Starting a Successful Business in Canada Kit

This book tells small-business owners and entrepreneurs everything they need to know about turning their good ideas into profitable businesses in Canada.

This book tells small-business owners and entrepreneurs everything they need to know about turning their good ideas into profitable businesses in Canada.

PREFACE xv1 WHY GO INTO BUSINESS FOR YOURSELF? 12 SETTING YOUR MONEY GOAL AND ATTAINING IT 51. Money versus Your Personal Life 52. Attaining Your Financial Goal 63 WHAT KIND OF BUSINESS IS BEST FOR YOU? 94 HOW TO GET STARTED 131. What Type of Business Structure Should You Choose? 131.1 A proprietorship 131.2 A partnership 141.3 A corporation 161.4 What to do if it is a husband/wife business 212. Federal Requirements and Regulations You Should Know About 222.1 Goods and services tax (GST) 222.2 Federal excise tax 23vvi Starting a successful business in Canada kit2.3 Customs duties 232.4 Federal income tax 242.5 Employment insurance 242.6 Canada Pension Plan 242.7 Privacy Acts 253. Provincial Government Requirements and Regulations You Should Know About 263.1 Licensing 263.2 Sales tax 264. Municipal Government Requirements and Regulations You Should Know About 264.1 Licensing 264.2 Municipal taxes 274.3 Building requirements 274.4 Hospitalization 275. Miscellaneous Information You Should Be Aware Of 285.1 Weights and measures 285.2 Packaging and labelling 285.3 Patents, copyright, trademarks, and industrial designs 285.4 Product standards 305.5 Immigration and citizenship 315.6 Foreign investment 315.7 Consumer protection 315 FINANCIAL FORECASTING FOR A NEW BUSINESS 331. Major Items to Consider 331.1 The market 341.2 Prices 341.3 Materials 341.4 Competition 341.5 Facilities and equipment 341.6 Employees 351.7 Production costs 351.8 Financial considerations 351.9 Working capital 352. Be Sure of Your Sources 363. What Forecasts Do You Need and How Do You Prepare Them? 373.1 Income and expense forecast 373.2 Cash flow budget 383.3 Break-even analysis 386 HOW TO GET MONEY 431. What Financing Alternatives Do You Have? 441.1 Equity 441.2 Borrowed money 452. Plan Your Financial Requirements 473. Where Do You Go to Rent Money? 483.1 Personal sources 493.2 Banks 503.3 Institutional term lenders 543.4 Credit unions 544. Using Your Home to Raise Money 545. Other Sources of Money 555.1 Leasing 555.2 Accounts receivable (factoring) 555.3 Venture capital 555.4 Angel investors 565.5 Private placement (minimum $500,000) 575.6 Franchising 575.7 Going public (minimum $1 million) 586. More Tips on Approaching Your Lender 587. Government Help 607.1 Business Development Bank of Canada 607.2 Industry Canada 617.3 Specialized federal programs to help you 617.4 Provincial programs 637.5 Confused? Call your local Canada Business Service Centre 638. Employment Incentives 638.1 New jobs 648.2 Skills development 648.3 Hard-to-employ persons 64Contents viiviii Starting a successful business in Canada kit7 WHAT ABOUT FRANCHISING? 671. What Is Franchising? 682. Advantages and Disadvantages 693. Beware the Hard Sell 704. Where Do You Start? 705. Check out the Franchsisor 716. The Franchise Contract 718 WHAT ABOUT BUYING A BUSINESS? 731. Advantages of Buying 742. Locating and Purchasing a Business 742.1 Select carefully 742.2 Seek opportunities 742.3 Properly evaluate each opportunity 752.4 Establish a fair price 752.5 Location is important 772.6 Ensure that the transaction is handled properly 772.7 Tax considerations in buying a business or franchise 783. Financing the Transaction 799 LOCATION — HOME OR OFFICE? 811. Rented Premises 822. Operating at Home 833. Taxes and Your Home 834. Your Personal Life Versus Your Business Life 8410 SALES AND MARKETING 851. Product or Service — Which Do You Sell? 852. Marketing Techniques 862.1 What is the right product? 862.2 What is the right price? 862.3 What is the right place? 862.4 What is the right promotion? 863. Satisfying Your Customers through Services 864. How to Attract Customers 874.1 Are you reaching the customers? 884.2 Do-it-yourself advertising 884.3 Get free advertising or publicity through news releases 884.4 Add something — and multiply sales 894.5 What’s in a name? Plenty! 904.6 Dramatize differences 905. The Importance of Your Sales Staff 906. Using Persuasive Pricing 916.1 Help a customer unload 916.2 When you cut the price, say why 917. The Big One-Time Order — Do You Take It? 928. The Giant Customer 929. You Needn’t Be Best 9210. How to Select New Products 9210.1 The “ideal” product for a small business 9310.2 Product life 9310.3 Make product appraisal a continual practice 9311. Wrong Location? Capitalize on It 9312. Move Your Merchandise to Where the Customers Are 9311 WINNING THE WAR ON PAPER 951. Don’t Be a Paper Collector 952. Keep Your Desk Organized 953. Bunch for Efficiency 964. Cut It Off at the Source 975. Take Shortcuts 976. What Records Should You Keep? 977. Use Technology That Will Help You 9812 KEEPING THE BOOKS 991. Finding an Accountant 992. Tips on Keeping Your Books (and Staying out of Trouble) 1012.1 Employee pay records 1012.2 Accounts receivable 1022.3 Accounts payable 1032.4 Other requirements 1042.5 What you should know about financial statements 104Contents ixx Starting a successful business in Canada kit13 WHAT ABOUT COMPUTERS? 