It starts with an idea

All good businesses start with an original concept or idea, but sometimes your original idea doesn’t make the money that you imagined. The idea may need some slight adjustment or even a major overhaul. What seems like a good idea one day, may not be such a good idea after time passes. Remember, the marketplace changes constantly and to be successful in business you must always keep coming up with new ideas.

Look before you leap

Before you take your idea to the next stage of development, it’s crucial to analyze it from all possible angles to make sure you’ve thought of all possible scenarios. There’s a lot of information and research available to you on market trends and other issues. A failed business can cost you a lot of time and money; it pays to do your homework.

Preparing a plan

The final step before launching into action is to create a thorough business plan. This plan should be a summary of what you want to achieve with your business.

A well-written business plan can be very helpful to you on many levels. Firstly, it allows you to accurately determine the amount of money you'll need to start your venture and when you'll need it by. It will also help you to set short and long-term goals. These goals can be invaluable while getting started and act as a reference guide to keep your business on track as time passes.

Another advantage of a solid business plan is that it makes it easier for potential investors or lenders to see that you are organized and have thought things through completely. This demonstrates that you have good business management skills and are therefore a much safer bet with their money.

Lastly, and perhaps most importantly, a business plan allows you to identify your market, your customers and your competition. It can help you gain a competitive advantage and determine what strategies will drive you to succeed.

After your business plan

You have an idea and a plan to make it profitable. But there are countless legal issues involved in starting a business and the choices you make can be the difference between success and failure.

Protecting your ideas

You probably know that it's essential to get a patent for any invention that will be exclusive to your business. You may also need a trademark, copyright, or industrial design to protect any original words, symbols, or photographs. Make sure you legally protect all your ideas from being copied by others.

The three types of businesses

The next step is to determine and develop the business type that's best suited for your idea. The simplest kind of business to set up is a proprietorship. This is where you are the only person involved. You run the business, and you keep all profits and assume all losses. It's an inexpensive way to begin, but it can be difficult to raise startup capital if you need it.

A partnership may work better for your project. It's a good way for two or more people to combine abilities and knowledge to run a business. A partnership agreement needs to be established, but it's still easy to set up, and there can be additional sources of money to rely on.

Incorporating is the most expensive and most difficult type of business to start. The advantages, once it's set up, are the ease of getting capital and the possibility of being involved while maintaining limited liability.

Buy-sell agreement

What happens to your business if you pass away? A buy-sell agreement enables the business you start to keep going. It can ensure that your family will not be burdened with outrageous taxes and that the money they were counting on from the business will be there for them to use in the future.

You'll need an attorney to help you set up a buy-sell agreement. In fact, it's strongly suggested that you talk to a lawyer before making any of these major decisions about starting your new business.

Getting legal advice

At Niverville Credit Union, we know how hard it is to start a new business, especially if it's your first. But don't worry, there are people and organizations out there who can help.

It's strongly advised that you consult a lawyer or legal accountant before making any major decisions about starting your new venture. They can help make sure that you meet all the necessary legal requirements before you begin. Be selective in choosing a lawyer. Make sure that they are knowledgeable about the type of business that you wish to begin and able to provide all the services you'll need.  

Financial consultants

When starting a new business, a financial consultant can help you raise startup funds or venture capital. A consultant can also assist with putting together a strategic plan for growing your company. A consultant can also make you aware of the various taxes and insurance payments you'll be required to pay annually.

Employment agencies

An agency will have access to a lot more potential employees than you will when first starting a business. For a fee, you can tell them how many people you are looking for, with which specific skills, and they can put the appropriate parties in contact with you.

Payroll assistance

It may be a good idea to hire a payroll firm to process your payroll instead of hiring a full-time accountant and human resource specialist. You can get competitive quotes from national and local companies that provide full-service payroll and employee benefits administration.

Starting up a business can be a very time-consuming and stressful event. Hiring the right lawyer and a good financial consultant can take a lot of the worry out of the whole process. Using an employment agency or a separate payroll firm can free up a lot of your time so you can concentrate on the more personal aspects of running your new business. And if there's anything we can do to help, just ask.

Organizations you need to know

Whether you're planning on being a sole proprietor or heading a large corporation, if you're starting a new business you'll need to contact a variety of regulatory bodies. There are several different organizations existing on the federal, provincial, and municipal levels. We can help you find the information you need to contact them before you begin any new project.

What's in a name?

If you plan on operating your business as a proprietorship, partnership, or limited company, you'll have to register the name with your provincial Corporate Registry. This ensures that you aren't using a name already in existence. There are registration locations throughout each province.

Getting a licence

Municipalities require you to obtain a licence for the location of your business. You may also need separate licences if you conduct business in several municipalities, as well as licensing for any commercial vehicles. Any kind of licensing will include fees, and the fees can vary from place to place.

There are dozens of other federal and provincial licences that you may require depending on the type of business you're in. For example, if your business is food service related, you'll have to become familiar with the Food Inspection Act as well as several other acts that will apply to you. Make sure that you have all applicable licences for your business before you begin.

Taxes

Become familiar with how you are required to file federal income taxes as a business. If you are a sole proprietor, you must file a personal income tax return once a year. If you are in a partnership, you are only taxed on your share of the income the business makes each year. A corporation must remit taxes every month, as well as file an annual corporate income tax return.

