test the viability of clothes retail and I think the method holds good for pretty much any small business.

The general idea is that you create the minimum viable product with which to test your idea.

A common example is the guy who set up Zappos - he didn't have any stock upon the launch of his shoe selling website. Or any staff. He went to local shoe stores and took photos of random pairs of shoes, and uploaded them to his website. If anybody bought the shoes, he would go and buy the shoes full price from the shop and send them to his customer. All completely manually.

This may sound like an expensive way to research the viability of a product, but it's a lot less expensive than buying stock you can't sell. And saved him from setting up expensive systems before they were needed.

So the advice I would give, is that I wouldn't even think about software until you get to the point where doing the accounting manually is annoyingly time consuming.

If you have not made the product already, why not buy some very similar products and try to sell them to your target market so you can at least make a stab at extrapolating demand.

If it's a web business, build a fake landing page, send £100 worth of adwords traffic to the page to see what conversion is like.
posted by molloy at 4:50 AM on November 22, 2012

So the advice I would give, is that I wouldn't even think about software until you get to the point where doing the accounting manually is annoyingly time consuming.

I agree with this to a point. Hold off on software until you know the business is going to be a go, but there are benefits other than the accounting side for a program like Simply. I think the version my wife and I had was only ~$300 (Tax deductible expense) and it tracked customer purchase history and all sorts of other useful things to keep an eye on in the business. The other advantage that I see a lot is for people that just aren't oriented towards doing accounting related tasks, being able to create an invoice from inside the accounting software takes care of all the entries, inventory adjustment, etc. So it takes care of a little redundancy and helps you avoid avoiding the bookwork. A small investment at the right time can pay off immensely down the road.

I like the advice about remembering that you're speaking as the brand and not yourself. One of the things nobody told us was that you could have the nicest people in the world turn into the most miserable, unreasonable, jackasses of customers. Good long standing friends would treat you like shit just to get a break on the services.

I also like the Lean startup advice, in your case maybe clothes could be made to order once you got a deposit covering (most of) the cost of materials. I would be careful about buying someone elses product and marketing as your own, I'm imagining that one of your key selling points is going to be handmade quality, that might not be reflected in the substitute products available and word of mouth reputation building is going to be critical for a long time for you.
posted by Beacon Inbound at 7:06 AM on November 22, 2012

"there are benefits other than the accounting side for a program like Simply"

Accounting software is super useful,. My own issue, which might be just me, is I find it so easy to procrastinate by exploring software options, that I put off tasks that are more crucial to kickstarting the business.

"I would be careful about buying someone elses product and marketing as your own"

It's common to resell clothes so this wouldn't necessarily be damaging to your reputation. You could buy handmade clothes of equal or even superior quality to your own to test with.
posted by molloy at 7:50 AM on November 22, 2012

For information about legal requirements, registration, etc, please contact your local Canada Business Network office. They may also be able to refer to local organizations and resources.
posted by Kurichina at 8:02 AM on November 22, 2012 [2 favorites]

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