1091. Plan 1092. Hardware and Software 1112.1 Software applications 1112.2 Operating systems 1142.3 Hardware 1153. Networking 1184. The Internet 1184.1 Business on the Internet 1184.2 Connection options 1205. Security 1225.1 Virus and malware protection 1225.2 Backup systems 1245.3 Powerline conditioning 1245.4 Office security 1256. Ergonomics and Your Environment 1266.1 Ergonomics are important 1266.2 What files? 1276.3 Other considerations 1277. Choosing a Supplier 1288. Training 1299. Administration 12910. Rules 13011. Conclusion 13014 USING TAX LAWS TO YOUR ADVANTAGE 1311. Introduction 1312. Income and Taxes in Canada 1323. Maximize Deductible Expenses 1323.1 Keep every receipt 1333.2 Accounting and legal expenses 1333.3 Advertising and promotion expenses 1343.4 Business entertaining and meals 1343.5 Business tax, fees, and licences 1353.6 Depreciation 1363.7 Car or truck expenses 1363.8 Convention expenses and holiday trips 1373.9 Cost of goods sold 1383.10 Delivery, express, and freight 1383.11 Interest, exchange, and bank charges 1393.12 Maintenance and repairs 1393.13 Office expenses, petty cash, postage, and stationery 1393.14 Medical and dental expenses 1403.15 Office expenses (in the home) 1403.16 Property taxes 1403.17 Rent 1413.18 Salaries, wages, allowances, and bonuses 1413.19 Supplies and materials 1413.20 Telephone, light, heat, and water 1413.21 Travel expenses 1423.22 New product development 1424. Where Does the Money at the Bottom Line Go? 1424.1 Incorporate to save tax dollars 1424.2 Splitting your income 1434.3 Set up tax shelters 1444.4 Delay tax payments for a year — or how to choose a fiscal year-end(Corporations only) 1444.5 Estate planning benefits 1444.6 Use salary and bonus accruals to save taxes 1444.7 Planning for your retirement 1454.8 Interest-free and low-interest loans to employees and shareholders 1455. What If You Have Business Losses? 14615 INSURING YOUR BUSINESS (AND YOURSELF) 1471. Introduction 1471.1 Agencies 1471.2 Direct salespeople 1471.3 Clubs and associations 1481.4 Insurance brokers or consultants 1482. Watch Those Loopholes 148Contents xixii Starting a successful business in Canada kit3. What Coverage Does Your Firm Need? 1493.1 Loss of physical assets 1493.2 Liability to third parties 1493.3 Business interruption 1503.4 Loss or sickness of key people 1503.5 You can afford some self-insurance 1503.6 All about business life insurance 1503.7 Taxes and insurance 15116 WHAT TO DO WHEN YOU ARE SHORT OF CASH 1531. Have Suppliers Bill You on Your Best Day 1542. Use Discount Day Payment 1543. Refinance Fixed Obligations 1554. Spread Out Major Purchases 1555. Make Every Day a Billing Day 1556. Plug Loopholes 1567. Keep Aware of Past Due Accounts 1568. Cut Off the Deadbeats 1569. Develop Short-Term Credit Terms 15717 HOW TO FIND AND KEEP GOOD EMPLOYEES 1591. Hire or Contract Out? 1591.1 Costs 1601.2 Space 1601.3 Replacement 1601.4 Availability 1601.5 Cross-promotion 1602. How to Find Employees 1603. How to Keep Employees 1613.1 Pride 1613.2 Consistency 1623.3 Listen and communicate 1623.4 What about the person who does not fit in? 1633.5 Compensation 1634. How to Evaluate Employees 1635. Handling Creative People 1646. What about a Health Benefits Package? 1647. Use Share Option Plans 16418 MORE SUCCESS TIPS 1651. Constantly Review Your Financial Goal 1652. Never Stop Learning 1652.1 Use your public library 1662.2 Know how to read books 1662.3 Use the Internet 1663. Your Competition Can Help 1664. Make Your Own Decisions 1685. Use Time Effectively 1686. Keep Expenses Down 1687. If You Want Something, Ask for It 1698. Does the Weather Affect Your Business? 1709. Know How to Protect Your Product 17010. Know How Much Past-Due Accounts Really Cost You 17011. Look Before You Cut Prices 17112. Use Pareto’s Law to Advantage 17113. Know Where to Go for Outside Help 17313.1 Government programs 17413.2 Suppliers can help you 17413.3 Join organizations that can help 17513.4 Use your banker for credit information 17513.5 Free student aid 17514. Discover How to Get Better Telephone Service 17514.1 Ask your telephone company to help you save money 17614.2 Telephone options 17614.3 Consider Interconnect 17814.4 Consider VOIP 17915. Do You Need a Buy-Sell Agreement? 18016. Why Not Export? 182APPENDIX — PREPARING A BUSINESS PLAN 189Contents xiiixiv Starting a successful business in Canada kitSAMPLES1 Income and expense forecast 402 Cash flow budget worksheet 413 Break-even chart 424 Balance sheet (Sole proprietorship) 1055 Partner’s equities (Part of balance sheet for partners) 1066 Shareholder’s equities (Part of balance sheet for a corporation) 1067 Profit and loss statement 1068 Buy-sell agreement 183TABLES1 Effective annual interest rate 1542 Short-term credit possibilities 1573 Sales increase needed when prices cut 172