For someone thinking about starting a small business in Ontario, it is easy to talk yourself out of the idea. The economy always could be better. You can’t quite find the right location to rent. Or maybe you’re worried whether your business name is clever enough. (The latter may be a clear sign that you’re stalling.)
The truth is that starting a business is nearly always a daunting process. But at some point, you’ll never know whether you can make it a success unless you overcome your fears and pull the trigger.
Granted, quite a few Canadian startups don’t survive beyond several years. But more make it than you may think, according to an Innovation, Science and Economic Development Canada study, which shows:
Those odds are not too bad, especially considering how many startups aren’t anywhere as near well-prepared as they should be before unlocking the doors and turning on the neon “OPEN” sign.
You can give yourself a better chance to have both short- and long-term success when you take the time to prepare yourself as much as you can. (Better preparedness is likely to silence the doubting voice inside your head as well.)
Our beginner’s guide on how to start to a small business in Ontario aims to help you with your research. We’ll discuss a variety of things you need to know to give yourself the best chance at making it 3, 5, or 10 years and beyond with our 10 steps to starting a business in Ontario.
Let’s get started!
Brainstorming Ideas for a Business
According to an ISED Canada Small Business Branch study, 1.14 million small businesses existed in Canada at the start of 2016. Ontario had more than 407,000 small businesses at that time.
Although those are huge numbers, it doesn’t mean that all of the good ideas are gone. Whether you’re coming up with a new idea that no one else is doing, or you’re improving on what a current business is doing now, there are many opportunities that will make a viable business.
What Type of Business Should You Start?
As a general rule, the vast majority of small business startups will either be selling products or providing services. Some small businesses even can do both, but it usually is better to start with one or the other and then migrate into the second area as you grow and gain solid footing.
Consider which type of business fits your skill set and interest level better and focus on ideas for that type of business.
When trying to come up with a business idea in Ontario, it may help you to discuss your ideas or to discuss the process with others who have gone through it.
Your local Better Business Bureau may be able to help you find other small business startups in your local area who are willing to provide help with formulating a business idea.
You may be able to network with other Canadian small business entrepreneurs through Facebook, LinkedIn, or other social media sites too.
Deciding the Best Way to Start
As one final consideration when brainstorming startup ideas, think about how you want to obtain the business.
Online Vs. Offline Businesses
Think about the type of business you want to run. Do you want to have a physical presence in Ontario, or are you looking for an Internet-only business that you may run from your Ontario home with no brick and mortar location? Some businesses may need both an offline and brick and mortar presence.
Developing an Online Marketing Presence
Regardless of whether you plan to create a brick and mortar offline business, a fully online business, or a combination of both, you will want to have an online marketing presence.
Very few customers are simply going to walk into your business or make an online purchase from you without doing Internet research about your business.
You’ll want to start with a professional looking website. This should give information about your business, provide an ability to contact you, and explain what you are offering as far as products or services.
If you are selling products online, the website will serve as your storefront. So instead of having a brick and mortar store, people will visit your website to order your products or hire your services.
Creating a Social Media Following
Another huge aspect of marketing for either an offline or online type of business is developing your social media presence. Customers, especially those using a mobile device to learn more about your business, expect to be able to do so through social media.
You can use social media to try to draw in new customers with contests or discounts. Once someone is a customer, social media can encourage them to return on a regular basis.
Social media also can entertain them or inform them about new products and services. Sharing photographs and videos can give the potential customer a feeling like he or she is an important part of your business. Making a positive emotional connection with your customers over social media can drive repeat visits and purchases.
Some customers want to ask questions or provide feedback on your business performance over social media too, so this is a good way to engage with customers.
If a customer had a negative experience with your business, he or she may go onto social media to let you and others know about it, so anticipate some negative feedback. Use this as an opportunity to become aware of problems in your business flow and to attempt to fix the problem the customer had, showing your skills at solving customer problems for your entire social media audience to see.
Seeking Help With Online Development
Understandably, some small business owners are far more adept at running social media campaigns and building and operating a website than others. If you need to hire someone to help you in these areas, it will be a good investment.
For a small business startup, it is almost impossible to overstate the importance of having a strong and professional looking online presence. If you do not have a trustworthy online look, customers almost certainly will pass you by, and you will have no idea why.
You also may need to hire someone to handle updates to the website and to social media, ensuring customers remain engaged and have a reason to follow your business.
Considerations for an Offline Business
For a brick and mortar business, you will need to perform several steps unique to this type of setup, including:
FedDev Ontario has a number of resources to help offline businesses perform the tasks required to be up and running in the province.
Considerations for an Online Business
When running an online business, you will also have a number of steps to follow to meet the needs of this type of business, including:
The Ontario government’s e-Business Toolkit is a nice resource for those seeking to start an Internet based business.
Understanding Government Requirements
You almost certainly will need to file paperwork with either the provincial Ontario government, the federal government, or both before you can start the business.
If you are struggling to understand some of the terminology the government uses with regard to business registration and other aspects of starting or operating a business, the ServiceOntario Business Information Guide is a great resource.
Legal Name and Incorporation
You can register the name for your business through the ServiceOntario website. Search through existing business names at this website to determine whether someone already owns the business name you want to use.
Understand that if you are running a sole proprietorship and using your own name as the business name, you do not have to register the name of your business.
Registration for Tax Purposes
As you begin operating your business, you will need to apply for and receive a Business Number (BN) from the Canada Revenue Agency (CRA). The BN is a requirement for managing your tax payments and tracking.
The CRA allows businesses to obtain their BN online, by phone, by mail, or by fax.
