Starting a business in a small town might seem like a daunting task to some, but there are benefits to the slower pace.
The economy in small towns is not as strong as in big cities, but if you can find a niche market for your company, you may find that the slower pace provides less competition and more time to establish your business.
There are rare occasions when the economy is “right” to start an entrepreneurial venture. The current economy is the least favourable because of restrictions related to the COVID-19 pandemic, and even though we are hopefully going toward a way of life—or “new normal”—that will need to take into consideration this ongoing disease which makes a brick and mortar business much more difficult to operate. With all these considerations and many more that come flooding the brain while even considering opening the doors to a new business, this does not mean that we should give up on our dreams.
Starting a business today requires thinking out of the box and patience. We are in a pivotal moment where companies have employees not willing to get back to work in a cubicle, once they have experienced the possibility and freedom to work from home.
The first pitfall will be getting over the discouraging advice from friends and family, then, rejections or failures. These will be the very first moments when your stamina will be tested. While many will fold, instead, try again and focus on what you can do to improve your business idea.
It can be hard to decide what type of business to start. Your decision will depend on your skills, interests, and the opportunities available in your area.
These are the basic advice that we believe are necessary before the planning stage:
Research the market
Make sure you’re going for a profitable market. Use the internet to research your competition and see what they’re charging.
You should also research if there’s a market for your potential product or service, before deciding to start a business. This means you need to know how much people are willing to pay as well as how many people will be competing with you. Once you have done this, you can start researching for suppliers or manufacturers and find out what it will cost to create the product and sell it.
You want to make sure that you have a strong understanding of your target market and what they need. If you do not, then you can end up with an unsuccessful business venture.
Consider what type of business to start
Starting a business is not an easy task. There are many factors to consider before actually starting it. One of the major factors would be picking the right type of business for one’s skillset, aspirations, and goals. the most obvious statement is that there are many types of businesses one can start with, some being easier to enter than others.
To start a new business, you need an idea that will solve a problem for people in your target market; money to invest in your new company; time and energy to make your business idea work, and confidence in yourself and your abilities. Naysayers will be biting your heels all the way. You can make these haters your best source of motivation, or get beaten by them…this will be your choice.
Start small and grow
We all know that big businesses are attractive and their cash flow seems more appealing. Our advice is to start small even if you do have the means to go big. The more knowledge and experience you possess, the more likely it is for your business to be successful.
Another fundamental consideration is that making a small mistake, or a series of small mistakes is easier to fix compared to one big mistake. An example is to lease a space that is too big, or too expensive, thinking that the returns will compensate for that overhead, in all cases—whether successful or not—the total funds chewed by the location and renovations will delay your gains and possibility to expand.
What are the common mistakes that entrepreneurs make?
It is important to be aware of the different mistakes entrepreneurs make. Part of the problem is not recognizing the difference between operational and entrepreneurial skills. As a result, they might not be able to execute their business plan without help from someone with more experience, identifying the gaps in your skill sets so you can hire people with the right skillsets for your company is crucial.
A mistake that I encounter frequently is that the marketing and advertising are poorly managed by the owners, or by employees that have little or no knowledge of the dynamics of the market, that have no design skills, nor knowledge of what the advertising world is all about and how it can impact negatively the perception that the users have of your business.
Many new entrepreneurs don’t network enough, nor do they ask for advice from someone who has a similar business. Accounting is another huge pitfall, a mistake in this area can be extremely costly and can make or break your new venture.
Another common mistake is that it is best to start with an idea and figure out later the details. This is probably the riskiest of all pitfalls, I strongly recommend watching the episode of Dragon’s Den Adjustable Golf Tee, a failure that has cost Jean Gauthier his home and lifetime savings, these are lessons that need to be learned before jumping into a new entrepreneurial venture (as TV shows like Dragon’s Den and Shark Tank have taught us).
You might find out later that there is no market for it, that your “million-dollar idea” is something that nobody cares about; that the costs of execution are too high; that the initial investments will bankrupt you before you even begin. It might also be best to see what other startups are doing in your industry and learn from them.
