BUSINESS ADVISORY CENTRE

Small Business

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Visit the Business Advisory Centre 3 1. Developing Your Idea 4 2. Do Your Research 4 3. Write a Business Plan 5Resources 5 4. Choosing a Business Structure 6Sole proprietorship 6Partnerships 7Corporations 8 5. Choosing a Business Name 9 6. Choosing a Location 9 7. Regulations, Licenses and Permits 10Resources: 11 8. Register Your Business 11Incorporating Your Business 12Provincial Incorporation 12Federal Incorporation 12 9. Business Number Registration 13What is the difference between a business number (BN) and a Business Identification Number (BIN) 13 Do you need a program account? 13 GST/HST 13 Payroll 14 Corporate income tax 14 Import/Export 14How to register 15Canada Revenue Agency 15 10. Hiring employees 16Employment Standards 17Workplace Health & Safety 17 Workplace Safety and Insurance Board (WSIB) 17 What is Bill 119 Mandatory Coverage in Construction? 17Occupational Health and Safety Act 18 11. Business Insurance 19 12. Other Professional Services 20Appendix A – Business Model Canvas 22Appendix B – Business Plan Template 24Appendix C – City of Peterborough Licensing By-Law 34Appendix D – City of Peterborough Home Based Business By-Law 35Appendix E – Developing Your Idea 36Appendix F – A Guide to Market Research & Analysis 40

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If you decide to start a new business, you will need to spend some time developing your business idea. One of the greatest advantages of being an entrepreneur is being able to work on something that interests you and that you are passionate about. Unfortunately, passion does not always translate into profits.

Research, research, research! The more information you can gather about the potential demand for your product or service, about your competitors, and about the needs and wants of your prospective customers, the more successful you are likely to be.

Before starting a business, you need to evaluate your idea and determine what your chances are of making a profit from that idea. This document lists some things that you should consider and provides links to additional information to help you assess your idea.

For more information on developing your business idea see Appendix E

Successful businesses have extensive knowledge of their customers and their competitors. Market research is the process of gathering information that will make you more aware of how the people you hope to sell to will react to your current or potential products or services.

Whether you are aware of it or not, as a business owner you conduct market research all the time. When you talk to customers about your business or check out the prices of your competitors you are conducting market research. Formalizing the process can produce a wealth of information about your products and services, your customers and the marketplace you operate in.

The level of complexity used in your market research campaign is up to you, as market research can cover a broad spectrum of activities. You can undertake simple activities that can be done on your own, such as creating a short customer satisfaction questionnaire or studying demographic data for your area, or undertake complex ones that require assistance from a professional market research firm. Regardless of the size of your market research budget, the time you have available or your level of experience, some form of market research is possible and it can help you to improve your business decisions.

More information on conducting Market Research is available in Appendix F – Guide to Market Research & Analysis

Developing Your Idea

Do Your Research

2.Canadabusiness.ca – A Guide to Market Research - http://canadabusiness.ca/eng/page/2691/

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3A business plan is a valuable tool for every business owner, whether you are starting up, have been in business for years, or are ready to grow. It is a written document that describes your business objectives and strategies, your financial forecasts, and the market you are targeting. It will help you set realistic and timely goals, secure external funding, measure your success, clarify operational requirements and establish reasonable financial forecasts. Preparing your plan will help you focus on how your new business will need to operate to give it the best chance for success.

Think of your business plan as a sales blue print for your business. It must convince readers that your venture has the potential to be successful and act as a guiding document for your business and its next steps. Your enthusiasm, dedication and confidence in the project should be evident to the reader. Avoid highly technical terms and diagrams that the reader may not be familiar with. You will want to write the plan as if the reader is not familiar with the type of business you are starting.

The most effective business plans are dynamic documents that evolve as your business grows and changes. This document is a living document. Your plan should reflect the current reality of your business, the environment in which it operates, and your present and future goals1.

ResourcesBusiness Model Canvas – Appendix A Business Plan Template – Appendix B

Write a Business Plan

1. Canadabusiness.ca – Business Planning FAQ’s - http://canadabusiness.ca/eng/page/2751/sgc-35/naics-445120/#toc-what_is_a_business_plan_

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4When starting your business, choose the business structure that best suits your needs. The three most common business structures are:

Choosing a Business Structure

With this type of business organization, you would be fully responsible for all debts and obligations related to your business and all profits would be yours alone to keep. As a sole owner of the business, a creditor can make a claim against your personal or business assets to pay off any debt.

• Easy and inexpensive to form a sole proprietorship (you will only need to register your business name provincially)

• Relatively low cost to start your business

• Lowest amount of regulatory burden

• Direct control of decision making

• Unlimited liability (if you have business debts personal assets would be used to pay off the debt)

• Income would be taxable at your personal rate, and if your business is profitable this may put you in a higher tax bracket

Advantages

Disadvantages

• Minimal working capital required to start-up

• Tax advantages if your business is not doing well, (for example, deducting your losses from your personal income – lower tax bracket when profits are low, and so on)

• All profits will go to you directly

• Sole proprietorship

• General partnership

• Incorporation

• Lack of continuity for your business if you need to be absent

• Difficulty raising capital on your own

Sole proprietorship

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A partnership is a good business structure if you want to carry on a business with a partner and you do not wish to incorporate your business. With a partnership, you would combine your financial resources with those of your partner to build the business. You can establish the terms of your business with your partner and protect yourself in case of a disagreement or dissolution by drawing up a specific business agreement. As a partner you would share in the profits of your business according to the terms of your agreement.

