Starting a business is something many immigrants are familiar with. Chances are you or a family member had some sort of business in your country – sometimes even more than one! I remember my aunt baking cakes on the side and selling them to her friends. My own friends reselling clothes and accessories. Even I found a way to make money while in high school by being my family’s “cleaning lady” – if they were going to pay someone, they might as well pay me! True story.
All of these business stories have something in common though: none of them grew or scaled, let alone survived past the two-year mark (cleaning my brothers’ messy room lost its financial glamour very quickly). Also, most of these businesses were “under the table” and earnings were never really reported – it was just a quick way to make some cash. The ideas were also born out of a quick “hey, I think I can make some money, let’s give it a try.”
Coming from a developing country such as Mexico, rules are a bit laxer as it pertains to business, compared to Canada. It almost feels like it is easier and faster to open a business in your home country. I mean, you or someone you know can cook? Just put a few chairs and tables in your garage and call it a restaurant…another true story.
Love it or hate it, opening a business in Canada as an immigrant requires a lot more self-control and planning than what we are used to. I have spoken with hundreds of aspiring and current immigrant entrepreneurs, and these are the most common mistakes newcomers make when setting up a business in Canada: 1. SHOOT, READY, AIM!
We get so excited at the possibility of making money that we start backwards: we give our business a name, set up our Facebook page, then we get sidetracked with the shiny new website and start talking about this new business we have created. Sometimes we go straight to creating/selling our product or service without giving much thought to the foundation of the business. Although speed is important when starting a business, sometimes taking some time to think about A, B, C will help avoid many headaches down the road.
And how do you do that? Well, I’m glad you asked!
Gone are the days of writing long-winded business plans (however, if you need a business loan, you will require one in Canada). Nowadays, companies are agile and constantly evolving that spending weeks (or months) in a business plan can kill the momentum and the enthusiasm. However, there is a happy medium called the Business Model Canvas. This document asks the right questions and forces you to come up with important answers that will help you shape your business and provide a strategic direction in one page.
In very general terms, this one-pager will force you to think about:
Who are your customers?
What is unique about your business and why would your customers buy?
How will you sell your products/services?
How will you interact with your customers through their journey?
How will the business make money?
What must your business have in order to compete?
What can your business not do so it can focus on its key activities?
What is the cost structure of your business?
The more you work toward answering these questions before the excitement takes over and blinds you from developing a strong foundation, the higher success your business will have.
Remember, it’s one page. Take the time to Ready, Aim and THEN Shoot.
This is a great Business Model Canvas tutorial. 2. OPERATING UNDER THE TABLE
Admit it – we’ve all done it. Making a product (or service), selling it, and pocketing the income. If you are serious about your business and you are successful enough to have people buying from you, take the time to register it.
There is something psychological that happens the moment you register the business. It all of a sudden becomes “official” or “real.”
Contrary to what you may believe, it is actually really easy to make your business official in Canada. You can register as a sole proprietorship or a corporation (these business structures are the most common) and do it in a matter of minutes online.
Ownr is my favourite site to register a business in Canada. It’s easy, affordable and their customer service is unreal. * 3. MIXING BUSINESS WITH PLEASURE
Imagine going to school with only ONE notebook for an entire year. At the end of the year, you need to study for two different exams and all your class notes are in that one notebook with no tabs separating the subjects. You have to go back and forth chronologically to figure out which are your notes for Class A and which are the notes for Class B. What a mess, right?
Ideally, you have one notebook per class, that way it’s easier to study from your notes.
One of the biggest mistakes my clients make is that they use the same bank account and/or credit card for their personal banking and for their business. Now, imagine trying to see at the end of the year how much your business spent in inventory, marketing, etc. Trying to come up with those numbers while also mixing your personal expenses will be near impossible.
The strongest business owners are those that have a good idea of their numbers. Do yourself a favour and open a separate bank account and credit card for your business. In an ideal world, this is what should happen:
Register your business (you will be sent a “master registration number”)
Open a business bank account and get a credit card for your business (depending on your credit history, the credit card might have to wait) – the bank will require the master registration number in order to open the account
Some sole proprietorship owners even use a separate personal bank account that they designate as their “business account” and use it solely for that. That’s a great start but I would still try to get the business its own legitimate account.
If you are thinking of incorporating, the business MUST have its own bank and credit card. 4. FILLING UP A SHOEBOX WITH INVOICES AND RECEIPTS – AND THEN FORGETTING ABOUT IT
It is very important that every transaction you make for your business (ideally from your shiny, brand new business bank account) gets recorded somewhere on a consistent basis. That includes income AND expenses. Every single transaction needs to be accounted for – remember, the strongest business owners are those that have a strong knowledge in their numbers – those numbers need to be written down somewhere.
Ideally, you want to incorporate an accounting system. A good free option is Wave. Other options are Quickbooks Online* (I use this one) and FreshBooks.
This is why you should get one of these systems and implement it now: you can link that shiny, brand new business bank account and credit card electronically to one of those accounting systems and every single transaction gets recorded automatically. But wait! There’s more. Most of those systems also have a feature where you can take a picture of your expense receipts and store it in your accounting file. Goodbye shoebox with faded or coffee-stained receipts!! Pretty neat, right?
Some added benefits of using an accounting system like Wave: you can create and send invoices to your customers directly from there. You can accept payments via credit card using their platform and since your bank account is connected to your accounting system, the payment gets deposited to that account seamlessly (check transaction fees). You can send reminders automatically to outstanding invoices. You can create reports and check different areas of your business, etc.
By incorporating this and recording every transaction, you (or whoever does your taxes) will have a much better time at the end of the year.
It is important to know that if you are thinking of incorporating, you MUST set up an accounting system.
5. DOING IT ALONE
Being an immigrant is a very isolating experience. Being an entrepreneur can be even lonelier. Put both of those together and you have a recipe for disaster. The worst thing an immigrant entrepreneur can do is doing it alone.
If you had a business in your home country, you were probably used to being very self-sufficient for many reasons (you didn’t want competition infringing in your business; you had a healthy social network so you never felt alone per se; you had great family support, etc.).
Canada’s entrepreneurship ecosystem is extremely collaborative – all you need to do is look for it and get involved. Look online for your local Small Business Enterprise Centres and join their workshops and community. Look for industry-specific communities – most often they have networking events and other learning opportunities where you can compare notes and learn from others. Join your local board of trade or chamber of commerce – these organizations are great allies and supporters of small businesses and offer a larger community of entrepreneurs you can rely on.
Last but not least, if you require more one-on-one help, look for a business advisor or business coach.
I have been in business for over a decade and I continue to have a business coach who acts as a sounding board and challenges me to be a better and more strategic entrepreneur.
You don’t have to do it alone.
So there you have it, the top five mistakes many of us have made (I’m guilty of many in my earlier days). The good thing is that they are all fixable. The sooner you get on them, the bigger chances of success and growth your business in Canada will have.
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Original Post: https://www.karlabriones.com/blog/the-5-mistakes-immigrants-make-when-opening-a-business-in-canada