If you are buying goods for retail or wholesale you must apply for a Social Service Registration Certificate; if your annual revenue is more than $30,000, you also need to register for the Federal Goods and Services Tax. For full information on taxes, and how they apply to your business, contact the Canada Customs and Revenue Agency.

Financing your new business

From a lemonade stand on the corner to a brokerage house in the downtown core, every business needs capital to get started and to continue operating. Described below are the four basic types of financing you should be aware of.

Venture capital (equity or shareholders' loans)

Money paid in exchange for partial ownership of a company. There is no obligation to repay equity because the investor has bought a share in the profits. A shareholder loan is money loaned to the business by a shareholder. Both equity and shareholder loans create leverage which is the ability of the business to attract other loans and investment.

Capital asset financing (term loans)

Used to purchase fixed assets required by the company, such as office equipment or vehicles. A percentage of the value of the assets purchased then acts as security against the loan until it is repaid.

Operating loans

Used to cover wages, rentals, inventory costs and other expenses in advance of collecting revenues to pay them. The lender will use a percentage of your accounts receivable as security against an operating loan. Operating loans are essentially a series of pre-approved, monthly term loans that save you from having to constantly negotiate new loan terms.

Bridge capital financing 

A form of loan intended to bridge the gap between the due date of a payable and the date a specific receivable is anticipated. The receivable itself is the security for the loan. Bridge financing is typically reserved for low-risk situations.

Loan privilege

Lenders invest in a business based on, among other factors, your financing plan. If you were to use a term loan to cover wages or inventory costs, you would violate the integrity of your plan. Investors would lose confidence in you, making it difficult to get further financial support. Even worse, your business may fail.

Working from home

You've likely considered the benefits of working from home. The gurgle of the coffee machine wakes you. You take the time to linger over a couple of cups while reading the newspaper in your housecoat. You check your day's agenda and make a few phone calls. With no one to interrupt you, you manage to get most of your work done by early afternoon. Maybe you take a shower, throw in a load of laundry, and head to the bank during the mid-afternoon lull.

No commute. No rush. No distractions. No boss. What could be better?

The fact is, that while working from home has its advantages, there are disadvantages too. Will you be able to perform all day-to-day tasks necessary for running your business from home? Do you have the space available to conduct business meetings if necessary? Are you sure you won't be more distracted by small chores at home than you would be by coworkers in an office?

These are questions that only you can answer. But if you do decide that working from home is right for you and your business, then you can look at the other benefits of having a home office.

Home office benefits

The main benefit of working from a home office lies in tax write-offs. You will be able to write-off a portion of your rent or mortgage payment based on how much room is dedicated as office space. You'll also be able to write off a percentage of your utility payments such as phone, electric, water and internet service.

Depending on the specific nature of your business, there may be many other things you can write off as well. A designer, writer, or photographer may be able to write off magazine subscriptions. An interior designer who showcases their own home may even be able to write off a portion of home renovations.

In any case, you should strongly consider hiring an accountant to help you. The amount of money you personally save through effective accounting can make a big difference in your income, especially during the early years of a new business.

You're the boss

Most businesses need employees to help with day-to-day operations. While hiring employees can certainly make it easier to get all the work done, having even a single employee can make operating your business more complicated.

At Niverville Credit Union, we want to help you understand these issues because, as an employer, you are strengthening our community by creating jobs for others.

Hiring for the needs of your business

Before hiring, determine how many employees you need and what specific jobs must be filled. Hiring the right number of employees is critical, especially during the early years of your business. If you hire too many employees, you may not be able to pay them, too few and you may not be able to meet the demands of your customers.

Legal and financial issues

Before you can pay your employees, you'll need to set up a payroll plan and create a payroll account. You'll need to make deductions from their paycheques for income tax, employment insurance and federal pension plans. You also must pay worker's compensation costs to protect your employees if they are injured while on the job. Because of the many new issues involved, you should seriously consider hiring a professional accountant or outsourcing your payroll to a payroll administration company.

Effective management

To effectively manage your employees, you'll need to establish work rules and policies. Maintain an open dialogue with all your employees and be prepared to discipline employees should they break with your policy. All these rules and any disagreements arising from them should be recorded to prevent your company being held liable for the actions of an employee.

The importance of managing your employees can't be overstated. Your employees aren't merely extra sets of hands; they are an investment in your company. If your employees are happy and enjoy their work, they'll do their jobs more effectively. If they appreciate your business, its aims, and policies, they're more likely to remain your employees for a long time.

Where to learn more

There are many resources available to someone starting a business. Whether you want to begin a small mail-order business out of your home or start a multinational corporation, there's plenty of free information at your fingertips.

Do research online about consumer trends and get up-to-date market analyses to help you plan your business and assess your market. You can also learn how to obtain funding for your project from the government or private resources. Many of the legal registrations and applications you’ll need are also available online.

Government agencies have information packages available to help you as well. Contact them and they can send over what you need.

We can also assist you with various aspects of your new endeavour. Come and talk to us before you begin.

Getting to the customer

Market research is vital to succeeding in business. Who will need your product or service? Is there a demand for it? Once you’ve answered these questions, you need to establish how you’re going to distribute, what price to charge and how you’re going to promote your service or product. Marketing begins with customers’ needs, and you should design a strategy to fulfill those needs.