You may also be interested in including a limited liability partnership in the business. This means that you would not take part in the control or management of the business, but would be liable for debts to a specified extent only.When establishing a partnership, you should have a partnership agreement drawn up with the assistance of a lawyer, to ensure that:

• Easy to start-up a partnership

• Start-up costs could be shared equally between you and your partner

• Equal share in the management, profits and assets

• Similar to sole proprietorship, as there is no legal difference between you and your business

• Unlimited liability (if you have business debts, personal assets would be used to pay off the debt)

• Hard to find a suitable partner

Advantages

Disadvantages

• Tax advantage if income from the partnership is low or loses money (you and your partner each include your share of the partnership in your individual tax return)

• Possible development of conflict between you and your partner

• You are held financially responsible for business decisions made by your partner (for example, contracts that are broken)

• You are protecting your interests

• You have clearly established the terms of the partnership with regards to issues like profit sharing, dissolving the partnership, and more

• You meet the legal requirements for a limited partnership (if applicable)

Partnerships

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Another type of business structure is a corporation. Incorporation can be done at the federal or provincial level. When you incorporate your business, it is considered to be a legal entity that is separate from the owners and shareholders. As a shareholder of a corporation, you will not be personally liable for the debts, obligations or acts of the corporation. When making such decisions, it is always wise to seek legal advice before incorporating.

• Limited liability

• Ownership is transferable (to a partnership, new owner or next generation)

• Continuous existence

• A corporation is closely regulated

• More expensive to incorporate than a partnership or sole proprietorship

• Extensive corporate records required including shareholder and director meetings and documentation filed annually with the government

Advantages

Disadvantages

• Separate legal entity

• Easier to raise capital

• Possible tax advantage as taxes may be lower for an incorporated business

• Possible conflict between shareholders and directors

• Possible problem with residency of directors

Corporations

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Some points to consider when naming your business:

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Before registering your business, you should decide what you want your business name to be. The right name can be an effective advertising tool that can help your customers understand what your business does, and which market you are targeting.

For most businesses, choosing an appropriate location is critical, and the address is often needed for registrations, licenses and permits. Your ideal location will depend on your business needs, zoning restrictions, and where your customers and competitors are. Taxes, noise and the local business environment are also important factors to consider when reviewing your options.

If you are considering setting up your business in your home, make sure you know what regulations and restrictions will apply to your home-based business before you start. You can do that through the Clerks Office at your local municipality or township office.

If you are signing a lease for a commercial location, it is very important to understand the terms and responsibilities of the agreement. Commercial leases have both longer terms and additional costs such as shared area costs, taxes and parking.

Your business name is an important part of your business identity. Choose a name that will fit your needs and suit your business image. Good business names generally have 2 parts, an “Identification” and “Description”. The Identification is the term that makes you unique. The Descriptions clearly says what you do.

Choosing a Business Name

Choosing a Location

• Short names are easier to remember

• Descriptive names can help people understand what your company sells

• Professional names can fit the image you want to project

• Distinctive names can separate you from your competition

• Unique names ensure that the name is not already in use

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7Your business may need licenses and permits from either the federal, provincial and/or municipal levels of government.

It is important to ensure that your business venture is within the by-laws of your municipality. A complete list of businesses requiring municipal licenses in The City of Peterborough is found in Appendix C.

Usually you will need to speak with the Planning & Engineering or City/Town Clerk’s office. If your township office has an Economic Development Officer, they are a great first point of contact, too. You will want to ask questions such as:

Make sure to enquire about whether there is a home-based business by-law that will affect you.

Regulations, Licenses and Permits

• Is the property properly zoned for the business you will undertake?

• Does the building have any restrictions to its use?

• What are the Sign By-laws?

• Are there any parking restrictions or requirements?

• Is a permit or license required from the Municipality for the type of business you intend to open?

Municipality Contact Information

www.peterborough.ca/en/doing-business/doing-business.aspx

Asphodel-Norwood

North Kawartha

Cavan-Monaghan

Douro-Dummer

Trent Lakes

Havelock-Belmont-Methuen

Selwyn

Otonabee-South Monaghan

City of Peterborough County of Peterborough

www.antownship.ca

www.northkawartha.ca

www.cavanmonaghan.net

www.dourodummer.on.ca

www.hbmtwp.ca

www.trentlakes.ca

www.selwyntownship.ca

www.osmtownship.ca

Curve Lake

First Nations Reserves

Hiawatha First Nation

Resources: City of Peterborough Business Licensing and Fees – Appendix C

8As a prospective entrepreneur or new business owner, you are no doubt aware of the importance of spreading the word about your organization. In addition to informing potential customers about your business, you must let the government know about your plans.

You may need to register with several different levels of government for many different reasons. This document provides an overview of the key registration requirements that may apply to your business.

Before you register your business you will need to choose a name, preferably one that is unique and easy to remember and describes the products and services you provide. Business name registration applies to entrepreneurs who want to register a sole proprietorship, a partnership or an operating name (trade name) for a corporation. For information on how to set up a corporation, see the Incorporating Your Business section below.

You can complete an optional name search and register your business in the following ways:

The cost to register your business ranges from $60 to $80. Your registration is valid for five years at which time it must be renewed. Once you have registered, you will receive a copy of your Master Business License for your new venture.

Register Your Business

• Through Service Ontario’s website – www.ontario.ca/serviceontario

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www.antownship.ca

www.northkawartha.ca

www.cavanmonaghan.net

www.dourodummer.on.ca

www.hbmtwp.ca

www.trentlakes.ca

www.selwyntownship.ca

www.osmtownship.ca

www.curvelakefirstnation.ca

www.hiawathafirstnation.com

Master Business Licence

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A corporation is a legal entity that separates the business from its owner/operator. You can choose to incorporate federally or provincially. Each option comes with its own advantages and disadvantages.

