Do as I Say, Not as I Do
Dos and don’ts for the first year in your own business
By Larissa Primeau
Branching out on your own and opening your own small business is one of the most exciting and terrifying things you can do in your professional life. About 85% of small businesses survive the first year, 70% two years and 51%, 5 years. (Source: Industry Canada)
Opening and running your own business is definitely not for the faint of heart, or those who don’t like to live within their means. I’m sure a lot of people make tons of money in their first year of starting up, but grow ops don’t count. It’s pretty unusual to make a big profit, if any at all, your first year of business but that’s no deterrent from trying. You will, most definitely, make some mistakes in your first 12 months, but I’m here to assure you, you’re not the only one. I have no problem letting you in on the blunders I caused, created and attempted to clean up in my first year of operating.
* Filing your business taxes on time isn’t just a ‘friendly suggestion’ from the government.
So sure, up until this point, you’ve just gotten a T4 from whomever you’ve been working for and electronically filed you taxes, or paid someone to do it. It’s not too difficult. While running your own business, you may procrastinate about doing this or even just push it aside and think to do it at a later date when suddenly that later date is upon you and whoops! Taxes are late. They don’t really care that it’s your first year; you’re going to get dinged with a penalty. Yup, that stung.
* Do your research when you’re trying to impress your clients with really nice Christmas/Holiday gifts.
It’s a great idea to give your clients a gift during the holidays. It is not a great idea to just assume they’re not recovering alcoholics and drop a bunch of money on an amazing bottle of wine. On the other hand assuming someone is an alcoholic is also not the right move, but take it from me, it can be really awkward when your client tells you they can’t accept your gift because of their addiction. An also inappropriate reaction to this proclamation is to laugh manically. The good news is now you have an awesome bottle of wine to yourself.
* When treating new clients to lunch or dinner, have a look at the price of the menu online before you go out.
What’s the point in landing a new client if your invoice to them is less than the dinner you bought them to get them on board in the first place? At the end of the day, it will probably all be for the good of the business, and yes, it’s a write-off, but hopefully you’re a better actor than I am when the bill comes. Choking was a bit obvious.
It’s all a matter of learning from your mistakes, and hoping that they’re just small mistakes. I went to Patricia Casky, owner of Accountants Assistant Bookkeeping in The Beaches, to see what the three biggest mistakes she sees new business owners make in their first year of operating.
“Trying to do everything themselves, following the ‘shoe box’ philosophy of filing their paperwork and pricing.”
Yup, I can safely say I did all of that. What’s the solution to these problems?
“Find creative ways to fill out the ‘departments’ in the business so that the owner is working on the business, not in the business. Partner with complementary businesses - you have something they want and they have something you want. Some ideas are using co-op students from a local college to market for you or sell for you or do some graphic design or blog. Join a networking group (such as BNI) where the focus is on marketing each other’s business.”
What about financial advice?
“Sit down with an accountant or a bookkeeper and set up a simple system to handle your receipts and invoices and notices from the government - from the time the paper is created (either a sale or a purchase) to the time that the first year’s tax return, payroll remittance or HST report needs to be filed or you want to know if there is more to your business than the money in your bank account. Get good advice about the record keeping – such items as what needs to be on your invoices to your customers, what expenses are claimable.”
If you’re a passionate entrepreneur it’s sometimes hard to slow down and create a process that will help your business succeed, but it is incredibly important. If I could go back and do it all over again, I certainly would. I still, however, would have drunk that amazing bottle of wine. Wastage isn’t a mistake I’m willing to make in my business.
Larissa Primeau is Executive Producer - Online Video Content, El Pea Productions www.elpeaproductions.com 647-207-5749 @elpeaproductions