CONCEPT. Exploring the Life Cycle of a Small Business. Do I need a trademark, copyright, or patent? By Sarah Sawler

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1 SMALL BUSINESS: PLANNING Exploring the Life Cycle of a Small Business By Sarah Sawler From founding to succession, each stage of business has its own challenges and opportunities, triumphs and disappointments. To help you understand and prepare for what lies ahead, we ve put together this handy infographic with the help of Dr. Tom Cooper, business professor at Memorial University and Richard Niedermayer, corporate lawyer at Stewart McKelvey. CONCEPT Whether you ve dreamed up the next big thing (or think you have), or you just want a more enjoyable way to pay the bills, this is your chance to see if your idea has legs. Ask the tough questions CONCEPT LAUNCH OPERATING MODE SUCCESSION What s Next? Do your homework Before you invest much time and money, you ll need to do your market research. Start with the basics: look at the demographic data for the market you want to reach, conduct surveys, identify your competitors and check their pricing, and ensure there s demand for your product or service. For more on market research, visit Canada s Business Network website Choose a structure Sole proprietorships, corporations, and partnerships each have their own legal and financial complexities. Research the differences, decide which one is right for you and have an expert prepare the proper documentation. Invest now to avoid costly mistakes down the road. Do I have the skill-set? Do I have the support system I need? Will I earn enough to make a profit? Is this something that I really want to do? Am I ready to work the long hours required for a start-up business? Can I get all necessary permits? Are there any zoning or regulation issues? Do I need a trademark, copyright, or patent? Write the fine print Apply for a permit to operate with your local municipality and register your business through your province s Registry of Companies. If you plan on making more than $30,000/year, you ll also need to apply for a GST number. Lawyers, accountants and local business centres, like the ones provided by Atlantic Canada Opportunities Agency (ACOA), are great resources for start-up assistance. 26 Atlantic Business Magazine September/October 2016

2 Explore your options for start-up financing: Pay for it yourself (e.g. savings, credit cards or line of credit). Ask friends and family to invest. Seek out venture capital and angel investors. Consider a bank loan. Loans and grants from a community business development corporation or government program. Start-up competition like CBC s Dragon s Den. A mentor is typically an industry expert who will share their experiences and offer advice that can help you grow your business and advance your career. Find a support system An incubator or accelerator is an organization that exists to support businesses in their start-up phase. Usually, they offer benefits like office space, training and advice, and networking opportunities. Your local chamber of commerce or industry association can also be great resources for business advice and networking opportunities. But remember to get involved: you ll get much more out of your membership if you re active. LAUNCH Convinced that your idea has potential, you decide you want to move forward. The big question now is: how can you grow your company? Get out there! It s time to reach new markets or attract new clients (or both!). The Four Ps of marketing (product, price, promotion, and place) can help you along. Product What makes your product or service different? How does it meet a need or demand? You need to communicate those competitive advantages in your messaging and branding so that potential clients understand how your product or service will enhance their lives. Price Think honestly about the product or service you re providing. How much is it worth? Does that value deliver the profit margin you need? If it doesn t, you may be able to improve the product value by reconsidering your positioning, branding, or marketing efforts. Promotion Depending on your market and budget, you may want to think about: Traditional advertising like paid advertisements, billboards, and commercials Consumer-focused options like social media, brand advocacy, and online product reviews Trade shows, presentations and guerilla marketing (think unconventional marketing in public places) Place How are you going to sell and distribute your product? Where are you most likely to interact with clients? Can you work from home or do you require a storefront or online store? Do you need a distributor to get your product into stores? Will you need a warehouse? atlanticbusinessmagazine.com Atlantic Business Magazine 27