Along with the BN, you may need to register for a few other programs related to taxes through the CRA, including:
Licenses and Permits
The best resource for business startups seeking information on the licenses and permits they may need to have on hand to operate the business legally is through BizPaL. This is a free government resource for businesses.
The BizPaL website allows you to search for licensing and permitting requirements at a federal or provincial level. With the Ontario section of BizPaL, you can search for information based on your location or on your industry.
Other Governmental Information
When starting a business in Ontario, you need to be aware of any provincial regulations that could affect you. The provincial government maintains a searchable regulations registry containing information about regulations that currently are in place, as well as about proposed regulations.
Typical Startup Costs
Before you begin seeking funding for your startup, it is important to have an idea of how much money you need to have the business up and running.
With startup cost estimates in hand, you can determine exactly what kind of income you’ll need to break even or turn a profit. When you start calculating these costs, you may find that this particular business idea is not viable, because starting the business is too expensive, leaving you unable to move the business into the black for several years.
Some typical startup expenses you may encounter include:
For someone who is running a sole proprietorship from home that consists of selling freelance proofreading services, startup costs will be very low, other than maybe a computer and a fast Internet connection.
For someone starting a restaurant, startup costs will be extremely high, as this business requires a lot of equipment, advertising, and supplies, as well as several employees.
The amount of funding you have available at startup may play a key role in determining what type of business you can start.
How to Find Financing
Financing is available from a number of sources. According to ISED, Canadian small and medium businesses in 2014 accumulated $53.5 billion in funding.
Many small businesses used multiple sources of funding to obtain the financing they need, according to ISED. The percentage of businesses that used each type of funding in 2014 included (with many businesses using more than one type):
Other options for funding your small business in Ontario include credit cards, crowdfunding, government secured loans, and banking lines of credit.
If you have some collateral to put up in a bank loan, either personal property or property belonging to the business, you could receive a lower interest rate and a better chance of receiving approval.
The Ontario Network of Entrepreneurs has several ideas that can help you find funding for your startup.
How to Write a Business Plan
As you’re studying the different types of businesses you may want to run, you should be taking notes on the potential market you will be entering, the requirements for startup costs, your plans for future growth, and projected profits you can achieve.
You then can compile all of this information into a business plan, once you decide on an idea.
Importance of a Business Plan
Nearly every startup is going to want to create a business plan. This simply is a guidebook that provides answers to questions about how you plan to start the business, how it will operate as you move forward, and how you plan to grow it in the future.
It is important to have a business plan in hand, especially if you are seeking funding from other sources. Those considering investing in your business or providing you with a business loan will want to see your business plan.
An incomplete plan will not give investors confidence that you have a chance at success. If your business plan is sloppy, investors may believe you will run the business in a sloppy manner too.
Sharing Your Vision With Others
The business plan helps investors see your vision for starting the business. After all, you should be the expert on what the business will look like. You know why you are the right person to run the business successfully.
However, your potential investors almost certainly will not be able envision the business in the same way that you do. You can use the business plan to help them understand and share your vision, which should make them feel more comfortable investing with you.
Writing the Business Plan
Here is a checklist of items you should have in your business plan. Use an outline format, where you summarize the main points on the first page or two and give more details on those main points throughout the rest of the document.
How to Find Business Advice
If you are feeling unsure about the process and steps for starting your new small business in Ontario, seeking help from others may help you feel more comfortable. You also may discover that your initial ideas need a lot of tweaking to be viable, thanks to the honest feedback and advice from someone with experience.
We mentioned earlier attempting to network with others who have gone through the process of starting a small business. But there are other areas to find advice for a busines startup.
Ontario Startup Resources
One of the best places to find business advice is through Small Business Enterprise Centre (SBEC) locations throughout Ontario. Through these centres, those looking to start a business will be able to obtain one-on-one help with a variety of items they may need for their small businesses.
Whether you are in the very early planning stages of a business startup, you’re seeking advice for creating a business plan, or you need help with putting the finishing touches on your new business before you go live, your local SBEC can help. Some of the services the SBEC provides include:
Resources for High Growth Businesses
If your business will be starting fast, carrying at least 10 employees and having at least $2 million in sales in your first year, you are eligible for advice from the Ontario Business Advisory Services. Some of the services you could receive through this program include:
Ontario Network of Entrepreneurs (ONE)
ONE is an advisory service for those looking to start or grow businesses in Ontario. Many of the advisory services through ONE are free, but you would have fees for seminars or other events that ONE sponsors, should you choose to attend.
Startups will be able to access both resources found online and resources found in-person through ONE.
Canada Business App
The federal government’s Canada Business App gives you a host of information about governmental programs and services, including those that are specific to your business area or industry. This mobile app is available for Android and iOS.
The FedDev Ontario website has an extensive collection of advice for small businesses and startups, helping you figure out exactly what you need to do.
The site even contains step-by-step guides for how to start certain kinds of businesses, such as a daycare, a salon, or a restaurant. Many of the documents at FedDev Ontario are available in languages other than French and English, providing excellent resources for immigrants to Ontario.
Business Tax Considerations
There are a number of tax situations startups in Ontario must understand, involving both provincial taxes as well as federal taxes.
As a small business, you will have to pay tax on your profits, but you also may need to collect certain types of taxes from your customers that you’ll pass directly to the government.
As we mentioned earlier, you will need to obtain a BN for starters. After that, here are some of the items related to taxation you need to understand.
Common Mistakes to Avoid for Startup Businesses
There are a few mistakes Canadian startups make repeatedly that lead to a higher failure rate. Learn from the mistakes of others. Here are 12 common mistakes startup businesses should avoid.