I would also consider reading Arlene Dickinson’s book “Persuasion”, which illustrates Arlene’s success and failures with incredible candidness making us understand even more her past and her success, while applying her knowledge to our day-to-day life, whether corporate, employee or entrepreneurial.
At thirty-one, Arlene Dickinson found herself stranded. Recently divorced, she had only a high school diploma, no savings and no clue how she was going to feed four young children. But just one year later, she was a partner in Venture Communications. Ten years on, she was CEO, poised to grow the business into one of Canada’s largest independently owned marketing firms. Today, as a co-star of the CBC hit Dragons’ Den, she is one of the country’s most sought-after female entrepreneurs. The secret of her journey from poverty to the corner office? The art of persuasion.
Will your business live to see the first year?
To found a startup means to risk a high failure rate. 20% of businesses fail in their first year and around 60% will go bust within their first three years.
There are many risks in entrepreneurship. The success rate is low (only 10% of startups succeed). The most profitable business is in hi-tech, SaaS, mobile apps, etc.; this is mostly because the possibility to regain the investment by digital distribution worldwide to a potential pool of users of 7.6 billion people, is as easy as a click of a button compared to brick and mortar.
Which types of startups are most profitable?
According to TechCrunch, the most profitable startups are, in order:
- Chrome extensions
- Mobile apps
- Enterprise SaaS
- SMB SaaS
Most profitable small business in Canada?
IbisWorld’s review of Canada’s most profitable industries in 2016 shows that the healthcare industry is king when it comes to high-profit margins. There are a few reasons why it dominates the list, with high fixed costs and educational barriers being the most significant, followed by Real Estate, with an average profit margin of 46.5%.
The top of profitable Canadian businesses is dependent on fairly laborious qualifications. One exception is Real Estate, as mentioned above. The top industries depend on high education levels, high skills and a high income.
- Healthcare: Primary Care Doctors
- Real Estate Investment Trusts
- Commercial Banking
- Law Firms
- Apartment Rental
- Accounting and Bookkeeping Services
- Physical therapists
- HR Consultants
How many Canadian startups survive the first 10 years?
- There is a slight difference in survival rates between goods-producing companies and service-producing firms.
- In the first two years after starting up, these two sectors have similar failure rates – 86.8% of all Canadian startups make it to year 2.
- After the third year, the rate of survival drops more precipitously and is higher for the goods-producing sector than for companies providing services. 66.8% of companies producing goods were still there in the third year and only 63.3% of service sector companies.
- After 10 years, almost half the companies that were involved in the manufacturing of goods had survived, at a rate of 47.8%. In services that number was significantly lower, though not far off at 42.9% survival.
Why do startups fail?
A survey by CBInsights that covered employees and founders from 101 startups analyzed the reasons why those companies failed. The main results were as follows:
- 42% of startup businesses fail because there’s no market need for their services or products.
- 29% failed because they ran out of cash.
- 23% failed because they didn’t have the right team running the business.
- 19% were outcompeted.
- 18% failed because of pricing and cost issues.
- 17% failed because of a poor product offering.
- 17% failed because they lacked a business model.
- 14% failed because of poor marketing.
- 14% failed because they ignored their customers.
Top Tier Entrepreneurs
With this in mind, I find myself awestruck when a new business revolutionizes its niche concept.
These revolutionary ideas are at the base of all successful entrepreneurs and the feeling to just “go-for-it” is a must that needs to fuel your new idea.
This is the case with Top Tier. A barbershop that sells the latest kicks. Their style is elegant-minimal with black, white, and gold. These new entrepreneurs are not stopped by the conventional and decide to manage their business as they see fit, adding a wall of sneakers for you to choose from while getting a fade.
While I was getting my long-overdue haircut, I chatted with our two stylists and stole a few of their secrets.
1. What made you choose your business?
My brother and I have been cutting hair for a few years now and have always talked about opening our own barbershop. With the pandemic going on it was the perfect opportunity for us to plan and execute our vision.
This is what I was talking about. Research, knowledge, passion, and using adversity to plan details and execution strategies.