Incorporating your business provincially allows you to do business under a corporate name in Ontario. Corporate name protection applies in Ontario, and you can open offices/stores within the province.

Contact: www.ontario.ca/page/start-dissolve-and-change-corporation

If you incorporate your business federally, you can open locations within Ontario and/or in other provinces and territories across Canada. If you open offices/stores in different provinces, you will be required to register your business in those locations. Federal incorporation also provides corporate name protection across the country.

For more information: www.ic.gc.ca/eic/site/cd-dgc.nsf/eng/cs06939.html

Incorporating Your Business

Provincial Incorporation

Federal Incorporation

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The BN is a 9-digit business identifier used in Canada to which businesses can register program accounts with the Canada Revenue Agency (CRA).

This number should be used when communicating with the CRA about program accounts you have or wish to register for. For example, if you would like to discuss your GST/HST account or you would like to register for a payroll account, you should quote your BN. A Business Identification Number (BIN) is the 9 digit number on the Master Business. Licence that is used by the Ministry of Government Services to identify provincial, business registration

What is the difference between a business number (BN) and a Business Identification Number (BIN)

Not all businesses require a business number (BN), so it is important that you review the information for each type of program account before registering.

You only need a BN if you require any one of the following business accounts:

Do you need an account?

You must register for GST/HST if your total taxable revenues exceed $30,000 ($50,000 for public service bodies) in a single calendar quarter or in four consecutive calendar quarters. Some exceptions do apply. For more information visit the Canada Revenue Website at:

GST/HST

9The BN is a numbering system that simplifies and streamlines the way businesses deal with the federal government. It is based on the idea of one business, one number.

Not all businesses require a BN and CRA program accounts. It is important to identify if you require a BN before you register.

Business Number Registration

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Most employers, trustees, and administrators need a payroll program account.You are an employer if you:

When you incorporate with the province of British Columbia, Manitoba, New Brunswick, Nova Scotia, Ontario, or Saskatchewan, or Industry Canada your business will automatically be registered for a business number (BN) and a corporation income tax program account.

Within 45 days of incorporation, you should receive a notice confirming your BN and a summary of program accounts.

When you incorporate with any other province or territory you will have to register for a BN and a corporation income tax program account by contacting the CRA.

If you import goods into Canada or export goods to other countries, you should register.

Your import-export program account number will be used to process customs documents.

To avoid delays in releasing your goods at the border, open your program account before you import or export goods.

If you are not sure whether someone is your employee or is self-employed, visit the Canada Revenue Website for RC111 Guide Employee or Self-employed - www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll.html

Payroll

Corporate income tax

Import/Export

• pay a salary, wages, advances, bonuses, vacation pay, or tips to your employees and/or

• provide a benefit, such as board and lodging, to your employees and/or

• hire a non-resident person, partnership, or corporation to perform services in Canada

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You can register for a Business Number (BN) and one or more of the Canada Revenue Agency (CRA) program accounts at the same time using the Business Registration Online (BRO) service: www.canada.ca/en/revenue-agency/services/tax/businesses/topics/registering-your-business/bro-register.html

You can register for some provincial program accounts at the same time. Businesses that do not have complex registration requirements can use this service. For more information, go to what you can register for: www.canada.ca/en/revenue-agency/services/tax/businesses/topics/registering-your-business/business-registration-online-overview.html

Resources:Form RC1, Request for a Business Number (BN) - www.canada.ca/en/revenue-agency/services/forms-publications/forms/rc1.html

By Internet with Business Registration Online

How to register

3. Non-resident corporations that register for a BN with CRA will also be registered with a corporation tax account

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10Key to the day-to-day functioning of your business is your employees. You will want to determine the number of staff you require and their necessary qualifications. Then you will need to recruit the best and brightest, and create a working environment that they want to be a part of.

To ensure that employees are treated fairly, the federal and provincial governments have established employment standards regarding:

Certain industries fall under federal regulations, while others must comply with provincial or territorial employment standards. If your employees are unionized, there may be additional standards set out in their collective agreement that go above and beyond what is required by law.

For more information on what business owners need to know about Employment Standards in Ontario visit the Ontario Ministry of Labour - www.labour.gov.on.ca/english/es/pubs/fs_compliance.php

Hiring employees

Employment Standards

• Minimum wage

• Annual vacations and other types of leave

• Public (statutory) holidays

• Hours of work, including standard hours, overtime and emergency requirements

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You have an obligation to ensure the health and safety of all of your employees while they are working. This requires that you comply with certain regulations and standards for the safety of your workplace.

Most businesses in Ontario that employ workers (including family members and sub-contractors) must register with the WSIB within 10 days of hiring their first full- or part-time worker.

Registering with the WSIB provides workplace insurance coverage for all of your workers and gives you access to experts in health and safety for your business sector.

There are a few industries that do not have to register. These include:

As of January 1, 2013, the Ontario Government made WSIB coverage mandatory for most people in the construction industry.

Even if your company is in one of these categories, you can still choose to insure your workers through the WSIB.

More information is available elsewhere on this website. You can also call your local WSIB office and ask an account representative about applying for coverage for your business.

Workplace Health & Safety

Workplace Safety and Insurance Board (WSIB)

What is Bill 119 Mandatory Coverage in Construction?

• Banks, trusts and insurance companies

• Computer software developers

• Private health care practices (such as those of doctors and chiropractors)

• Trade unions

• Private day cares

• Travel agencies

• Clubs (such as health clubs)

• Photographers

• Barbers, hair salons, and shoe-shine stands

• Taxidermists

• Funeral directing and embalming

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As a sole proprietor in construction without workers you are considered by the WSIB to be an independent operator.

