New Business Ventures
The Aga Khan Economic Planning Board for Canada is pleased to offer resources for Jamati members who are either thinking about starting a business, or have started a business in the last few years. Regardless of the industry or sector, many resources, skills, and tools are common to all businesses. We seek to provide resources on these common tools to help Jamati members build strong and lasting businesses. The content here is presented in the order an entrepreneur might think about each step. However, if you have an existing business, we encourage you to read earlier sections as it is common to overlook certain aspects of running a business when first starting. We aim that resources on this page will support you in your New Business Venture launch. However, please note that there is much more information related to operating and growing your business that is beyond the scope of this page and it is very important to engage professional advisors, including a lawyer and an accountant, when launching a New Business Venture.
Additionally, the Ismaili Business Support Network - Referral Program (IBSN), aims to assist Ismaili Business Owners with short-term challenges, recover from the COVID crisis, and position themselves to prosper! IBSN’s referral network of Ismaili professionals is able to provide relevant 1:1 guidance in various business areas free of charge for a minimum of 30 minutes lasting up to a maximum of 60 minutes for each business area query. Click here to ask your question or request support from an expert!
The resources here can be generally applied to either a product or services business, and also a technology or non-technology based company. These building blocks are also applicable to companies that may franchise in the future. However, if you are buying a franchise, then many of the early steps of starting a business may have been addressed by the Franchisor (e.g., defining the product and market), in which case we have compiled specific resources for franchises, which can be accessed here.
The information on this website and its contents are intended for general informational purposes only and are not intended to be professional advice nor the advice of the Shia Imami Ismaili Council for Canada or its boards, portfolios, or local councils, including the Aga Khan Economic Planning Board for Canada. Please seek the advice of a relevant professional advisor in relation to your specific situation.
In addition to the resources on this page, the Business Development Bank of Canada (BDC) has resources available if you are a:
Unfortunately, many businesses may not survive, so it is important to understand the risks and your goals in advance. While there are many benefits of having a successful business, launching one does involve risk, so you and your family should have the ability to take such a risk. Some questions to consider before considering entrepreneurship:
Do you have enough savings to forgo a salary for months or a year?
It may take some time for your business to have the revenue (or investment) to pay you a salary.
Are you willing to work evenings and weekends?
Full-time entrepreneurship typically requires working more hours than a traditional job. If you do maintain other employment, then you will need to devote non-working hours to your business.
Can you afford to have this business fail?
Think through ideas/options if the business fails and how this would affect you and your family.
Personality
Not everyone will thrive as an entrepreneur. There are certain personality traits that can be helpful for you to have and/or to build if you would like to become an entrepreneur:
You like autonomy and work well independently.
An entrepreneur requires internal drive and motivation.
You have a keen ability to focus.
As an entrepreneur, you have the autonomy to direct your business, but an ability to say “no” more often than you say “yes” is an important trait to not being distracted by an endless number of options.
You are creative, especially when it comes to problem-solving.
Entrepreneurs are often tasked with imagining creative solutions to unique challenges. An entrepreneur must find solutions to problems through consultation with a strong team and has the autonomy to implement creative solutions.
You are able to embrace change.
Unlike established companies, early-stage entrepreneurs can only plan months in advance (as opposed to years) given the unknown opportunities and challenges that will materially impact the business at an early stage.
You have passion and are action-oriented.
Early-stage entrepreneurs must test new ideas quickly and improve or discard them just as quickly. Most entrepreneurs will have many ideas that do not work before finding something that their customers want and will pay for.
You are optimistic.
Entrepreneurs see a better way of doing things than what currently exists in the market. To realize this vision, an entrepreneur must be willing to do things contrary to the status-quo and therefore requires the optimism to believe in their vision when it is not apparent to others or when they meet challenges along the way.
You are resilient.
Entrepreneurs are faced with many setbacks and challenges and must have the resilience to keep going. This burden often falls to the leader who must provide confidence to the team and stakeholders to move forward.
You may also want to think about your mental health and emotional resilience and spend some time planning support in these areas. Starting a business can cause stress, so it is helpful to think about what support you might need, such as a strong social support network, a self-care routine, and/or access to a counsellor.
Developing the Right Idea
There are many great ideas out there and most entrepreneurs agree that it is not the idea but its execution that determines the success of a business. Therefore, you have to be passionate about the problem or solution to build a great and lasting business.
Are you passionate about the problem that you’ve selected?
Are you passionate about the solution that you’ve selected?
Would you work on this as a “hobby” if no one paid you?
Do you think your solution can be the “best in class” for this problem?
At the beginning your product or service may not be “best in class”, but you should have the ability to work toward that goal and develop a strong team (of employees and advisors) to assist you.
