What everyone needs to know before Launching a business! By Master Steve

Evaluation and Research Before Starting a Business

Before taking any action, do your research and avoid moving forward simply based upon your prior and subjective knowledge. Through a primary research, identify the market climate of the target country before starting a business in there.

While starting a business in a new environment, immigrants face a grave challenge; they lack a proper understanding of geographical zone in the target country.

Each geographical zone has its business model. The first step in this situation is to identify these methods.

• First, evaluate yourself, assess the resources, and see if you can adapt yourself to the new environment and its unique business models.
• See if you have the potential, resources and conditions of starting a new business.
• Examine how expert you are in the category of the business you intend to start.

In Canada, numerous educational workshops and seminars are held daily. For instance, Toronto municipality holds quite practical seminars about business. 90% of these seminars are free of charge and the remaining 10% demand a low cost. By attending these seminars, you will obtain useful information and many interesting yet useful business ideas will come to your mind.

These seminars are even held on the internet. Try to find them in the city you live and appreciate them.

Note: When you are hired in a corporation as an employee in a foreign country, you will face way fewer problems comparing to when you start your own business. 

Sources of information are your first requirement. Gather information in any way you can. Whenever you attend a conference or a seminar, ask for the visiting card of anyone you think might be of any help to your business. Information of people will be handy in the future. As an entrepreneur starting a business in Canada, you must always be on the lookout for any useful information that might help your business grow and make the process of advancing your business easy.

Nowadays, internet can be used to facilitate these research activities. In modern world, there are tools such as Google which made the process of research a very easy one. Use Google a lot and employ new smart methods because it constantly updates the way it searches and it will provide you with a large number of research tools. 

One of the interesting things about Google is that when it is looking for an answer to a question among searching options of others, it provides suggestions which are a resultant of the questions asked by other people about that same subject. These suggestions, which are in fact the proper ways of asking such questions, can also be used by you to gain more knowledge about what you are looking for. For instance, even when you type in Pinglish, it provides you with those suggestions. 

For example, let us assume you want to launch a restaurant. As soon as you enter the word, restaurant, in the searching box, many answers appear under that keyword showing what others asked about that word ‘restaurant’. This simply means that other people have been looking up the word ‘restaurant’, hence you can also look up their search and have more knowledge about restaurant. 

So with that you will be able to establish whether launching a luxury restaurant would be profitable in Canada or a fast food place.

In essence, by asking this question, you access the results of what was experienced by others who launched these businesses in Canada. In addition, you can find the statistics of this business provided by state organizations such as municipalities.

 Sometimes, you don’t have any clear intention about a given category of business and you just want to know what types of businesses are profitable in Canada so you could start one. In this case, how to search would be different, and as before, you will find various useful statistics. 

Notice 1:

While doing research about launching a business, you should ask for help and counsel from informed and trustworthy people. Many Canada-resident immigrants even don’t know anything about the routine banking systems of this country. However, you must understand if someone is simply a citizen of Canada with years of experience living there, it doesn’t automatically mean that person is necessarily a good counselor for you when it comes to starting a business in Canada.

Notice 2:

Before launching a business in another country, examine the status of the product or services you are interested in. 

Buying or Starting a Business?

After evaluating yourself, you can decide how to enter the new business. see which one is better:

• To buy an independent business?
• To buy a franchise of a business?
• Starting your own business?

For example, see whether launching a restaurant or buying the franchise of a chain restaurant would provide you with the most possibility of success.

Note 1:

If you buy the franchise of a brand, its followers would come to your restaurant since the first day. In fact, you would be less concerned about attracting customers but you must follow the rules of that brand because it belongs to someone else anyway. It is important for you to understand that franchise is a type of license that a party (franchisee) acquires to allow them to have access to a business’s (franchisor) proprietary knowledge, processes, and trademarks in order to allow the party to sell a product or provide a service under the business’s name. In this regard, you will be given a liberty by a business to operate your own branch/business under that company. You will be able to use the name and goodwill of that company to develop and grow your own business. However, you are expected to pay certain fee to the company. 

The goal of every business is to make money. Choose either to buy or start a business by considering this standard along with your personal status, resources and work plan.

When starting a business, you should consider the culture of that geographical zone while you follow the path of your ideas. In many countries, it is wise to buy the franchise of a business unless you have a very unique idea and you can provide the required investment for it.

Your intended business may have not started as a franchise in that geographical zone. However, an independent business may have developed it to some points with limited customers. In that case, it is guaranteed for you that this business has certain customers, so it would be better to buy and develop it through implementing your own ideas.

 For example, you may launch a 200 thousand-dollar business while its franchise is worth a million dollar. The difference is 800 thousand dollars. However, the second way is better because it guarantees your success but if you start a business, you may lose all your investment. 

Note 2:

If your idea didn’t match any of the ongoing businesses, trust yourself and start your business with sufficient research and considering your capabilities and what the market needs.

