Brought to you by RBC Small Business
Three steps to starting a business in the skilled trades
October 10, 2023 in HPAC General
By HPAC Magazine, in partnership with RBC Small Business
At some point in their careers, many skilled trades professionals consider going into business for themselves. This jump into entrepreneurship can feel both exciting and daunting. There are many steps to consider when starting up any new business, and skilled trades are no exception.
Step 1: Finding the money and getting the finances in order: The big four
When planning out a new business, Karen Svendsen, senior director of client and business strategy – small business for Royal Bank of Canada (RBC), says there are four key financial considerations that aspiring entrepreneurs should keep in mind before venturing into business ownership.
The first consideration is to understand how much money will be needed to start the business.
“Everything from the cost of a website, marketing materials, insurance, equipment, permits, signage – anything that they need to have in place before opening the doors,” says Svendsen, who has more than 25 years of experience at RBC and focuses her time on helping small businesses (including the skilled trades) across Canada.
Next, consider how much money the business can make.
“You need to know how much the business is going to make, to make sure that the business is viable in that you can pay both the business’ bills and your personal bills,” Svendsen says.
The third consideration is to ensure your personal finances are in order.
“Do you understand how much you need to cover off for your financial commitments while you’re running the business, getting it started, and when it starts to grow? You need to make sure that you can cover those financial responsibilities, and make sure that you’re not going to negatively impact your personal credit rating with anything that happens with that business in its early days,” Svendsen says.
The final consideration is to know where you will get the money to fund the business.
“If you’re not sitting on a large pile of cash, then you have to figure out how you’re going to fund that business, as it starts up, and to make sure that you’re still able to make ends meet on the personal side. You may need to juggle full-time work for a little bit longer and start your business as a side hustle. We’re increasingly seeing this as a way to ease into building the funds for that new business,” Svendsen says.
Step 2: Building a business plan
A business plan is often regarded as something required to get loans from a financial institution. However, Svendsen says, the most important user of a business plan is the owner of that business.
“A business plan is for you. It’s to help you get all the ideas that are in your head out of your head and on to paper, and to organize your plan for success.”
Business plans are meant to be used as living documents that will evolve with your business. A well thought out business plan should explain to other people your vision for the business: where you think you can fit into the market, and document all the steps that you’re going to take to succeed.
“What do you want to do? How do you intend to do it? That documentation can make the difference between success and failure,” Svendsen says. “In terms of tactics, that plan should include an outline of your business strengths. It should include any trade certifications you possess and any other education you have completed that are relevant to your business.”
A business plan should also include a SWOT analysis, which identifies strengths, weaknesses, opportunities, and threats for your business.
“This is where a little bit of research about your local market and customers comes in handy to understand where your business will fit; how to forecast cash flow; how to outline the required equipment that you’re going to need; and what your marketing plan is for the business,” Svendsen says. “Are you planning to be subcontracted to other businesses or are you going to go directly to customers and build your own customer base?”
Taking time to review your business plan periodically is also important. As your business grows, make sure to review the plan from time to time and update it where necessary.
Step 3: Registering your business
Registering your business establishes your brand and the name of your business as an official business entity. It is also required from a tax and/or legal perspective, if your business earns more than $30,000 in revenue annually. Whether the new business structure will be a sole proprietorship or a corporation, some steps apply to all businesses.
“The first step is to gather all the information you need to register, like your business address, where you plan to operate, your proposed business name and what structure you’re choosing,” Svendsen says. “The next step is to do a business name search. Make sure your business name is unique and it’s available for you to use. In some provinces, you may need to register your business name before registering the business online.”
If the business is based in Ontario, Quebec, Alberta or B.C., you can use Ownr to register a sole proprietorship in minutes.
“Ownr is a digital platform that enables entrepreneurs to simplify starting and registering their business. They’ve recently lowered the price of sole proprietorship registration fee to only $49, which is an amazing bargain,” Svendsen says. “As an added benefit, new entrepreneurs are eligible to receive up to $100 back when they register their business using Ownr and then open an RBC business account.”
Svendsen has one final piece of advice for entrepreneurs considering starting up a new business in the skilled trades: go for it.
“Whether it’s the slow start, or a side hustle and continuing with salaried work to ease yourself into it, that act of starting really enables you to begin learning about how entrepreneurship works. And when I think about the skilled trades, which has an aging workforce with many people retiring, there are lots of opportunities,” she says. “That’s not to say that there aren’t some risks associated, like making sure that you understand how that cash flow is going to work; checking out the people you’re working with to ensure they’re reputable suppliers of goods that are going to deliver on time and deliver the quality that you’re expecting; and that your clients can make the payments so your cash flow doesn’t get impacted; and then there’s protecting your business from cybercrimes.
“Finally, just surround yourself with advisors that are there to give you good advice. Don’t hesitate to ask questions. People love talking about their businesses. A lot of business owners are so happy to pass on their knowledge to the next generation. The more information you can get from people, the better.”
Bonus: Additional tools
There are an almost infinite number of options to choose from when it comes to potential resources for starting up your business. Here are a few that RBC recommends:
ADP: This leading-edge, comprehensive payroll and HR services company can help reduce your administrative obstacles allowing you to focus more time on your business.
“This can help make that whole process of calculating your payroll, payroll taxes, and the end-to-end payroll management much easier, especially for a small business,” Svendsen says. “It’s not something that most business owners want to spend their time on. They’d much rather spend time on helping their business grow, so having a payroll company take that out of an owner’s hands is a great way to invest in your business by giving you more time to focus.”
Magnet Construction Pathway: The RBC Youth Employment Portal enables youth job seekers across Canada to create a free Magnet account and get matched to jobs, work placements, and internships with Canadian small and medium-sized businesses, including those available through RBC’s extensive business client network.
“With Magnet, through the RBC Youth Employment Portal, employers have access to RBC resources to help them grow and manage their business. The portal allows them to create job postings for full- and part-time positions, take advantage of wage subsidies, and access other resources,” Svendsen says.
Magnet has a new program called Construction Pathway (created by BuildForce Canada) that links businesses with people who want to work in Canada’s growing construction industry.
“This platform links people who want to work in the growing construction industry with small- and medium-sized employers seeking to fill job vacancies and offset the onboarding costs with financial incentives. It’s an awesome source of great people looking for work and offers benefits to the company as well,” Svendsen says.
Indeed: RBC has teamed up with Indeed to provide small businesses a special offer to help them find the right people to grow their companies. When RBC clients create an account with Indeed, they receive a $300 credit for a Sponsored Job posting.
RBC Future Launch program: Allows access to hundreds of programs, tools and resources designed to help you launch your career.
Futurpreneur: Designed for entrepreneurs aged 18 to 39 who want access to business resources, financing and mentoring, Futurpreneur Canada supports young entrepreneurs with an expert business mentor for up to two years and resources to help you plan, launch, manage and grow your business.
“They’re an awesome organization that supports young entrepreneurs with business mentorship, really helping them through that startup phase on how to plan, launch, manage, and start and grow the initial business,” Svendsen says.
Entrepreneurs can access these solutions and business advice online through the RBC Start a Business Hub at www.rbc.com/startingabusiness.
Created by Amplify by Annex, in partnership with RBC Small Business and HPAC Magazine.