Starting a new retail business in Ontario can be an exciting venture with the potential for great success.
According to Colliers Canada, in 2021, total retail sales were the highest on record, reaching $680 billion. Retail sales were also expected to exceed $730 billion in 2022, an increase of 7%.
One of the biggest advantages of starting a retail business in Ontario is the province’s large and diverse population.
With over 14 million people, there are plenty of potential customers to target, and the province’s multiculturalism presents opportunities to cater to various markets.
However, starting a retail business is not without its challenges. One of the biggest hurdles is the high cost of real estate, particularly in major urban centers such as Toronto.
Additionally, the industry is highly competitive, and entrepreneurs must be prepared to stand out from the crowd.
Other challenges can include navigating regulations and compliance requirements, adapting to changing consumer trends and behaviors, and managing inventory and supply chain logistics.
Despite these challenges, with careful planning, research, and a solid business plan, starting a successful retail business is certainly possible.
With the right strategy, entrepreneurs can tap into the province’s vibrant economy and diverse customer base to build a thriving retail enterprise.
Step 1: Develop a Business Plan
It is important to develop a business plan for a new retail business in Ontario.
A well-written and well-researched business plan can help you understand your target market, evaluate the competition, secure funding, set goals and milestones, and plan for the future.
Here are some steps you can take to create an effective business plan:
Executive Summary: The executive summary should provide an overview of your business plan. It should include a brief description of your business, its goals, and the products or services you plan to sell.
Business Description: This section should provide more detailed information about your business, including your business name, legal structure, location, and history. It should also describe your target market, your competition, and your unique selling proposition.
Market Analysis: The market analysis should provide information about your industry, including market size, growth trends, and customer demographics. It should also analyze your competition and identify opportunities for growth.
Products and Services: This section should describe the products or services you plan to sell, including their features, benefits, and pricing. It should also include information about your suppliers and how you plan to manage inventory.
Management and Organization: This section should describe your management structure and the roles and responsibilities of each member of your team. It should also include information about your organizational structure, including your legal structure, ownership, and management team.
Financial Plan: The financial plan should include a detailed budget and cash flow projections for your business. It should also include information about your funding sources, such as loans or investments, and your financial goals, such as revenue targets and profitability.
Appendices: The appendices should include any additional information that supports your business plan, such as market research data, resumes of key team members, or legal documents.
Step 2: Choose a Business Structure
Choosing the right business structure for your new retail business is an important decision that can have significant legal and financial implications.
An appropriate business structure can protect your personal assets, reduce your tax liability, and facilitate business operations.
Follow the steps below to help determine the right system for your new retail business:
Understand the Different Legal Structures: The three main legal structures for a business in Ontario are sole proprietorship, partnership, and corporation. Each structure has its own advantages and disadvantages, so it’s important to research and understand each option.
Determine Your Business Goals and Needs: Your business goals and needs will help you determine which legal structure is best for you. For example, if you want to have complete control over your business, a sole proprietorship may be the best option. If you want to share ownership and responsibility with one or more partners, a partnership may be a better fit. If you want to limit your personal liability and separate your personal assets from your business, a corporation may be the best choice.
Consider Liability and Taxes: Liability and taxes are important considerations when choosing a legal structure. Sole proprietors and partners are personally liable for the debts and obligations of their business, while corporations provide limited liability protection. Taxes also vary depending on the legal structure, so it’s important to consult with a tax professional to understand the tax implications of each option.
Consult with a Lawyer or Accountant: Consulting with a lawyer or accountant can help you make an informed decision about the best legal structure for your business. They can provide guidance on legal and financial implications, and help you navigate the legal requirements of each structure.
Register Your Business: Once you have chosen a legal structure, you will need to register your business with the Ontario government. This may include registering for a business number, HST number, and any necessary licenses and permits.
Step 3: Register Your Business
Registering new businesses is a basic legal requirement; without it, you may not have legal protection for your business name and brand, which could make it difficult to enforce your rights if someone else uses your name or logo.
You may also be ineligible for certain government programs, financing options, or tax benefits that are available to registered businesses.
Here’s how you can register your business:
Choose a Business Name: The first step in registering your business is choosing a name. The name you choose must not be in use by another business in Ontario and should not be misleading to the public.
Register Your Business Name: Once you have chosen a business name, you can register it with the Ontario government. You can do this online through the Ontario website or by filing a Form 1 with the Companies and Personal Property Security Branch.
Obtain a Business Number: You will also need to obtain a Business Number from the Canada Revenue Agency. This number is used to identify your business for tax purposes.
Register for HST: If your business is expected to earn more than $30,000 in a year, you will need to register for a Harmonized Sales Tax account. You can do this through the CRA website or by completing Form RC1.
Register for Other Licenses and Permits: Depending on the type of retail business you plan to start, you may need to obtain additional licenses and permits from various government agencies. Check with your local municipal and provincial government to find out what licenses and permits are required for your business.
Register with WSIB: If you plan to hire employees, you will need to register with the Workplace Safety and Insurance Board (WSIB) to ensure that your employees are covered by workplace insurance.
Obtain Insurance: It is also important to obtain appropriate insurance coverage for your retail business, such as general liability insurance, property insurance, and product liability insurance.
Step 4: Obtain Licenses and Permits
Obtaining the necessary licenses and permits for your new retail business is a legal requirement and essential for operating your business in compliance with regulations.
It can protect your business, avoid fines and penalties, enhance business credibility, and provide access to financing.
The following steps can help you obtain licenses and permits:
Determine the Required Licenses and Permits: Research and find out what licenses and permits are required for your type of retail business in Ontario. You can find this information on the Ontario government website, or by contacting the appropriate government agency.
