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AustinMcmahon,United Kingdom,Researcher
Published Date:16-07-2017
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BUSINESS START-UP HANDBOOK 519 Main Street East, Hawkesbury, ON K6A 1B3 Tél: 613.632.0918/1.877.632.0918 Fax: 613.632.7385 TABLE OF CONTENTS THE 10 MOST FREQUENTLY ASKED QUESTIONS ........................................................................................... 2 EVALUATING THE START-UP DECISION ......................................................................................................... 7 SO, YOU WANT TO BE AN ENTREPRENEUR?… .......................................................................................... 7 DEVELOPING BUSINESS IDEAS AND OPPORTUNITIES ............................................................................. 12 BUSINESS OPTIONS ..................................................................................................................................... 19 STARTING A BUSINESS ................................................................................................................................ 23 THE 10 STEPS TO STARTING A BUSINESS ................................................................................................ 23 PREPARING YOUR BUSINESS PLAN ......................................................................................................... 24 BUSINESS PLAN CHECKLIST ..................................................................................................................... 36 ASK THE EXPERTS .................................................................................................................................... 50 ARRANGING YOUR FINANCING ............................................................................................................... 53 OVERVIEW OF FINANCING PROGRAMS .................................................................................................. 60 UP AND RUNNING ....................................................................................................................................... 64 CATCHING YOUR BREATH: HOW TO ANALYZE YOUR CURRENT SITUATION .......................................... 64 TAKING YOUR PULSE: HOW TO RECOGNIZE SIGNS OF PROBLEMS ........................................................ 69 UP AND RUNNING CHECKLIST ..................................................................................................................... 72 STREETWISE ADVICE FROM ENTREPRENEURS ............................................................................................ 75 BUSSINESS START-UP HANDBOOK Page1 THE 10 MOST FREQUENTLY ASKED QUESTIONS 1. How do I start a business? There is no single answer to this question. There are a number of factors that should be investigated when starting a business. Have you considered... Start-Up Check List (a sample)  Do you have a business idea?   Who will your customer be?  Have you started your business plan?  Is this going to be a full time or part time venture? Do you need a business license(s)?  Have you started your market research?  Are you going to charge GST/HST?  What business structure have you decided on?  (This list is just a sampling of some of the questions you will be faced with when considering going into business. You are on the right track if you have started to ask yourself similar questions). Did you know? ...The average person spends more time planning a one month holiday than planning the start-up of a new business 2. What loans are available for business start-ups? In addition to funding provided through the chartered banks and other financial institutions there are also some loans provided through partial guarantees by provincial and federal government departments. The programs are generally geared towards both, existing and start-up businesses with varying degrees of criteria and eligibility requirements. Specialized programs are also in place aimed at assisting young entrepreneurs seeking funding, encouraging region-specific initiatives, or facilitating growth in certain industry sectors. 50% of new businesses are financed through loans provided by friends and family be sure to have them share in your plans and excitement. They are often your most important "partners" and supporters. 3. Are there grants available for business start-ups? While there has been a great reduction in the number of grants available to general business start-ups over the past ten years, there are monies available. Most of these programs are federally funded and are targeted strictly to specific industries, geographical areas or particular groups of entrepreneurs. BUSSINESS START-UP HANDBOOK Page2 4. Are there any loans available for existing businesses? The Canada Small Business Financing Program is governed by the Small Business Loans Act and is a loan guarantee from the federal government. The loan is available for the purchase of land or premises, equipment and/or renovation required within a premise. Working capital requirements are not eligible. The loan is administered by the chartered banks and covers capital expenditures up to 250,000. 5. Where should I start looking for a good business opportunity? Identifying a good business opportunity is an ongoing process and requires considerable thought and research. Business opportunities can be identified through a number of sources including your workplace, magazines and newspapers, trade shows and the Internet. A sound understanding of consumer trends and lifestyles may also lead to innovative business ideas. 