The WSIB considers you to be a sole proprietor in construction without workers if:

We all share the goal of making Ontario’s workplaces safe and healthy.The Occupational Health and Safety Act provides us with the legal framework and the tools to achieve this goal. It sets out the rights and duties of all parties in the workplace. It establishes procedures for dealing with workplace hazards and it provides for enforcement of the law where compliance has not been achieved voluntarily by workplace parties.

The Act came into force in 1979. Changes to the Act in 1990 and subsequent years continued the evolution of occupational health and safety legislation since its original enactment. These changes have strengthened requirements for occupational health and safety in Ontario workplaces, reinforced the Internal Responsibility System (IRS) and the workplace structures, in particular the joint health and safety committees.

Employers should note that the Act makes it clear that the employers have the greatest responsibilities with respect to health and safety in the workplace. However all workplace parties have a role and a responsibility for promoting health and safety in the workplace. This is the basis for the Internal Responsibility System.

Every improvement in occupational health and safety benefits all of us. Through cooperation and commitment, we can make Ontario a safer and healthier place in which to work.

If you’re not sure what you need to do, or how you’re defined under Bill 119, WSIB has an online tool to help you find out: www.wsib.on.ca

Sole proprietors in construction without workers

Occupational Health and Safety Act

• You own your business alone (a non-incorporated business with no partners).

• You perform Class G construction work.

• You carry on business alone, and do not employ any workers.

4. Ministry of Labour – A Guide to the Occupational Health & Safety Act – online at http://www.labour.gov.on.ca/english/hs/pubs/ohsa/index.php

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• General liability

• Errors and omissions (professional liability insurance)

• Inventory and assets

11All businesses require some form of business insurance. Some of the types of insurance you may need to consider include:

If you are running a home-based business, be sure to call your insurer and let them know what you are planning to do. In most cases, there will be some change to your current premiums. An Insurance Broker can help you assess the types of insurance you will require. A list of brokers can be found at The Insurance Bureau of Canada: www.ibc.ca

Business Insurance

• Vehicle

• Bonding

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An accountant can help you with the financial aspects of your business. It is a good idea to seek an accountant’s advice so that you will know from the start what records to keep and how to do so properly. An accountant can also assist you in deciding what form of business to choose and how to optimize your income tax planning.

An Accountant

In business, you will likely experience a lot of dealings involving contracts. Some of them will be written, and some of them will be verbal or implied. Your lawyer can help you understand your rights under a contract and advise you on the proper course of action. It is a good idea to have a lawyer review any documentation before you sign it, including a lease. A lawyer can advise you regarding the legal liabilities related to the ownership of your business, and work with you to incorporate your business. A partnership agreement should also be drawn up between you and your business partner(s) using the services of a lawyer.

A Lawyer

In business, you will likely experience a lot of dealings involving contracts. Some of them will be written, and some of them will be verbal or implied. Your lawyer can help you understand your rights under a contract and advise you on the proper course of action. It is a good idea to have a lawyer review any documentation before you sign it, including a lease. A lawyer can advise you regarding the legal liabilities related to the ownership of your business, and work with you to incorporate your business. A partnership agreement should also be drawn up between you and your business partner(s) using the services of a lawyer.

A Marketing Consultant

12As an entrepreneur, you will be required to wear many different hats. Part of being a good entrepreneur is understanding what you are able to do yourself, and when to call in a professional. Yes, they will charge you for their services, but more often than not, they will save you money in excess of their fees. It is a good idea to find someone you are comfortable with and who knows your industry to assist you.

If you have further questions, please do not hesitate to contact or make an appointment with the Entrepreneurship Officer at the Business Advisory Centre.

Other Professional Services

Conclusion

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Key Partners

Cost Structure

Revenue Streams

Customer Relationships

Channels

Customer Segments

Key Activities

Key Resources

Value Proposition

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AAppendix A – Business Model Canvas

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This is at the heart of what the business offers to its audiences and is arguably most important to success.

Value Proposition

Identify different target audiences that the value propositions will appeal to. In the business model canvas the alternatives recommended are mass market, niche market, segmented (broken down further) or a range of diverse segments.

Customer Segments

The types of relationships that will be formed, for example self-service, automated services, communities or more personal assistance. Co-creation of content may be part of this.

Customer Relationships

The methods by which the organization’s services will be delivered and the audiences reached.

Channels

To exploit online and offline value networks; forming partnerships provides an opportunity to expand reach and take advantage of existing organizations and online influencers that have built an audience.

Key Partners

The main activities that need to be performed in order to deliver the value proposition to develop revenue.

Activities

Of The people and processes required to complete the activities needed to create and deliver the value proposition.

Resources

Different cost-elements, these should be checked against activities and resources. Costs are classically broken down into Fixed and Variable costs and economies of scale.

Cost Structure

This is the method by which a business derives income. Common online options are: ad revenue, subscription fees, and sales of physical or virtual goods or affiliate based commission arrangements. Licensing and leasing are other alternatives.

Revenue Stream

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BAppendix B – Business Plan Template

Your Business Venture

Discuss:

Background

Describe:

Future Plans

This section introduces readers to your business. It is a broad overview of the business, telling the reader when and why a business is being formed and a brief description of how it will run. This section also includes personal and business goals for the future.

• The date the business was started

• The name of the business

• A brief description of the business

• The structure of the business (sole proprietorship, partnership or corporation)

• The contact information for the business (if you do not have a business address yet, include your personal contact information)

• The name of the owner and key individuals involved

• Any applicable historical information on the business (has it been operating for a period of time already, was it owned by someone else, etc.)

