10 Steps to Starting a Business

Many Canadians want to start a business. In fact, 1.19 million (97.8 per cent) of the country’s 1.22 million businesses in 2022 were small businesses [1]. Micro-enterprises (one to four employees) make up 55.3 per cent of Canadian businesses.

A lot of hard work goes into the process, but becoming a business owner also has unique benefits. You’ll control the way you conduct business, enjoy scheduling flexibility, and have the freedom to create the work environment that feels best for you.

Starting a business is no small task, but anything is possible with a good idea, enough determination, and the right paperwork.

In this article, we’ll walk you through the steps to starting your own business, from the initial idea to preparing to launch.

1. Choose your business idea.

Whether you want to launch a disruptive global start-up or a cozy local establishment, every business starts with an idea. Knowing what you plan to offer and who you aim to serve is the first step toward starting your business. 

Your business might offer a service (e.g., event planning, child or pet care, landscaping, handyperson), or you could sell a product (e.g., bath bombs, fashion, handcrafted goods).

Did you know? More than half of Canada's small employer businesses were concentrated in Ontario and Quebec (439,694 and 250,724, respectively) [1].

2. Conduct market research.

Market research is an information-gathering process that helps determine your business's likely success. It incorporates data regarding economic trends and consumer behaviour to forecast whether your business idea has a place in the current market.

Market research can provide insight into what similar businesses are doing, how they’re performing, and how you can better serve your target clientele. This can help reduce your risk exposure. Plus, your market research can offer data that supports the needs of your business. You’ll need this as you write your business plan and secure funding.

Conduct market research independently by doing things like looking into local competitors and surveying your target clientele. You can also hire a market research analyst to conduct a more thorough investigation.

3. Write a business plan.

Your business plan is a guiding document for how you’ll build, run, and grow your business.

As you write your plan, you’ll envision what your business will become, anticipate potential roadblocks, and imagine what success will look like.

This document benefits you and your potential partners, investors, or funders so that you can structure it however you see fit. 

Many business owners will create a traditional business plan, which is a highly detailed, multi-page document. Traditional business plans outline information such as:

• Executive summary

• Company overview

• Business goals

• Market research

• Internal organization chart

• Services and product offerings

• Marketing and sales plan

• Funding requirements

• Financial projections

• Appendix

You can also opt to write a lean start-up business plan, which is a one-page document presenting a high-level overview of the information a traditional business plan would describe in detail. This formatting may be useful when presenting your business idea quickly. Still, as you generate interest, potential partners or financial backers may ask for a more thorough plan. 

When you start a business, anyone looking to fund it will likely ask you for a business plan.

4. Secure funding for your business.

Creating your business plan provides a strong sense of the amount of money you’ll need to start and run your business. The next step is securing that necessary funding.

You can fund your business in a number of ways. Some common funding options include:

• Personal savings: Using your personal savings to fund your business, also called “bootstrapping,” is essentially investing in yourself. If you have a solid amount of savings, using your own money to start your business could allow you to maintain total control. However, it’s worth noting that self-funding also comes with the risk of your investment not panning out according to plan.

• Business loans: Securing a business loan is when a bank or credit union gives you a set amount of money you will eventually have to pay back. Business loans allow you to retain control over your business, but you will often have to pay back the loan on a set schedule and with interest.

• Investors: Investors provide you with seed capital to start your business in exchange for some return, often in the form of equity or a role in your company. Since investors typically don’t expect direct payback for their investment, you may lose some control over your business depending on the investor’s desired level of involvement.

• Grants: Business grants are sums of money given to businesses without expecting a return. Many grants list a series of qualifications; if your business meets those qualifications, you can apply for the grant. Not everyone who applies for a grant will get it, but it’s essentially free money for your business if you do. Grants can come from the government, corporations, associations, or many other organizations. A good starting point in Canada is Innovation Canada’s Business Benefits Finder.