6. What are the different business structures? The three most common business structures are: 1) sole proprietorship, 2) partnership and 3) corporation. The three structures are outlined in the following chart format for ease of comparison. 1) Sole Proprietorship Advantages Disadvantages  Ease of formation  Unlimited liability  Low start-up cost  Lack of continuity  Greatest freedom from regulation  Difficulty raising capital  Owner in direct control  Less status and credibility All profit/loss to owner  2) Partnership If you are establishing a partnership, be sure to seek legal advice to prepare a proper partnership agreement. This could help avoid disagreements and considerable legal costs later. Advantages Disadvantages  Ease of formation Unlimited liability   Low start-up cost  Lack of continuity  Limited regulations  Responsibility for partners’ business  Broader management base obligations  Increased source of investment base  Difficulty raising capital  Possible tax advantages  Partner conflicts Divided authority  BUSSINESS START-UP HANDBOOK Page3 3) Corporation Tax and legal implications vary depending upon the business structure, so don’t forget to get legal and professional advice before you make your decision. Advantages Disadvantages  Limited liability  Closely regulated  Transferable ownership  Higher start-up cost  Ease of raising capital  Losses remain within the business  Separate legal entity  Yearly reporting  Possible tax advantage  Extensive record keeping required  Continuous existence  Possible charter restrictions 7. What is the difference between a provincial corporation and a federal corporation? Provincial Federal Application Fee On paper 360. On paper 250. Online Statutory Fee 300 Online 200 Office Established Ontario only Any Province NUANS Search Required (for name search) Yes Yes National Selling Restrictions No No International Selling Restrictions No No Required Extra-Provincial License No Yes Other Business Requirements Varies depending on the province Varies depending on the province Corporate Filings Yearly fee – none Yearly fee – 40 online 20 Where to Register Service Ontario Corporations Directorate Land Registry Office 365 Laurier Avenue West, 110 Laurier Ave West, 9th Floor, Ground Floor, Ottawa, ON K1A 0C8 Ottawa, ON K1P 1J1 Tel: (613) 941-9042 Tel: (613) 239-1230 Corporations Canada 8. Is it mandatory to register for GST/HST? If your gross revenues over a 12-month period do not exceed 30,000, registration is optional. However, once you surpass 30,000 in gross revenues you must register and collect GST/HST. The decision to register for GST/HST should not be based solely on revenues. Your customers may require that you have a GST/HST number to do business. If you are not registered to collect GST/HST, you may not take advantage of the GST/HST Input Tax Credit. BUSSINESS START-UP HANDBOOK Page4 By not being registered for GST/HST, your customers may know your revenues are less than 30,000. This may make it more difficult to secure business with larger Corporations who may be concerned about the stability of a smaller company. 9. I have heard so much about the business plan – what is it? The business plan is simply a document that contains information about your business. The information should be current and accurate – supported by facts. It should be easy to read and use. If used properly, it will be an important tool in guiding your business. A business plan will provide you with a road map or path to follow so you have direction and focus. It will be used as a tool on which to base your business decisions. A business plan can help you determine whether the venture will be viable or not. The plan forces you to look at each aspect of the business under a magnifying glass to ensure you have researched all areas before starting your business. "Long range planning does not deal with future decisions but with the future of present decisions." Peter Drucker Whether you are selling your idea to the bank or to your family, you need a business plan. If you are negotiating with investors, partners, or financial institutions, a business plan is essential to assist financiers to evaluate the investment opportunity. 10. Where do I start? The key to writing a business plan is to first identify what you already know and devise a plan to gather the information necessary to fill the gaps. Put it in Writing Get an outline (table of contents) of a business plan. At the top of separate pages write the titles of the various sections. Next, spend 2-3 hours writing – point form only – the information you already know about each section. Check to See What You Don’t Know Gather information on what should be included in the various sections and identify what you are missing. This information can be obtained through publications and courses on this subject and/or seeking the advice of a consultant or professional. BUSSINESS START-UP HANDBOOK Page5 Start Your Research There are numerous sources of information available for today’s entrepreneur. The Entrepreneurship Centre is an excellent place to start as it provides one-stop access to these sources. Time Line the Plan It is critical that the development of the business plan be time lined – if not entrepreneurs may become bogged down with researching and time may fly by without the entrepreneur taking the final step to implementation. BUSSINESS START-UP HANDBOOK Page6 EVALUATING THE START-UP DECISION So, you have decided that entrepreneurship might be for you – the idea of being your own boss appeals to you and you are interested in joining the thousands of Canadian individuals who strike out on their own every year. The following section explores what you need to consider before taking the plunge. SO, YOU WANT TO BE AN ENTREPRENEUR?