Three steps to success when starting a business in Ontario
When done wisely, starting a business can provide professional satisfaction and financial stability and Canadians are making the most of this option. As of June 2022, Canadian officials report 1,326,321 businesses in operation throughout the country. Of these, over 97% are small business, 2% identify as medium and less than 1% are large business. Of these small businesses, over half operate in Ontario.
Unfortunately, not every business is successful. Over the last five years an average of 101,324 businesses were created and 90,151 either closed or were acquired by another organization. Those who are looking to start a business can take steps to better ensure their business finds success. Three examples to get off to a good start include the following.
#1: Complete due diligence
It is important to put in some work before starting your business. Laying this groundwork will help to better ensure you have the foundation you need for success. Groundwork like conducting market research, looking into the demographics and targeting markets in your area of operation. Review the market carefully and make sure your product or service differentiates from the competition. This can include a review of statistics and university research as well as personal interviews of potential customers and others in the field.
Use this information to develop a business plan. A business plan should include the business name, market analysis, description of how your business differentiates from the competition, as well as plans that address marketing, legal, and human resource needs. Once this step is complete, begin putting together a projected budget. This should include expenses that come with registration and licensing as well as marketing and basic utilities. Once you have an idea of the expense review financing options and include the budget as part of your business plan.
#2: Choose a business structure
The three most common options are:
- Sole proprietorship. This is a sole organization — owned by only one individual. It is the simplest and provides the owner with full control. This individual has ownership over all profits and deducts losses and expenses from their own personal income. However, there is no protection from creditors. This means creditors for the business can come after the owner’s personal assets.
- Partnership. Owned by two or more individuals, partners share profits as well as debts. The owner includes expenses on personal tax returns. Partnerships are also relatively easy to establish.
- Corporations. A corporation provides separation between the owners, known as directors and shareholders, and the business. This level of protection from creditors is a key distinction between corporations and other business structures. A corporation is more difficult to establish compared to sole proprietorships and partnerships.
Additional options are available, though less frequently used, and can include co-operatives.
#3: Register the business
Ontario businesses with employees or offices in the province must register with the Ontario Business Registry. Business owners should also take tax obligations, license requirements, applicable regulations, and insurance coverage into consideration when starting their business.