• Your goals for the business and your strategies for achieving them at the:

o One year mark

o Three year mark

o Five year mark

• Your personal goals for opening the business (income, self-employment, etc.)

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Industry & Market Analysis

Outline:

Industry

Describe:

Competition

This section is a description and analysis of your direct, as well as indirect competitors,assessing their competitive advantages and how you will compete in the market. It is also an examination of the primary target market for your product or service.

• What type of industry your business will operate in?

• What have been the trends in this industry over the past five years? Is it growing, stable or declining?

• What do you foresee as upcoming trends in the industry in the next five years? (i.e. the transition of cassette tapes to CD’s to MP3’s or an increase in the number of teenagers with access to cell phones)

• Any specific standards or regulations for this type of business

• Is this a seasonal business? Does it experience seasonal patterns?

• What is the size of this industry? (Support this figure with market research information including data and statistics. The size can be determined in dollars or units).

• What is the market growth potential? (Analyze local, national and international markets for this information).

• Who your major competitors are

• Complete a SWOT (strengths, weaknesses, opportunities, threats) analysis of each competitor, evaluating them on such things as:

o Pricing

o Product quality

o Customer service

o Location

o Assortment

• What are your competitive advantages? (What do you do better than your competition?)

• How will you position yourself compared to your competitors? (i.e. will you be offering a higher quality product, a lower price, longer hours, etc.?)

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Discuss:

Customers

• Who your primary target market is (i.e. individuals, other businesses)

• If you are targeting individuals, describe your ideal customer using demographics (i.e. age, gender, occupation, location, income, etc.)

• If you are targeting individuals, describe your ideal customer using psychographics (i.e. values, attitudes, the product/service benefits they want)

• If you are targeting other businesses, describe your ideal customer by identifying the type of business you are targeting

• When do your customers buy? Is it daily, weekly, monthly, one time only? Are there any seasonal trends to their purchases?

• How big is your target market? ($ or numbers). Consider:

o The number of potential customers

o Annual purchases of the product/service

o Anticipated market growth

• What are your market share projections? How much of the “pie” are you planning on capturing?

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Marketing Plan

Outline:

Price

Describe:

Place

Discuss:

Advertising & Promotion

The marketing plan outlines all of the components of your marketing strategy for the reader. The marketing plan includes a detailed explanation of your sales strategy, pricing plan and proposed advertising and promotional activities.

• What price do you plan to charge for your product/service?

• How does your pricing compare with your major competitors?

• What will your terms of sale be? (i.e. Credit payments of 30 days)

• What forms of payment will you accept?

• What type of discounts you will offer?

• Where will you sell and distribute your product or service?

• What distribution channels you will use? (i.e. How will you get your product or service to the market?)

• How do you plan on generating awareness for your business? What types of media will you use?

• What is your advertising strategy?

• When will you start advertising?

• How frequently will you run ads?

• How long will you advertise for?

• Estimate how much your promotional activities will cost

• How and where will you obtain free publicity?

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Management & Ownership

Outline:

Management

Identify:

Owners

This section outlines the business’ legal structure and management team, including internal management, external management or advisory resources/assistance and any human resources the business will require to successfully conduct operations.

• The organizational structure of the company

• Who the key people are, their positions, their duties and their responsibilities

• What are the required skill sets to properly manage this business?

• Identify the owners. Who are they? What strengths (including experience and areas of expertise) do they bring to the business?

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Operating Plan

Describe:

Location

Outline:

Facilities and Equipment

This section describes the physical requirements of your business operation, including the business’ physical location, facilities and equipment. Depending on what type of business you are operating, this section may also include information about inventory, suppliers and information on the manufacturing process of your product.

• The location of your business. Is it home based?

• What are the advantages, as well as the possible disadvantages, of this location? (i.e. good visibility, lots of parking, good traffic flow, etc.)

• Are any specific zoning requirements for this type of business?

• Do you plan to buy, lease or rent your facilities and/or equipment?

• What will the associated cost(s) be?

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Financial PlanStart-Up Budget

Capital Requirements

ITEM

ITEM

Total Start-Up Costs

Total Capital Requirements

ESTIMATED COST

ESTIMATED COST

ACTUAL COST (if available)

ACTUAL COST (if available)

The start-up budget helps to identify how much money will be needed to start the business and includes such items as promotions, insurance, licenses, etc. In the start-up budget, you will estimate the first three months of monthly operating expenses.

Business Registration

Building

Insurance

Vehicle

Stationary

Tools

Phone Line

Furniture

Identifying your capital requirements helps to identify how much money will be needed for the larger items required to start and to operate your business. This includes such items as land, building, vehicle, tools, equipment, etc.

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Sources of Financing

• List proposed sources of financing and the amount that you anticipate each source will provide to your business venture

• Detail the repayment terms for each funding source (i.e. owner’s investment, term loans, line of credit, venture capital, other investors, etc.)

