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Self-Employment: Getting Started

If you’ve assessed your skills, experience, and attitude and want to try self-employment, your next step is to make it real.

Here are a few basics to start with.

Do your research

Measure demand for your product or service by doing a market analysis. This can take time, but it’s better to do it now than wait until you’re up and running and realize no one’s buying what you’re selling.

You can pay a company to do this for you, or do it yourself. If you do it yourself, your first step will be to define key features of your target market, such as:

  • Age
  • Income
  • Education
  • Gender
  • Location
  • Size
  • Growth potential

Next, think about your competition:

  • Who are they?
  • What are they charging?
  • How will you attract, keep, and grow your share of clients?

Statistics Canada, your local chamber of commerce, industry groups, and future clients may provide these details. You can also search articles, company websites, message boards, and use online market research tools.

Think about money

It can take several years to produce a steady income. How will you pay your bills until then? Some people keep part-time or even full-time jobs while getting started. Others borrow money from friends, family, or a business partner. Banks or government agencies may also offer loans.

Write a business plan

A business plan describes your product or service and how you plan to sell it. You’ll need one if you apply for grants or loans. Other good reasons to write one are to:

  • Ensure your plan is solid
  • Ensure you know the strengths and weaknesses of your idea
  • Help you see opportunities and foresee change
  • Help you draw a roadmap and measure your progress

For most business plans, you will:

  • Write a 1- or 2-page summary
  • Prepare a profile of your company and industry
  • Describe your products or services
  • Define your market and how you will reach it
  • Outline how you will manage your business
  • Provide a schedule with key steps leading to launch time
  • Forecast your finances for the first 3 years

Research permits and licenses

In some lines of work, you may need a special permit or licence. For example, if you’re starting a catering company, you may need a health permit. For more information, contact your local government, or use the BizPaL online service.

Register your business

Decide how to structure your business. Choose whether to incorporate, be a sole proprietor, or buy a franchise. You’ll need to register your business with the province where you live.

Depending on the earnings you predict, you may need to apply for a business number. This provides you with access to federal, provincial, and municipal accounts. Some common examples include GST and payroll deductions.

Write winning proposals

Many self-employed people write proposals to compete for work. Sometimes clients issue requests for proposals (RFP), but you can also submit them without being asked. Either way, it’s good to know how to write one.

Most RFPs provide a format for you to follow and details about what to include. Make sure you read these details and include what’s needed.

Keep costs down

“Overhead” refers to the costs of running a business, such as rent and office supplies.

All businesses should try to keep costs down, but it’s even more vital if you’re just starting out. You can control costs by:

  • Working out of your home
  • Buying only the equipment and supplies you need
  • Hiring people for projects only as needed

That said, working out of your home is not free. You’ll still need a phone, computer, Internet, office supplies, a website, and more. You may also need to pay for a lawyer or accountant.

You can deduct many of these costs from your income tax. Contact the Canada Revenue Agency (CRA) to find out which ones.

If it’s your first time starting a business, it may not be obvious what needs to be done. By starting on some of the steps outlined here and reading some of the resources below, you will be well on your way.

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