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Starting a Business - Important Consideration for Success_Final.pptx

  1. 1. Starting a Business Important Considerations for Success Nathan Mean, Director, Business Resources March 13, 2023
  2. 2. WITH OVER 97,000 MEMBERS When you join CFIB, you can drive policy change at all levels of government. Access personalized advice and tools. Enjoy exclusive savings on essential business services.
  3. 3. Entrepreneurship and democracy are inextricably linked; you cannot have one without the other. Starting a business is a vote of hope, in one’s family, one’s community, one’s country.
  4. 4. 4 Starting A Business Practical advice From thousands of Canadian business owners for over 50 years Shared with CFIB Business Advisors as important to success
  5. 5. 5 Starting A Business First an Important Note • Few businesses succeed without a good lawyer and good accountant (CPA) • Business principles discussed are not complicated, but details can be • Don’t waste your time trying to figure out the law • Don’t do your own taxes • Your expertise is in the practicalities of business
  6. 6. Today we will look at three foundational themes and why they are so important to the success of the entrepreneur.
  7. 7. 7 Starting A Business Three Themes Discussed Today 1. Buying an existing business 2. Starting a completely new business 3. Inheriting or hiring new employees
  8. 8. As a new entrepreneur, never buy a business without first considering: • Evaluation • Liability and Taxes • Partners • Assumed Contracts • Current Employees • Unions BUYING A BUSINESS
  9. 9. 9 Buying a Business - Evaluation 9 Never buy an existing business without having a competent evaluator complete an appraisal of all assets, debts, liabilities, cash flow and physical structure See your lawyer or accountant for referrals Liabilities include intangibles like complaints to Human Rights Tribunals, Worker’s Compensation (claims/rate changes), Labour Boards/Tribunals
  10. 10. 10 Buying a Business – Liability and Taxes 10 Be aware of any past taxes still owing, and taxes owing in the future
  11. 11. 11 Buying a Business – Partners 11 Will you have one or more partners? Insist on a corporate shareholder agreement that determines • Dispute resolution • Future sale of shares in the business • Succession in case of death or resignation – even if your partners are family members
  12. 12. 12 Buying a Business – Assumed Contracts 12 Will you assume service contracts as part of the business purchase? • Franchise agreements • Membership contracts • Merchant services • Garbage and snow removal • Telephone, etc. Not comfortable? Negotiate before you sign
  13. 13. 13 Buying a Business – Current Employees 13 Does the business have current employees? They may have ‘continuity of employment’
  14. 14. 14 Buying a Business – Unions 14 Is the business unionized or in the process of joining a union? • Likely inherit the union with the business • Consult a labour lawyer specializing in management rights before signing any business purchase agreement • Unionized businesses are subject to different laws than businesses without unions
  15. 15. Choose Business Structure that suits you (common types) • Sole Proprietorship – easiest to set up • Incorporation – more paperwork, but may have tax and liability advantages • Partnership – used mostly by professionals like lawyers and accountants STARTING A NEW BUSINESS
  16. 16. 16 Starting a New Business – Banking & Financing 16 Required • Written business plan • Dedicated bank account • Credit card/debit card/smart phone payment acceptance • Beware: Some companies more honorable than others • Personal guarantees
  17. 17. 17 Starting a New Business – Insurance 17 Types of Insurance: • Building/vehicle • Liability • Errors and omissions • Business continuity • Other
  18. 18. 18 Starting a New Business – Professional Services 18 Legal advice • Business Structure • Regulatory filing/demand • Contracts • Demand letter/lawsuit/court or tribunal preparation Accounting advice • Tax Structure • Tax Filing • Payroll
  19. 19. 19 Starting a New Business – Licensing/Permits 19 Permissions required to operate your business • Building permit • Health • Liquor • Music • Certification • Provincial/Federal regulatory requirements
  20. 20. 20 Starting a New Business – Electronics/Security 20 You may need to sign contracts • Telephone • Computers/Software • Website • Security (both physical and cyber)
  21. 21. 21 Starting a New Business – Time Management 21 To increase your chances of success Communications plan • Calendaring system to meet deadlines and avoid penalties • Tax/Regulatory/Banking/Contractual/Legal • Messaging/voice mail/mail response plan for quick follow-up
  22. 22. As a new entrepreneur - whether inheriting employees along with the company you are buying, or needing to hire new employees in the business you are starting - once you are responsible for other people under a contract of employment, your life will never be the same – for better or for worse EMPLOYEES
  23. 23. 23 Employees 23 Buying a business with current employees? • Discuss current employment contracts with your lawyer before signing a Business Purchase Agreement Hiring new employees?  Consider the following before you do
  24. 24. 24 Employees – Prior to Hiring 24 Job Description • Should be in writing, ready before the interview Interview • Know the questions you may NOT ask Employment Contract • Should be in writing Payroll system • Needs to be in place Workplace policies • Know what must be in writing and implemented in your business
  25. 25. 25 Employees – After Hiring 25 Understanding the basics • Employment Insurance and Canada Pension Plan • Employment Standards Act/Canadian Labour Code • Human Rights • Workplace Safety and Insurance Board • Occupational Health and Safety • Training (Mandatory)
  26. 26. 26 Employees – Ending Employment 26 Resignation • Get it in writing Termination • Give it in writing • Termination for cause/willful misconduct vs. not for cause • Notice and pay in lieu of notice • Employment Standards Act requirements • Common law requirements • Record of Employment and Service Canada • Legal advice when appropriate Retirement • Succession planning • Severance • Canada Pension Plan requirements • Record of Employment and Service Canada • Accounting advice when appropriate
  27. 27. 27 27 Buying a business Do your due diligence before signing Talk to your lawyer & accountant before signing purchase agreement Prepare to negotiate what doesn’t make financial sense; accept nothing until you know the value and costs involved Insist on partnership agreement vetted by your lawyer if you have partners in on the deal Best get it right from the beginning Saves you money! Starting from Scratch Have a written business plan that outlines how you will make money Have financing in place before you start your business Insist on partnership agreement vetted by your lawyer if you will have partners in the business Talk with your lawyer and accountant before you start to ensure proper business and tax structure Don’t waste time trying to figure out the law and don’t do your own taxes Much time and money can be lost trying to clean up a mess that need not have been Employees Employees can either help you grow or lead to loss Always have a written employment contract vetted by your lawyer Never fire for cause without input from your lawyer Only hire employees committed to helping you grow your bottom line The best employees are people who will do just that
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  29. 29. Contact Business Resources 1-833-568-2342 to sign up and access a copy of the Practical List for New Entrepreneurs: Steps to Take When Opening a Business Interested in an Introductory CFIB Membership?
  30. 30. 1-833-568-2342 @CFIB @CFIBNews @cfib_fcei @CFIB Canadian Federation of Independent Business General Inquiries @cfib_fcei