To make sure starting up a business goes as smoothly as possible and help you keep luck on your side, don't forget these five essentials.
Put simply, your business model summarizes your business concept: what product or service your business will offer, how it will deliver it to clients and how it will generate revenue
A good business model enables you to create added value for your clients and is based on a real need or behaviour you have identified (this is your "value proposition").
In addition to the value proposition, your business model will set out:
- Your client segments
- How you will create an attractive offering for each client segment
- The channels you will use to reach your clients
- Your key resources and partners
- Your cost structure (which will enable you to set your prices)
- How you will generate revenue
Revenue can be generated via a number of strategies: selling memberships, discount sales, direct sales, using the sharing economy, group buying, implementing a freemium model, etc.
You will also have to consider how your business model will operate. You could use a click and mortar, cooperative, franchise or online-only model, to name just a few.
Remember that if you focus on an innovative model that creates added value for your clients, it will be harder for your competitors to copy you.
While the business model defines your business concept, the business plan sets out the steps required to achieve a goal. Think of it as an action plan that will be applied by your business. Investors will also use your action plan to estimate the potential of your business.
A good business plan explains:
- The mission or philosophy of the business. Express it as a concise sentence that sets out your clients' issues, needs or problems and explains how your business will address them.
- A summary of your business model.
- Information on your market: a profile of your target clients (demographics, habits, interests), the approximate number of potential buyers, your direct and indirect competitors, and the estimated value of the market.
- Your competitive edge: what you offer that makes you stand out from what's already on the market, whether it is your product/service or the way you deliver it.
- The sales and marketing strategies you will use to acquire clients and build loyalty.
- Concrete information on your operations (sourcing, human resources, physical and digital structures, legal form of business, etc.).
- Your financial projections.
- Key achievements and when you plan to arrive at them
- A clear action plan over a defined period (e.g., 3 years).
You should also include an executive summary of your business and introduce yourself and your partners. Describe how your expertise will help you meet your objectives. In this way, you can approach investors and provide them with all the information they need to make an informed decision.
Your business will only be as solid as the network of experts behind it.
Although small business owners often find themselves doing a portion of all the tasks required to run the business, it is highly unlikely that their competencies will include every important aspect of operations.
Surround yourself with trusted experts. Your network should include an accountant, a banker and a legal advisor. They will help you make the best possible decisions and build a strong foundation to support your business so it can grow over time.
Small business owners can choose to manage their own payroll. However, it may be wise to seek out a payroll service provider, as it can be very time-consuming to handle all the tasks linked to payroll management (calculating and paying government remittances; producing paycheques, pay slips and records of employment; preparing T4, T4A, RL-1 and RL-2 tax slips, etc.).
You could also make errors that affect your employees, your accounting and revenue agencies, which will take even more time to correct.
That's why we recommend entrusting your payroll services to a reliable provider. It will allow you to focus on growing your business, your employees will always be paid on time and you will avoid the administrative burden.
If you have partners, a shareholder agreement will set the parameters of your responsibility toward your partners and the business.
It settles in advance any potentially contentious issues that could emerge in your relationship with your business partners. For example: What happens if your partner wants to sell? Will you have first right of refusal over his shares, or will he be entitled to sell them to anyone without consulting you? Is your partner permitted to sell his share of the company and go work for a competitor, bringing some of your clients with him?
Or, if one of your partners does not live up to expectations, what can you do to take back his portion of the business?
If a partner passes away suddenly, who will inherit his shares?
It's best to agree on terms when your relationship with your partners is going well and before you have invested lots of time, effort and money in the business.
In addition to these five essentials, you will of course have to consider other necessities like opening a business account. You can open a business account in a single meeting at National Bank. Click here to contact us!
The information in this article is not exhaustive and is for information purposes only. For advice on your personal or business finances, please consult your National Bank advisor or an industry professional (e.g., an accountant, tax specialist or lawyer).
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