Expect long hours, financial risk

Running a small business is no small feat

Entrepreneurship can be a boon for those struggling to pay the bills by providing an extra revenue stream but it clearly isn’t for everyone because it often means long hours and financial risk.

“The first year, I used to take calls at 5 a.m. because some members of my team are in a different country,” said Abraham Roy, the software programmer who founded Prince Edward Island-based Contacts-db, in an interview.

Even though he already had a bachelor’s degree in engineering and a post-graduate diploma in business administration, Roy put himself through Atlantic Canadian start-up accelerator Propel ICT’S 12-week entrepreneurship program.

“It’s really tough,” he said. “It’s like a crash MBA.”

Although self-employment, including part-time gigs, is up in Canada’s big provinces of Ontario, Quebec and British Columbia, it’s down as a percentage of the labour force in Atlantic Canada and has been dwindling for decades.

Provincial government programs provide financial and other support for would-be entrepreneurs. There are business accelerators to foster entrepreneurship.

But running a small business is no mean feat.

When he was still in his 20s, Michael Sanderson, now the acting director of the Saint Mary’s University Entrepreneurship Centre, set up one such business. It was 1998. The business was called Sandman Video. And it drove Sanderson to bankruptcy.

“It took me four years to drive it into the ground,” he said in an interview. “I took out a lot of loans … I didn’t know what I didn’t know.”

The video industry was then already in a steep decline. The young entrepreneur tried to be innovative, luring in customers from nearby office buildings with a weekend rental deal for movies.

“That worked – but it worked too well and wiped out my store of movies on Fridays and so there were no movies for my walk-in traffic,” he said. “If I had someone in distribution with me, it might have worked.”

Sanderson later started up a side venture, Chimeriam Productions, which made a short film for the Atlantic Film Festival.

In addition to the business risks that come with entrepreneurship, being self-employed can also result in a feast-or-famine rollercoaster of an income.

In a study published last year by financial software company Intuit Canada and the Emergent Research consulting firm, 59 per cent of the self-employed reported they didn’t have enough predictable income.

There are, though, up sides to self-employment. Starting a small business can provide a great deal of flexibility for the entrepreneur, rewards him or her based on performance, and allows the self-employed person to follow his or her passions.

“Life is too short to spend 40 years or 30 years of it – or whatever – doing something you don’t love,” said Sanderson.

Besides, being self-employed also comes with tax breaks.

The best bit of advice for those looking to go out on their own is to plan carefully before making the jump.

“You need to build a sustainable revenue model so that you can take home a salary and have retained earnings so that you can re-invest them in the business and grow it in scale,” said Sanderson.