• Include confirmation letters in the appendices for any lender(s) and/or investor(s) that have already agreed to help finance the business

• Financial statement projections

o Projected cash flow statement (should be detailed on a monthly basis for a minimum of one year) see attachment for explanation of cash flow statement

o Projected income statement

o Projected balance sheet

o Break-even sales analysis

o Sensitivity analysis (i.e. worse-case scenario, best-case scenario)

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Cash Flow Budget

CASH RECEIVED

CASH PAID OUT (EXPENSES)

SUMMARYTotal Cash Received

Total Cash Out

Cash Over (Short)

CUMULATIVE CASH TOTAL

Cash Sales

Personal Investment ($Only)

Loan Proceeds

Grants

Total Cash Received

Owner’s Drawings

Legal Services

Rent

Wages

Telephone

Accounting Services

Receipts

Utilities

Advertising

Insurance

Miscellaneous

Travel

Taxes

Total Cash Out

Month 1

Month 5

Month 9

Month 3

Month 7

Month 11

Month 2

Month 6

Month 10

Month 4

Month 8

Month 12 TotalStart

Up

Your Company Name

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Twelve Month Cash Flow StatementThe cash flow statement, on a month-by-month basis, summarizes cash coming in and cash going out of the business. It shows how much cash a business will have at the end of each month.

Example of a Twelve Month Cash Flow Statement:(Add or remove items as required)

Executive Summary• The purpose of the executive summary is to provide a concise overview of the

business for a reader of the business plan.

• This section will appear first in the plan, but it should always be written after the rest of the plan has been completed.

• The executive summary is a description of the business that provides the following information:

o The name of your business

o The location of your business

o The form of ownership (sole proprietorship, partnership, corporation)

o Summary details of the product/service to be offered

o Financing required

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The City of Peterborough licences the following types of businesses under our Business Licensing By-law 14-080. All applications will be subject to inspections for any building, zoning, health and fire regulations that pertain to the specific type of business. Please note this is not the Provincial registration licence, this is for a municipal licence to operate in the City of Peterborough. Any further questions, please contact the City Clerks Office 705-742-7777 ext.1819.

• Adult Entertainment Licence Application• Auctioneer Licence Application• Auto Centre Licence Application• Bake Shop, Caterer, Restaurant Licence Application• Barber Shop, Esthetics Services, Hairdressing Establishment Licence Application• Body Modification Licence Application• Butcher Shop Licence Application• Dry Cleaner, Laundromat Licence Application• Mobile Canteen Licence Application• Mobile Canteen Indemnification• Pet Grooming Parlour Licence Application• Plumber, Drain Layer, Sheet Metal Worker Licence Application• Salvage Yard Licence Application• Temporary Trader Licence Application• Licensed Rental Premises Application• Licensed Rental Premises By-law 17-067• Licensed Rental Premises FAQ

For more details, please visit: www.peterborough.ca/en/doing-business/business-permits-and-licences.aspx

CAppendix C – City of Peterborough Licensing By-Law

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Notwithstanding any other provisions contained in this Zoning By-law, home-based business shall be permitted subject to the following:

a) no person who is not a resident of the dwelling unit shall be engaged in a homebased business;

b) except as provided in paragraph (c) there shall be no display of goods, exterior storage, or any other external evidence (including noise, glare or odor) associated with a home-based business;

c) signage shall be permitted to identify a home-based business provided that such signage is non-luminous, is attached to the dwelling unit or any associated accessory buildings, and that the total sign area of such signage for all homebased businesses within the dwelling unit does not exceed 0.2 square metres;

d) the total building floor area of all home-based businesses within a dwelling unit and any associated accessory buildings shall not exceed 46 square metres of which not more than 28 square metres may be located within accessory buildings;

e) retail sales, excepting customer ordered sales, shall be limited to those goods or articles which are produced within the dwelling unit or any associated accessory buildings;

f ) any home-based business involving instructional activity shall be limited to a maximum of five (5) students at any one time;

g) the following shall not be permitted as a home-based business: i) a restaurant ii) a home daycare which is required to be licensed pursuant to the Day Nurseries Act iii) an office of a veterinarian iv) a taxi service v) a public garage vi) a dog boarding kennel vii) a commercial dog kennel

For more information, please visit: www.peterborough.ca/en/doing-business/resources/Documents/HOME-BASED-BUSINESS-REGULATIONS.pdf

DAppendix D – City of Peterborough Home Based Business By-Law

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You will need to research your idea to see if it is truly original or whether someone else has commercialized it. Capturing a niche market — one that no one else is targeting — may be more profitable than competing with others who sell a similar product or service. A business expert or mentor can help you evaluate or enhance your original business idea.

A great idea can only translate into a successful business if people are willing to pay for the product or service.

• First, you need to determine the target market for your offering. Are you planning to sell to young people or to seniors? Is your product primarily for women, men or both? Is it a necessity or a luxury item? Are you going to sell to individuals, other businesses or to the government?

• Once you know who you are going to sell to, you’ll want to find out how much the target market would be willing to pay for your product or service.

• If your product or service is something people would be interested in, but not willing to pay for, you can consider alternate business models. Some businesses, in particular in the service industries, offer their service for free or at a low price, but are able to make money through other avenues, such as advertising.

EAppendix E – Developing Your Idea

Is your idea truly original?

Will people be willing to pay for your product or service?

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Before you begin selling something, you need to know who you are selling to. If you haven’t determined who your target market is, you are likely to try to be all things to all people and end up with a product nobody likes or a service that doesn’t meet anyone’s needs.

When developing a general profile of your customers, you might want to define them by their demographic characteristics, such as:

For example, a clothing manufacturer may consider a number of possible target markets — toddlers, athletes, grandparents, teenagers and tourists. A general profile of each of these possible markets will reveal which ones are more realistic, pose less risk and are more likely to result in a profit. A test market survey of the most likely target groups, or those who buy for them, such as parents for babies and toddlers, can help you separate real target markets from unlikely possibilities.

Once you have defined your target customers, you must learn about their needs and preferences.

Those are just a few of the many things you might want to learn about your prospective customers.

To develop a profile of your customers and understand their needs, you will have to do some market research.

