Category Archives: entrepreneurship

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Experience report: So much for having a virtual bookstore

As part of my experiments in entrepreneurship, I decided to try out selling used books online. I like books, and am happy to keep a small library of my favourite titles in order to reread, give to friends, or resell.

I checked out Toronto Reference Library’s bookstore, focusing on donated hardcover business books that had never been in circulation and limiting it further to books that I had liked.

Listing my books on Amazon was quick and easy. I described the condition and picked a price in the neighbourhood of the other sellers.

After two weeks, I received an e-mail telling me that someone had bought one of my books: Dan and Chip Heath’s Made to Stick, an excellent book on how to make ideas more memorable. I wrapped the book in bubble wrap and dropped it off at the post office as soon as the store opened on Monday.

Here’s where the wrinkle is: Canada Post is expensive. Let’s break the transaction down.

 
Price of book CAD $10.50
Amazon fees CAD $-3.31
Shipping credit CAD $6.49
Actual shipping cost (regular parcel, no insurance) CAD $-13.71
Cost of book CAD $-1

Net: $-1.03, not including packing costs and time. (“That’s all right, we’ll make it up in volume!” as the joke goes…)

There are probably cheaper ways to ship, but I can’t imagine that they would be drastically better, or result in anything close to minimum wage.

On the plus side, I got a blog post out of it, so that’s not too bad. I’ve increased the price on the other book I listed, but I don’t mind not selling it either – the benefits of picking books I like anyway.

Selling books online might work fine in the US and other countries with inexpensive postal systems, but probably not here. I think my future experiments will focus on things that don’t need to be physically shipped! =)

Experience report: Applying for a Harmonized Sales Tax account

In Canada, corporations are required to collect and remit Harmonized Sales Tax if their revenues are over $30,000 in a year or if they meet certain other conditions. If you’re starting out, it might be a good idea to register for an account anyway. That way, you don’t have to change things when you do earn more than $30,000 (doable with consulting), and you can claim input tax credits for the taxes that you pay (with some exceptions).

Registering for an HST account turned out to be more of a convoluted process because Revenue Canada didn’t have my ownership information on file. I had created a federally-incorporated company just the weekend before, and the process didn’t ask for the information that Revenue Canada needs. If you happen to want to register for GST/HST for a newly-incorporated federal corporation, the easiest way is to call Revenue Canada (1-800-959-5525 – redial if you get a busy signal), explain that the business registration online system won’t let you register for a GST account probably because you don’t have information on file, and give that information (SIN, etc.) to the call center agent.

Me, I took the scenic route.

First, I tried the Business Registration Online system. It asked for my business number. “What business number?” I asked. I couldn’t find anything remotely resembling it on my incorporation certificate. I called and found out that I could use Industry Canada’s Federal Corporations Search to get my business number. Okay.

With this business number in hand, I tried registering for an HST account through Business Registration Online. It reported that my details didn’t match the owner they had on file. I called the agency to clarify, and found out that it was because they didn’t have any owner information yet.

The first call centre agent I talked to directed me to the RC1A form for opening a GST/HST account, or to the RC1 form for registering a business number and applying for a number of other accounts. The RC1 form looked more complete, so I filled in the general information section and the GST section, checked the box for the corporate income tax account (I’d probably need that!), and attached a copy of my certificate of incorporation. I figured that if the business number I looked up wasn’t the business number they were looking for, they could get the right one.

After I sealed the envelope and put a stamp on it, I hesitated and decided to call for confirmation. Was I sending the right form in? Would it create a duplicate account? Would sunglass-wearing agents from the Canada Revenue Agency break down my door?

I explained my situation to the second call center agent, who told me that yes, the ownership information wasn’t on file, but this was something that we could set up easily over the phone. I gave her my social insurance number and company details, and she set up the corporate income tax account and the GST/HST account for me. By golly. We were done in ten minutes or so.

So, if you want to set up a Harmonized Sales Tax account and the online forms just aren’t working for you, see if you can do it by phone. Sometimes that’s faster than trying to do things yourself.

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Experience report: A brief chat with an accountant

I checked out two accountants on my way home from opening a business bank account. It’s difficult to get time with an accountant during tax season, but they spared a few minutes to answer my questions.

