You can turn a pink slip into a golden opportunity
Jimmy Pattison didn’t get rich working for somebody else. Nor did Bill Gates or Warren Buffett.
So maybe a pink slip isn’t just a pink slip. Maybe it’s also a ticket to a golden opportunity, especially if it comes with cash that can help turn the dream of starting your own business into reality.
With unemployment in Canada ballooning, more and more Canadians are doing just that with the ranks of the self-employed swelling by 35,000 in July and 75,000 since October, according to Statistics Canada.
Gurpreet Sangha and Kuldeep Singh had a different reason for striking out on their own a few years ago. The two drywallers had growing families and wanted to better provide for them, Sangha said.
So in late 2005 the two, along with Sangha’s father Ajit, started their own drywall company which has now turned into Crystal Consulting Inc., which operates out of an 8,000 squarefoot office in Surrey and has as many as 250 employees. Best of all, Sangha and his partners don’t have to do any drywalling themselves anymore.
The key was being prepared, Sangha said. Before the trio even bid on a project they gathered up a group of advisers, including a financial planner, a lawyer and an accountant, to help them get started and help them stay in business, Sangha said.
The financial planner insisted the company — then operating as a sole proprietorship — come up with its own detailed business plan. Included in the plan were cash-flow projections, which required some finesse to ensure the company wasn’t paying large amounts for material at a time when money wasn’t coming in — and growth projections. The partners also made a detailed list of their competitors’ strengths and weaknesses, information they had because they had worked for them in their careers.
Within a few months of starting up, and with a few smaller contracts under their belt, the company had the chance to bid on a Concord Pacific project to build 565 homes. They took the chance and won.
The key to their success? “Self-belief,” Sangha said.“You have to believe in what you are going to do because if you don’t, I don’t think you’ll get anywhere.”
You also have to be ready when opportunity strikes.
“There are a lot of opportunities that come our way but we need to know when it’s there for us and grab it,” Sangha said. “And that’s where self-belief and hard work comes into play. Because if you don’t believe in yourself, nine out of 10 times you’re just going to walk away from those opportunities.”
“When the right opportunity comes, if you’re ready for it don’t wait, because it may not come tomorrow,” he added.
While self-belief may have been the key to Crystal Consulting’s success, there are a lot of mundane details to think about before deciding to go out on your own, said Myron Knodel, director of tax and estate planning with Investors Group. For example, check with the local municipality to ensure all requirements are met, including getting a business licence. If you are using a business name, it may have to be registered.
And find out before you make your first sale if you have to charge the goods and services tax and the provincial sales tax. If you don’t, you may end up owing money to the government that you can’t recoup from your customers.
Learn the rules about payroll deductions if you have employees.
And keep detailed records of all expenses, so you can prepare your income tax return at the end of the year.
For those contemplating starting a business, check out www.smallbusinessbc.ca.
Income splitting opportunities, whether to incorporate and other tips for the self-employed will be covered in an upcoming MoneyWatch column.