Even if you’ve spent the last three days staring at an empty email inbox, crying, wondering why you ever did this, things are always “going great. Super busy.”
Most Yellowknifers have at some point, been involved in that slightly lubricated, late-night “you know what we should do?” party conversation, in which someone (perhaps you) tells their friends about a brilliant business idea that would make a ton of money.
I’m not sure where it came from, but there’s a feeling among much of the employed class that it’s easy to start a successful business in Yellowknife. Open your doors and the river of government money will flow through, it’s assumed, and you won’t have to work again.
This notion is, of course, bullshit. By starting a business, in Yellowknife or anywhere else, you commit to years of intense struggle that may or may not pay out. And paying out means everything from not failing to building a company that could be sold at a significant profit.
At some point in your YK life — perhaps because of the sentiment I just mentioned — a great number of people you know will likely leave their soul-sucking [government/corporate/institutional] job and strike out on their own. Yellowknife’s entrepreneurial spirit is something we rightfully celebrate, but we pay less attention to the people who, one to five years later, return to a similar job because things didn’t work out.
For nearly seven years, I’ve been self-employed as a journalist, professional writer and communications consultant. Most recently, I’ve partnered with a pair of hard-working individuals to build Verge Communications Ltd. (publisher of EDGE YK magazine and EDGE Online) into the North’s most innovative media and tech company. Some years, I’ve made a good living while others I’ve wondered whether to keep going.
The cliche that running your own business is one of the most rewarding things a person can do is utterly true. That said, this isn’t an inspirational story about how to start one. Instead, it’s more a gut-check of things to consider before going out on your own. Along with confirming if this lifestyle is for you, I’m hoping to help aspiring entrepreneurs avoid some common mistakes. I’ve also asked a few colleagues to provide tips of their own.
It’s really hard to make what you make now
If you’re making $60,000-$120,000/year, it’s incredibly hard to maintain your current lifestyle, at least right away. Considering you’re also probably contributing to a pension and your employer is renting office space and covering the payroll tax on your behalf, you actually have to make almost twice as much money to be as well off. That means, from the get-go, you’re having to bring in $10,000/month or more. This isn’t impossible, but if making a large amount of money right away is important, turn back now.
“There’s nothing easy about going out on your own, so you better have a thick skin and a hard work ethic. If you think weekends, “sick days” and vacation time are your god-given rights, then stick with the gov, because when you first start off on your own, those types of benefits don’t exist,” says my friend Pablo Saravanja, co-founder of the film production shop Artless Collective.
Examine your lifestyle
Fear not, you’ll have money coming in as you start your business, but it’ll likely arrive sporadically. I’ve waited as long as a year to get paid for completed work and delays of at least two months or more are common, especially if you’re dealing with the territorial or federal government.
Examining how you spend your money and making cuts to help cover extended dry spells as clients take their sweet time paying your invoices can help. When I first started, I found I could save $1,000/month by not partying and eating out three times a week. Who knew?
Start something that matters
“Do something truly worthwhile and interesting, not just because you’ll feel better, but you’ll also feel better asking people to help out,” says Paige Saunders, one of my partners in Verge. “Starting a business means asking friends for support and often asking staff to work for less than they are worth. You won’t feel as bad doing it if you feel what you’re doing is important and interesting for everyone involved.”
If you care about what you’re doing, it’ll also be easier to deal with the inevitable low points over the first few years. This doesn’t mean your personal relationships won’t be tested, but at least you’ll be doing something you care about.
Get dressed for the day
For many cubicle-chained workers, the home office seems a dream come true. But the reality is, working where you sleep and do everything else can, at times, feel like living in a cage, especially when it’s freezing and you don’t feel like leaving.
Photographer Angela Gzowski started her business last fall working out of her home and has some tips: “Get out of the house and work in environments that are social so you don’t go crazy. And don’t stay inside all day. Also, make sure you get dressed for the day. Don’t start it in what you slept in the night before or you’ll feel gross. Also, go out for lunch with people if you work from home. I find that helps.”
Use your network
This may seem obvious, but the personal network’s even more important in Yellowknife. Market research is hard to come by, so it’s important to talk to as many people as possible before investing time and money. Thinking about starting a company that plans birthday parties? Tell everyone you run into and get their feedback. Would they use this service, or do they know someone who would?
And once you’re running, let everyone you meet know what goods and services you offer. Nobody wants to be that annoying person always talking shop, but to some degree, as a self-employed person, you’re always selling. Just don’t overdo it. And remember, if your business relates to your current job, your soon-to-be-former employer could make a great client.
Things are always going well
Really? No, of course they aren’t, but people are going to ask you “how’s everything going?” A LOT. Self-employment is a strange-and-mystical beast to many, and they’re intensely curious about how it works. So even if you’ve spent the last three days staring at an empty email inbox, crying, wondering why you ever did this, things are always “going great. Super busy.” You get the idea. It helps to have some vague long-term project/client to reference when things really are something of a nightmare professionally.
There will also be plenty of times when things are going better than you ever imagined — just keep it to yourself when they aren’t.
And this isn’t to say you shouldn’t have friends you open up to, but these people need to keep this important information confidential. News of any professional funk, no matter how short lived, can spread like wildfire through your social network.