Marketing budgets

It takes money to make money. Setting funds aside for marketing is an essential part of running a business, but how can you best put this money to use? Keeping up on your target market can be time consuming. It may be more cost effective for you to hire someone to research the changing needs of your customers and watch what your competition is doing, allowing you to concentrate on running the business. If you don't keep up with current trends and keep your prices competitive, you may find yourself losing customers.

Advertising and promotion

You need to decide how you will advertise and promote your product or service. What medium will you use to advertise? There are countless ways to inform potential customers about your business; you need to decide which is the most cost effective for you. Traditional advertising isn't the only way to reach your market. You can promote your business in other ways, like sponsoring charity events, holding a contest, or speaking at events.

Marketing companies

There are a lot of agencies that specialize in advertising and promoting businesses. They have the expertise in this area, but they do not have the intimate knowledge of your business. If you do decide that outsourcing is right for your business, make sure that you find an agent that will meet all your needs.

Paying your employees

Though it's of paramount importance to pay all your bills in an accurate and timely fashion, the fact is that your employees rely upon and plan around their payment schedule. Even a 'minor' delay of a single day in receiving a paycheque can cause an employee serious hardship. Should such delays happen repeatedly, employee morale will drop, your employees may quit with little or no notice, and they may even report you to the Better Business Bureau.

Payroll deductions

Payroll isn't simply a matter of multiplying hourly wage by hours worked, or even of issuing regular cheques for salaried employees. There are literally dozens of factors that figure into a single paycheque. You need to know the regulations for overtime and vacation pay. You need to know how to make deductions for income tax, employment insurance and federal and provincial pension plans. You will also need to pay worker's compensation costs to cover your employees in case they are injured.

Your payroll plan

Unless you are a professional accountant, it's probably not a good idea to do your payroll yourself. There are numerous software packages that make payroll easier, but you'll still need good accounting skills, regardless of what software you use. The decision to hire an accountant or outsource your payroll will be largely based on the overall size of your company. The advantage of having an accountant handle your payroll is that all your finances will be consolidated. The disadvantage is that payroll can be a lot of work, and as your business grows you may end up having to outsource payroll anyway.

Outsourcing payroll

There are numerous companies that provide payroll service as their principal business. They almost never make mistakes, and you can rest assured that everything will be accounted for and will be in full compliance with all federal and provincial regulations, no matter how complex your payroll structure is.

Deciding on the payroll structure that is best for you and your employees is a critical step. Ideally, you want to maximize your administrative efficiency, while minimizing costs. It pays to investigate all options to implement a payroll plan that will work for you now, and into the future.

Managing cash flow

Having a positive cash flow simply means having more money coming in than going out. A positive cash flow is critical to the operation and success of your business, and is a key indicator of a healthy, well-run business. Unfortunately, especially in the beginning, maintaining a positive cash flow can be difficult.

There are two basic keys to maintaining a positive cash flow. First, you need to know how much cash is coming in and when, and second, you need to know how much cash is going out and when. The trick lies in balancing your income against your outlay. To do this, you need to be aware of several important factors. Is your business seasonal? Is your payment cycle in sync with your collection cycle? Are you managing your assets and inventory properly by purchasing only what you need, when you need it? Keep your finances running smoothly by continuously evaluating all these things and be prepared to change your practices as necessary.   

Getting paid

Unless your customers pay immediately on receipt of goods or service, if you run a café for example, then you may be in a position where you are extending credit. In this case, you'll need an effective system for monitoring and collecting receivables and you'll require a clearly defined collection policy. All of your customers must be aware of your collection policy, and you must be willing to enforce it in the event that a receivable becomes overdue.

Financing resources

There are also financing options available that can help you maintain a positive cash flow. Operating loans can help you cover your regular costs in advance of collecting the receivables to pay them. The lender will use a percentage of your accounts receivable as collateral against an operating loan. Rather than a one-time loan, operating loans are set up with a lender as a series of pre-approved, short-term loans with a maximum limit, saving you the hassle of having to constantly negotiate new terms. Many new businesses require operating loans, but as your business grows, you'll ideally be able to operate without them.

Remember that Niverville Credit Union is here to provide the advice you need and to help your business grow from a start-up to a self-sufficient operation.

Reaching capacity

As your business grows you may run up against limitations imposed by the size of your facilities, the number of your employees, or both. It's critical that you anticipate and plan for these occurrences. If you're unable to grow to meet increasing demands, you may lose customers and profits to your competition.

Facility requirements

It's critical that your facilities are the right size. Unnecessarily large facilities may create a drain on your finances and slow your growth. Small facilities may require you to relocate or expand before you're financially able. Do not underestimate the effect a small facility can have; cramped quarters can be an enormous efficiency problem for workers.

When you decide that it's necessary to expand or relocate, you'll need to begin the search for a new facility. It's important to choose a facility that meets not only your needs, but those of your customers as well. You need to consider the location of your new facility carefully, as well as the condition and utility of the structure itself.

New employees

It's also crucial to have the right number of employees to promote and support growth. Having too many employees not only slows financial growth but can cause workplace inefficiency. That said, you don't want to overwork your employees. Aside from the costs of overtime, tired and irritable employees will have poor morale, which could cost you more than just money.

Determining whether you need new employees is a cost/benefit question. The obvious hard cost is in the form of wages and benefits, but you should also consider the time and effort required to train new employees. On the other hand, the benefits of having new workers are sometimes hard to quantify. Will new employees free up time for you to market your services? Will they directly increase production or allow you to serve more customers or clients? Are there new roles that need to be filled to provide new or better services? If you can't answer yes to one of these questions, you probably shouldn't hire anybody. Remember, expansion is often a sign of a healthy business.

