Five good questions to ask yourself before starting a business in Canada
Do you have an innovative business idea? Here are a few key questions to ask yourself before starting a business in Canada.
Did you know that, since 2006, the Government of Canada has invested over $9 billion in support of science and technology? Such measures and programs are designed to assist small and medium businesses (SME) and foster growth in high-tech fields like aerospace and digital technology. A world leader in science and technology, Canada places great emphasis on research and innovation.
1. How can I get financing for my business?
As an immigrant entrepreneur, you can apply for a Start-up Visa. But first, you must obtain financing from a designated organization. You could also receive grants or contributions from government departments and agencies or loans (commercial loans, mortgage loans or lines of credit) from private-sector lenders and investors based on their assessment of how likely your business is to succeed. Nowadays, more and more entrepreneurs use online crowdfunding platforms to collect contributions from members of the general public who are interested in their projects and want to support them financially. Young entrepreneurs can also register for the Futurpreneur Canada Newcomer Program.
2. What business structure should I choose?
In Canada there are three types of legal structures for a business, and they all have their advantages and disadvantages, which you will have to weigh carefully.
This is the simplest structure. With this type of business organization, you are the sole owner and are fully responsible for all debts and obligations related to your business.
Easy and inexpensive to form. You have control over decision making and all profits are yours to keep.
Unlimited liability. Lack of continuity for your business.
Partnerships involve two or more people who share in responsibilities and profits. Partners include their share of business income in their individual tax returns.
Equal share in the management and costs. Tax benefits.
Possible conflicts between you and your partner. You are held financially responsible for business decisions made by your partner.
When you incorporate your business, it is considered to be a legal entity that is separate from its owners, called shareholders. You must produce a separate tax return for this type of business.
Limited liability. Easier to raise capital.
More complicated and more expensive to set up.
3. Do I have a solid business plan?
Putting together a solid business plan is a must for every entrepreneur who wants to succeed. It’s also a great way to secure financing from financial institutions. A business plan is a bit like a pilot’s flight plan, which contains information on the aircraft, flight route and number of people on board. To get where you want to be, you must also think about your project and the way you plan to go about it to make sure it turns out well and becomes profitable. In other words, you must know how to sell your project to improve your chances of getting bank financing.
Many entrepreneurs may see drafting a business plan as a daunting task involving hundreds of pages. In reality, however, your business plan should be clear and concise and cover the following:
- The vision, mission and main objectives of your business
- Your target market
- The competitive landscape and strengths, weaknesses, opportunities and threats analysis
- Your needs in terms of human resources, raw materials, facilities, equipment and IT systems
- Financial data (assets, budget and sales forecasts, cash flow)
- Legal aspects (business structure and responsibilities)
- Your marketing and e-business strategy
- The project timeline, including dates and steps
There are many resources you can use to write an effective business plan. Here are some websites that may be helpful: Canada Business Network, Business Development Bank of Canada and National Bank of Canada.
4. Where do I have to register my business?
To make it easier to deal with government agencies, you first need to apply for a business number, which you can use for GST/HST remittances and corporate income tax returns. You must also register your business with your provincial government. Remember to check what permits and licences you have to obtain. If you need information on patents, trade marks or copyright, go to the Canadian Intellectual Property Office website.
5. Do I need to use professional services?
If you plan to start a business, you will need professionals such as lawyers, financial advisors, notaries or accountants to help you with your project every step of the way.
Consult professional association websites or the directory of accredited professionals to find an expert you can trust.
You can also work with a mentor, who will guide you, provide valuable advice, help you network, and open doors for you. Participate in business networking activities, check out interesting profiles on LinkedIn or contact the Canadian Chamber of Commerce, a good starting point in finding useful resources.
Edited on 8 August 2018