… In pursuing your dream, you will be the biggest factor in your own success – your ability to identify an opportunity, execute an idea or deliver a service. In this section we will consider the all-important question: What are the qualities and personality traits that come together to make the successful entrepreneur? Many studies have been conducted that delve into the personality of entrepreneurs. The results of these studies can help us begin to build the profile of the successful entrepreneur. For example: they were most likely the first born in their family; they held their first job before they were fifteen; and while they are college graduates, they were average students. These kinds of studies of the entrepreneurial psyche may be interesting, but as you evaluate your entrepreneurial potential, you need to know more. After all, being the second born in your family, or being at the top of your class, does not preclude entrepreneurial success. While many of the key characteristics and attitudes that make up the entrepreneurial "right stuff" can be acquired or learned, the importance of innate attributes such as physical health, energy and emotional stability cannot be overlooked. The life of the entrepreneur is a demanding one and there is little distinction between professional and personal life. That they are comfortable in this all-consuming role is critical to the success of the business and the satisfaction of the individual. In this chapter we will look at what have been described as the key elements of the entrepreneurial "right stuff" the characteristics that are essential to the successful entrepreneur. It is important that you evaluate yourself as objectively as possible. There is no right or wrong answers and an honest evaluation will help you map your characteristics against those that define the successful entrepreneur. Is It You? Ask yourself if you agree with the statements listed in the "Is It You?" section following each characteristic description. The more strongly you agree with the statements, the more closely your characteristics match those of the successful entrepreneur. BUSSINESS START-UP HANDBOOK Page7 Determined and Dedicated Determination, dedication, perseverance, commitment– many consider these to be the most important of all the characteristics of the entrepreneur. In fact, strength in these areas can make up for many other areas of "weakness". Starting a new business is never easy and these characteristics are necessary tools for those who persevere through the difficulties of start-up – the practical implications of which can put anyone’s dedication and determination to the test. Is It You? □ I am prepared to make sacrifices in my personal life to ensure the success of my business. □ I am prepared to take a cut in pay while I build my business. □ I am happy to work long hours to get a job done. "An entrepreneur must be prepared to spend long hours and be the last in line to collect dollars from a venture." Michael Mulhall "There are lots of smart people in business, but the ones who succeed never give up. In business, perseverance is the key to success." Ron Connelly Optimistic Realist Successful entrepreneurs combine natural optimism with a healthy dose of realism. They are very self aware and possess a keen sense of their own strengths and weaknesses. They are objective and can examine themselves and their ideas impartially. They know when they are beyond their capabilities and have no problem seeking help from experts. In pursuing opportunities, the entrepreneur is not fool- hardy or stubborn. In fact, despite their dedication and determination, they will give up the pursuit of an opportunity more quickly than most if they perceive it will not deliver the promised benefits. This – combined with the fact that the entrepreneur possesses a keen understanding of their competitive environment and an intimate knowledge of their customers – means that entrepreneurs do not waste their efforts. Is It You? □ I can admit my areas of weakness as readily as my areas of strength. □ I am comfortable asking for, and accepting, advice from people more experienced than I. □ I have a strong and intimate understanding of my future business and my potential customers. BUSSINESS START-UP HANDBOOK Page8 Resilient Studies have shown that many successful entrepreneurs have had businesses that have failed in the past. This statistic speaks to one of the key defining characteristics of a successful entrepreneur: the ability to bounce back and respond positively to challenges. Entrepreneurs do not take failure personally. In fact, for them there is no such thing as an unmitigated failure– every experience is a lesson and every challenge an opportunity. They quickly come to terms with a defeat and learn from their mistakes in order to ensure that the same problems do not reoccur. They have the ability to pick themselves up, dust themselves off, and begin again – armed with new information that makes them stronger and better at what they do. Entrepreneurs meet change