Here Are 12 Top Tips to Ensure a Successful Startup
A look at a successful startup in 1987
The date was October 1987. My husband had submitted his resignation to the company he had been working for the last three and a half years because his boss reneged on a promise.
We put a used desk in the spare room in the basement. A small room with one window underground. A computer (an IBM 286) had been purchased with amber typing on a black screen and a floppy disk. My husband built shelves to store samples.
We were going to share the same space. We were going to work together.
Our new business adventure was about to begin.
- We registered our company as a Canadian Corporation.
- This is a picture of a Telex machine. My husband had used one like this in his former position. In our new business, we have one integrated into our computer. Although fax machines were available they were prohibitively expensive.
3. A NEC dot matrix p7 printer. This is the one found on Ebay. That’s it! We kept this printer for the entire 14 years we were in business. What a workhorse!
4. We set up a business bank account.
5. We cashed out hubby’s retirement savings. We received a line of credit on our home [for “renovation purposes” — oops small white lie]. We also obtained an unsecured line of credit (because I had a small teaching job). I had managed to save a little money too.
6. I had been hired to teach 3 half-days a week — to teach music (that’s another story, as I am not musical at all).
7. Our youngest, who we had enrolled in 1/2 day Kindergarten, also started to go to 1/2 daycare. A bus picked her up in the morning and took her to public school in the afternoon.
8. We named our company.
Connections are important
A few suppliers decided to take a chance on my husband’s expertise to distribute their products. He still needed to find more.
We had done our cost projections and decided we could live well on a 15% profit margin. One problem remained — at that time Canada had a 13.5% Manufacturer's Sales Tax. All companies who sold raw materials could apply for exemption status. It was the finished good that was taxed. However, it would take 6 months to recoup the funds. In the meantime, we had to pay the 13.5% tax.
We hoped that the money from the retirement plan, my part-time job and the 1.5% would keep us from hunger. We had three young children and a mortgage on our home.
Things were going to be tight.
We had had only one income up until that point. Now that income was diminished. Our son decided he wanted other shoes than the ones I could buy him. He looked around for a way to get money. He found work with a neighbour who had helped us set up our accounting system. He did filing and office work.
Working around our schedules
Obviously, my husband had to make sales calls and also had to visit suppliers. We figured out my time schedule and his and worked around it.
Since I was used to his being away in his other jobs it wasn’t too hard to keep running the fort while he was on business trips and at dinners and meetings.
But also running a business and teaching — that was an added challenge.
That took fortitude and co-operation between us.
A big learning curve
I knew a little about computers as our son had become interested when they first came out. I had a little knowledge of HTML so the DOS operation system wasn’t too scary.
Our software, called ACCPAC, came in a DOS format. Picture a black screen (yes no colour) with different functions — F1, F2 etc. Different modules for accounts receivable and payable. Invoicing. (What was that?) New knowledge. And a floppy drive to store the information. A Telex machine to communicate.
A Paradigm Shift — What do you mean that’s a credit?
My biggest learning curve now seems the simplest.
I spent hours trying to figure out debits and credits. We had hired someone who we hoped could help us set up our business and teach me.
From my limited knowledge of accounting (I only knew how to keep an accurate bank account) to me a credit happened when my bank put money in and a debit happened when I took money out. That’s what I saw on my statement. So credits meant money in and debits meant money out — simple right?
Wrong! Now my accountant was saying Debits meant money in and Credits meant money out. What? That makes no sense. What are you saying? I argued and argued. I am a fact checker by personality. I got so frustrated that I could NOT understand this. I need to understand to do something.
Finally, the light bulb came on.
The accountant said, pretend you are the bank and look at it from their side. Okay — money coming into them is a DEBIT. And money going out is a CREDIT. I said, “right”. So now you have to pretend you are like the bank. You take in money and it goes to the DEBIT side of the accounting. You pay out money and it goes to the CREDIT side. Ah ha. Got it.