• Crowdfunding: Crowdfunding is a set of small donations from family, friends, and others willing to contribute to your business’ growth. It’s a less traditional funding model that allows you to set the terms for repayment, if any while retaining total control over your business. Some popular crowdfunding sites include Kickstarter, IndieGoGo, and SeedInvest.

5. Choose your business structure.

A business structure is the first step in building your company’s legal setup. Choosing your business structure determines how you’ll file taxes and your legal protections and liabilities.

You can typically choose from four key business structures in Canada:

• Sole proprietorship 

• Partnership

• Corporation

• Cooperatives

Sole proprietorships

A sole proprietorship is a simple business structure where one person is responsible for all daily operations. This structure does not create a separate business entity, meaning business assets and liabilities fall under your personal assets and liabilities.

Since this structure links business and personal assets, sole proprietorships are best if you launch a low-risk business and will not seek outside funding. Registration is also quick and renewable every five years.

Partnerships

A partnership is similar to a sole proprietorship but used when two or more business owners share responsibilities. The business assets and liabilities are shared under the partners’ assets and liabilities in a partnership.

Corporations

A corporation creates a separate business entity from its owners. These are a bit more complex to establish but offer more legal distance between a business and its owners’ assets and liabilities. There are also more laws regarding the way a corporation operates.

You can incorporate federally or provincially. Each option has its benefits and drawbacks. Many people who start a corporation will consult a legal advisor to guide them through the process of establishing and running their business.

Cooperatives 

A cooperative structure, which all collective members own, protects the owner’s assets and liabilities while limiting tax and legal requirements. You can set up a cooperative for profit or as a not-for-profit in Canada. Like a corporation, you can also elect to register your cooperative federally or provincially. To start a cooperative business, you may want to hire legal support to work through the setup process to ensure compliance.

6. Register your business.

Once you’ve selected your structure, registration makes your business an actual, legal entity. The requirements and processes will vary by location, as you’ll likely need to comply with a series of federal, provincial, and local processes. 

The cost to register in Canada is $60 [2]. Your registration is valid for five years, after which you must renew it.

You’ll likely want to register your business name and apply for a business number that identifies your company with the federal government. Depending on where you conduct your business, you may also want to file for a trademark. Registering your business will be important as you seek to open bank accounts, apply for business licenses and permits, and legally begin operations.

7. Apply for licenses and permits.

You may need federal, provincial, or municipal licenses and permits to launch certain businesses.

Going on BizPal can help you discover what permits and licences you may need to start and operate your business. 

8. Open a bank account.

Opening a separate bank account for your business from your personal account can help keep your finances organized. With some accounts, you may also have the option to open a line of credit for your business. If you plan to hire employees, you can authorize them to access the business accounts should they deal with your business finances.

You may want to open a business credit card with your business bank account for larger purchases and regular business expenses.

9. Get business insurance.

Business insurance will protect you and your business in the event of any accidental or unexpected incidents, such as theft, damages, and lawsuits. The type of protection you may require will depend largely on the type of business you’re running and how you expect to run it.

In general, you’ll likely want to consult an insurance agent to help you assess risk, determine the most appropriate type of insurance for your business, and find policies that will fit your budget and coverage needs. An insurance agent can also help you determine whether your province requires specific insurance coverage.

Some common types of insurance for small businesses include:

• Business owner’s policy

• General liability insurance

• Professional liability insurance

• Business income coverage

• Commercial property insurance

• Workers’ compensation insurance

• Cyber risk and data breach insurance

• Hazard insurance

10. Prepare for launch.

With your preliminary logistics settled, you are well on your way to starting your business. Check out the Entrepreneurship Specialization on Coursera for additional insight into launching your own business. Through five courses, you’ll learn more about developing your idea, launching your business, proven growth strategies, profitability, and more.

As you approach your launch, you may find it helpful to organize your marketing efforts and promote your business. Consider launching a website, advertising your services at local events, or turning to social media. The Meta Social Media Marketing Professional Certificate program lets you learn and practice social media marketing skills.