Becoming an employer

If your business becomes too large to run by yourself, you may need to hire extra personnel to help. The first step to becoming an employer is to get a Business Number, which will allow you to deduct income tax, Canada Pension Plan contributions and employment insurance premiums from your employee's wages. There are many rules and regulations to adhere to as an employer; make sure you comply with all of them before you bring new people on board.

Hiring: what to look for

Of course you want to hire someone who can get the job done, but you also want someone you can get along with. You must be careful, however, when you interview potential employees. Avoid asking personal questions in an interview and stick to topics that relate directly to the duties you'll be asking them to perform. If you ask personal questions in an interview, and then give the job to someone else, you could be accused of discrimination.

It's also not a good idea to hire the cheapest labour you can get. It can be more expensive in the long run when you consider the supervision they may need, the training you must provide, and the turnover that often accompanies low wage employees. It's a much better plan to hire more costly and more qualified workers who will get the job done right without any headaches.

Don't rush the hiring process. It's better to spend plenty of time and interview a lot of people than it is to hire the first qualified person that comes in the door. If you hire the right person the first time, the extra time spent will pay off, for you and your new employee.

Where to look

There are a lot of options available to employers when looking for new personnel. Both the provincial and federal government have programs in place to put workers and businesses together, and there are many private employment services that can help you find the right candidate. One of the more successful ways to find an employee is by advertising on the many online hiring marketplaces available. It's inexpensive, fast, and people searching for a job know to look there. The one method that has proven most effective overall is finding employees through referrals, acquaintances, and other employees. In these cases, a lot of the initial screening process has been done for you. And best of all, it's free.

Marketing strategy

Your business is up and running. You've invested a lot of time and money to get your product or service just the way you want it. Now what? The first thing to do is find out which people will be buying your products. Who will your customers be? Once you've found this information, you need to devise a plan that will get your products and services into the proper market so people can buy them.

Distribution channels

Distribution channels are the paths that products and services take to get from your business to your customers. These paths can be long and convoluted, involving wholesalers, distributors and retailers, or they can be as simple as selling directly to the public online. What method of distribution is right for you? How does your competition distribute? What can you afford? If other people or companies need to be involved in the distribution process, it's essential that you communicate well and know exactly which part of the operation each is responsible for.

Distribution resource planning (DRP)

DRP is a matter of looking at the needs you have compared to the resources available to you. This includes looking at the possible use of extra manpower, hired transportation, warehousing, and other factors. Will you need to lease a truck and hire a full-time driver, or will you need to contract a much larger fleet? A good DRP will help you manage your inventory as well. You'll know exactly how much product you're shipping, where it's going, and when. Whatever distribution method you choose, it must be reliable and safe for your product and your business, and it must be a method you can afford.

Getting your supplies

You never want to have operational downtime because you've run out of production supplies. To ensure this doesn't happen, you need dependable suppliers. Do your research and ask other businesses until you find a supplier with a solid record of filling their clients' needs. Even if you do sign up with a supplier that meets your needs, it's still a good idea to keep an eye out for something better to ensure your current supplier stays competitive. After all, business is still business.

Foreign exchange (FX)

If your business involves importing or exporting products to or from other countries, you're affected by the value of the Canadian Dollar. If you provide a service in another country, you're similarly concerned with the rate of exchange. Foreign exchange is determined by the value of all the world's currencies in relation to one another.

While there is nothing you can do to affect the value of the Canadian Dollar, there are some precautions you can take to make sure your business doesn't go under due to a fluctuation in FX. Learn more about protecting your profits and devise a strategy to manage your exposure to these changes.

Reaching new markets

There are a lot of businesses competing for foreign markets in today's growing global economy. Fortunately, there are a few things you can do to help you gain a competitive advantage. As with any business venture, you have to start with something that you're interested in and that you can do. Look around at some of the Canadian companies that have been successful in other countries. Your business may be able to use some of the strategies they employed.

Choose an appropriate market. Your target market must have a need for the product or service that you plan to provide. These new customers must also be able to afford a price that will allow you to profit. It's a good idea to choose a market in a culture that you are interested in, because spending time in that culture is essential to success. You'll have to travel there to do market research, establish contacts and keep up with changes in the market as your business prospers.

Do your research

It can be a challenge to expand your business outside your home province, let alone outside of Canada. Learning all the regulations and researching the various options is time consuming, but essential to success. Developing foreign markets is a long-term commitment, but one that can be very rewarding if handled wisely.

Determining your technology needs

Technology is an important part of any business. Whether you need a few laptops or you need servers for a local intranet and broadband internet access for hundreds of employees, technology is an important tool in modern business.

Determining your specific technology needs is simply a matter of informing yourself. Take stock of the tasks that need to be performed to operate your business effectively and determine which of those tasks can be made easier and more efficient through technology. By becoming an educated consumer, you will save time and money when it comes to purchasing, installing and operating new technology.

Financing new technology

Take the time to determine exactly what you need before you spend the money. Hopefully your original business plan accounted for the capital expenses of any technology purchases you are planning. If not, you will need to look at the financing options available to you. In most cases, the best financing option for the purchase of assets is a term loan. Once you have a firm idea of what you will need to purchase and how much it's going to cost, contact us at Niverville Credit Union and we can discuss the financing options available to you.