Every business must define its core business proposition: the product (or service) that you will provide and your market(i.e. your customers). The goal is to find product-market fit. This expression is defined here but it generally means that your customers are so excited about your business that they are marketing it for you or referring your product or service to their friends and family.
During the discovery process, you will need to ask the following key questions, which are also outlined in the Lean Canvas:
What customers are you targeting?
Segment your customers as narrowly as possible.
Are these customers individuals or businesses?
Which customers will you target initially?
What are the key problems that your (potential) customers are facing?
How are these problems currently solved?
What solution can your company provide to each problem?
How is your solution better than existing solutions to this problem?
Known as your unique value proposition.
Do you have an unfair advantage over other businesses or entrepreneurs?
Examples of this include: knowledge, skills, exclusivity, or an invention.
What channels will you use to attract customers and get your product to them?
What are your fixed and variable costs to start this business?
How will your business make money?
A business may have more than one revenue stream.
Minimum Viable Product (MVP)
Once you have a business idea, it is important to build (or acquire) the simplest version of your core product and put it in front of customers to get their feedback.
Following the methodology of the Lean Startup, it is important to get the minimum set of features in front of customers to validate that your core product or service provides value. Ask them for feedback, then improve your product or service.
To bring a new product or service to the market, you are making certain assumptions. It is important to identify the key assumptions and test them: Risky Assumption Test (RAT).
Similarly, Disciplined Entrepreneurship describes the minimum viable business product (MVBP) as the minimum product that customers will pay for. Specifically, the MVBP must satisfy the following:
The customer finds value from the product.
The customer pays for the product.
The product is sufficient to obtain feedback from the customer to help improve the product to achieve product-market fit.
Business Partners (Co-founders)
Being an individual entrepreneur is hard. While business partners can support you and provide different perspectives, too many partners can also lead to deeply diverging views, significant debate and not enough of a focus on execution. Many entrepreneurs will recommend between 2-4 partners to start a successful business.
Select your business partners very carefully. The average startup journey lasts approximately 7 years (to exit or close), so you should be prepared to be deeply connected to your partners for at least 7 years, and possibly spending more time with them than your family.
Shareholders’ equity (or business net worth) shows how much the owners of a company have invested in the business.
Most businesses will initially divide the ownership shares (equity) among the co-founders
As the business grows, additional shares may be issued to investors or employees.
- A business may pre-allocate shares for employees in an Equity Stock Option Pool (ESOP).
An entrepreneur may grant employees stock/shares in the company as part of their compensation, so they are effectively a co-owner in the company. It is important to implement a vesting schedule for the stock option in case the employee leaves the company early.
As the company grows, an entrepreneur may also create new shares (typically for investors). In this case, existing shareholders retain their shares, but their ownership percentage of the company is reduced as there are more total shares. Typically, each share’s value increases when the company raises investment, so effectively each share is a smaller piece of a bigger pie and worth more overall.
“If you want to go fast, go alone. If you want to go far, go together.” - African proverb
Mentors, Advisors and Professionals
Most entrepreneurs will benefit from mentors and advisors. Friends and family may be able to offer free advice, but an entrepreneur may also compensate its advisors with cash or stock (equity).
A business may grant equity to an advisor. The Founder Institute has developed a Founder/Advisor Standard Template (FAST) that may be helpful in guiding your equity division and establishing a working relationship with an advisor.
Some professionals will typically charge an hourly rate (as opposed to equity). Some key relationships with professionals to consider are:
Corporate lawyer
They create and review contracts to protect you and the company.
CPA qualified accountant (and bookkeeper)
They ensure strong financial tracking and reporting and tax compliance and tax planning
Banker or financial institution
They may help provide you with access to capital through loans and other debt.
Insurance agent
They may help you limit your risk
Industry expert
They have done something similar in a related field and can help guide you.
Intellectual Property (IP) lawyer (if developing IP)
They draft and file patents and trademarks.
Regulations expert (if entering a regulated market like health or food)
They help ensure regulatory compliance.
Outsourcing / Contractors
Outsourcing generally refers to paying another company (or contractor) to provide a product or service. A company will often outsource part of their business operation that is not core to its value.
Outsourcing generally saves time, since the person/business that you outsource to is an expert in that area, and allows you to focus on your core business.
Outsourcing can be useful for tasks that require infrastructure that the business does not want to build themselves (e.g., shipping and delivery or a technology platform), or one-time projects that may require a depth of knowledge (e.g., building a website or app).
It is generally not advised that a company outsource its core intellectual property. For example, a samosa shop should own its recipe and not outsource making samosas. But it may benefit from outsourcing packaging, shipping, marketing, equipment maintenance, etc.
