My name is Mark Goodfield. Welcome to The Blunt Bean Counter ™, a blog that shares my thoughts on income taxes, finance and the psychology of money. I am a Chartered Professional Accountant. This blog is meant for everyone, but in particular for high net worth individuals and owners of private corporations. My posts are blunt, opinionated and even have a twist of humour/sarcasm. You've been warned. Please note the blog posts are time sensitive and subject to changes in legislation or law.

Monday, October 24, 2011

Advice for Entrepreneurs

In one of my blogs, I said that I have developed a sixth sense in “sifting out,” among the people I meet, those which will most likely be successful. Based on this comment, one of my readers suggested that I write a blog on the “distilled” advice I would provide to an entrepreneur starting a business. I really liked his/her suggestion and thus this blog was born. My comments, based on 25 years of observation are discussed below.

Personal Relationships

In my opinion, the most important issue facing any entrepreneur involved in a relationship or married, is their significant other. Starting a business requires a significant time commitment and comes with a large element of risk. If your significant other is not willing to support you both financially and spiritually, either your business or marriage/relationship is doomed. Where there is resistance to starting the venture, or the other person does not have the same risk threshold, they seem to just drain the enthusiasm and energy from the entrepreneur. Thus, in my opinion, if there is not buy in from your significant other, your chance for success is diminished before you start.

Be Honest With Yourself

The first thing you must ask yourself before you commence any business is; are you an entrepreneur by choice or circumstance? If it is by choice, move to the next paragraph. If your reason is circumstance, such as being laid off due to a recession, you must realize that unless you are starting a service industry or similar industry where you have portability of your clients or customers (i.e.: you start your own law practice and when the economy picks up, if you are hired by law firm, you can take your clients with you to the new firm), this will potentially be a lifelong commitment. If you cannot make a long-term commitment, do not start your business, as it will most likely be doomed to fail.

Business plans and cash flow statements

My first suggestion is to walk before you run. Make sure you start slowly and have everything you require in place. To ensure you have everything in place, you need a business plan and cash flow statement.

Developing a business plan forces you to consider all aspects of your new businesses from production to the marketing and professional fees you will incur. A business plan acts as an initial road map, and although it will change, it provides initial direction.

In almost all cases, the banks will require a business plan and statement of cash flow. For any new business, the revenue line is an educated guess at best, however, the expenses and cash outlays are fairly predictable and as such, you will have some cost certainty. Once you know your costs, you know the minimum amount of revenue you will require to pay off your creditors and lenders.

Partners and employees-Know Your Abilities

Most people are either sales oriented or business oriented. If you are strong in both aspects you have the best of both worlds. Whether you start with a partner or hire an employee later, know your strength. If you are a sales person hire a good bookkeeper or accountant to help you. If you are the business person, hire a good marketing person or get advice on how to market your product or service.

Type of business

If you are developing computer software or apps, you are entering an industry with few barriers to entry and your costs may be limited to the utilities in your basement. However, if you intend to start a service or manufacturing business you may have serious barriers to entry and financing issues.


Whether you are starting a services business or manufacturing business, you will likely require financing. Although you may be able to access some small business loans (research which loans are available to start-up businesses), financing is often problematic for a start-up business and, even when you can obtain financing, you will almost always require some personal capital. Thus, where possible, you should try to start your business after you have worked a few years and built some capital. If you are lucky enough to attract venture capital, the VC's will want to see that you have significant "skin" in the game. Many young entrepreneurs access family money, either as loans or as equity. However, since many start-up businesses fail, you should ensure that if you borrow or capitalize your business with money from your parents, you do not put their retirement plans in jeopardy.

Where possible, have a line of credit or capital cushion arranged in advance.


If you cannot afford to hire a marketing consultant to ensure that you have a market for your product or service, then utilize the internet for research and, more importantly, talk to people in the industry. Although some people may view you as the competition and avoid speaking to you, others benefited from a mentor when they started and may be willing to speak to you and, if you are lucky, they may be willing to provide some mentorship along the way. Either way, get out there and pound the pavement and speak to people.

Don’t discount your services or product

One of the biggest mistakes I have seen entrepreneurs make is discounting their services or products to get business. The problem with this is that your customers will refer you to their friends as a cheap provider and you will get referred customers who are only looking for discounted services. This cycle is very hard to break. Sell for a fair price, but don’t become known as the person with the “cheap prices” unless you can truly make money in that manner.

Keep Your Books Yourself

This is a bit of an unusual suggestion, but if possible you should initially keep your own books and learn about accounting. You may require a bookkeeper to assist you, but you will always be a better decision maker if you understand your own books. You do not want to be dependent on your bookkeeper.

