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What is the main reason for small business failing in Canada? Should I start a small business in Canada?

+1 vote
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I have been working my whole life and I am tempted to open a business of my own. Somehow I feel that I could earn good money through starting my own business in canada. I am quite fed up of having to take order from my boss and having to commute so far for my job. Though I know it won't be easy for me to start a business from scratch, I still feel it is worth a try. I am not looking to start a giant company but a small family business would do.

Some of my co workers had started their own business and are doing just fine. Though they haven't become a millionaire or something but at least they seem quite self satisfied with what they are doing with their business. They say it is self fulfilling and gives them a sense of purpose in their business, rather than just blindly working for someone else. I am wondering even which type of business is best to start with. There are so many business opportunity I can think of but I can't be sure if that particular business can bring me good money or not. I do not want to risk all my hard earned money on some business which would lose money and cause me to go bankrupt. I only have one chance to make it right after which if I fail, I would be back to the rat race of going to work everyday for the rest of my life. What are the risk and chances of failure in starting my own business in canada?
asked in Gaspe by Victor Adams (127 points)

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2 Answers

0 votes
If you have a very steady job with high pay and job security in Canada, you do not need to start a small business. In fact, when you go to borrow money or apply for a house mortgage, the bank's will be more than willing to give it to people with high paying jobs, than to small business owners. The reason being that most small business fails within 6 months to 2 years and only 40% or less small business survives past 2 years in Canada. But if you feel that you do not like to work for others and being your own boss has always been your goals in life, then you have to learn everything you can fast and quick. Not only small business but bigger corporation also goes bankrupt here in canada due to changing times and customer preferences. Big companies like Sears, Target, Radio Shack, Mr Sub, Blackberry and many other corporations have gone out of business in Canada in the past years and mainly due to following reasons:

1.  Companies fail to recognise the changes and trends in the consumer market quick enough. They could not change their product and marketing strategy to adapt to ever changing needs of the customers. Even if they eventually did adapt to the right strategy, it has become a bit too late already, and the consumers have moved onto the other companies' products already.

2. Not listening to what the customers want in a product and instead focus what the company thinks the customers needs instead. Only those companies that listens well to their customers' voice and opinions were able to produce and improve on their existing products and increase their relationship with their customers.

3. Many companies selling the same thing in the market and no differentiation in their products. If every one sells the same thing then there is no uniqueness in the products. The customers are just getting rotated between the various companies. Good example will be restaurants selling same type of food and the number of customer are the same but they are just getting rotated between different restaurants.

4. Smaller business don't have enough resources and finances to compete with bigger corporation selling similar products in the market. Customers prefer to buy products from bigger corporation which offer returns and exchanges whereas smaller business usually don't allow returns or exchanges. The overhead and expense for such returns and exchanges are too much for small businesses to bear.

5. The bigger companies does heavy advertising and marketing for their products because they can afford it and this lifts the images of their company brands. Smaller business can't handle the cost of advertising and marketing because it eats into their thin margin of profits easily.

6. Small business do not have a profitable business module and proven stream of revenue. They are often running on very thin margin of profits and any disruption to that profit margin is enough for small business to go out of business.
answered by Business advice
0 votes
Watch video on "Tips on getting self employed and starting your own business in Canada":

answered by Self Employed Canada

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