New employees

When you start your business, you may be the only employee, or one of only a few. But as a business grows, you may need even more employees to meet the demands of a growing customer base. Eventually, you should step away from handling the everyday workload and into a more managerial role. This can be difficult, as up to this point you have probably tried to handle it all yourself. Now you will need to delegate the major responsibilities to key employees and be able to trust that they know what they're doing. The fact is that they may not be as proficient as you, but the costs of trying to do it all yourself as your business continues to grow are much higher than the cost of a few mistakes made by employees in the learning process.

Managing employees

Delegating the workload to employees is relatively easy. Managing them, on the other hand, can be difficult. It's not enough to simply tell them what the result needs to be; you need to make sure they are properly trained to do their jobs. You will probably need to promote some of your employees into supervisory roles, and you may even need a full-time manager for day-to-day operations. You must be able to trust the people you hire or promote into these positions, because the success of your business will depend largely on their ability to do the jobs you've asked them to do.

Employee relations

Part of managing your employees effectively is maintaining good relations with them. It goes without saying that you must treat all your employees with respect and courtesy, and that you can expect the same from them. However, things won't always run smoothly. To keep things moving as well as possible, you will need to establish clear rules and policies for all of your employees.

With firmly established policies in place, there should be no question about what is or is not appropriate behaviour on the job. If an employee presents a problem, you need to be prepared not only to react accordingly, but also to record any transgressions of your workplace rules or policies in a log. If you ever find yourself in the unfortunate position of having to fire an employee for repeatedly breaking with your policies, a log of past incidents may protect you from being charged with wrongful dismissal.

Joining forces

Sometimes you can learn a lot from your competition by looking at what they're doing right, what mistakes they make along the way. Your competition can also learn from you. Maybe your competitor is a genius when it comes to design and production but has no idea how to market, while you have a real knack for that aspect of the business. After keeping an eye on each other for some time, you may decide that you could increase profits by joining forces.

You don't have to limit your analysis of potential alliances to the person down the street. You can align yourself with businesses and companies from other countries to capitalize on the skills you have and different resources available to each of you. Nor do you have to limit your partnership to just one other business or even to a similar business. A coffee shop, a bookstore and a laundromat could form a very successful alliance, given the right circumstance.

There are things you should be aware of before you decide to form or join any alliance. First, you need to ascertain whether there's enough of a market to support both you and your potential partner. If there is, proceed with caution. Look closely at what each of you is bringing into the relationship and make sure that profits will be divided accordingly. Legal assistance and a solid contract are strongly advised.

Mergers and takeovers

Two companies coming together is not always a matter of mutual agreement. If a business is in danger of going bankrupt, the owners may agree to merge with a competitor just to stay alive. In the case of a large, public company, the fate of the business could be in the hands of a shareholder majority. A predator company may approach a target company with a business plan, and even if the directors of the target company reject the plan, the shareholders of the company can accept the new offer and force a merger. This type of business practice is sometimes called an acquisition or a takeover.

Taxes

Learn about the various types of federal and provincial taxes that apply to you and your business. If you're federally incorporated, you must pay taxes in monthly installments. If you're the sole proprietor, you include the income (or losses) of your business in your personal income tax–even in this situation, you may be required to pay taxes in installments.

There are a lot of tax regulations to be aware of when operating a business. Revenue Canada provides all the information you need to make sure that your business complies.

Outside support

There are dozens of organizations, both governmental and private, set up to assist the business community. Do some research to learn about the programs, counseling and assistance available. A good place to start is your local Resources Development Canada Human Resources Centre.

Research and development are crucial to the success of a business. Make sure you have and make use of all the information available to you.

Should you expand?

If business is going well, you may be thinking about expanding. Before launching into any new markets, there are some key things you must consider. First, you'll want to make sure that the current success of your business is not a fad. Do some forecasting to make sure that the market will keep rising in your new area. You also want to take a very close look at the area you're expanding into. Is there a need for your product or service that hasn't been provided in the past? Make sure another competitor hasn't already gotten the jump on you, established themselves and cornered the market.

A new market

Once you've established that the market's there, make sure that you're ready for the shift. You'll need to change and expand your original business plan to reflect this move. You need to start running your small business as if it were a big business for a while before you'll be able to tell if expansion will work for you.

Hard facts

You will need to consider the logistics of expanding. Do you have the capital you need to expand? Do you have enough trained staff to smoothly transition into a new market? Have you done your research and examined all the legal considerations involved in expanding?

Are you ready?

Consider the added stress on yourself. Is it worth it? Many entrepreneurs have expanded their enterprises only to have their business take over their lives. Unchecked expansion may be great for the bottom line, but what are the other costs? When you first started your business, you probably hoped that one day you'd have more time to spend with your friends and family. By pushing to expand relentlessly, you may find your personal life falling apart around you.

Deciding whether to expand your business into new markets can be difficult and complicated, so make sure you have all the facts before moving ahead.

New challenges

If you've finally managed to get ahead in your business, you've probably attracted your competitors' attention. They'll be watching to determine what you do right and learning from any mistakes you make. By setting a new standard, you've challenged them to do better, so now isn't the time to be complacent.

Using information to maintain a competitive advantage requires effective interpretation. Analyze the information to determine the strengths and weakness of your competitors, where they see opportunities, and what they see as a threat. From this basic analysis, you can start predicting their next actions.