Watch Your Accounts Receivable

It is imperative that you get in the habit of collecting your accounts receivable on a timely basis. This is important for both cash flow and establishing with your customers that you will not allow them to drag out payments. As you grow, you must print out your accounts receivable listing at least every 30 days and either follow up yourself or have your office assistant/A/R clerk call to promptly collect your overdue A/R.

Give it Time to Grow

Most businesses require three to five years to begin to mature and solidify. Thus, you will need patience and an understanding that you will not be “raking in the cash” for several years.

Your Psyche

Many entrepreneurs at some point in their business lives have been perilously close to bankruptcy or have actually had a business go bankrupt. While not always the case, entrepreneurs seem to have nerves or steel or at least give that impression. You may be able to be successful without those steely nerves, but they would be an attribute if you start a business, so you can face down the many challenges that will confront your business.

Post Mortem

It has been my experience that when entrepreneurs reflect upon their businesses, they almost all say that if they knew about the physical toll, long hours and financial stress they would endure, they would not have started their business.

But that is the wisdom or weariness of age. New entrepreneurs are driven and they have boundless energy and they do succeed in spite of the above noted risks and stresses. However, it is vitally important to plan and to try to implement or consider many of the factors I have noted above to make the journey a little less bumpy.

The BDC currently has a program to support young Canadian entrepreneurs in which they donate $1 for every time the above badge is downloaded

The blogs posted on The Blunt Bean Counter provide information of a general nature. These posts should not be considered specific advice; as each reader's personal financial situation is unique and fact specific. Please contact a professional advisor prior to implementing or acting upon any of the information contained in one of the blogs.


  1. after 26+years in health services industry (private sector) I am running out of marketing strategy .(even after hiring professional marketing consultants ) Due to change in economy top of the food chain market is not getting ROI therefore there is less to spend for that generation where our service industry depends on . I have not given up yet but bottom line is getting less and less. I have the nerves made of steel even though I am a woman enterprenuer .

  2. Hey Anon, why the qualifier about being a women with nerves of steel, I dont think men have that exclusive. The reality I see as an accountant is my clients have to continually adapt and change. I have done so a few different times in creating new niches or products etc. That being said, sometimes a business sector just changes and you cannot do anything about it. It then becomes a cost cutting exercise or worse. I hope for your sake things turn around or you find a niche within your niche.

  3. Hi Mark,

    I cannot agree with your comments more. My husband and I decided to purchase an incorporated business recently and it has been a real eye opener and roller coaster over the last year. We definitely have our moments, but we know that we are in this together. I have a question for you regarding health benefits (maybe this could be a future blog topic). We currently have an individual extended health plan (dental and perscrption coverage)under my husbands name that we have been paying for through the corporation as an expense (100%). We received some poor accounting advice and are currently making a change in accountants, but I am weary and would like to know the rules around this for taxes purposes. Thanks for all your help!

    1. Hi Anon

      Sorry, too complicated to respond here, but I will consider as topic on its own in the future.

  4. Hi Mark,

    I started a business (corporation) a few years ago, a business that I was not particularly passionate about but saw an opportunity, which I am now ready to move on from. However, I still have outstanding invoices with one supplier and I do not have all of the money to pay them. They are asking for payment and I'm not quite certain on how to approach it.

    Should I declare corporate bankruptcy in order to avoid paying? In order to do so I would assume I need a lawyer and am also concerned about how much this will cost. I understand I cannot simply dissolve a corporation if I have outstanding debts, is this correct?

    This supplier has been pretty shady in the past, requesting payment in cash, making errors on invoices, etc.

    What do you think the best approach is here?

    Thank you,


    1. Hi George

      This is a bankruptcy question. You need to see a trustee in bankruptcy about this, not my area of expertise.

  5. Target Canada should have perhaps meditated on #11 a little before they leaped. Less than two years and they call it?

  6. Hi Mark,

    My wife and I have several rental properties we personally own and manage. We live in an area with a depressed housing market and have started to rent homes from home owners and re-rent them to tenants to help reduce our risk. My wife is thinking of making a business out of it as it has proven to be profitable. At the moment we have been claiming the difference between what we pay the owners and what we rent to sub-letters for as rental income at the advice of our accountant. Wondering if this should be business income hence we would need to collect/ pay HST or is it fine to continue to claim as rental income?

    Thank you in advance,

    1. Hi Greg

      Sorry, I don't provide 2nd opinions on readers accountants.