The first accountant I talked to ran a small office with a few other people. He had just finished talking to another client who did business on the Internet, so that was good to hear. He chuckled when I told him that I had just started a business and I wanted to make sure I did things right. “You can come by near the end of your fiscal year with a shoebox of receipts,” he said. I told him I’d like to be more organized than that. (I’m the kind of person who updates her financial records every week or every other week and uses double-entry accounting for fun…) So I guess I don’t have to worry so much, although I still want to set things up properly. (Hence the separate business account.)

The second accountant I talked to handled accounting, payroll, and tax returns. She seemed busy, so I took her business card and promised to look up her website. I like how she offers year-long consultations, and may probe this further once the personal tax season subsides.

It sounds like picking an accountant is less critical, then, although still a good idea. I’ll find one sooner or later, possibly when things settle down enough for accountants.

Experience report: Opening the RBC Small Business eAccount

Having a business bank account is good for separating business and personal expenses. Reconciling your books is easier when you don’t have commingled expenses, and clean separation is important for minimizing legal liability.

After considering several options for business bank accounts, I narrowed it down to a choice between Royal Bank of Canada’s Small Business eAccount and Bank of Montreal’s Small Business Banking Plan. RBC’s Small Business eAccount was launched mid-January 2012, I heard, which could explain the lack of reviews on the Internet.

Here’s the side-by-side comparison as I understand it:

 
RBC Small Business eAccount BMO Small Business Banking Plan
Monthly fee $0 $9.50, free with a minimum balance of $4,000; new businesses (< 9 months of operation) pay no plan fee for the first three months
Included transactions Unlimited electronic transactions 15 monthly transactions, unlimited transfers
Cheque deposits $3.50 + $0.20/item $1/transaction over limit; Cheque plan: 20 items included, Cash plan: 10 items included; $0.20 per additional item;
Cash deposits $3.50 + $2-5 per $1,000 if cash $1/transaction over limit; Cheque plan: $1,000 notes deposit included, cash plan: $4,000 notes deposit included; $2.25/$1000 for notes deposited over plan limits, $2.25/$100 for coins deposited over plan limit
Withdrawals $1.50 + cost of cheque if needed $1/transaction over limit + cost of cheque

I do practically of my banking online, and I expect the business will be similar. Because RBC had no monthly fees to start with, free electronic transactions, and another person I know recommended RBC’s online interface, I decided to open an account and see what it was like.

I called the bank and set up an appointment on the same day. It took us one hour to set up profiles and bank accounts because I had never banked at RBC before. I brought my Articles of Incorporation and two pieces of government identification. A senior account manager asked me questions about what I planned to do in business, photocopied my documentation, and walked me through the forms. We set up a chequing account and a savings account (no monthly fee, two debits, free transfers in, $0-$9,999 0.100% interest). He advised me to ask an accountant about the best way to move money into the business: whether it should be structured as a loan, and so on.

When we reviewed the paperwork, I noticed that one of the forms mentioned the banking resolution in Form A. We flipped through the client agreement that the account manager had given me, and we realized he’d given me the consumer banking agreement instead of the business one. Score one for reading closely! Unfortunately, he didn’t know of an electronic copy of the form, so I may have to retype the banking resolution.

The account manager was filling in for the person who normally does business accounts, so he apologized for not being able to set up a credit card for the business as well. I’ll need to follow up on the phone or in person some other time.

I’ll see how I end up using the account. I may open up a BMO account to give that a try, too.

Apparently, banks charge for deposit slips, but other people have used accounting software or printed out their own templates. Your mileage may vary. You can order cheques from places aside from your bank, which can help keep costs down. If I ever find myself using either, I’ll share my experiences!

People-centered entrepreneurship

Practically all Many of the books I’m reading about entrepreneurship assume that you start with a big idea for a product or service, and then you find and validate the market for it.

Many of the people I talk to start with the same assumptions, too. “Oh, I’ve always wanted to start my own business, but I’m waiting for the idea to hit me.”

Starting with the idea seems like putting the cart before the horse, and the cart is full of things you want instead of things other people want.

I was mindmapping where I’d like to start with this business experiment. Consulting is handy, but hourly billing’s not going to get me to where I want to go: a family-friendly business where value isn’t directly tied to time.

Every time I tried to come up with a snazzy business idea, though, I hit a brick wall. It didn’t feel right. It felt like I was approaching the challenge in the wrong way.

I thought: Well, if entrepreneurship is about going from having one boss to having a hundred bosses, maybe I can pick the kinds of bosses I’d like to work with. Maybe I should start by picking the kinds of people I’d like to have as clients, then looking for ways I can delight them, then looking for ways I can take advantage of my talents or skills to deliver more value than it costs me.

