Published October 19, 2023 • 10 Min Read
Ever wonder what it takes to start a business?
In the RBC webinar “5 Steps to Starting a Business,” a panel of successful entrepreneurs shared their insights, experiences and advice on starting a business.
Shelagh Cummins is the CEO and Founder of The Road to Seven. For over a decade, this company has been fueling women’s business success through strategic financing, coaching, and training.
Mathieu Plante is the founder and CEO of helloDarwin, a virtual marketplace that connects business owners and B2B professionals in the marketing and agency space.
Andrew Zuk is founder of Plantworthy Food, a healthy snack company that manufactures in Canada.
Based on their own entrepreneurial journeys, the panelists shared their thoughts on the five steps to starting a business. While the drive behind entrepreneurship can vary, starting a business has always been more than a career choice – it’s a life choice.
Watch webinar:
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Password: RBCsmallbiz |
1. Understand what it “really” takes to start a business
There are plenty of myths out there when it comes to what an entrepreneur looks like. Some preconceived notions include needing a lot of money or being a risk-loving extrovert. But as the panelists indicate, that isn’t true – rather, it’s a different set of characteristics needed to make entrepreneurship work.
Recognizing that starting and owning a business will have its share of challenges, Cummins encourages asking yourself some key questions. “Owning a business is not a smooth sailing path, so you’ve got to ask yourself questions like, do I have the grit and determination to keep going? Do I have what it takes to sustain a business when times get difficult? What is the impact I want to have on the world?” she says. In fact, the ability to tap into your purpose and align it with the goals of your business is an important quality for prospective entrepreneurs.
Plante adds that the ability to learn from failure is also key. “The most important quality an entrepreneur needs to have is resilience,” he suggests.
2. Just start
Many would-be entrepreneurs have a great idea, a strong purpose and the determination to get started… but there’s something holding them back. Perhaps it’s the concern that their idea won’t fly, or the feeling they don’t have all their ducks in a row for a perfect launch. The members of the panel recommend taking at least one small action to get started. “If you plan too much, you won’t go forward,” says Plante. “The most important thing in making your business happen is starting,” he says, rather than suffering “analysis by paralysis.”
In Zuk’s case, he set himself a personal deadline, setting a Kickstarter date to crowdfund. “By setting that date, it just got the ball rolling,” he says. “From there, the idea was on paper and there was some accountability.” He goes on to explain that he simply figured things out one by one as he went.
Cummins agrees, explaining that getting out an MVP (Minimum Viable Product) is a great first step. “Whether it’s a product or service, get whatever you’re selling to the point that you could actually exchange it with someone, and they can try it,” she says. “You can think about [your business] and think about it until you’re 150 years old – nothing’s going to happen until you take that first step.”
3. Write a business plan
Studies show that entrepreneurs who start with a written business plan are more successful than those who don’t. A business plan can help bring your idea to life, serving as the roadmap that will turn your vision into a successful and fully functioning business.
“It’s very vital at the first stage of the business to write a business plan,” says Plante. “It allows you to have different projections, consider different paths, and evaluate what’s best. The market analysis you’ll do within your business plan will also save you a lot of time and effort going forward.” He adds that it’s equally important to update the business plan as you go as new information, conditions and priorities emerge.
Cummins agrees, adding that “just because you’re putting it on paper, it doesn’t mean it’s set in stone. One of the things we’ve seen over the pandemic is that successful entrepreneurs are the ones that are fluid.”
4. Sort out your financials
Depending on your background and your expertise, figuring out the financial side of your business could be your favourite part – or it could be the aspect of entrepreneurship that’s the most daunting.
While the financials are important and represent a significant part of your business planning, they don’t have to be difficult – rather, it’s a matter of breaking them down into four different pillars.
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The first is to calculate your startup costs and working capital needs. Calculating these before you start your business is important because they’ll reveal how much startup financing you’ll need to get your business up and running. It’s a good idea to plug these into a cash flow statement for a clear understanding of the capital you’ll require.
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Next, it’s to identify the pricing for your product or service. To know how much to charge you’ll need to factor in how much it costs to make your product or deliver your service, to calculate your expenses and to look at how much your competitors are charging.
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Next, it’s to identify the pricing for your product or service. To know how much to charge you’ll need to factor in how much it costs to make your product or deliver your service, to calculate your expenses and to look at how much your competitors are charging.