• Age, usually given in a range (20-35 years)

• Sex

• Marital status

• Location of household

• Family size and description

• Income, especially disposable income (money available to spend)

• What challenges do they have that could be solved with your product or service?

• What are their needs and expectations regarding this product or service?

• What types of things do they desire?

Who is your customer?

• Education level, usually to last level completed

• Occupation

• Interests, purchasing profile (what are these consumers known to want?)

• Cultural, ethnic, racial background

• What do they spend their money on?

• Where do they shop?

• How do they make spending decisions?

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Once you find out who your customers are, you will need to look at who else is selling similar products and where they are selling them. Will you be competing with a product that has already been marketed? If your idea is a consumer product, check stores and catalogues or visit trade shows to find out what other products are available and what companies market them. You need to determine why customers will buy from you and not from your competitor. Is your product superior or is your price lower than other businesses? The best way to do this is to conduct market research using existing data or by doing your own survey.

To distribute your product or service, you can either start your own company or you can try to convince an existing company to buy your product or idea from you. It may be easier to start your own company than to try to convince another company to distribute your product or service. Many potential buyers are more willing to deal with a company as a supplier than they are to take on a product or invention from an independent person.

Your idea, invention or product may need to be protected from being copied by others. Find out if the tangible result of your intellectual activity is eligible for intellectual property protection and how to get it. For more information on intellectual property, including patents, trade-marks, copyrights, industrial designs and integrated circuit topographies and how they can protect your business visit the Canadian Intellectual Property Office - www.cipo.ic.gc.ca

An idea or invention is not very useful without customers to buy it! Have you considered how potential customers will discover your product? Some ways to market your product are:

• Having a website and being active in social media

• Participating in and attending trade shows, and by getting known through your trade association

• Placing advertisements in newspapers, on the radio, on television and on the Internet

• Distributing brochures

Will your product or service be able to compete with those of existing businesses?

How will you distribute your product or service?

Do you need intellectual property protection for your idea or invention?

How will you promote your product or service?

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Before you move ahead with your business idea, you may want to check to see if there are any regulations that may prohibit or limit the sale of your proposed product or service or the operation of your business. Learn about permits, licences and regulations that apply to your business through Canada Business Network – www.canadabusiness.ca

Developing a solid business plan is critical to the success of your business. A business plan will help you determine how much money you need to start your business. Also, a lender or investor will want to review it to determine your eligibility for financing. Your plan should clearly outline how you plan to make money and include an estimate of your projected sales for the first year. Base your estimates on the size of your market, your competition, your price, marketing plan and trends in the industry. Also, include your expected expenses for things such as supplies, rental space, salaries, insurance, etc. in your plan. Contact your local Business Advisory Centre for an appointment to discuss developing your business plan.

Are there any government restrictions or obligations that could limit your idea?

What resources do you need to get your business off the ground?

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Successful businesses have extensive knowledge of their customers and their competitors. Market research is the process of gathering information which will make you more aware of how the people you hope to sell to will react to your current or potential products or services.

Whether you are aware of it or not, as a business owner you conduct market research all the time. When you talk to customers about your business or check out the prices of your competitors you are conducting market research. Formalizing the process can produce a wealth of information about your products and services, your customers and the marketplace you operate in.

The level of complexity used in your market research campaign is up to you, as market research can cover a broad spectrum of activities. You can undertake simple activities that can be done on your own, such as creating a short customer satisfaction questionnaire or studying demographic data for your area, or undertake complex ones that require assistance from a professional market research firm. Regardless of the size of your market research budget, the time you have available or your level of experience, some form of market research is possible and it can help you to improve your business decisions.

FAppendix F – A Guide to Market Research & Analysis

What is market research?

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The goal of doing market research is to equip yourself with the information you need to make informed business decisions about start-up, innovation, growth and the 4 ‘Ps’: product, price, place and promotion.

The 4 Ps

Product — Improve your product or service based on findings about what your customers really want and need. Focus on things like function, appearance and customer service or warranties.

Price — Set a price based on popular profit margins, competitors’ prices, financing options, or the price a customer is willing to pay.

Placement — Decide where to set up and how to distribute a product. Compare the characteristics of different locations and the value of points of sale (retail, wholesale, online).

Promotion — Figure out how to best reach particular market segments (teens, families, students, professionals, etc.) in areas of advertising and publicity, social media, and branding.

Part of being prepared with market research is avoiding unpleasant surprises. Intuition and experience can be helpful at times, but research and facts often paint a more accurate picture of your market.

By conducting research on a regular basis, you can keep up with the dynamics of the economy and demography. You can also adjust to new regulations and technological breakthroughs.

Market research can help you:

• Understand your customers and their preferences (4 Ps)

o Profile your customers (location, age, gender, income level, etc.)

o Create more effective marketing campaigns

o Find the best business location

• Identify opportunities to grow and increase profits

o Recognize changes in demand

o Offer new products or services for the new demand

o Find new markets within and outside of Canada

Why conduct market research?

• Recognize and plan for industry and economic shifts

o Shift inventory, price and staff levels as needed

• Monitor the competition in your market

o Identify competitors

o Get information on how your competitors operate

o Learn how customers compare you with your competitors

• Mitigate risk in your business decisions

o Use information, not just intuition, to drive your business decisions

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Market research is widely viewed as a component of the planning stage of a business. Indeed, market research is critical for new start-ups and should be a key element of any entrepreneur’s business plan. Market research data feeds into a number of areas of the business plan, contributing to sections on:

First, it is important to establish clear goals for the market research activity you will undertake. You need to make sure you have defined what you need to know and why.