Watching your competitors

Just as your competitors will keep an eye on you, you should also pay attention to them. There are three basic steps to monitoring your competition: collecting information, analyzing information, and predicting the actions they'll take.

Predicting and planning

If you own a restaurant, and your competitor is building a patio, it's easy to deduce that they're planning to increase their summer business. If you're the president of an investment brokerage and your competitors hire a dozen graduates from a local fine arts college, you may need to hire a professional analyst to figure out what they are up to.

In any case, once you determine what your competition is planning, you need to decide how their actions will affect you. Do you want to compete directly, or let them test the waters first? If you try to 'build your own patio', you may find out the hard way that their plan was ill conceived. At the same time, if you don't compete, you could end up losing business. Whatever you do, your actions need to conform with your own long-term plans. Don't be unnecessarily reactive. Take the time to consider any new course, or you might find that suddenly you're the one trying to catch up.

Registration with Revenue Canada

In the case of a non-profit organization, registration refers specifically to registering with Revenue Canada for income tax exemption. If your organization has no need for tax-exempt status–if it will not be accepting gifts and issuing official receipts for income tax purposes–then your organization does not need to register.

Qualifying for registration

If your organization does need to register with Revenue Canada, first you'll need to demonstrate that your organization truly qualifies as a non-profit. There are two principal factors that disqualify your organization for registration.

First, the income of the organization may not personally benefit any proprietor, member, shareholder, trustee, or settlor of the organization. This does not prevent the organization from paying for services rendered. Second, your organization may not espouse, promote, support, or seek to achieve any political agenda, party, purpose, or doctrine, nor may your organization seek to persuade the public to adopt a particular social view or attempt to bring about or oppose changes in the law or government policy.

Advantages of registration

There are two basic advantages to being a registered non-profit organization. First, the organization will be able to issue receipts for gifts received. These receipts reduce the tax payable for the individual donor, or, in the case of a corporation, reduce the taxable income. The second benefit is that, upon registration, the organization is exempt from paying income tax.

Obligations of a registered charity

Of course, along with the benefits, there are requirements that a non-profit organization must meet to maintain its registration. First, the organization must donate its resources to charity. Second, it must continue to meet the requirements that qualified it in the first place. Third, a Registered Charity Information Return must be filed within six months of each year-end.

Finding direction

A non-profit organization may have a few volunteers, or it may have hundreds. Without a strong board of directors to steer the organization, their efforts will not be fully realized, and the aims of the organization may not be effectively met. To allow your directors to run the organization effectively, they'll need to know what is expected of them. Without some sort of job description, directors will not be able to focus their efforts-and the efforts of others-toward specific goals.

Directors' roles

In determining what you need from directors, it's a good idea to make a list of required skills and a list of current board members. By cross-referencing the lists, you can not only assign specific duties to existing board members, but also determine what holes need to be filled.

Another good idea is to consider having both an accountant and attorney on the board of directors. These sorts of professionals have specific knowledge that can be critical to your organization. Keep in mind, however, that while the advice and insight gained may be extremely helpful, conflicts of interest may prevent them from representing your organization in an official capacity.

Types of charities

The Income Tax Act currently recognizes three types of charity: the charitable organization, the public foundation, and the private foundation. The specific type of organization may also restrict who may or may not be a director depending on how the individuals are related through blood, adoption, marriage, common-law, or close business ties.

In a private foundation, 50% or more of the directors may be related persons. In a public foundation or charitable organization, less than 50% of the directors may be related persons.

While it may seem like a good idea to have your friends and family sit on your board of directors, it may not be an option, and in any case, may not be the best thing for those you wish to help. Remember that your organization exists to help your community and the rules governing the structure of the board are in place to ensure that all registered non-profit organizations are working to that end.

A non-profit business plan

Your non-profit organization will need a well-developed business plan to get it off the ground. In order to simply apply for registration, you'll need to clearly state the objects of your organization. You must also be aware of and prepared to comply with all federal, provincial and municipal requirements. Furthermore, to be successful, you'll need to have a carefully developed structure, operating procedures, and bylaws.

It may sound like a lot of work, but a business plan for a non-profit organization isn't that different from any other business plan. You simply need to describe why your organization is valuable, both to those who benefit from it, and to those who fund it.  

Scope

It's important when envisioning the scope of your non-profit organization to have specific aims and goals in mind. If your mandate is "to help the poor," you're probably thinking too big. You need to carefully define the group who will benefit from your activities and how they'll benefit specifically. A better mandate may be "to feed the homeless and hungry within the municipality by establishing a soup kitchen and providing information and access to local missions and shelters."

Vision and strategic planning

Although you should always keep long-term goals in mind, you may find them taking a back seat to the struggles of day-to-day operation. If you persevere through the difficult early years, your organization will grow, and things will calm down considerably.

Just because things stabilize doesn't mean you can relax. The danger now is not in failing outright, but in stagnating and losing touch with your community. Take the time to look carefully at what worked in the past and what failed. Use this information to develop a new, stronger plan that will help you help others even more in the future.

The rules of your organization

Aside from having to obey the legal and financial regulations of your province and region, a non-profit organization needs its own internal constitution and bylaws. These rules, which must be decided on and approved by the board of directors, will govern all the operations of your organization.

