Building a Successful Small Business in Ontario – Year 1

Owning a business is great. Keeping it running every day is greater and building one from scratch to the time that you have developed a team, and a loyal customer base, is the greatest. It is also a bit difficult to be honest. But persevering through tough times can lead to both financial gain and emotional fulfillment. Welcome aboard, fellow entrepreneur! Congratulations on your small business!

The first 12 months of your business are pivotal. Firstly, you are laying the foundation for (long-term) success at this time, every day. Ontario boasts a thriving small business ecosystem, fueled by various grants given by the government. There’s a diverse and skilled workforce at your disposal and a consumer market that’s just looking for quick and easy solutions. But due to management issues, every year over 70% of Canadian small businesses fail as well.

Understanding Your “Why”

Why are you doing what you are doing? It seems a simple question, but it is super important. In the first step, you get to identify the reason for your small business venture. Why are you starting a small business? Reflect on the driving force behind your business venture. Is it a financially promising idea that forced you out of bed one sunny morning to act? Is it a passion to offer a solution for a frequent problem, that you discovered (or developed if you are a SaaS business Owner)? Understanding your “why” helps in:

• Identifying your strength: Your motivations mirror your business’s strengths. For example, a passion for healthy eating might translate to strong marketing skills in promoting a new health food product.
• Being aware of your weakness: A chain is only as strong as its weakest link. You, my friend, must identify what the weakest link is before it infects everyone around. If you are enthusiastic about a tech product but lack business management experience, you may have to consider partnering with someone who complements your skillset. If you are a great chef, do not think the next step is to open your own restaurant. Do you know how to tend to the front of the house, or tend the bar? How to obtain liquor licenses? How to do payroll or hire or fire someone. You know how to cook, and you are excellent at it. But if you do not know everything that you should, you’re probably going to fail.
• Long-Term Vision: Your “why” keeps you focused during inevitable challenges as you operate your business in the first few months. Understanding the core purpose behind the moving machinery of your business will help you overcome obstacles and run a successful small business in Ontario.

Benchmarks for a Successful Small Business

With a clear understanding of your “why”, now you are ready to move ahead. In this step, write down specific goals and benchmarks for your first year. These benchmarks can act as milestones, tracking your progress and keeping you on the path to growth. The small business market itself is diverse by industry and depends on your focus and determination when talking about scaling the business. I am unable to list specific figures here as a metric of being considered “successful,” but by the end of your first year in business, the gap between your Expenses and your Income must begin to narrow down. If not, you need to cut the costs and/or offer more services at a higher rate.

Financial Viability:

By the end of the first year (or preferably at the start), you must create a comprehensive budget. It should outline the initial startup costs, operational expenses, and projected revenue. This will help you manage cash flow effectively and identify potential areas of cost savings down the road.

Before starting a small business, you must determine the point at which your business revenue will equal your total expenses. Understanding your break-even point allows you to set initial sale targets and timelines for profitability.

Before you begin to offer your services to the community, write down all potential expenses that could be incurred as you offer your product(s) or service(s). These include but are not limited to your labor costs, subscriptions, materials, lease, utilities, and marketing budget. Negotiate competitive rates with local suppliers if possible and explore cost-saving strategies at every point. In the first year of business, your target should be to establish profitable connections that can help you get the job done at minimal cost.

Market Awareness and Competitiveness

Keep conducting thorough research to understand your target market, competitor landscape, and industry trends before and during the first year of your business. Identifying market gaps and opportunities in a timely manner and actioning them proactively will allow you to position your business strategically in Ontario’s Small Business community without ever spending any money on ads!

At all times, at least you as the owner should be aware of the reason that sets your business apart from your competitors. What makes you unique? What do you have that others who offer the same product/service as you do not have? In (boring) business terms, this is called a Unique Value Proposition (UVP). It highlights your unique offerings and describes how this UVP resonates with your target audience. If you are thinking about pitching your small business to investors anytime soon, you will be required to submit a UVP document.

Like you are taking advantage of an opportunity today, the entrepreneurs after you will be trying for the same thing. The business landscape is constantly evolving. What system have you set in the business to stay informed about potential industry disruptions and are you prepared to adapt your strategies to any change in the market conditions? Both questions need to be answered in the first year of your operations if you plan to make it beyond this time.

