How to Start a Small Business in Canada

Starting your own business is a significant risk; yet, it is a potential path to independence and getting rich.

Step 1 – Consider Your Skills
Before even considering such an undertaking, one has to carefully think of whether they are ready for this step. First of all, the potential small business owner must be strongly motivated and determined to face the potential challenges, which will inevitably come up at some point. One should also be aware if he or she possesses the skills and experience necessary for running a successful business. Having a reliable financial base to back up a new business is also an important factor to consider.

Step 2 – Come up with Business Idea
When one is confident enough in their abilities to start and run a small business, he or she needs to pick a business idea that will bring financial success. Profitable ideas depend on the place and the local population. The business owner should be able to carefully evaluate the situation and determine what goods or service would be in demand over the next years. A good idea also needs a good name to go with it – one that is both attractive and appropriate for the chosen business type.

Step 3 – Prepare Business Plan

The next step is writing a business plan that will include an executive summary of the new business, an overview of the respective industry, and detailed plans for its operations, management, finance, and marketing strategies.

Step 4 – Choose Ownership Type
The prospective businessman has to choose the type of ownership for his or her venture. Sole proprietorship is the easiest to set up; yet, it can be difficult to pull off by only one person. To reduce the potential risk, the business owner can attract a partner. This option can be successful as long as there is no disagreement among the partners. Under this arrangement, management is shared and so is decision-making. Another option is to set up a corporation, which has limited liability and is able to raise capital faster; yet, the incorporation of such entity is generally more expensive and involves extensive paperwork.

Step 5 – Find Financing
Having clarified these options, the new business owner can also look for sources of financing, such as small business loans or the so-called angel investors – people willing to provide financial support with the expectation of good returns.

Step 6 - Licensing
Finally, the business owner needs to take care of the legal details involved in setting up a business. This involves licensing of the business which is done by the respective municipality. Businesses may require other permits and licenses if they involve certain goods or services. All businesses in Canada are also required to register with the sales taxes system (GST, HST, RST, and PST). The requirements may vary depending on the province where the business is registered. If you plan to hire employees in the new company, you will also need to register with the Worker’s Compensation Board.