head-on. When they meet with failure, they are able to objectively analyze the situation and identify what should have been done differently. In evaluating how things should be done differently, they are creative thinkers: unconcerned with rules, hierarchy or how things have been done in the past. Entrepreneurs have an insatiable desire to know how they are performing. Quantitative evaluation is more important to them than qualitative; they want to see sales figures and profit margins. They seek out constructive criticism from those they respect. They are good listeners and quick learners. Is It You? □ I can accept failure without admitting defeat. □ When something does not succeed, it is very important to analyze the situation and what could have been done differently. □ I appreciate constructive criticism, and encourage it from people whom I respect. "Trial and error are the ways of progress. A capacity to enjoy the trial and error adventure is a common characteristic of successful entrepreneurs." Grant Hooker Motivated and Motivating Entrepreneurship has no built-in status and no guaranteed perks or income level. Entrepreneurs therefore are not motivated by status or money, but instead they have a high need for achievement. Their greatest satisfaction is derived from the excitement and challenge of creating and building a business. For this reason, they are never content with the status quo and are not comfortable resting on their laurels. They always feel that things could be done better, more efficiently, more effectively — and they are constantly solving problems and improving their practices. BUSSINESS START-UP HANDBOOK Page9 Entrepreneurs have a strong success orientation but it is their own definition of success that is important and that definition is a constantly moving target. They are not content with just being better than others; they want to be better than their own best results. They are action-oriented and want to begin achieving results immediately. Successful entrepreneurs need not only be self-motivated, but must also be able to motivate others. They are visionaries with a clear idea of what they want to achieve. Because, as we have seen, they have little time for hierarchy, entrepreneurs can exert influence without a formal structure. They are able to inspire people to work towards a solution; they are skilled in conflict resolution. They understand that a substantial business cannot be achieved by one person. Because they have a strong understanding of their own strengths and weaknesses, entrepreneurs seek out those that complement their skills — and inspire those people to become part of the team. They are hero builders: happy to reward members of their team by sharing credit for success and giving them more responsibility. After all, it is not status that motivates the entrepreneur. Is It You? □ Perks such as company cars and expenses accounts are not important to me. □ Personal satisfaction is more important to me than being able to buy expensive things. □ I believe that change is the one constant. □ I am always trying to better myself. □ I find it easy to get people to do things for me. Self-Confident and Self-Reliant Entrepreneurs have tremendous confidence in their own abilities. They are optimistic and believe they can achieve anything. In fact, they believe that the impossible just takes a little longer to accomplish. They believe that they have been the most important factor in their own success and feel that luck (although welcome) has not been a major contributing factor. During the course of their lives, entrepreneurs have not been heavily involved in team or group activities. They do not have a great need for affiliation. They can get along with many different personalities but do not need to have a lot of friends. Their belief in their own abilities means that they do not need to seek approval in making decisions and they are comfortable with the fact that it is “lonely at the top”. BUSSINESS START-UP HANDBOOK Page10 Is It You? □ I prefer to make big decisions on my own. □ I wake up happy most of the time. □ I have made my own luck. □ I believe that every problem has a solution. Tolerant As we know, there are no guarantees of success for entrepreneurs starting out. In the same way that status and perks are not of great importance to them, they are not overly concerned with job security and retirement. They are tolerant of uncertainty and ambiguity. There is a commonly held misconception that entrepreneurs are risk-seekers but this is not the case. Entrepreneurs are comfortable accepting moderate and calculated risk — and they deal with stress effectively. They are able to make decisions quickly under pressure but they exhibit the patience and exert the self-control necessary to maintain their vision. Is It You? □ I am able to keep things in perspective in times of difficulty. □ I do not take risk for the thrill of it. □ I enjoy working in a fast paced environment. □ I trust my instincts in decision-making. □ I do not spend a lot of time worrying about all the things that could possibly go wrong. "Entrepreneurship is responsible risk-taking… the leadership of responsible risk-taking." John Kelly Integrity and Reliability Integrity and reliability are the characteristics that are rated most highly among entrepreneurs as the quality that they most respect. Trust is the single most important ingredient in building the strong business relationships that are key to