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A third consideration is the funding of your business, if you require it. There are many ways to fund, from bootstrapping with your own savings to applying to government grants, raising funds through crowdfunding, borrowing from your bank or securing venture or angel investor financing. Zuk, as explained earlier, raised money through the Kickstarter platform. “We decided on that because you can essentially start it for $0, write a script, make some graphics and launch your campaign,” he says. “You just want to make sure you know what your startup costs will be so you raise enough funds.” Kickstarter also enabled Zuk to see if people would be interested in the product he was preparing to sell, enabling him to tie funding and market research together.
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Plante suggests that self-funding with business revenue is perhaps the best and most healthy way to build a business in the beginning. “Because this assures you that you have product market fit, and all it costs is sweat equity. Then when you have something that works, you can look into funding in other ways,” he says.
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The fourth pillar involves the financials of operating your business, which includes creating financial statements for accounting and tax purposes and producing cash flow projections. After launch, you’ll want an income statement, which shows your profit or loss for a particular time period, and your balance sheet, which is a financial snapshot of your business at a given date. You can either create these using accounting software or through a bookkeeper or accountant.
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5. Prepare for launch
The final step in starting your business is actually getting it launched, which begins with registering your business and choosing your structure.
Choosing your business structure
In Canada, there are four main business structures:
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Sole proprietorship, where you and your business are one and the same
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Partnership, where two or more people own the business
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Corporation, when the business is considered a separate legal entity
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Co-operative, when the business is controlled by an association of members and is often used for not-for-profit organizations
The structure you choose depends on several factors, with pros and cons for each path.
When setting up Plantworthy Foods, Zuk decided to incorporate form the start in order to limit his personal liability with the business. “Also, with a plan to grow at some point, we’ll be looking for external investment,” he explains. “They would want to see a corporation set up.”
For prospective business owners thinking through business structure options, ownr.co is a great resource, with a great deal of information that takes the guesswork out of registering your business.
Opening a business operating account
Once you have registered or incorporated your site, you can open a business operating account. The panelists agree that while it may be tempting to simply use your personal account, it is best to separate business and personal finances to avoid an accounting headache come tax time.
Planning for taxes and other costs
And speaking of tax time… Cummins emphasizes the importance of accounting for taxes – and other operational costs – when setting up your business. “Often we underestimate how expensive it is to run a company,” she says. “One of the mistakes I see people making is that when they’ve sold $100 worth of stuff, they think they’ve just made $100.”
She advises to use the 30/30/30/10 rule. “While every company is different and every situation is unique, this is a really good way to watch your cash flow,” she says, sharing that the first 30 percent will go to the government. “They’re going to come calling whether you want them to or not,” she warns. The second 30 percent would go to operating costs, the following 30 percent to paying yourself and 10 percent to profit, which you can use to reinvest in your company.
Deciding whether to hire or outsource
Many new businesses start with a single entrepreneur doing all the work – and Plante suggests that this is a great way to begin, so as the owner, you really grasp how your business works. “Then you can create a system and delegate tasks,” he says. “I like to surround myself with experts that know how to do things better than I do, so I can learn from them,” he says of his hiring strategy.
For Cummins, her priority when hiring or outsourcing is to find someone who can help you make more money. While it can be tempting to hire someone to do the administrative tasks you don’t enjoy, finding someone with expertise to complement your skillset will provide more value.
Getting the word out
Finally, the marketing of your business is an important consideration once you launch. Understanding where your customers are – and where they aren’t – can make your marketing dollars work most efficiently. Cummins suggests not spreading yourself too thin. “You don’t have to be on all platforms – choose one and do it really well,” she says.
She also suggests joining networks and conferences to have real conversations with people, now that we have the gift of being in-person once again. Plante reminds us that “the best salesperson is you – because you’re the one with the passion for your project.”
Just as entrepreneurs have different reasons to start a business, there are many different ways to fund, market, grow and operate a business. As the panelists reveal, there is no one right path. But whichever route your entrepreneurial journey takes, it starts with believing in yourself and taking that first step forward.
A Resource for New Business Owners
RBC has created a new website just for small business owners, that can help walk you through the various stages of taking your business from idea to reality.
This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.
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