First Hires
After you have identified your co-founders, your first hires are some of the most important to the business. They must believe in the vision of the company, be qualified, be willing to take on new roles with little training and have a high level of integrity. You must also trust them to do what’s in the best interest of the company.
Typically, a company should avoid hiring for as long as possible and hire when the founders no longer have capacity.
Recruiting, hiring and training new employees will take time and may be expensive. The risk of a bad hire greatly outweighs the benefit of making a hasty decision, so take your time in finding the right people.
Be sure to always call references before hiring an employee.
Ensure the new hire has an employment contract that outlines the salary, benefits and expectations before they start work.
Additional resources on hiring can be found here.
You may choose to start your business from a home office.
Be sure to speak to an accountant about tax deductions for a home office.
Once it becomes necessary, many businesses will lease a retail location to conduct business.
Note that zoning laws may prohibit some types of businesses at certain locations.
Speak to a retail commercial real estate broker as they will negotiate on your behalf, but will be paid by the landlord. Example firms include: Colliers, Cushman Wakefield, CBRE and JLL.
Before signing a lease agreement, it is important to have a lawyer review the lease on your behalf.
Coworking or shared office space is a popular option for young companies as the leases are often not as long, furniture and other amenities are often provided, and they provide your business with the ability to grow easily by adding more desks.
Speak to a retail commercial real estate broker as they will negotiate on your behalf, but will be paid by the landlord. Example firms include: Colliers, Cushman Wakefield, CBRE and JLL.
Before signing a lease agreement, it is important to have a lawyer review the lease on your behalf
Most businesses will require a website (often an ecommerce site) and it is important to own the domain name for your desired address.
You can purchase a domain name (web address) even before you setup the website.
Most businesses should also obtain the appropriate social media handles (e.g., Instagram, Facebook, YouTube, Twitter, etc).
Additional information on increasing your business’s digital presence can be found in our digital transformation guide.
Selecting Business Structure
You must select a business structure. A corporate lawyer can help you understand the various structures, including the benefits and complexities of each. Generally, the types are:
Sole Proprietorship
Partnership
Limited Liability Company (LLC)
Corporation
Registering your Business
You must register your business with the government, specifically, you should:
Register your business name
Helpful information is available on the CRA website.
Register for a tax ID (GST/HST)
As the business owner, you can be held personally responsible for sales tax owed to the government.
Register for payroll deductions
When you pay employees, you must withhold some of their pay and remit it to the government. You must also submit payroll tax forms (to the CRA and your employees) at the end of each year.
As the business owner, you can be held personally responsible for payroll taxes owed to the government.
File year-end corporate taxes with the government
Identify and obtain permits and licenses.
BizPal is a free service recommended by the CRA to identify permits and licenses required for your business.
Your municipal government’s business resources website is also a great resource for information on required permits and licenses
Setup Accounting Systems
Accounting may not be an entrepreneur’s first priority, but try to view it as the scorecard of your company. Proper accounting will allow you to see cash flow problems before they arise and help you understand how your company is doing.
Separate your personal and business finances
Certain business expenses can be deducted from your business income and separating business expenses will make it easier to file a corporate tax return at the end of the year.
The corporate bank account should be separate from your personal account.
The corporate credit card should be separate from your personal card. We strongly advise that the credit card limit is kept as low as possible and only used for day-to-day activities, not large purchases like inventory. For large purchases, we suggest a bank loan, which will have a lower interest rate and a more stringent approval process. This process can be beneficial to (a) establish a business banking relationship with your bank, and (b) help you think through the repayment process.
An accounting software is a vital tool to understand your business’s cash flow and also to track sales tax (collected and paid). There are several paid and free services available; your accountant should be able to advise you on this matter.
It is important to set up payroll properly to hold and remit taxes. This may or may not be done in your accounting software.
Protecting Intellectual Property (IP)
Intellectual Property (IP) is defined as a creation of the mind; such as inventions, literary and artistic works, designs, and symbols or names used in commerce. You can protect this IP through patents, copyright and trademarks. An IP lawyer can help you with this, but it is important to know that you often need to protect the IP before you disclose it publicly. Disclosing it before filing for protection can void the protection in some cases.
“Plans are of little importance, but planning is essential.” - Winston Churchill
A business plan can serve as a useful checklist to ensure you have thought through the key questions and steps in building your business. You may want to consider filling out one of the following types:
The lean canvas, mentioned previously, is a useful tool to help think of and summarize the key components of your business.