Hire people who are honest, forthright and don’t overcharge. This accountant had given us an estimate to set up a business plan. When the bill came in it was 3 times the price he had given us. My husband called and the accountant said it was a bigger job than he thought.
Well, hubby answered, “I can’t pay for a while. You will need to wait. That price was not built into our plan.” [We did finally pay off that bill.] Maybe it was his time trying to teach me debits and credits?
We needed a new accountant.
We were given a recommendation of an accounting firm called KPMG — and because my father had a business connection with them, we were able to get their help. We had a fantastic relationship for the entire time we were in business.
How do we collect that money back from the government? Answer: Through our customer orders. Customers had to give orders with a proper stamp that recognized that they were the end-users of our raw materials and would be responsible for paying the tax as manufacturers. Good. But we had to train them to send us the paper orders as most times these transactions were done over the phone.
But how do we get the money back from the government?
Turns out I needed to take a photocopy of each invoice, and mail all of them with a completed form to the government — for the entire 6 months (there would be no money until we received our exemption certificate).
But we didn’t have a photocopier.
The computer and the software had drained our supply of funds (I think it was over $7000 — which would be almost $14000 in today’s money). We couldn’t afford a copier. Next best thing? I went over to our travel agent and he let me make copies at a great price. I stood there for over an hour making copies each time.
When the six months were over we had to wait to get our money. When the government's figures arrived, I disagreed with their numbers. I had kept accurate records of every penny we received. After a long talk and explanation with the government, they agreed with my figures.
Hurrah. We were in business.
When we first hired a lawyer we asked him if he knew how to do corporate law. He said yes but became completely bogged down in the intricacies of a Canadian corporation. We left him after we received a lead from our new accountant. We decided on a partner from Gowlings Law Firm. That too was an excellent relationship for the 14 years. And even more so when it came time to sell our business.
How did the kids handle the change?
I think they thrived. Our youngest learned to eat very well at the daycare. She thrived on the attention there — 5 to 1. Even though she liked Kindergarten, there were 2 adults for 30 children. Not much attention there. She became more out-going and loved the daycare.
Our middle child continued to do what she usually did — have fun, enjoy her friends and play with her sister.
Our oldest (boy) learned the value of money, and how to make it.
And all three loved having daddy at home.
Now my husband had time — the first time — to take them to skating lessons, to go on field trips, to attend most teacher meetings (prior to this time, his company came first and what the boss said had to be done, as well as travelling time from his place of business — he missed many appointments and childhood school presentations).
We were up and on our way.
About eight months in and we felt good. All the preparations were worth the work. And just doing it — felt tremendous. We were happy, healthy and ready to see where this adventure led.
12 Tips For Starting Your Own Business
- Do your research.
- Talk to people who are in your type of business or research businesses that do what you want to do.
- Have connections. Have knowhow. Know your business. (My husband knew what he was doing. His education and work record gave him the necessary experience to start this venture.)
- Be brave. Nothing ventured — nothing gained.
- Work to a schedule as much as possible.
- Keep accurate records. They are important.
- Set up a good file system. Whether paper trails or computer trails, keep those files organized.
- Hire good people. Work with people who are competent in their field even if they cost more. It will cost less in the long run.
- Remember to live your life while doing this. Enjoy each day and each moment. My husband’s words are: “Learn to run the business and not vice-versa. Don’t let the business run you.”
- Be self-aware. Take time for self-care. Take time with your family. Don’t work long hours — if you need to do that, you are disorganized.
- We never aimed to make a lot of money. We wanted the freedom to do something on our own. Our backup plan always was for hubby to find another job with another company. But we took this venture because he wanted a chance to see if this would work.
- Make sure if you are in a partnership the partnership is firm. We had been married for 16 years and had a solid, loving, respectful relationship.
Our business thrived and so did we.
My husband and I were recalling these activities from over 30 years ago. We learned many lessons in the fourteen years we were in business.
Are you feeling the tug to start a business on your own?
If passion is there, and you are willing to work hard, and if you aren’t fearful of failure — go for it. It’s an adventure I wouldn’t have wanted to miss.