2. What is your story?
It all began with my family migrating to Canada from the Philippines when I was 9 years old. We came over as a family not knowing anything about Canada, we spoke very little English and had no family here. It was a very difficult couple of years adjusting to a new country. My parents would always work to provide for me and my brothers. My two older brothers would often take care of me when my parents were gone. The 5 of us lived in a very tiny two-bedroom apartment on Kerr street, which is where our barbershop is now. I studied business marketing for three years and received an advanced diploma. Once I finished college I went into real estate and studied to get my licence but the pandemic derailed my real estate career and decided to go into barbering. Over the pandemic, the barbershop we both worked at was temporarily closed because of the lockdown, my brother and I turned our basement into a mini barbershop and fell in love with the idea of owning our own shop.
3. What set’s you apart from other barbershops?
Our barbershop brings a very unique and modern take on barbershops across the GTA. We not only cut your hair but also cater to your sneaker needs. We are a sneaker and consignment store that sets us apart.
This is another example of bringing something new to the table. We all know that it’s tough to think outside of the box, but this takes the cake.
4. We saw that you have a wall with the latest sneakers. Where did that idea come from?
The idea of selling sneakers came from one of our best friends who’s a reseller. He has been collecting and selling sneakers for 8 years now. He saw the spike in reselling of streetwear and Jordans. My brother and I thought it would be really cool if we sold sneakers as well in the shop.
5. We heard that you have beer on tap, is that true? and why?
We feel that at Top Tier the beer helps create an inviting and social environment, where people can not only get a haircut but spend time and socialize with other clients and the barbers. It also adds another service that sets us apart from other barbershops.
If you thought that younger generations didn’t have what it takes, this is an example of entrepreneurship that on paper would have received a series of bad comments from the naysayers, yet these guys have figured it out and made it real. Going to the barber was a moment to relax, to connect with a stranger, to chat with your stylist, to talk about the game, the match, the weather. This has been lost lately, and Top Tier has brought it back in spades!
6. What are the tribulations in creating a new business?
Creating a new business, especially at a time like this, is finding the perfect location for your business especially in our industry. We were looking for a spot with a huge parking lot for clients and walking traffic. It took us months to find the perfect location and we are pleased.
7. What are the pitfalls to avoid when starting a new business?
Pitfalls to avoid when opening a new business is to never rush it, not having a coordinated plan and blindly opening up a business would be very difficult for your establishment to grow.
8. Do you believe that fashion, and being up to date is important to factor in your line of business?
Fashion is very important in our industry, and we are always aware of any new fashion trends. As a new barbershop, hairstyles are always changing, and our stylists need to adjust to the clientele’s needs. With having a sneaker and apparel consignment in our barbershop we must be on top of the fashion trend.
Continue research and improvement. If this wasn’t obvious enough, every new business can’t sit on its laurels.
9. How do you stay on trend?
We stay on trend by utilizing social media and keeping up with sneaker drops, following influencers.
10. How important is social media for your business?
- Social media is very important to us. It is our number one marketing tactic to get new clients walking into our shop. We are very active on Instagram and Tik Tok (toptiercompany).
11. What are the advertising vehicles that you believe are best for your business?
Word of mouth and social media is the main vehicles of advertising for our business. With our existing client, they have created hype around Oakville about our shop. We are known as the barbershop that sells the latest Jordans and Nike. Social media has been amazing for us with new clients wanting to check something new in Oakville.
12. Give us the best 3 pieces of advice for who is willing to start a business?
The 3 best pieces of advice I have gotten from my mentors are the same advice I give to people who are interested in opening up their own business:
- stay humble;
- hard work and being true to yourself will always pay off;
- network as much as possible.
Now it’s your turn to start a new venture!
I hope that this information will help you in your journey toward a new life, as scary as it may be, the excitement and thrill of a new business is worth the hardship.
Photo by Andrea Piacquadio. Pexels.
Two of the many companies that you need to be aware of. © Miguel Á. Padriñán – pexels
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© Pexels Andrea Piacquadio
The Boost Your Business Technology grants offers support to Canadian-owned small and medium sized enterprises (SMEs) who want to adopt new digital technologies. Eligible businesses