Key Items in Buying a Business

Evaluate the future of that business based on development of new technologies. For example, a taxi permit in Canada was worth 300 to 500 thousand dollars in the past. However, since technology has developed and companies such as Uber are introduced, the value of a taxi permit has significantly decreased and practically became worthless. See if that business is under debt or not. And if it is, how much debt it has. Specially, consider the debt to the government. There is no forbearance in such debt. 

A business could be in debt to municipality, provincial or federal government. Seek counseling from a lawyer and examine all three types of debt.

See if there is any lawsuit against this business in any court so you would be held responsible later. 

According to the above reasons, I suggest you make your deal while using professional counseling. Although you have to pay for these services, it practically avoids any tremendous loss.

Notice 1:

In Canada, lawyers make most of the inquiries, and ordinary people have no access to the resources. 

Notice 2: When you want to buy a business, consider the characteristics of that business and see if it fits your personality.  

Business Valuation Based on Estate Property and Facilities

While buying a business, evaluate the basis of your purchase. Are you buying that business based on the property value or facilities or other factors? In many cases, you buy a business because of the facilities it has and not its geographical location. For example, you buy a restaurant with 200 thousand-dollar facilities and resources it has and you pay 50 thousand dollars for it. Here, you are making a 150-thousand-dollar profit. If you move to another location, you will take the equipment with you.

Business Licenses and Permits

While buying a business, see if you have all the required licenses and permits. For example, does a restaurant have all the permits related to its type of activity? Is there any flaw in the corresponding documents? Perhaps the required permits may exist but might have been revoked for some reasons. Check the validity period of permits and how to extend them.

Key Items in Buying a Franchise (Representative) 

While launching a business through buying a franchise, you will face a contract between the representative and the central office. This contract includes payment percentages and obligations of the parties. These contracts usually take a form of a 50- to 150-paged workbook containing many details.

The most important is that if the central office allows the trade or not. Sometimes, you provide an advance payment, but the central office opposes the conclusion of the franchise (representative) transfer.  

Note 1: Most of the time, the central office of a franchise asks for a separate payment for transferring the representative to a new person (you as the buyer). In that case, make sure it is clear who is responsible for paying that money. 

Regardless of all these points, buying a franchise is one of the safest models of transaction. The risk is very low because so many people will support you.

At the same time, there are many sidelines which should be examined by expert lawyers before the transaction is done. An example of these items is conducting an inquiry before the purchase.

When you decide to buy the franchise of a business, you should consider the following issues:

• How well-known is that business?
• How much should you invest?
• How much should you pay the seller?
• What is the background?
• How is the future of that business?
• How supported is that business?
• How much is the annual net income of that business

To realize the net income, the easiest thing to do is to ask about the tax paid in the last year. By this calculation of the income status of that business, you can make the deal with the owner of the business (franchise) you intend to buy its royalties. 

Note 2:

This can be applied to independent businesses as well, and all the aforementioned items must be checked. 

Renting or Ownership of a Location

The representative license is pertinent to a central office, so you should check the central office and be aware of the length of tenancy of the property.

Some representatives have temporary contracts which end in a certain time. If you are simply buying the franchise, and the place is rented, check the remaining length of the tenancy. For any reason, some owners end the contract of a tenant after five years. You may have only a year left of the length of tenancy and you will have to leave the rented place after the expiration of the tenancy. Although, you should also understand that one of the reasons to buy the franchise of a business is the goodwill. In any case, you must see if the franchise is still worth buying or not.

Writing a Business Plan

After deciding to start a business, you should design a business plan. Writing a business plan is necessary for any business. Business plan puts you in order, and it is somehow your roadmap. You should define at least a 3- to 5-year path for yourself. Implement the results of all your researches on a business plan.

Many people don’t tend to write a business plan. While it is not totally a wrong decision, it is at least necessary to write down the considerations. If you don’t want to write a business plan, at least ask yourself:

• What is your place in the market?
• Who are your competitors?
• How will your capital be financed?
• Do you need a location for the corporation? In that case, where should it be?
• What kind of problems will you probably face and how do you confront them? 

Write down any question that comes to your mind. The more question you ask and answer, the more success you will gain in practice.

This document was a to-do list. Check this list from top to bottom and explain the procedure of each item in front of them.

Notice:

Remember you can’t do everything by yourself. You should use counseling and help from expert groups, and even outsource some of the works. 

Providing a list of what should be done helps you to concentrate. Even if you don’t have the habit of writing things down, always carry a scratchpad. Don’t do anything without a scratchpad and writing. In that way, you can outline a general roadmap and define a path for yourself.

A business plan has the classified and standard answer to the questions above. While answering the questions of a business plan, you are actually designing a very precise roadmap which helps you to avoid incorrect and strayed paths.

Most people regret involving in a business in the middle of writing the business plan because they realize that the research about the business and the market has been defective and they have ignored many issues. This is one of the main benefits of having a business plan.

Note:

While writing a business plan, identify your needs and do some research about them.

The business plan you provide for working in Canada is different than the one you make for another country. You must use a business plan which is designed for Canada and not even the United States. You will find a more realistic perspective in this manner. 

Master Steve