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					Starting a Business?


                   Peter Keeshan
                   Megan Thomson
                   Bryan Chen
          Agenda

   Types of Business: Product or Service

   Types of Entities: Sole Proprietary,

    Partnership & Inc.

   Types of Financing: Debt vs Equity

   Common Pitfalls: Lesson’s Learned
Getting Started

You have a idea now what?

Are you cut out to be an entrepreneur ?

What’s your risk profile?
Product or Service

Product:
More capital intensive
Intellectual property [patents needed?]


Service:
Liability issues
P.Eng Consulting: P.Eng ---> C.O.A -->Consultant
                                       Engineer
Sole Proprietorship
   Pros
    • Unincorporated business established and
      run by a single individual
    • Easiest form of business to set up
    • No agreements or paperwork required
    • Reap all the benefits
   Cons
    • Liability
          Creditors can seize personal assets
    • Personal taxation laws still apply
    • Suffer all the pain
        Partnerships
   Pros
    •   Share the challenges
    •   No contracts or registration
    •   Limited partnerships can limit liability
    •   No separate tax filing
    •   Simple dissolution
   Cons
    • Personally liable (except for limited
      partnerships)
    • No new partners can be introduced
      without consent from all existing partners
    • Decisions not as easily made
       Corporation
   Pros
    • Liability is limited to the initial share
      purchase
    • Decisions by majority, not unanimity
    • Could continue in perpetuity
   Cons
    • More work and costs involved
    • Outside investment limited by size of firm
    • May be required to pledge personal
      property as collateral to secure
    • Tax return for the corporation
Funding by Debt
Mostly Charter Banks, but also include other
type of financing [i.e. Leasing].
•Usually require a form of secured asset as a
guarantee.
•‘Hands off’ Business Partner
•Debt cheaper than equity. Some Interest is
tax deductible [EBIT]
•Business plan: Show how you will pay off
debt.
•Good for product or more capital intensive
service
Funding (Private Equity)

    Friends and Family: “Love Money”
    •Easily accessible
    •Off balance sheet liability
    •Good for low start up businesses:
    Consulting
    •Forgiving payment schedule
Venture Capital Funding

   •Equity Stake in the company - vested
   interest in company’s success.
   •‘Hands-on’ Business Partner - use of
   contacts/networks
   •Looking for how to ‘exit’ and get return:
   IPO, Sell
   •Good for starting up a capital intensive
   product; Knowledge Based Industries, w/
   R&D, high growth potential.
Angel Investors & Government Funding
   Angel Investor
   •Similar to VC, but a individual rather than a Firm
   •Equity Stake in the company - vested interest in
   company’s success. Smaller investment.

    Government
    •Grant’s, Loans and VC
    •Government issues: Environmental concerns [i.e.
    green energy, Kyoto]
Common Pitfalls
Underestimating start-up costs. By the
time you incorporate, register business,
get started. Expensive

•Include your salary!


•Rule of thumb what you have budgeted
+ 1/2
                      Common Pitfalls
Not knowing your sales cycle:
How long will it be before you
start generating cash flow?
                                                              Information
                                         Open/Qualification
                                                               Gathering
Payment only comes after you have
gained the business [i.e. net 30 days]
Some Sales Cycles can last 12 months
or more.



                                               Close          Presentation
    Common Pitfalls
   Know who you are doing business
    with
    • Friends don’t always make good business
      partners
    • Some customers you don’t want.
          Demanding customers
          Customers that don’t pay.
    • Exhausting “warm” leads before doing
      any other business will not give you a
      realistic picture of the need of your
      product/service
    Common Pitfalls
   Self-discipline to execute
    • Plan – execute – measure - repeat
    • Business is not as precise as engineering
    • Intelligence + confidence
    • Leap of faith
    Parting Thoughts
   The surest sign of madness is doing
    the same thing but expecting
    different results

   Change + Action
   Ready to start a business?
    • Only you can answer…
        Helpful Link/Resources
Business Development Canada: www.bdc.ca
Royal Bank : www.rbc.ca
Canada Service Business Centers: www.bsa.cbsc.org




                     Contact Information:
                     Peter Keeshan     - pkeeshan02@schulich.yorku.ca
                     Megan Thomson     - mthomson02@schulich.yorku.ca
                     Bryan Chen        - bchen02@schulich.yorku.ca
Questions?

				
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posted:10/26/2012
language:English
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