success. Successful entrepreneurs are honest and forthright. They expect and reward the same from those they work with, both customer and suppliers. Is It You? □ I believe that ethics and honesty are key ingredients to a successful business. □ People describe me as being direct and forthright. □ I do not shy away from situations of confrontation. □ It is very important to me that I do what I say I am going to do. BUSSINESS START-UP HANDBOOK Page11 While this section outlines what are commonly held as the key characteristics of a successful entrepreneur, weakness in some areas does not forestall success. As we outlined at the beginning of this section, many of the characteristics of the successful entrepreneur can be learned or acquired– and knowledge and understanding of your areas of weakness can help you improve. "In business if you don’t dream of doing more, you’ll just end up doing more of the same." Jim Cummings DEVELOPING BUSINESS IDEAS AND OPPORTUNITIES You may have considered the prospect of starting your own business many times before. The thought of being your own boss – calling the shots, being responsible for your own financial rewards – is very alluring. You may have had the drive, the experience, and the financial resources necessary to succeed. The only thing stopping you was figuring out what type of business you should start. If this sounds familiar, you are in good company. Most entrepreneurs take a considerable amount of time investigating, analyzing, and agonizing about the right type of business for them. They may have a multitude of ideas, but are unsure which one of them would be the most satisfying and successful. The opposite is equally common: they do not have a business idea, but know they want to be an entrepreneur. How do people come up with ideas to start businesses and how do you know if an idea would make a good business? Business Opportunities Often, business ideas are generated from a problem in the market place: A group of people have needs that are not being properly satisfied. ▼ This leads to an idea for the solution to the problem. ▼ If the idea can be proven to be viable, a business opportunity has been created. As an entrepreneur, you must learn to look at situations from a whole new perspective. You must look beyond what is there and imagine what could be there. The possibilities are endless. The opportunities surround you. BUSSINESS START-UP HANDBOOK Page12 The challenge, for you, is to teach yourself how to recognize problems and visualize solutions. Learn how to tap into your creative side As we grow up, we often trade in our creativity for practicality and predictability. As employees, we learned to adapt our thinking to the expectations of our employers, often maintaining the status quo. Attend a seminar on creative thinking and brainstorming techniques.   Refer to publications which provide exercises to help ignite your creative fires. There are many available through libraries and book stores.  Organize your own brainstorming session with friends, family, or business associates. The energy created in group situations is infectious and can result in many interesting ideas. Take off your blinders As an entrepreneur, you must learn how to shed barriers to your creative thinking and look at situations with a new perspective.  Think of situations from the point of view of others.  Approach problems from different perspectives.  Learn how to look outside of the norm for solutions. Investigate opportunities Read everything you can get your hands on.  Go to trade shows.   Surf the Internet.  Attend conferences.  Never stop learning. Once you have uncovered a business opportunity, there are two key factors to consider: 1. Could this be a viable business? Only further investigation, such as conducting a feasibility study or writing a business plan, will answer this question. 2. Has anyone else done this before? Your research will uncover whether or not this opportunity has been discovered before. If it has, investigate who is successful at it to find out what they are doing right and if there is any room for you to do it better. You need something to differentiate your business from the competition. This is a critical part of deciding whether or not this idea will make a viable business. BUSSINESS START-UP HANDBOOK Page13 WHERE TO LOOK FOR OPPORTUNITIES Business opportunities can come from two different sources. They can evolve as a result of your personal background including your previous jobs, hobbies and personal experiences or from opportunities in the external environment or general marketplace. Look at Yourself The following list highlights the possible sources of business opportunities that are generated from your own life. Review each of these topic areas to see if there is a business opportunity ready to be uncovered.  