Once you have established your goals, it is important develop a strategy and select techniques you will use to gather data. The two broad types of research you can use are primary and secondary research.

Business plans and market research are not solely for new businesses. Accurate assessment of the market and development of an effective plan is critical to the success of both new and existing businesses.

Businesses contemplating significant changes, such as business expansion and relocation, are also wise to use market research to support their decisions. Examples of situations that might call for market research include:

The kind of information gathered through marketing research during the planning and growth stages of your business can also be very useful in its day-to-day operation. A regular flow of market research information can help you to maximize the potential of your current business activities and help you to create a roadmap for future growth.

When to conduct market research

How to conduct market research

• Determining the sales potential of your products and services

o Identifying the demographic characteristics of your customers

o Selecting the appropriate business location

o Setting the price for your products and services

• Attracting customers to your business

o Establishing your company image

o Setting prices for your products and services

o Ensuring advertising is on target

• Selling to customers and earning repeat business

• New advertising campaigns

• Opening a new location or changing business locations

• Increasing production levels

• Introducing new lines of products or services

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Primary research is original information gathered through your own efforts (or on your behalf by a hired research firm) to respond to a specific question or set of questions. This information is normally gathered through surveys, observation, or experimentation.

The following are examples of questions that can be addressed through primary research:

Some drawbacks of primary research are that it can be time consuming and expensive if not performed yourself, and the results are not available immediately.

The benefits of this type of research are that you can specifically target desired groups (such as your customers or the geographic market for your business) and you can tailor your research instrument to answer specific questions. In addition to keeping the costs down, an added benefit of doing the research on your own is that you will get to know the market for your business better.

Primary research

• Who are my customers and how can I reach them?

o Customer profiles

o Prospective business locations

o Marketing strategies

• Which products and services do buyers need or want?

• What factors influence the buying decisions of my customers?

o Price, service, convenience, branding, etc.

• What prices should I set for my products and services?

o Customer expectations

• Who are my competitors, how do they operate and what are their strength and weaknesses?

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• Through direct mail

o Hand out at the place of business or mail out with survey returned in person or via mail

o Questionable effectiveness; follow-up reminders necessary

• Over the telephone

o Cost-effective

o Can be difficult to reach participants

o Little appetite in the public for telephone interruptions

• Keep it as short and simple as possible

• Make sure it is visually appealing and easy to read

• Move from general questions to more specific questions

• Make sure questions are brief and easily understood

• Customer profiles

• Goods and services that customers demand

Surveys are the most common way to gather primary research. Surveys can be conducted:

The web is a good resource for sample questionnaire questions that can be adapted to answer your suit your particular research needs. There are also a number of companies that allow you to create and conduct surveys online.

Some business owners are reluctant to ask their customers to complete a questionnaire for fear that their customers will be made to feel uncomfortable or annoyed at the inconvenience. A good way to reduce any awkwardness is to offer your customers an incentive to fill out a questionnaire. You might reward them with coupons or hold a prize drawing for customers that turn in a completed questionnaire.

Good information on your customers can often be obtained without engaging them directly. Interviewing your employees can provide excellent insight, as they are in constant contact with your customers and can provide information on:

When designing your own research questionnaire, be sure to:

• On the web or via email

o Allows participants to complete the survey on their own time with little effort

o Cost-effective

• In person

o Personal interviews or focus groups

o Can introduce follow-up questions or change the focus of the survey on the spot

o Can be difficult to recruit participants

• Avoid leading questions, questions with ambiguous words, questions that are too difficult to answer (due to recall problems, etc.)

• Make sure any response scales used are logical with categories that are mutually exclusive

• Always pre-test your questionnaire to identify potential problems

• Satisfaction with price levels and quality of service

• Experiences with your competitors

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• What are the current economic conditions that my business is operating in and are these conditions changing?

o International, national, provincial and local economic conditions

• What trends are influencing the industry my business operates in?

o Consumer preferences

o Technological shifts

o Prices for goods and services

• Are there international markets for my products or services that could help me to grow my business?

Secondary research exploits existing resources like company records, surveys, research studies and books and applies the information to answer the question at hand. It is normally less time consuming than primary research, and can be less expensive as well.

While secondary research is less targeted than primary research, it can yield valuable information and answer some questions that are not practical to address through primary research (such as assessing macro-economic conditions) or questions that may make customers uncomfortable if asked directly (such as questions on age and income levels).

The following are examples of questions that can be addressed through secondary research:

Secondary research

• What are the demographic characteristics of my customers or where do they live?

o Populations, age groups, income levels, etc.

• What is the state of the labour market?

o How many people have the skills I require?

o How much should I expect to pay my employees?

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• Examining sales receipts to find trends in the demand for particular goods and services

• Cross referencing sales receipts with customer addresses or product and services to determine the effectiveness of advertising

• Compiling complaints to determine areas for improvement in customer service, prices or products and services offered

Existing company records such sales invoices, receipts and formal complaints are important secondary resources that businesses can utilize. Often times these records shed light on the same issues businesses seek to address through primary research, and therefore an examination of company records should be done before considering a customer survey or other form of primary research. Some specific examples of using existing company data in market research include:

Another key secondary resource is statistical data from official statistics providers and other organizations. These statistics in turn can feed into analytical papers and market profiles that can help to put the numbers in context.

Identifying statistics and analysis that can help you with your business decisions can be difficult, and some datasets are expensive to purchase. There are, however, a number of quality statistics and analytical resources available to you, as well as guidance to help you make sense of all the materials available.

Other sources of secondary research materials include libraries, universities, industry associations and government departments at various levels.

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BUSINESS ADVISORY CENTRE

Small Business