I figure that if I pick a segment of people who have demonstrated the willingness and ability to pay for products or services, and who have some idea of what they want, then that’s as good a place as any to start experimenting.

The wild “You don’t know what you want yet, but I’m creating it for you anyway” innovation can wait for when I have more business experience. In the beginning, it’s okay to take a well-known model and a well-known product, and look for ways I can put my own spin on it.

So I brainstormed personas representing some of the kinds of people I would love to learn more about and help out. Maybe I can make their lives better. Maybe I can help interesting people do interesting things. Here are some ideas:

  • Ive, the introverted independent
  • Ell, the Emacs enthusiast
  • Val, the visual thinker
  • Em, the excited entrepreneur
  • Quinn, the Quantified Self tracker
  • Pat, the practical parent
  • Bobby, the bashful blogger
  • Chris, the conference commando
  • Cathy, the cat cuddler

More details in this outline view of my mindmap

I “bump” into people like them often. Who knows, you might even identify with one of them. (Who? Tell me in the comments, or e-mail at [email protected] – I’d love to pick your brain!) Don’t see yourself there? Tell me what kind of person you are. =)

I think it would be great to look for small, cost-effective ways to make their (your!) life more awesome. I’m good at building systems, automating, sorting things out, and setting life up for constant improvement. There might be ways to scale across time or across more people. Hmm…

I described what I was thinking about to Mel Chua. She laughed and said it was like user-centered design. That made me think of Karen Quinn Fung, another friend of mine, whom I had met when she was working at the IBM User-Centered Design lab under Karel Vredenburg.

Where can I find more business/entrepreneurship books that start with people first instead of assuming you’ve got some genius idea? =) (Lean Startup is somewhat related to this because of pivots and watching how people actually work…)

It’s okay to not know

“Congratulations! What’s your new business about?” “What will you be working on?” “So, what do you do?”

I don’t know yet.

One of the most challenging aspects of starting something on your own is this uncertainty. We expect people to have clear, compact descriptions for what they do, even if we don’t understand it ourselves. For example, I got away with describing my work as, “Oh, I’m a web developer,” or “I’m a consultant on emerging technologies and collaboration,” or sometimes even the catch-all, “I work with IBM”. This last introduction often needed little explanation, eliciting an “Ahhh, I see,” from glazed-over networking contacts who probably filed me in their mental category for “people who do stuff with computers.”

What do I do? What do I want to do? What challenge do I want to address? What problem do I want to solve? What vision do I want to realize?

I’m not sure.

I’m tempted to be prematurely certain. I’ve listened to my fair share of “Oh, I’m working on a startup” people who confidently declare that their audience is “Well, everyone, I guess…” and who deflect further questions with, “We’re keeping our plans secret for now.”

I’m tempted to flee into the familiar. Consulting, web development with Drupal or Ruby on Rails… People ask me for these services, and it would be easy to focus on that: well-defined, well-understood. I know I can deliver when it comes to that. I also know that those services won’t take me all the way to where I want to go.

It’s okay to be uncertain. It’s better to admit that I’m figuring things out than to fake this. It’s better to draw people into the experiment than to present a façade. It’s all right to say the words that terrify most people when they try to use those words themselves: I don’t know.

Besides, it’ll be fun to find out.

I might not see the light at the end of the tunnel, but I can figure out some of the steps along the way. Writing is my favourite tool for figuring out complex branches. I want to write about what I’m learning: entrepreneurship, the steps to setting up shop, ways to figure out what you want to do with your life (or at least the next year).

This is a good time, a useful time. I shouldn’t rush out of it. I deal with this scale of uncertainty rarely. I never agonized over what course to take in university. I’ve been into computers since childhood. I remember the ups and downs of searching for a research topic for my master’s thesis, but I had a supervisor’s help. Even marriage was the logical (and emotional =) ) follow-through on a relationship that was already clearly a good thing. IBM was the same. This entrepreneurship, this uncertainty – this is me stepping up to bigger risks and bigger opportunities for discovery, having done well with the training wheels of past circumstances.

It’s not actually that scary when I can call the uncertainty out of the fog and name it. I know it’s there. I know it’s normal. I know it will pass, too. Each step I take throws light on something, even though some steps add more questions. If I do this right, each step won’t be about getting closer to a definitive “I know this to be forever true”, but rather towards springboards for more experimentation.