Lifestyle and Experience Your Job  Your Hobbies  Education  Why would business opportunities develop from your personal life? A major consideration in any business venture should be to love what you are doing. It is only natural that looking at past experiences and interests could reveal an opportunity to further develop them into a viable business. Possessing transferable skills is key to business success. Lifestyle and Experience Ideas may arise from casual observations of daily life situations. It’s simply a matter of being more attuned to what is happening around you. Ideas may become obvious as a result of travel, your own experiences in seeking products in the marketplace, ideas expressed by others who have recognized a problem or opportunity, or simply the result of observing the behaviour of other people. Your Hobbies Hobbies or interests may lead to business opportunities. Examples include serious athletes who distribute sporting goods, fishermen who open fishing lodges, boaters who establish rental or tour services, casual writers who establish publishing companies and so forth. An entrepreneur must be careful that they remain objective when assessing business opportunities in this area since what one loves to do may not always be the most profitable business opportunity. Your Job This is one of the most common sources of business ideas which is not surprising since it also normally provides an excellent match with the entrepreneur’s skill set. Ideas from your employment can evolve in many different ways. You may have identified a product or service opportunity that your employer is not pursuing. Perhaps you have developed specialized technical skills or knowledge that may be of interest to others in the industry or maybe you have a product to sell to your employer. If you decide to develop something similar to your employer’s product be sure to seek legal advice to ensure you are not violating any legal rights of your employer. BUSSINESS START-UP HANDBOOK Page14 Education Lifelong learning is an important requirement for successful entrepreneurial endeavours. In addition to developing skills, education – whether formally through courses or seminars or informally through self- directed reading – can lead to business ideas. It will significantly broaden your perspective and help you see opportunities in areas that you may not have otherwise considered. Look at What Is Happening Around You The following list highlights factors in the environment that may provide you with ideas for a business opportunity. Remember that when something changes, the result usually has an effect on something or somebody, often creating new needs or shifting the demand for products or services. Hence, the possibility for you to develop a creative solution. Changes in the Market When consumers change their buying habits and preferences there are always new opportunities to tap into. For example, the shift from going outside of the home for entertainment to staying at home and watching videos created a whole new opportunity for the growth of video stores, manufacturing of larger home entertainment centres and building smaller (cozier) movie theatres. Changes in an Industry When governments change regulations there is often an effect on many industries. Opportunities arise to help provide solutions to companies to deal with these changes or to service new needs created by them. For example, when regulations for first time drivers changed to a graduated system, the demand for driver education programs increased. Drivers who take a driver education program are allowed to test for their license earlier than those who do not take training. When you start a business, be sure you’re going to be doing something that you truly love doing. You’ll be spending at least 50% of your week working at it. Technological Influences The impact of technological growth has had an influence on almost all sectors in business from car maintenance to photo radar to video conferencing. New opportunities that exploit new technologies are developing at an incredible rate. Competitive Pressures The demand for certain products has created a very competitive market place in some industries. The personal computer industry is an example where competitive pressures have greatly influenced this market. BUSSINESS START-UP HANDBOOK Page15 Demographic Shifts Changes in the age, income, and status of the population have contributed to increased demand in many sectors such as health care, financial planning and travel advice. HOW DO TRENDS FACTOR IN? If you can identify a trend and learn how to tap into it, you are on the road to developing a successful business with incredible potential. Knowing what your client will want in the future is a stepping stone to success. According to Celente & Milton, in Trend Tracking, “A trend is a definite, predictable direction or sequence of events". A trend can last over ten years. Trend information provides us with data about the past and the future. Trend forecasting is accomplished by using different methods, depending on who is doing the forecasting. How do you predict trends? You have two options to help you recognize trends that are occurring. You can read one of the numerous books out in the market, written by futurists, or you can learn how to identify a trend yourself. Either way, the following tools should be considered:  Demographic data: shifts in the statistics relating to the population Changes in the make-up of the population (ie: baby boomers)  Changes in society: habits and values  Economic indicators: inflation, unemployment levels, etc.  