3 Build your team If you re starting to feel overwhelmed, it might be time to hire employees or start outsourcing. When you re deciding what to outsource or hire for, think about which areas you enjoy. Got it figured out? Good. Keep doing those things. Is there something you need to maintain full control over? Keep doing that too. If there s something you don t have expertise in (e.g. bookkeeping, human resources or marketing), then that s where you ll want to spend your money. Just make sure you maintain your profit margin. Now that you ve got employees or contract workers, you ll need your lawyer to check over your contracts and help you understand all of your obligations. You ll also need to talk to your accountant about payroll and mandatory deductions like income tax, Employment Insurance, and Canada Pension Plan. If marketing isn t part of your skill set, consider tapping into your support system or hiring a marketing agency. OPERATING MODE You ve made it! You have a stable business that generates the kind of revenue you ve been working so hard for. Now, how do you hold onto it? Stay vigilant Most businesses go into decline eventually, as product and service needs change, but you can extend the maturity phase if you watch and prepare for upcoming opportunities and threats like changing markets, technology advancement and consumer needs. Work on building up a contingency fund that s substantial enough to get your business through any dry spells. Keep working on your business It s easy to get swept up by your day-to-day work, but you ll still need to take time to work on your business. It s important to regularly update your business plan and continue to expand your personal development by actively seeking learning opportunities, either through formal education or professional connections. Talk to your legal and financial advisors regularly. If you re expanding in a way that requires you to buy another building or buy another business maybe you re buying a competitor s business, obviously those are transactions that are going to require some accounting and tax but also some legal assistance. As you go along, you ll probably be terminating employees when things don t work out, so there are going to be employment matters that arise as well. Richard Niedermayer, corporate lawyer, Stewart McKelvey Think about growth Looking for investors to help you expand? If so, you re in luck. A successful, mature business is a much more attractive investment, even if you re taking a big leap. Potential investors know there s an element of success at the root of your endeavor, and at this point, they trust that you know how to navigate new markets and leverage your current success. Provincial and government funders are much more likely to lend money to an established business, so make sure you check out all the programs available in your area. Your local business centre can help you source these programs, and so can your professional network. Manage your growth. Make sure you have enough staff for your expanding operations, but don t hire too many, too fast. Ensure that new staff and divisions are properly integrated into your corporate culture. Companies that fail to manage their growth have a tendency to implode. 28 Atlantic Business Magazine September/October 2016

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5 SUCCESSION You re ready to move on to the next stage, and this one doesn t involve your business. What s next? Buy-out If you get a buy-out offer, consider from a personal level whether or not you re ready to sell. If you re close to retirement, or you just want to try something new, it s worth considering. But you ll also want to make sure it s a good offer. Speak to a professional valuator who can confirm that the offer is fair. If it is, you ll need to start looking at the terms and whether or not they work for you. Will the buyer want to keep you as a consultant? Do they want you to completely walk away? Does their proposal work for you? Sell your business Contact a business broker or your accountant (who can also act as a business broker) and they can help you start the process. Your bank may also be able to help connect you with interested buyers. You can also tap into your professional network. There s nothing wrong with saying I m thinking of getting out, I m thinking of selling, do you know anybody? I think the key thing is giving it enough time. Sometimes things move really quickly and in other cases it could take years to find the right buyer. Dr. Tom Cooper, business professor, Memorial University DISCOVER YOUR POTENTIAL An MBA from UNB Fredericton combines rigorous academic study with real-life business challenges that prepare you for strategic thinking, effective collaboration, professional presentation and decisive action. Our programs offer flexibility, full-time or part-time study options, relevant electives, experiential learning options and specialized study tracks that provide a customized experience. SPECIALIZED MBA OPTIONS MBA with Concentration in Entrepreneurship MBA in Sport & Recreation Management MBA/Juris Doctor AVAILABLE ONLY AT UNB FREDERICTON Activator Program Student Investment Fund Mary Kate Pond (MBA candidate) MBA Office University of New Brunswick Fredericton MBAContact@unb.ca 30 Atlantic Business Magazine September/October 2016

6 Pass it down Family succession can be a great way to keep your business close and provide the next generation with a good livelihood. But before you hand over the business, you ll need to carefully consider some factors: Are your children interested? If not, would someone in your extended family be a good fit? Do they have the right skill set? If not, are they willing to build it? Where will you fit in? Will you be involved as a shareholder? What are the tax implications? Keep your emotions out of it. If you re a successful entrepreneur and you get to the point where you can actually sell your business, you ve got to make sure that you get paid and that you have enough money to take you to the next step in terms of whether you want to go into another type of business or [retire]. It s really important to be objective. Dr. Tom Cooper, business professor, Memorial University Find an internal successor Grooming a member of your internal management team for succession is another option. Have a look at your general managers, your directors, your VPs. Do any of them show promise? If so, they may want to take it over. In this case, too, you ll need to consider whether you ll continue to be involved as a shareholder or consultant. Feedback: * dchafe@atlanticbusinessmagazine.com #LifeCycle IMAGINE A NEW STARTUP CREATED BY YOU. $1,000,000 BREAKTHRU IS CANADA S LARGEST STARTUP COMPETITION Up to $1 million in cash and professional services will be awarded to create four new startup companies. Visit NBIF.CA to learn more and get started. Terms and conditions apply. Not open to residents of Québec. is presented with the generous support of VENTURE CAPITAL FUND atlanticbusinessmagazine.com Atlantic Business Magazine 31