A traditional business plan is a long-form document that summarizes what your business will do. The BDC provides a blank business plan template as well as an example business plan for reference. The sections below will outline some key areas that a traditional business plan should include.
If you are not sure which one to use, you may want to look at this website from the US government for details and examples of the two types of business plans.
Cash Flow (Financial Plan)Your company needs to understand how it will make money and how much it will cost to achieve that goal. A financial plan will detail the cost of goods sold (COGS) and estimate sales to project when the company will be profitable, how profitable it will be at each stage, and the capital (financing) required to achieve these targets. This can also include estimates of fixed costs like staff, office space, software and computing, etc.
In addition, it is important to understand the difference between operating expenses (OpEx), which are required to run the day-to-day of your business and capital expenses (CapEx), which are longer term investments that your company will benefit from for a long time (e.g., several years). The two types of expenses are recorded differently in your accounting software (and financial statements) and have different tax implications. Those viewing your financial statements will see capital expenses as an investment in future revenue, whereas operating expenses will be seen as the cost of current revenue.
Financing
Your company will require funding to get off the ground. Often, a business owner will finance the business personally, but you should learn about other financing options, including:
The government or other institutions may offer small business grants.
Debt
Funding the business yourself is considered a personal loan from you to the company and is typically referred to as bootstrapping.
Your bank may offer small business loans. BDC is a useful resource for this.
A higher interest loan may be available through debt crowdfunding where many investors (often individuals) will invest a small amount to provide the total loan.
Private Equity
Individual investors who are willing to give your company money in exchange for equity are known as angel investors. A group of angel investors that invest together on many deals is often called a syndicate or angel group.
Equity crowdfunding is a way of collecting smaller amounts of money from many investors in exchange for equity in the business.
Some high-risk technology companies may attract venture capital investment, which is generally able to provide much larger sums of money for companies that have a rapid growth strategy.
Alternatively, lower-risk (often slower growth) companies that require large amounts of capital can approach a private equity (PE) firm for investment.
Sales and Marketing
How will customers learn about your business? And once they are aware of it, how do you convert that interest into a sale? A business plan should discuss these topics:
Social Media
Search Engine Optimization (SEO)
Building a personal brand
Become a thought leader
Networking
Trade shows
Promotions and Discounts
Price analysis
In addition, BDC has advice on creating a marketing plan.
Competitive Analysis
A business plan should include an analysis of competitors in your space, as well as a SWOT analysis, which means evaluating the company’s:
Strengths
Weaknesses
Opportunities
Threats
The BDC has further information on conducting a SWOT analysis on your business.
Exit Strategy or Succession Planning
It may feel too early to think about an exit strategy, but it is helpful for founders and investors to understand the goal of the company. Often the goal of starting a company is to build up the product or service and then sell it. Not only will the sale of the business reward you and your investors for the risk you took in starting the business, but the new owner will hopefully be able to continue to grow and operate the business, or it may be combined with their existing business. For a very large business, an initial public offering (IPO) is a way of selling the business to the public, where many small shares of the company are listed on a publicly traded stock market.
Alternatively, some companies are “lifestyle” businesses and focus on providing a great lifestyle for the business owners and their families. This type of business is often only sold (or given) to a friend or family member to continue running so they can then benefit from the business - both financially and also the “lifestyle” it provides. In either case, having all parties aligned can be helpful in determining the strategy of building the business, including the type of financing to pursue.
After you have launched your product and you have generated some revenue or received some investment, it is important to continue to improve upon your product.
Listen to your target customers and build the features that they want
It’s unfortunately common for companies to build features that customers do not want or care about.
Continue to improve upon your operations
Improving operations is important, but it should be secondary to growing sales revenue.
The BDC has an excellent resource on improving operational efficiency.
Invest in infrastructure as you grow
More infrastructure can accelerate your growth, but this can often be expensive and should be done carefully; like hiring.
For further detail on the steps outlined on this website and additional resources for starting your business, we recommend the following books. Many of these books are available at your local library in print, digital and audio format:
The E-Myth Revisited by Michael E. Gerber helps the reader understand the important difference between building a business and doing the technical work of that business.
Disciplined Entrepreneurship by Bill Aulet is a fantastic 24-step guide to building a scalable technology company. However, many of the steps and lessons are applicable to any business.
- The Lean Startup by Eric Ries shows entrepreneurs how to continuously build and iterate using innovation accounting. This process can help entrepreneurs find product/market fit faster.
In addition to the books listed above, these websites and online courses are excellent resources as well:
The Canadian government has compiled a list of business support centres by region.
BDC has great articles on starting a business.
BDO has a StartSmart program for eligible companies
Y Combinator has a free online program called Startup School that covers the various aspects of starting a business.