Internal Operations of a Small Business in Ontario

Business is a machine. The more efficient you keep its parts, the more long lasting it will become. And this is your job as the Owner/Founder to ensure not you, nor any member of your team, experience wear-and-tear for too long. Even though there’s tons to be done in the first year and everything comes with a deadline of yesterday, it is your job to make a well-structured team that can handle both the repetitive and innovative tasks. Here is how you can approach this:

• Take a definitive stance towards establishing roles and responsibilities for each team member. This prevents confusion and ensures everyone knows their contributions to the overall goals. It can be tempting to make a team that “knows-it-all,” but this is simply not humanly possible to achieve as your team expands.
• Establish streamlined processes for repetitive daily operations, including but not limited to your sales, customer service, marketing, finance and HR. Tasks like onboarding new teammates, checking if everyone is working the due time etc. are just some of the things that you can automate easily with your involvement needed only to review these items occasionally.
• Technology Integration: Automations can help optimize your workflow. This directly leads to an increase in your efficiency. Leverage technology in whatever software you choose, be it Google Suite, Microsoft Suite, or local 3^rd-party tools (Zoho, Asana, ClickUp, Trello, Notion, Hey.com, Monday.com etc.) to improve communication, collaboration, and data management. Consider cloud-based solutions for tasks like accounting and finance, customer relationship management (CRM) and business development (BD Teams) to fast-track your growth right in the first year of operations.

Key Performance Indicators (KPIs) for a Successful Small Business

In fancy language, KPIs are quantifiable metrics that track your business’s performance across different areas at different points in time. Monitoring these KPIs allows you to identify areas of strength, address your business weaknesses, and adjust your strategies as needed. Here are some essential KPIs to track in your first year:

• Website Traffic & Social Media Engagement
• Customer Acquisition Cost
• Customer Lifetime Value
• Net Promoter Score
• Conversion Rate
• Sales Growth

Financial Health:

Though the first year of your business could be a time when you are struggling to break even, it is essential to know where you stand financially, month after month (or week after week if that is the nature of your work).  For this purpose, use the following financial reports:

• Profit Margin: Shows the percentage of revenue remaining after accounting for all expenses.
• Cash Flow: Tracks incoming and outgoing cash to ensure you have enough working capital to cover your expenses at any given time.
• Burn Rate: The rate at which you are spending cash helps you understand how long your runway is with your current funding.

Sustainability to Ensure Long-Term Success of Your Small Business

The first year is crucial, but it is just the beginning. When you are going through the operational grind of every day, do not forget how you want the business to look like 5 years from now. Here are some key strategies to ensure your small business not only survives the first year, but also thrives eventually:

• Continuously refine your UVP to maintain its competitive edge. Customer needs and market trends evolve, so your UVP should adapt accordingly.
• Make it extremely easy for customers to find, understand, and connect with your business. Maintain a user-friendly website and be responsive on social media platforms.
• Optimize your marketing strategies based on data and analytics.
• Stay informed about industry trends and advancements. Attend industry events, participate in webinars, and invest in your own professional development. The biggest benchmark of success for all your employees is you. This comes with its due responsibilities.

Shape a Self-Healing Future

Understanding common reasons why businesses fail in your niche can help you avoid similar pitfalls. One of the key benchmarks of success for your small business is the amount of research you have done before actually starting the business. Make sure you are not:

• Failing to adequately understand your target market and competition.
• Starting off without a clear business goal in mind.
• Underestimating startup and operational costs.
• Following an ineffective marketing strategy.
• Neglecting Customer Service.

Social Media Usage for Ontario-Based Small Businesses

The turn of this millennium brought social networking sites like Myspace, 4chan, Facebook to existence, which help you connect with your target audience. With smart use of these sites, you can build brand awareness and drive customer engagement without having to pay hefty sums in ad-campaigns. Below we have compiled strategies used by multiple small businesses, all based in Ontario, to leverage social media as a tool for getting new leads:

• Research which platforms your target audience uses most frequently and focus your efforts there.
• Maintain a consistent posting schedule to stay top-of-mind with your followers.
• Create valuable and engaging content that resonates with your audience.
• Respond to comments and messages promptly.

First Steps as a Small Business Owner

Now that you have the benchmarks to aim for when building a successful small business in Ontario, it’s time to take action. Here are some initial steps to get you started right now:

1. Solidify your business concept, ensuring it addresses a genuine market need and has a competitive advantage.
2. Create a comprehensive business plan that outlines your business strategies, financial projections, and marketing plan.
3. Research and explore various funding options, including personal savings, loans, grants, and investors.
4. Complete the necessary steps to register your business with the Ontario government.
5. Depending on your industry, you may need to obtain specific licenses and permits to operate legally.
6. Create a user-friendly website and establish a presence on relevant social media platforms.
7. Hire qualified individuals to complement your skillset and support your business growth.
8. Implement your marketing plan to reach your target audience and generate leads.
9. Develop a strong brand identity that resonates with your target audience.

Winning as a Small Business Owner in Ontario

Success doesn’t happen overnight. But to action on it is a whole different story. You must be prepared for challenges, prepared to embrace even the most frustrating learning experiences, and willing to celebrate the smallest of your achievements to keep your team’s morale boosted throughout the hardships. And you have to manage it all without disturbing your cash burn rate! With perseverance, a purposeful business strategy, and a commitment to continuous improvement, all of this is possible. Your small business in Ontario has a guaranteed potential to flourish. Even if you are past your first year of operations, do not be afraid or shy to seek guidance when in need. Ontario’s small business community is super supportive, and there is a network of individuals and organizations ready to help you navigate the path to success, if you are willing to call for help!