Points to Consider When Starting Your Own Business

Summary

Entrepreneurs have always turned their ideas into goods and services. They have met the needs and wants of consumers and, at the same time, they have built rewarding careers for themselves.

Becoming Your Own Boss
Many people start a small business in order to enjoy the perceived rewards of freedom and independence. This is understandable because owning your own business can offer you the opportunity to experience freedom:

• the freedom to use your own ideas;
• the freedom to be the boss;
• the freedom to not be fired; and
• the freedom to earn as much as you want.

The reality of small-business ownership can be quite different. Many small business owners will tell you that they work more hours than when they worked for someone else.  A large number of those hours are the result of demands of others.

Some of the more demanding aspects of small business ownership can be:

• Regulations imposed by provincial and federal governments. Some of the other regulations that must be adhered to are: federal and provincial licensing; local safety and health regulations; environmental protection rules; employee deductions and labour standards.
  
• The customer; you must satisfy your customers, for these are the people who will ultimately decide whether or not your business will succeed. You will be successful only if you can provide them with the goods and/or services that they want or need badly enough to pay for.
  
• Financial concerns include the people who provided you with funds to get your business started. They might be relatives, friends, bankers, etc. No matter who they are, they will have a vested interest in how well you run your business.
  
• Even your competition will become more significant as their policies and competition will affect the way you run your business, the hours you work, prices, profits and more.
  
• Most importantly, you alone will take full credit when errors in business decisions are made. A poor decision that can result in losses not only to yourself, but to your employees, creditors and customers as well.

It is money, after all, that is the bottom line. Your success depends upon your ability as a boss to make sure your business is making more money than it spends.

Why Will "You" Succeed?
At this point, the idea of running a small business may not seem very attractive. Don't get discouraged. Running your own business can provide you with a tremendous source of self-satisfaction and pride.

Most small business experts urge prospective business owners to carefully and completely analyze their potential to succeed and assess their strengths and weaknesses. Typically, you will begin by analyzing yourself as a future entrepreneur. What kind of person are you? What technical or special knowledge do you have?

Self-confidence and drive, innovative thinking, goal-orientation and business and technical knowledge are necessary for success. These traits must also be tempered with realism. Knowing the limits of your own abilities and not being afraid to ask for help is imperative.

Successful business people know what they want to achieve. They determine where they are going by setting goals, paying attention to details and motivating others around them. It is wise to understand and follow the lead of those successful people around you.

What Kind of Business
The type of business that you enter should complement your experience, interest and/or technical knowledge. It is fine for you to dream about becoming your own boss someday; however, before you put too much work into your business, make sure that the area you choose is the right one for you.

When deciding what business to start, you may want to consider what hobbies and/or interests you have as well as your experience and background. If you are interested in an area in which you have little experience, you may want to seek some training before you begin. Arranging a job in the area of interest or acquiring a mentor are two ways that may help you gain the knowledge and experience that you need.

Other factors that are equally as important as the above mentioned are:

1. Is there a need for the goods and/or services you are going to offer?
2. Are you equipped to fill the need?
3. Will there be a market for your product in the future?

Fads, technology, and innovations all affect the opportunity for any business to be and remain successful.

The Odds of Success
Starting your own business is risky.  Of all companies started, just about a third fail within one year, and 80 percent will fail within three to five years, but after five years the rate of discontinuation drops rapidly.

Lack of management experience accounts for nearly all of small business failures. This does not mean that all small business managers have poor management skills. More accurately it refers to the person's ability to deal with the "unknown" that is likely to occur.

Desire and persistence along with innovative thinking improve the odds. In tough times, a small business can quickly change direction by introducing new ideas and creating better methods to help move its product and sustain an adequate income.

Start-up Money
After you have decided that you want to be in business, you face the problem of money. How much money will it take to start your new business? How much operating capital will you need?

There are business plan guidelines available which can help you put together a very good estimate of your start-up and continuing capital requirements. A business plan will provide information of your proposed venture to lenders, investors, and suppliers to demonstrate how you plan to use their money, and to establish a basis for credibility of your project.

For further information:
see the document  Business Plan Guide 

The Interactive Business Planner (IBP) uses the capabilities of the Internet to assist you in preparing a 3-year business plan for a new or existing business.

For further information:
visit the Web site:
The Interactive Business Planner
http://www.cbsc.org/ibp/

It is recommended that you become well acquainted with your local bank, as it will probably be the main outside source of capital.

All the above information should be helpful to you as you think about establishing your new business. Remember, it never hurts to gain more knowledge in your business area. Few businesses have gone broke because the owner knew too much about his/her business.

Related Web Sites

• Salute to Small Business/Small Business Central
  http://www.ontario-canada.com/ontcan/en/starting/sb_central/sb_central_home.jsp
• Online Small Business Workshop
  http://www.cbsc.org/osbw/
• Business Start-Up Assistant
  http://bsa.cbsc.org/
• Guide for Canadian Small Businesses
  http://www.ccra-adrc.gc.ca/E/pub/tg/rc4070/rc4070eq-01.html

• Important Notices
• Before You Start - Understand These Business Terms
• Legal Issues in Starting a Business
• Checklists for Going Into Business
• Feasibility Checklist for Starting a Small Business
• List of Fact Sheets
• Business Start-Up Info-Guide
• Financing for Starting a Business Info-Guide

Adapted with permission from "Points to Consider When Starting a New Business": © Saskatchewan Economic and Co-operative Development, Regional Economic Development Services