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Common questions small business owners have... Some advices

on Sat, 11/12/2011 - 15:12

I have been realizing people who want to start their own businesses always have the same questions, especially after attending the Small Business Summit, that feeling had got even stronger. I will try to share what they are.

The 2011 TD Canada Trust Small Business Survey reports out of the 402 business owners they surveyed across Canada think indicated managing cashflow as the most difficult challenge, with staffing (both retaining and hiring) continuing as a major obstacle.

So how do we address that and keep things under control?

1. Build an emergency fund

- normally 6 months' of expenses

2. Try before you start

- work for somebody in the field, experience it and make sure you like it

- gain experiences + get connected

3. Make sure you like what u do, don't just start a "money making" business

- a business without passion will eventually fall. TRUST me.

4. Connect with people, collaborate

- you never know who is going to lead you where

5. Don't hire just because "you need someone"

- repeated training can be VERY costly

6. Don't try to do EVERYTHING

- spend most of your time to do what you good at and be effectively get things done, outsource what you don't do good in

7. Keep earnings in company, don't take salary, take dividends and bonus

- Based on one of Canada's top tax expert, Jamie Golombek, dividending earnings from company is the most tax efficient way

8. Pay yourself first.

- Try to max out your Tax Free Savings Account, as you might not have a lot of RRSP room.

9. Jungle with limited resources

- always take care of your family first. Always protect your family from business environment. A healthy family life will give you extra energy to work on your business.

10. partnership or sole proprietorship?

- Always start with sole proprietorship. Introduce partners but never give out more than 51% to stay in control.

11. Building capital - why venture capital might not be a good idea

- make sure you do not introduce investors into the company too soon, you can end up losing your company. Extra funding should come after you have your company on the right track, stable in business earnings, for expansion.

12. You CANNOT expect anyone invest in you without you investing in yourself FIRST

- Thoughts without implementation are just a ideas. You cannot expect anyone invest in your IDEA without showing potential of it by making prototypes.

13. Find ways retain your good employees

- Consider group benefits and/or set up a group retirement plan, survey tells us employees stay with a company with benefits longer even if they get paid lesser

14. protect yourself from losing a key employee

- Get yourself covered by placing disability and life insurance on your know-it-all person with the company as a beneficiary. If anything happens to the key person, the impact to the company will be reduced.

15. Explore different ways to get your retain earnings out of the company

- One of the ways is to utilize a life insurance policy on yourself.

16. How to choose your bank? which bank works better with small businesses?

- In my opinion, RBC works best with small businesses. They will look into different angles for you and try to get things work for you.

17. how to position your business to banks or VCs?

- show potential lenders the ability your company in earning, and strong cashflow, be sure you have invested into your company financially (not sweat equality)

18. protect your personal assets from the business?

- People think incorporating the company means they are "off the hook" when the company is in trouble. Not quite. Read the fine prints. Protect your personal assets by investing in segregated funds provide by insurance companies.

19. put your numbers together for your accountant, so that you are not paying your accountant to bookkeep for you

- Put all your expenses in a spreadsheet, have it done every 2 weeks. Don't wait long, as the longer you wait, the messier the expenses will get.

Lastly, I would like to share an infographic with you I read from The Entrepreneur Magazine, where are you in this?

Comments

pozycjonowanie's picture

All thoe advices are good and usefull but sometimes it is not easy to fullfill all those pint as resources are limited and market is very agressive.

trufinancial's picture

Thank you for reading my blog and left a comment. Very much appreciated.

Very tru... Life is hard. That's why point 4, 5 and 6 is extremely important in that regards... and I am helping my clients as much as I can in managing their risk and find resources for them as well :)

What do you do if you don't mind sharing?

Mimi

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