What you are looking for in a trend are indicators that there will be a large enough segment of the population who have similar needs to support a business venture. For example, if we look at the sheer numbers of baby boomers in Canada (9.8 million out of a total population of 30 million) a business that focuses on servicing the needs and wants of this segment of the population could be very successful. The impact of technological changes on our work and personal life is another area that should not be overlooked. BUSSINESS START-UP HANDBOOK Page16 The following chart identifies some major trends that have resulted in new business opportunities. This is by no means complete but it will give you a few ideas to consider: Trend Industry Resulting Business Opportunities Technological Advances Computers Internet training Going Green Recycling Environmentally friendly products Small Office/Home Office Business Providing specialized products to small office/home office Accessibility for All Construction Re-doing existing entrance ways, washrooms, etc. Re-engineer/Re-structuring Business Specialized business and of Business/Government management consultants Eating Healthier Food Restaurants specializing in alternative eating New Media Media Hardware/software – mass market products Gardening/Landscaping Horticulture Garden centres Personal Financial Control Financial Financial planners, RRSP’s and mutual fund sales Fresh Air Transportation Alternative modes of transportation – bicycle, car pools, rollerblades Home Improvement Numerous Do-It-Yourself-Centres retail sales – “How To” Seminar Series Licensed Merchandise Sports Retail sportswear Craft Making Arts/Crafts Specialized retail outlets – tradeshows – country fairs Aging Population Healthcare Private nursing homes, healthcare & food products Increasing Consumer Affluence Service Social clubs and organizations, convenience services, adventure tours/services Continued Self-Improvement Training Training, Development and Self-Improvement directed Adult Education Programs Part of the science of evaluating a business opportunity is knowing that what is hot today may not be tomorrow and what is hot somewhere in the country may not be hot here. Annual listings of hot or growing businesses are available through numerous sources such as the Entrepreneur Handbook and Business Start-Up Magazine. Look before you leap has never been truer than in starting a business. Ask questions, read up on everything published on the subject, check the competition, do your market research first; act afterwards. EVALUATING YOUR IDEAS Discovering business ideas is only part of the process involved in starting a business. The ideas must be screened and evaluated to determine those which warrant further investigation. The following checklist includes a number of questions that will help guide you through an initial screening and further direct your research efforts. BUSSINESS START-UP HANDBOOK Page17 Business Opportunity Checklist Market Issues Yes No Not Sure Is there a need for the Product/Service? Is there a trend that supports the need for the product or service? If the product or service is successful in a different geographical area, have you considered these differences? Is the market large enough to support the idea? Financial Issues Yes No Not Sure Can the product or service be produced for a reasonable cost? Will the customer pay the price required to generate a profit? Avec quelle fréquence la nouvelle technologie change les affaires dans votre industrie? Strong Avg. Weak What are the profit margins in the industry? Operation Issues Yes No Not Sure Can the product or service be delivered within a reasonable time frame? Are there industry changes that may affect production or delivery of the product or service? 6 mo. 2Yrs. 5Yrs. How frequently does new technology change the way your industry does business? Entrepreneurial Issues Yes No Does the idea coincide with your own values and beliefs? Is the idea an extension of your work experience, hobby, and education? BUSSINESS START-UP HANDBOOK Page18 BUSINESS OPTIONS Here are a few interesting statistics for you to consider: (Source: Canadian Entrepreneurship and Small Business Management) According to a 2001 Statistics Canada study, nearly 3⁄4 of the 789, 000 businesses in Ontario  have fewer than 5 employees; and more than 95% of said businesses have fewer than 50 employees.  Eight out of ten influential North Americans indicated that they believe entrepreneurialism will define twenty-first century business. In the previous section you were introduced to suggestions for generating ideas to start new businesses. There are other options available for getting into business. The following section discusses the three most popular ways that people become entrepreneurs. WHICH OPTION IS RIGHT FOR YOU? Before you decide if business ownership is right for you, consider the following:  What are you expecting from self employment?  How much control do you want?  How much money do you want to invest? How much experience are you bringing to your business?  Which business option best matches your personal and business needs? It is important for you to take the time to assess your personal and business goals and  objectives.  These should be considerations when you decide which method of becoming an entrepreneur is right for you. Outlined below are three business options available to you: 1) Starting from scratch 2) Buying an existing business 3) Buying a franchise In each section there are a number of questions to help you identify your personal and business motives for choosing the business option that will best suit your needs. The questions have been written as open ended questions with no right or wrong answers. They are to be used to assist you in making your business choice. A list of advantages and disadvantages is included for your consideration. BUSSINESS START-UP HANDBOOK Page19

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