Amherst Daily News
AMHERST - Setting up a new business, or taking one over, can be a slow process.
And for some, it could be that much slower if the person comes across some red tape.
"One might consider the process of opening a business slow," said Randy Smith, executive director of the Cumberland Business Development Corporation. "It depends on a number of things, including whether or not you have a business that you're not going to incorporate."
Smith uses an advertising company as an example, with one or two employees in a safe environment, of a business that wouldn't need to be incorporated.
One of the biggest things a person wanting to open a business has to do is create a business plan, which requires talking to an individual such as Smith, as well as a lawyer, an accountant and a banking institution.
Smith said people might find the business plan to be one of the biggest hurdles to overcome.
"A lot of people don't have much experience with a business plan. They haven't talked enough about it and haven't done enough research, so they may have to start the process over."
For Tony Hubert, the business plan was something he admits he didn't have much knowledge of and was one of the things that slowed down his opening of Croft Street Convenience (formerly D&J Convenience Store).
"When you go to set a business up, there's a lot more to it then one might think," he said from his store Tuesday during the Canadian Federation of Independent Business's inaugural Red Tape Awareness Week.
"First, you have to get that business plan together, which is needed by the bank. I didn't know what to do with the plan, and that was my own fault."
Hubert said two other roadblocks came with using the BDC out of Truro. He tried to go through Smith at CBDC but wasn't able to meet their deadlines.
"First, the corporation wanted me to use their lawyer, and I found that really odd. Lawyers are supposed to have a non-biased opinion, so how do you separate that," he said.
The second roadblock came when he had to apply for a licence.
"There were two different companies that did that sort of thing. When I got it done, the government lawyer said I couldn't use it, that I needed to use the most expensive one, but my lawyer said they would both get the same results," said Hubert.
"To me, that looked like a government kickback. Why would I have to use the most expensive company if it got the same results as the other?"
Dave McNairn, a partner with Hicks Lemoine in Amherst, said a number of things can stall a business startup.
"A key tip is consulting with a lawyer to make sure due diligence is done when buying a business," he said, noting the business should be up-to-date with Revenue Canada, as well as for workers compensation or money owed to employees.
"They should also look around if they're going to be financed through a bank or organization such as the BDC to make sure they're getting the best deal possible from the lender."
McNairn said lenders have different ideas on the types of security needed to finance a business, from mortgages to personal guarantees.
"If you're not incorporating a business and you have no assets, you might need personal securities."
If opening a new business, it's best to think about what type of business (sole proprieter, with a partner or incorporated) you're opening because of liability purposes, taxes and estate planning.
Using a convenience store as an example, McNairn said gasoline, lottery tickets and cigarettes need specific licences in order to be sold.
"If you want to sell lottery tickets and you don't have a licence until a month after you open, it can really hit your profits."