The scope of a constitution

Aside from stating the purpose of your non-profit organization, a constitution also defines its structure. It establishes, among other things, the number of directors, the length of directorial terms, and the powers and duties of the board. A constitution details all the procedures for the organization, from how minutes are entered and distributed, to how votes are conducted. Further, a constitution needs to outline the procedure for making changes and amendments to the constitution itself.

A constitution can be simple or complex. In general, the larger your organization is, and the larger the geographical area it services, the more complicated your constitution will need to be. For a non-profit organization that you operate largely from home to the benefit of people in your immediate neighbourhood, your constitution may be only a single page in length. For a national organization, with directors serving regionally and flying across the country for annual meetings, you'll need a lengthy constitution.

If your organization is incorporated, you'll not only have a board of directors for the organization, but officers for the corporation as well. The Articles of Incorporation will detail the roles of the directors, but the constitution must be drafted in full awareness of the relationship that exists between board members and officers.

Writing a constitution and bylaws

Even a simple constitution is an important legal document. It's a good idea to draft your constitution with the assistance of an attorney experienced in non-profit law. Furthermore, since it is not always easy to amend a constitution once it's approved, make sure that it not only serves the organization in the early stages, but that it will also be adequate when your organization expands.

Are you covered?

If you lease office space, for example, you'll need to consider renters insurance that covers theft and fire to protect any office equipment or furniture that the organization owns. If you're using a vehicle for operations, make sure you have insurance that complies with the regulations of your province, especially if there will be multiple drivers.

Bond insurance should be considered if you have board members or volunteers working with money. You always hope that you can trust the people wanting to help, but sadly that's not always the case. If your project involves working directly with the public, you may need liability protection in the event that something unexpected happens.

Special considerations

As a non-profit, there are a few other types of insurance that may be required. If your organization uses volunteers, you should think about having them covered as part of your original liability agreement. This protects volunteers if they're negligent while performing duties and a client gets injured somehow.

If there are social workers involved in your operation, you'll need to get Social Workers Professional Liability, which covers any unskilled or negligent act resulting in harm to a client. It's essential for any kind of facility that has a clinic or other medical operation to get Medical Malpractice insurance to protect against a client's lawsuit in the event of any unfortunate incident. Nobody wants bad things to happen, but that's no excuse for being unprepared. Having the proper coverage can ensure that your good work can go on, even after an unfortunate event.

Non-profit structure

Non-profit organizations come in all shapes and sizes. A poetry group that gives free readings at a café once a month is just as much a non-profit organization as an international agency mandated to protect a certain species of wildlife.

There are, however, two main types of non-profit organization: those that are incorporated and registered as non-profit charitable organizations, and those that are not. If you are incorporated, your organization will probably function very much like any other corporation, and that means you need a formal structure.

Starting structure

The structure that your organization has at the beginning will be determined by your Articles of Incorporation and your constitution. There will be corporate officers, a board of directors and a staff that reports to the board, or to an executive director appointed by the board.

Aside from the officers, the board, and the staff, non-profits have one thing that most for-profit corporations do not: volunteers. In many ways, volunteers function as an extended staff. They are often assigned to the programs offered by your organization where they can most directly serve the people you're trying to help.

Organizational theory

There are thousands of books and papers written on the topic of organizational theory and there is no one way to set up your organization. There are good ways and there are bad ways, with a huge grey area in between.

One of the key roles of the board of directors is to constantly analyze what is working and what is not. If you adopt an organizational structure that is not helping you meet your goals, you'll need to change it.

A good director will never be afraid to reassess the organizational structure and initiate changes. Some directors may even feel that changes need to be made periodically to structures that are working, just to keep things from growing stagnant. The point is, the ability to adapt and to continually strive for excellence can only be a benefit, both to the organization and to those it serves.

Getting to know you

If you're sponsoring a hot meals program, you first need to let the people who need this service know how to contact you to obtain help. You also need to get the word out to the people in the community who would like to support your cause, either by volunteering their time or by donating money, building space, or materials.

Advertising

Word-of-mouth is the cheapest and easiest way to get information out to your target audience. Putting up posters in designated areas with information about your organization or a specific event you're holding can work in much the same way, and advertising in local print media can be relatively inexpensive as well.

Make sure you have a good website, look for non-profit listings online, create a social media ad budget, and get the word out through public relations.

Staff vs volunteers

Many are unable to help a non-profit organization by donating money but are willing to donate their time. Finding people who will work for you for free isn't easy, but it's not impossible either. There are many websites dedicated to matching volunteers with organizations. While volunteers are an invaluable asset, there are limitations. Since they aren't getting paid, they will determine when they're available, not the other way around.

Aside from volunteers, you will likely require at least a few paid staff. As with any business, hiring staff requires you to carefully decide which jobs you need done, interview prospective employees, and hire the best candidates. Be sure to comply with the Employment Standards Act and all other regulations governing employer-employee relations.

Volunteer hours

Many volunteers aren't involved with your organization for strictly altruistic reasons. Some people are required by law or by their profession to record a certain number of volunteer hours. Others may be looking for experience in a field related to your organization, hoping to spruce up their resume.

In these cases, you can expect that they will inform you of their circumstance, and you should be prepared to keep careful track of their hours and performance. Expect that many of them will leave once they've accumulated the hours they require. At the same time, these sorts of volunteers may turn out to be your best, especially since those looking to improve their resume or to gain valuable experience may want to use you as a reference when applying for a job in their field.

