Monday, October 17th, 2016
Small business owners are a brave bunch. They go out on their own to start a business. It's a risk and can be a bit scary, but when it works, it can be very satisfying.
All businesses have startup costs. We're not talking about Silicon Valley or the Golden Corridor (Toronto to Waterloo) startup costs. We're talking about what it costs to buy business cards, rent a space or buy accounting software.
I asked two Canadian business owners to share some lessons on what they spent starting up their businesses, including some unwelcome surprises.
Opening a restaurant
Sylvia Cheverie is a co-owner of Chartier, a rustic, French-Canadian restaurant in Beaumont, Alberta. She and her husband, Darren, quit their jobs to start the restaurant, which opened in March 2016.
"Because we're nuts!" says Sylvia when asked why they chose to open a restaurant. "And because we love being able to flex our creative muscles without borders, working on our own schedule, and seeing the direct impact of the hard work that we put into what we do. We are 100% responsible for the success of our career. It's scary — but totally exhilarating."
Sylvia and Darren couldn't get a business loan for the full amount they needed to start their business, because banks consider the restaurant business to be a risky investment. They crowdfunded some of what they needed and got a private investor. They initially estimated the startup costs would be between $400,000 to $500,000, but they ended up spending close to $700,000.
The Cheveries spent their money on rent, tenant improvements and equipment, but like many small businesses, a nasty surprise happened. There was an unexpected bill related to their heating/ventilation/air-conditioning system that started at $30,000 and ended up totalling $110,000 due to complications with the building and fire code.
Starting your own agency
Elena Yusunov's Toronto consultancy sideline was growing so fast that she started Communicable Inc., a marketing agency for startups and tech companies. But she wasn't ready for the costs. "Starting my own business wasn't really something I financially prepared for, so I wanted to spend as little as possible to get it going."
For Elena, her costs were $8,000, which she spent on rent, branding, equipment and materials. "The money went towards hosting, getting a domain name, a simple one-page site design with custom illustrations, some business cards, some legal paperwork, a new laptop and a business address." Elena self-funded her company, investing the money she received from clients.
With both of these stories, the owners had to spend money to start up their businesses, and it has paid off. Sylvia says the restaurant is doing well and they're regularly fully booked.
Elena is philosophical: "I'm feeling lucky that the cost of entry was this low. It would've been an entirely different story if I were opening a restaurant, or even a small shop. Now when I have a product I'm working on, I'm financing that through business revenue. Even though the costs there will be higher, I intend to bootstrap and take it as far as I can before seeking additional funding."