Complete the Application Forms: Once you have identified the required licenses and permits, complete the application forms provided by the government agency. Make sure you have all the necessary information and documents to support your application.
Submit Your Application: Submit your completed application and any required documents to the appropriate government agency. Make sure to submit your application well in advance to allow time for processing.
Pay the Fees: There may be fees associated with obtaining licenses and permits. Make sure to pay the fees in a timely manner to avoid delays in processing your application.
Wait for Approval: Once your application is submitted, you will need to wait for approval from the government agency. This may take several weeks or even months, depending on the complexity of your application.
Maintain Your Licenses and Permits: Once you have obtained the necessary licenses and permits, make sure to maintain them in good standing. This may involve renewing your licenses and permits periodically, and ensuring that you comply with any ongoing requirements.
Step 5: Secure a Location
Securing an appropriate location for your new retail business is important for attracting customers, targeting your market, standing out from the competition, controlling costs, complying with regulations, and reinforcing your brand’s identity.
It’s important to conduct research and consider your business needs and goals when choosing a location.
Here’s how you can find a good location:
Determine Your Budget: Determine how much you can afford to spend on rent or purchase of retail space. This will help you narrow down your search to spaces that fit within your budget.
Determine Your Space Requirements: Determine the size and layout of the space that you need for your retail business. Consider factors such as the type of products you will be selling, the number of employees you will have, and the amount of storage space you need.
Research Available Spaces:Research available retail spaces in the area where you want to start your business. You can do this online, by contacting a commercial real estate agent, or by searching for “for lease” or “for sale” signs in the area.
Visit Potential Spaces: Visit potential spaces in person to get a sense of the size, layout, and condition of the space. Make sure to take measurements and note any repairs or renovations that may be needed.
Evaluate the Location: Consider the location of the space, including factors such as foot traffic, accessibility, and parking. Choose a location that is convenient for your customers and employees.
Negotiate Lease or Purchase Terms: Once you have identified a suitable space, negotiate the lease or purchase terms with the landlord or seller. Make sure to review and understand all terms of the agreement, including rent or purchase price, security deposit, lease term, and any additional fees or expenses.
Obtain Required Permits and Licenses: Before you can move into your new retail space, you may need to obtain permits and licenses from the local government, such as a zoning permit or building permit. Make sure to obtain all necessary permits and licenses before opening your business.
Step 6: Set Up Your Store
After careful planning, securing locations, and getting permits, it’s now time to set up your new store.
Careful planning is again required at this step to make your store run more efficiently, give you a competitive edge, reinforce your brand image, and increase productivity.
Here are things to consider when setting up your store:
Create an Inventory List: Determine the type and quantity of products you want to sell in your retail store. Create an inventory list that includes the names, descriptions, and prices of the products.
Determine Your Budget: Determine how much you can afford to spend on inventory, fixtures, and equipment. This will help you prioritize your purchases and avoid overspending.
Research Suppliers:Research suppliers for your inventory, fixtures, and equipment. Look for reputable suppliers that offer high-quality products at reasonable prices.
Compare Prices and Quality: Compare prices and quality from different suppliers to find the best value for your money. Consider factors such as shipping costs, lead times, and return policies.
Place Your Orders: Place orders for your inventory, fixtures, and equipment. Make sure to confirm the lead time and delivery date with the supplier.
Set Up Your Store: Once your inventory, fixtures, and equipment have arrived, set up your store. Arrange your products in an appealing way, and make sure your store is clean and inviting.
Keep Track of Your Inventory:Keep track of your inventory levels and reorder products as necessary. Use inventory management software to help you track sales and manage your inventory.
Step 7: Create a Marketing Plan
Creating a marketing plan for your new retail business is important as it helps you to clarify your business goals, establish a budget, define marketing channels, measure results, and compete effectively.
It’s important to consider your target market, budget, and business goals when creating your marketing plan.
Define Your Target Audience: Identify your target audience based on factors such as age, gender, income, location, and interests. This will help you tailor your marketing efforts to the needs and preferences of your potential customers.
Set Your Marketing Goals: Determine your marketing goals, such as increasing sales, building brand awareness, or expanding your customer base. Your goals should be specific, measurable, and achievable.
Identify Your Unique Selling Proposition: Identity what sets your retail business apart from your competitors. This could be factors such as product quality, customer service, or price.
Develop Your Marketing Mix: Develop a marketing mix that includes the four Ps: product, price, promotion, and place. Determine the products you will sell, the pricing strategy you will use, the promotional tactics you will employ, and the channels you will use to reach your target audience.
Determine Your Budget: Determine how much you can afford to spend on marketing. Your budget should include costs such as advertising, promotions, and marketing materials.
Implement Your Marketing Plan: Implement your marketing plan by executing your marketing mix. This may include tactics such as social media advertising, email marketing, influencer partnerships, and in-store promotions.
Monitor and Evaluate Your Results: Monitor and evaluate your marketing efforts to determine what is working and what is not. Use data such as sales figures, website traffic, and customer feedback to measure the effectiveness of your marketing plan.
Conclusion:
Starting a retail business in Ontario can be a rewarding and lucrative venture, but it also requires careful consideration and planning.
Entrepreneurs must be prepared to face challenges such as high real estate costs and fierce competition while navigating complex regulations and managing inventory and supply chains.
However, with the province’s strong economy and diverse customer base, there is ample opportunity for success.
By developing a solid business plan and leveraging the advantages that Ontario has to offer, aspiring retail entrepreneurs can turn their dreams into a thriving reality.
Maurice (Moe) Muise learned the ins-and-outs of government while an employee of the Government of Canada in Ottawa for 10 years. His current focus is helping small businesses in Ontario to identify and maximize government grants to grow their business.
Click here to learn more about Moe’s background and how he can help your business.