Paying employees

In the case of paid employees, you'll require a payroll plan to keep track of employee hours, wages, and salaries. You'll also need to make deductions from their paycheques for income tax, employment insurance, and federal pension plans. You also must pay Worker's Compensation costs to protect your employees if they are injured while on the job. Because of the many issues involved when you hire employees, it's probably a good idea that you outsource your payroll to a payroll company.

Receiving money

It's essential that you make it easy for people to donate. If the process of donating is too arduous, they're less likely to help.

Have an account

It's important to register your non-profit name to have a separate account for your organization. This makes it easier to budget the amount of money that comes in and goes out. Another benefit to having a separate account is that you can cash cheques made out to your organization.

You can also establish a merchant credit card account. Just contact the financial institution that services your business and tell them that you want to be able to receive credit card contributions.

Making contact

There are many options that make it extremely easy for people to donate to your organization online. Look into platforms specifically designed for nonprofits. If you are approaching members of the community through a face-to-face campaign, they can simply make cash donations, or you can direct them to your website.

The first rule

The most important part of fundraising is asking people for money. It may seem obvious, but a lot of people are shy, or can never seem to find the right time. Members who donate large sums of money to non-profit organizations should inform friends, family and co-workers; and encourage them to make donations. Most people will not give money if they are not asked.

Who do you ask?

Board members should be first on your list. They're obviously interested in the goals of your program, and they should show their support by making a substantial donation. The next group you should approach is the recipients of the service that your organization provides. The people that enjoy local theatre should support that theatre. Parents who benefit from an after-school daycare feel obliged to help financially. Finally, ask people who have donated before. If they felt strongly enough about your work in the past, they likely still do.

How do you ask?

Modern digital outreach tactics include personalized email campaigns and social media, both organic and paid. While cold calling is seen as intrusive, a follow-up call after an initial interaction is sometimes warranted. For major contributions, face-to-face meetings remain essential, especially when conducted by board members who have made significant donations themselves. Of course, it’s essential to have a user-friendly website with secure donation options.

When do you ask?

The obvious time to ask for donations is the end of the year. The holiday season has people in a charitable mood, and with tax season approaching they know they can use a sizable donation as a credit. This being said, it's important to keep fundraising year-round. Most of the money given to charities each year comes from smaller donations made by people who just want to help.

Organization is the key

Like any new business, the key to success is a solid original idea and a well thought out long-term plan. This is also the key to getting grants. Write a business plan that answers the following questions:

• Do people need this new organization?

• Are there people who will support you?

• Where will you get the funding necessary to operate?

• Why are you the right person/people to do this project?

Getting grants

There are two major types of grants available to a non-profit organization: government grants and foundation grants. But the amount of money they contribute isn't as significant as people think. Foundation grants, for example, contribute less than 10% of all non-profit revenue. Grants can be a big help in starting and continuing a non-profit organization, but you can't rely on them as a major means of support.

Budgeting

It's not enough to come up with an excellent business plan and get the grant money you need. It's imperative that you put together a new budget at least once a year. First, your board of directors would be happy to see it, and it's always helpful for you to see how things are going so you can improve future operations. But most importantly, if you're applying for continuing grants, organizational budgets are a necessity. The people giving you the grants need to see that you're using the money to achieve what you set out to do.

Supporting your cause

You need the support of your community to start up a new non-profit organization, and to keep that operation going. Whether you're a small local project or a huge, national non-profit, the support of people who want to help you is essential. Make it easy for your supporters to help you financially by getting a merchant credit card account.

How to register

Talk to the financial institution that handles all your non-profit organizations' funds and ask them about setting up a merchant credit card account. If they can't help you themselves, they will be able to guide you to an institution that can.

The benefits

Once you have registered, you'll be able to receive charitable donations via credit card. This makes it easier for people who believe in what you're doing to contribute financially, especially online.

Ending your non-profit

You may decide to close because of funding. It may be because of funding; you've tried every way imaginable to raise the funds necessary to operate but just can't get the support you need from the community. Maybe you just don't have the time to keep the organization going and you can't find anyone else to take over the responsibility of running things. It could also be that the service you originally provided is no longer necessary, and you find that there are less and less people using the service every week.

Be sure

Don't decide to close your doors at the first sign of financial hardship. Just because one source of funding stops coming in, it doesn't mean that things are hopeless. Try to find a different source of income and explore new avenues. There may be a supply of money you've overlooked.

Schedules change. You may start a new job that doesn't allow you the same amount of free time. Maybe you decide to start a family. In most instances, there will be more than enough people able to fill your shoes. There are, however, non-profits run by a very small group or even just one person. In that case, if someone simply no longer has the time, the non-profit may need to shut down. Whatever the case may be, try to do everything you can to find a replacement. If your cause was worth working for to begin with, it's more than likely still going to provide a valuable service that would be missed if gone.

Maybe your clientele base gets so low that you feel the assistance you provide is no longer needed by the community you're in. Perhaps your organization was so successful that the problems you originally set out to fix no longer exist. Congratulations on a job well done. It could also be a demographic change. If you provide meals for elderly people, but over time the community you work in changes to a young family neighbourhood, your service will no longer be as useful. But if you move your operation to a different part of the city, you could find yourself with a brand new, and very grateful, clientele.

In any instance, be sure that that you've explored all your options before you stop providing what is probably a valuable service.