The number of startup companies continues to grow in Canada thanks in part to government initiatives, innovative post-secondary programs, an influx of venture capital firms and a steadily growing population. More and more, Canadians are going into business for themselves, be it out of necessity, passion or opportunity. If you’re considering joining the ranks of Canadian entrepreneurs, or maybe you already have, you know that while the market can be rewarding, those rewards come with risks. Approximately half of new Canadian businesses last longer than five years. But there’s no reason why, with proper planning and a strategy, your startup can’t be one of the successful ones.
Here are five tips if you’re thinking about, or are in the process of, starting a new company:
Find a Solution
What this means is to create a product or service that addresses a real need and helps people or other businesses solve a problem they deal with on a regular basis. The best way to do this is to find your niche. This could be an industry you’ve worked in for years, a passion or hobby you’re involved in or just something you’re good at doing. It’s important that it be something you enjoy doing as you will be living and breathing it for the foreseeable future. But the idea is that you should know the industry you intend to serve inside out and know there is a legitimate need for your product or service.
Business plans may be needed for funding but when taken seriously, can provide a road map to your startup’s success. To carry on from the last point, researching your industry should allow you to quantify how much money is available to be made in your market annually. You will also need a realistic budget that includes a safety buffer in case things don’t go as expected, A-list players to head up your management team and a SWOT analysis (strengths, weaknesses, opportunities, and threats) couldn’t hurt either.
A part of that analysis will undoubtedly involve studying your current competition and potential competitors. You’ll want to find a way to differentiate your startup from that competition. This could mean creating a more efficient product or service, going after a different demographic, or making the purchase process more convenient for customers through an app or in-house financing to sway their decision.
Finally, or maybe firstly, decide why it is you want to start this business and what your mission is, beyond making money. Having a clearly defined mission can help you make decisions when the answer isn’t always clear, will help differentiate you from your competitors, and can get you buy-in from customers who believe in your mission.
Make Sure You Have Enough Money
With a realistic budget and business plan in hand, you may need to get financing through a bank or venture capital firm. You may even want to consider a Kickstarter campaign. But before you start shopping around for a business loan or investors, make sure you check out the Government of Canada’s Innovation Canada page to see if your company qualifies for any of the programs designed specifically to encourage entrepreneurship by offering financial and other incentives.
Again, make sure you have more than what you think will be enough money. For far too many businesses, their downfall is caused by a lack of cash. It’s vital for your startup’s survival to be able to pay its bills and it can only do this with cash on hand. This is known as your business’s cash flow – the amount of money coming in vs the amount going out. Which should not be confused with profitability. You can make sales on paper but until you collect on those sales, they won’t help your cash flow, meaning you’ll have to find another way to pay your expenses.
And not just in your industry. Networking where your customer’s network is one of the oldest and most effective ways to market your business. But aside from networking to make a name for yourself in your industry, you might want to consider networking with other entrepreneurs to learn from them. As Startup Canada advises:
“The entrepreneurs in the startup community are always open to sharing their expertise, sharing their experiences, and helping other entrepreneurs succeed. Entrepreneurs with young startups should connect to their local startup community to learn what other startup owners have done to manage risk. Ask them about the risks they encountered as a startup, and what risks did they not expect?”
A good place to start is Startup Canada’s Community page for community locations and other great resources for startups.
Once you’ve started operating, you’ll need to market and provide great customer service. But in every facet of your business, you have to be flexible and adapt to new circumstances. This could mean trying new marketing techniques, using different suppliers, or adjusting your business strategy to address your current reality.