Frequently Asked Questions

What's it like to be your own boss?

Entire books have been written about the self-employment lifestyle. There are varying opinions, but you must live it to understand it. There are many misconceptions about business life, as you'll learn below in "Myths & Truths".

I've got a great idea, but no money. How can I start my business?

Financing a new business is so important but can often prove difficult, especially if you're young and without collateral. There are a number of finance programs available to young people, such as the Student Venture program or the Young Entrepreneurs Program from the Royal Bank and the Government of Ontario. Not every new entrepreneur needs a loan, however. Try "thinking outside the box" to create alternate methods of finance. Can you strike a deal with suppliers/creditors? Can you pre-invoice customers? Do you have personal assets to invest in your business? Can you keep a part-time job while you start your new business? Can you sell shares to raise capital, even if it's from friends and family?

Seek advice on financing your business. Whatever you do, get enough money! Remember - revenues may not be realized as quickly as you hoped. Those bills can stack up quickly. Unless you start your business well financed, it's best to ease into it by keeping some form of income such as a part-time job.

Do I need an education in business studies to succeed as an entrepreneur?

A business education certainly helps. However, many successful entrepreneurs do not have formal business training. If you want more business skills without going back to school full-time, consider taking a part-time course to learn any skills you're missing. Again, successful entrepreneurs surround themselves with skilled people - so ask for help or hire employees with complementary skill sets. Many government-sponsored programs offer mentoring for new entrepreneurs, such as the Business Development Bank of Canada. Locally, organizations such as the Community Opportunity & Innovation Network (COIN) or Junior Achievement can help young people to acquire business skills in a learn-by-doing environment.

What is the most important business skill?

There are many opinions, but without sales ability a new business can stumble. Some of the best new enterprises fail because the owners simply don't like the idea of going out to sell. Selling can be intimidating, but very rewarding in both a personal gratification and monetary sense. If you're hesitant to sell, take a sales training course. Find a professional salesperson and ask if you can job shadow for a few weeks. Talk to as many salespeople as you can find and get their advice. Or, if you have the resources, hire a professional salesperson of your own.

Sooner or later, an entrepreneur must promote their product, service or idea. You sell to the bank when you seek financing. You sell to suppliers when you seek credit. You sell your concept to partners or employees. You'll definitely sell to your customers. Often, entrepreneurs typically make great salespeople for one reason: passion. Enthusiasm is contagious, so be sure to use it. Combine your passion for your business with some professional sales skills and you'll be sure to achieve results.

Why do new businesses fail?

The two most common reasons for small business failure: poor management and insufficient cash flow. (Although poor cash flow is often the result of poor management!) While there are numerous factors behind new business failure, most are caused by "entrepreneur over-optimism": we often underestimate the time required to produce desired business results. The solution? SEEK HELP. No entrepreneur - especially a novice - can expect to achieve success on his or her own. Identify your weakest skill area (or something you just hate doing, like accounting) and find or hire professional help. There are many organizations listed in this website that can provide free or low cost assistance to help your new business succeed.

I don't like the idea of paying all those taxes. What should I do?

Taxes are a fact of business life. Revenue Canada does recognize the importance of small business to the economy and does provide advice for new entrepreneurs. Remember, though, that your income less expenses will be taxed. Many entrepreneurs fail to build in a tax allowance when pricing their products or services and end up losing money.

Taxes are another reason to invest in a bookkeeping or accounting service. If you don't like math or keeping the books, hire some help. Many small business owners will keep their own records using store-bought accounting software such as Mind Your Own Business or Simply Accounting, then take their files to an accountant to prepare year-end tax reports. If you do keep your own books, at least let a professional do your income tax return. These professionals are worth the investment. And, your form of business organization (sole proprietorship, partnership, corporation) may affect your taxation rate.

GST must be charged on all products and services. PST must be charged on all retail sale products (call the Ontario Ministry of Finance for more details). 7% GST must be charged to all of your customers if your business earns over $30,000 per year in revenue.

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MYTHS & TRUTHS

MYTH: Entrepreneurs keep their own hours and spend little time working.

TRUTH: Entrepreneurs may keep their own hours, but usually work twice as many hours as an employed person. You'll have schedule flexibility, but a lot more work to do.

MYTH: Entrepreneurs make a lot of money.

TRUTH: We wish! While there is always the potential to make substantial revenues, it all depends on your business idea, how well you run your company, how smart you work, what your expenses are and a number of other factors. Just because you're in business doesn't mean you'll get rich. In fact, money isn't the objective for many entrepreneurs. Some simply want to control their own destiny, enjoy flexible working hours or want to work from home to be close to family. Most entrepreneurs will identify personal satisfaction as their biggest motivator.

MYTH: You need to be older and well established financially to start a business.

TRUTH: In Canada, people under the age of 30 start 30% of all new businesses. This is the Era of the Entrepreneur, a time when conditions are most favourable for business start-up. Yes, it is important to adequately finance your new business as discussed in this website, but consider starting out small. Apple Computers was started in a garage... Perhaps your best business attribute will be your youth. Energy, enthusiasm and time to fail and recover are very valuable assets. We tend to take fewer risks when we're older, so why wait? Develop a plan and explore entrepreneurship today.

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