Starting a Business?
Types of Business: Product or Service
Types of Entities: Sole Proprietary,
Partnership & Inc.
Types of Financing: Debt vs Equity
Common Pitfalls: Lesson’s Learned
You have a idea now what?
Are you cut out to be an entrepreneur ?
What’s your risk profile?
Product or Service
More capital intensive
Intellectual property [patents needed?]
P.Eng Consulting: P.Eng ---> C.O.A -->Consultant
• 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
Creditors can seize personal assets
• Personal taxation laws still apply
• Suffer all the pain
• Share the challenges
• No contracts or registration
• Limited partnerships can limit liability
• No separate tax filing
• Simple dissolution
• Personally liable (except for limited
• No new partners can be introduced
without consent from all existing partners
• Decisions not as easily made
• Liability is limited to the initial share
• Decisions by majority, not unanimity
• Could continue in perpetuity
• 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
•‘Hands off’ Business Partner
•Debt cheaper than equity. Some Interest is
tax deductible [EBIT]
•Business plan: Show how you will pay off
•Good for product or more capital intensive
Funding (Private Equity)
Friends and Family: “Love Money”
•Off balance sheet liability
•Good for low start up businesses:
•Forgiving payment schedule
Venture Capital Funding
•Equity Stake in the company - vested
interest in company’s success.
•‘Hands-on’ Business Partner - use of
•Looking for how to ‘exit’ and get return:
•Good for starting up a capital intensive
product; Knowledge Based Industries, w/
R&D, high growth potential.
Angel Investors & Government Funding
•Similar to VC, but a individual rather than a Firm
•Equity Stake in the company - vested interest in
company’s success. Smaller investment.
•Grant’s, Loans and VC
•Government issues: Environmental concerns [i.e.
green energy, Kyoto]
Underestimating start-up costs. By the
time you incorporate, register business,
get started. Expensive
•Include your salary!
•Rule of thumb what you have budgeted
Not knowing your sales cycle:
How long will it be before you
start generating cash flow?
Payment only comes after you have
gained the business [i.e. net 30 days]
Some Sales Cycles can last 12 months
Know who you are doing business
• Friends don’t always make good business
• Some customers you don’t want.
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
Self-discipline to execute
• Plan – execute – measure - repeat
• Business is not as precise as engineering
• Intelligence + confidence
• Leap of faith
The surest sign of madness is doing
the same thing but expecting
Change + Action
Ready to start a business?
• Only you can answer…
Business Development Canada: www.bdc.ca
Royal Bank : www.rbc.ca
Canada Service Business Centers: www.bsa.cbsc.org
Peter Keeshan - email@example.com
Megan Thomson - firstname.lastname@example.org
Bryan Chen - email@example.com