Starting a small business in Canada takes much more than a good idea – it takes a lot of planning and hard work. According to Statistics Canada, only 70 per cent of Canadian small businesses still have open doors after two years, while only about 50 per cent survive to see their fifth birthday.
So how can you ensure you don’t become one of those statistics? Here are some rules on how to start a business like a seasoned pro, including tips from the world’s most successful entrepreneurs.
- Keep costs low.
Lowering your expenses might seem like a no-brainer, but the question is how. First, consider whether you require a physical office or shopfront – or can you join more than half of small to medium businesses in Canada who run their business from their smartphone.
Another option is to work from home or the neighbourhood coffee shop, which can offer more flexibility, provide built-in tax breaks and reduces overhead costs substantially. It’s also easier than you think. The advent of cloud-based software and apps makes it easy to manage accounts, supervise staff and visit with clients – all without ever having to sit in a boardroom. In fact, according to Intuit’s 2015 Small Business App survey, businesses operating from a brick and mortar location have dropped 20 per cent. Meanwhile 20 per cent of small business owners run their company from a tablet.
- Hire the right people.
Employing the right people from the start ensures your business functions optimally, prevents high staff turnover, and reduces costs associated with new hires.
However, as a small business, it’s unlikely that you have a team of HR professionals devoted to recruiting passionate and engaged employees. To mitigate this challenge, make sure expectations are clearly outlined and discussed during the interview process. If you manage your business remotely, this flexibility is a selling point for prospective employees. (For example, your team may collaborate online using project management apps or by checking-in through a time-tracking app.) Finally, the government’s Canada Business Network also offers support and resources to help you find and retain the best employees.
- Establish a pricing strategy.
Regardless of whether you’re selling a product or a service, making sure the “price is right” can mean the difference between success and failure. Write down your fixed costs, evaluate what your customers or clients are willing to pay, and investigate your competitor’s prices. Finally, if you’re required to charge GST or HST, factor this in to the total cost.
Consider using financial management software such as QuickBooks to keep track of your expenses, taxes and bills. It provides cash flow reports and make sales projections, to help you decide on your prices.
- Manage cash flow
Being able to manage cash flow is one of the greatest sources of stress for small business owners. In 2014, Intuit conducted a financial literacy survey of small businesses in Canada and discovered that only two per cent of respondents were able to answer all 10 skill-testing questions correctly. And just over half rated their financial literacy of being sufficient.
To help businesses, QuickBooks Online can track your expenses and accounts receivable (with features like its ability to issue invoices, auto-fetch your credit card and bank statements, and do the painful data entry for you), it can also generate real-time reports, allowing you to make critical decisions quickly. When integrated with a cash flow forecasting or financial management app, QuickBooks Online is that much more powerful – it help you set, track and meet all of your financial targets without spending costly hours crunching numbers.
By hiring the right people, keeping overhead costs low and using financial management software to stay on top of your cash flow and accounting, you will lay the groundwork for ongoing success. Remember, success is not only determined by your products or services, but why the way you run your business.
For more information on how to make your first year a success, visit Quickbooks Online.