A week becomes a month
It takes a while for projects to go from pitch to reality, so if you aren’t doing anything for a week, that can turn into a month or longer without getting paid. You may have heard self-employment is feast or famine in terms of work, and for many people, myself included, this is largely true, especially in a town revolving around government schedules.
But how do you take on additional projects when you’re already so busy you can’t see straight? One way is to probe a little deeper when a client first gets in touch. Do they really need that done this month, or can it wait until next month?
There’s also a lot of talk about projects that never materialize. In my experience, about four in five “I might have a project for you” conversations, whether by phone, email, or in person, never become income. The lesson? Always be lining things up.
Have a cash flow statement
Most people get hung up on having a business plan, but David Patrick, General Manager of the Metis Dene Development Fund told me, you need an idea and a cash flow statement, and while a business plan is nice, what matters is having a rough plan for what you’re doing and an idea of when money’s coming in and going out.
If you’ve never used a cash flow statement, there are plenty of free Microsoft and Google templates to help you keep things on track. It’s the most important document we have in terms of the financial management of our business, and I thank Dave often for making me use it. It’s important to be as honest as possible about revenues and expenses, or you can find yourself in trouble in a hurry.
What are you selling to the government?
This isn’t a must, but in a government-dominated economy, it’s a good idea to sell something to either the government or a mining company. If you offer a good or service that makes sense for either of these clients, learn their rules around purchasing. For the territorial government, register under their Business Incentive Policy, which gives northern firms an up-to 20-percent discount on most bids submitted through RFP. It’s a myth you have to be registered under BIP to do any business with the GNWT, but it’s one that has deep roots, so rather than trying to educate potential clients, just register your business.
Beware of bartering
It could just be me, but I’ve always found YK businesses really into bartering for goods and services. Basically: I’m a photographer, you’re a graphic designer, so I’ll take some photos for your website, if you design my logo. Barter can be just fine, assuming the services exchanged are of equal value and, more importantly, you’d have spent that money anyway.
Problems start when you accept things like tow truck services you may never need. At some point, you have to generate actual cash to pay for actual food, so only barter when it makes sense.
Don’t ask mom and dad for money
This is in the “if you can avoid it” category. A lot of experts recommend separating your personal and professional accounts as soon as possible, and I tend to agree with them. It’s exciting when your friends and family believe in you; less so when your business falls apart and you owe money with no clear way to pay back.
If you need additional money to get started, I recommend:
- Your bank – No matter how long you’ve been working together, these guys will almost certainly turn you down. They’re allergic to the risk of dealing with small business clients, no matter what their website says, but it’s still worth a shot. Last time around, even screaming, waving my arms and threatening to walk my business across the street didn’t affect their mood or decision to turn down my loan application.
- An alternative lender – A couple of years ago, unable to get a loan from my bank for a business that had both doubled sales and increased profits for two straight years, I was introduced to the Metis Dene Development Fund. They offered competitive interest rates and were more focused on me as the individual than my balance sheet. I’d highly recommend working with them, as well as other alternative lenders, such as the Akaitcho Business Development Corporation.
- Personal credit cards and/or line of credit – This is probably the worst thing you can use to start a business with, but it’s how I did it and how many others have, I’m sure. If you’re going to do this, have a business chequing account so you know how much money the business has and use that account to make payments on the card.
On another note, there’s grant money available through the Department of Industry, Tourism and Investment’s Support for Entrepreneurs and Economic Development program, as well as the Business Development and Investment Corp.’s Business Development Project Fund. Both have relatively straightforward application processes. Note: these funds should be used to support a good idea, not artificially prop up a bad one.
Keep your day job
This may seem counter-intuitive, but start your business while you’re fully employed, if possible. Yes, it’s glamorous to say you’ve quit your job, are going out on your own, being your own boss, etc., but unless you’re absolutely miserable and can’t take another day breathing the stale air in your government office, don’t quit yet.
Instead, work evenings and weekends (and maybe even a bit of time at work, shhhhh) on it and see if this is a full-time business or just a fun hobby. Both options are cool, but you don’t want to quit your job for something that will never be more than a rewarding sideline of income, especially if you don’t have to. Along the same line of thinking, set up as many contracts as possible before leaving your job to ease the transition from stable salary world to the unstable self-employment universe.
In closing, if this column hasn’t scared you off, and you’ve got an idea, done a bit of research, have money and something resembling a plan, get started. There’s never a perfect time to start a business and no such thing as a perfect plan, just people willing to work their ass off and adapt on the fly. But for all the struggle, it really is worth it.
Small Business Paperwork: How to
Before you get rolling, here are a few of the things you’ll need to do:
- Get a business license with the City of Yellowknife – No matter what type of business you start, (home-based, storefront etc.) you’ll need a business licence to legally operate.
- Register your business with NWT Corporate Registries – This is something most people don’t know to do, and it’s particularly important to become listed on the GNWT’s Business Incentive Policy List, which requires it.
- CRA Business Number and GST Number – You don’t need a business number unless you have employees on payroll (you don’t count) or need a GST number because you’ve brought in $30,000 through your business. But if you’re serious about doing this, I’d recommend registering for one right away as it’s easy to do and you’ll need to do it eventually, if you’re at all successful.