There’s no joy like starting a small business — the thrill of serving your community, creating jobs and becoming your own boss. There’s also no defeat like losing that business and giving up on a dream.
Before becoming an entrepreneur, you need to understand the risk, reward and responsibility of the gig. That means committing to education and humility, says Dennis Ensing, an entrepreneur, investor and executive consultant at MaRS who has coached hundreds of would-be founders. Some of them had great vision, Ensing says; others needed to park their ambition and find a job for a while.
So, is now the time for you to start a small business? Here are five signs you’re ready and five signs you’re not.
1. You know how to delegate
Joachim Hayward has been a head chef since he was 23. After a decade running kitchens on three continents, Hayward is happy to admit his success came from selecting good teammates. “I’ve seen how quickly things can fall apart,” he says. “A lot of chefs that I’ve worked with were more technically skilled than me, but they didn’t have leadership quality” — which often resulted in exhausted employees. Hayward builds a team he trusts from the start. He hires people who can help him with the hidden yet essential tasks: invoicing, food costing, inventory, scheduling. He also surrounds himself with talented people who talk straight, but are also forgiving of his errors. And as a young father, the chef ensures his staff have ample time off — rare in an industry where work weeks exceed 60 hours.
2. You can balance the books
After building a trusted team, Ensing says the most critical piece of business management “is having a robust, rolling cash flow.” His key to navigating tough times: planning six months of cash flow at the outset, and always adding to a pool of reserve funds when you can, thereby extending your company’s safety net. Entrepreneurs need to keep solid accounts for taxes, but this information can also be used to forecast outcomes up to five years into the future. Having a good record of historical sales also puts you in a better position when negotiating new financing.
3. You have an idea that the world needs
Entrepreneurship is about filling gaps in the market. Civic leader Chris Rickett was bitten by the bug as a teen in Stratford, first opening a café for local bands to play shows, then running a politics and entertainment magazine. “I’ve always wanted to solve community challenges,” he says. As the coronavirus shuttered Ontario’s economy, Rickett founded My Main Street, a $23-million program to restore small-business vibrancy in 65 communities across the province. So far, it has helped thousands of entrepreneurs by providing business advice and advertising support, organizing workshops and events, and offering resources such as market research and data analysis. Demand remains high: millions of dollars for 2022 have already been approved for community organizations in Niagara Falls, London, Cornwall, Kingston and elsewhere.
4. You love what you do
Bernadette Butler made a career out of storytelling, then left that career to found a storytelling startup, and now lives for sharing the story of that startup with everyone she meets. When you love something that much, you’re ready to make a business out of it. “I was working in marketing at a massive telco with too much money,” Butler says. The corporation was burning through cash coming up with video advertising campaigns. Butler thought she could do it better and decided to start StoryTap, which enables big brands to share positive video stories from their clients. The company now has dozens of employees spread across Vancouver, Guelph and Toronto. When asked what gave her the confidence to enter the minefield of entrepreneurship, Butler replies: “Storytelling is the number-one thing I do. All leaders have to tell stories. It’s how you pitch your business and meet good people.”
5. You welcome criticism
Ideas good and bad tend to summon unsolicited advice — especially when money is at stake. That’s just part of the game, according to Alexander Whitfield and Owen Osinde, founders of Hustle Over Everything, a podcast and media brand dedicated to culture and entrepreneurship. The two Torontonians started their company at the Artscape Daniels Launchpad incubator before setting up their own headquarters. Welcoming criticism — from listeners, coaches, business partners, and even their on-air guests — is how Osinde knows where improvements are needed. “It’s how you learn to become someone else and think in new ways; how you build and grow,” he says.
YOU’RE NOT READY
1. You can’t change
You hear it often from new founders: “This company is my baby.” That passion is fine in the early days. But Ensing only sees hurdles for leaders who refuse to change as their companies grow. “Every stage of growth is completely different from the last,” he says. Initially, it may be appropriate for the boss to handle hiring and marketing and finance and even the office birthday cards, but such behaviour saps productivity when teams and revenues start to balloon. Ensing asserts that there are several adjustments most founders must make over time: listening instead of speaking; delegating instead of micromanaging; and knowing when to give up on something. You may love your company like a baby, but the real-life adults on the team will cry foul if you don’t let them do what you hired them for.
2. You’re obsessed with speed
“In tech, it’s really easy to get over-excited,” says Sophie Howe, founder and CEO of Toronto-based startup Xesto. Howe and her small team of scientists and engineers have nevertheless profited from patience. She launched Xesto in 2016 to develop tech that could interpret hand gestures for use in augmented reality. R&D was expensive and took longer than desired, but the extra time allowed Howe to assess the market. As a result, she pivoted her tech to a new, growing industry: virtual footwear fitting. “You can’t just throw money at problems and hope for the best. Sometimes you have to wait until the market reveals a need,” she says. Today, Xesto’s tech has been validated and lives on the Apple App Store — without ever raising a seed round.
3. You’re afraid of failure
Studies have repeatedly shown that most small businesses fail. Still, if you have to constantly rationalize why you’re in the game, best not to play. “That looming feeling of failure never goes away,” says Whitfield, the podcast host. “Entrepreneurship comes with accepting risk.” And it’s not as though Whitfield and his co-founder Osinde haven’t made progress: they have expanded their brand with merchandise and corporate partnerships, and they’re planning a summer festival for founders to network. Osinde keeps the fear of failure in check by focusing on what he can do to make the business better. He can’t predict the future, but he can control the quality of his work.“There’s beauty in pushing on and being consistent,” he says.
4. You don’t hang out with fellow entrepreneurs
When Joshua Wong founded Opus One Solutions in 2011, he boasted breakthrough tech that could upgrade the world’s utilities, as well as years of engineering and business experience. However, he lacked peers to share strategies and moral support. So he reached out to several founders and also found veteran advisors to workshop ideas. “Every entrepreneur needs peers to relate to,” says Wong. “I fell a lot over the course of my journey; Toronto’s innovation community helped pick me up.” The relationship-building paid off. In December, GE Digital announced it would acquire Opus One Solutions to further its energy-transition ambitions. Wong says his startup could never have reached scale-up status without the help of his fellow business folk.
5. You ignore the help available
One of the attractions of entrepreneurship is being your own boss and flying or failing on your own merits. But that doesn’t mean you must have all the answers. Just as thriving businesses lift their communities, so thriving communities lift their entrepreneurs. Toronto has an army of organizations dedicated to supporting new businesses. “The great thing about Toronto is the wealth of support — incubators, accelerators, government programs, workshops,” says Rickett, the My Main Street founder. The key to getting the support your business needs from these services is to reach out early and reach out often. “It’s unique how much Torontonians want to help others start businesses. Take advantage of what’s out there.”
Looking for support to help realize your business idea? Find connections with funders, mentors and advisors here.