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      07-26-2012, 08:26 PM   #1
frenchM3dreamer
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Question starting a business in Alberta - any advice welcome !

Hi gents !
after 6 years of living in Edmonton and Fort McMurray, and realizing how Alberta is the place where just about anyone can start a business and be successful, the wife and I have decided to start something...
without going into too much details, a French company I know really really well (based in my hometown) exports their (somewhat high-end) products in North America through an official distributor.

Right now, he has no presence here, so here is my chance to get involved... he wants to start something here, and my connections to the French factory / manufacturer and being from the very place where these products are manufactured gives me (he & I think) an edge on someone who would just join the business with no background whatsoever.

I know that there are some very successful people on this forum, and i'm sure some of you could spare some advice...

first, from the business / paperwork aspect of things... registering a business is easy here (thinking of going as a corporation), but what else is involved with it that could come bite us in the a$$ later? I've started a list of things to do and various accounts to set up (GST, payroll, WCB possibly, insurance, etc). Any specifics to watch out for? Any recommendation on who to contact for that in Edmonton, i'm thinking as far as a good, reliable accountant for small business, possibly a lawyer (more on that later)?
We do have friends who run their own business (he as a contractor, she as a gas station owner), and have gotten some directions from them. I am also researching online through various websites, but anything more wouldn't hurt either.

now for the distributor <-> dealer relationship... so far our conversations have been limited to one phone call (albeit very encouraging), he's away for 1.5 months, which also works out well with the timeframe we had in mind, so i'm just trying to get as much info as possible to get educated before we start discussing again. He's the official distributor, which means (until i hear differently) that we would HAVE to go through him to import the goods to Canada. I will contact the French GM to confirm that.
Assuming so, I believe we have two options (please correct me if i'm wrong): either work for his business as employees and carry his brand name / logo / products. We take advantage of his knowledge, network, import capabilities, etc, but we are still employees, have to go by his rules and only get a small piece of the pie... which goes against the whole idea of starting a business to begin with...

Or, we become an independent dealer, no different than say a car dealership... buy the product from him and then run our own show locally. More independence, but also possibly more risk if things dont work out that well.
Has anyone dealt with something similar before? In this case, what kind of agreement is typically required between the distributor and the dealer? That's where the lawyer comes in... The distributor is obviously doing this to make money, and so are we... i dont want to end up with the sh*t end of the stick because of some fine prints in a 250-page contract...
say the distributor buys the goods for $100 (to his door) and market price is $150, how do the $50 get split? (I realize this is a very simplified way of looking at it)... in other words, what's the typical mark-up that a distributor (who also sells the product directly to the public in his area) would take on his costs when selling to his dealers?

My wife and I are not totally ignorant (Ph.D / P.Eng), but that doesnt us make us business-savvy either. Working in construction management for the last 6 years has given me the confidence and knowledge to approach all different kinds of people, from laborers to millionaire clients to engineers, and dealing with unpleasant situations at times, so i'm not overly worried about that part. But all the legal, financial and business aspects can get confusing and also take a business down very quickly if not handled properly... any advice from successful (or not) entrepreneurs here is welcome.

lastly, i'm not sure yet if we should go all out right off the bat, rent / lease a space for a showroom and set up a shop, or start off slow with a website, brochures, business cards and contacting potential buyers while maybe still keeping our current jobs to get a feel for the market...
Selling the product is more based on the experience than the mass consumption (think Bentley dealership vs. Honda), so being able to see, feel, experience the product might be more important for the potential buyer than the price itself (that's where a showroom would come in handy...)

anyway, i just realized i wrote a book here ! we're at a point where we think that it's "now or never"... 30, no kids, some substantial savings for the rainy days... I know that if we don't get involved, the distributor will set up a shop regardless within 6 months or less and be successful... so we might as well be part of it...
and if it doesnt work, well, we're in Alberta... i'm confident i could get a job back real' quick and get back on our feet within a year...

I'll welcome any advice you may offer, and if this turns out to be a successful venture, i might even offer a M3post discount one day

Thanks in advance,
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      07-26-2012, 09:42 PM   #2
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Assuming you choose to start your own company rather than be an employee, my general recommendation is to keep overhead as low as possible during the startup phase.

1. Get incorporated, and register for GST. This shouldn't cost you more than a few hundred dollars. Don't worry about getting registered for payroll, WCB and insurance unless you're planning to hire people right away or work in a high-accident environment, and at the very least until you've got point 2 handled.

2. Concentrate on nailing down your agreement with the manufacturer or distributor. Your whole business model hinges on the pricing, territory exclusivity (if that is possible), termination clause(s), and support (pre/post sales) you get from them, so until you've got this nailed down, don't spend money anywhere else. Also make sure you've got some sort of delivery timeline commitments so you don't end up selling stuff your manufacturer/distributor can't deliver on. Do not accept verbal commitments, make sure everything is in your agreement.

3. Once you've got your terms, put together a financial projection based on your margins and expected sales, costs of goods sold etc. Once you've got that in hand, you'll be able to figure out how much to spend on what and when. Do not spend money on offices, inventory etc., until you've got this worked out.

I hope this helps, and good luck with your new venture!

Last edited by sawzall; 07-26-2012 at 09:50 PM.
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      07-26-2012, 09:51 PM   #3
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Thanks for the advice..
Point 2 is bang-on and the biggest of my concerns right now... i have little to no experience with commercial contracts like this, hence why i was thinking of hiring a lawyer to review it.

i need to do more research on such contracts...

and trust me, the past 6 years have taught me that verbal agreements dont mean squat anymore...
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      07-27-2012, 09:23 AM   #4
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My only advice would be to enlist the services of a good lawyer when setting up the business and doing any contractual stuff (as you mentioned). It is very easy to get burned if you do not know what you are doing - a few bucks initially will be worth it in the long run.

Good work on getting out of FMM, it sucks way too many people in for life.
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      07-27-2012, 09:56 AM   #5
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haha, Fort Mc aint all that bad, i'm just tired of being away from the wife as she stays in Edmonton... it's time for us to actually "physically" live together !!

as i said, i have about 6 weeks to get all my ducks in a row before meeting with the distributor again. i'll definitely contact a lawyer before that. i know this is a good business venture with a potential for good profit, but i need to make sure my back is covered...

Thanks !
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      07-27-2012, 04:35 PM   #6
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Hey good luck in your new journey if you need any tax questions answered, my wife is a CA specialized in tax. I'm sure she can answer some questions for you
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      07-27-2012, 07:28 PM   #7
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thanks for the offer and the encouragement, i might take you up on that when the time comes
we have a meeting at the bank next week to get more info on that end of it (accounts, financing, etc...)

it's coming together, slowly but surely !
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      07-29-2012, 02:12 PM   #8
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Good luck on your business venture, it is not my area of expertise at all but I am sure you will rock it! Then you will be able to change your name to 'frenchM3'.
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      07-30-2012, 10:22 AM   #9
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haha, thanks for the kind words !
and yes, a M3 is definitely on my list if the business turns out to be successful. but by then the M4 will be out most likely
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      07-30-2012, 10:26 AM   #10
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I like to echo on Shizzle's first point about registering. While the incorporation work should be done by a knowledgable person, registering for tax accounts are not complicated so if you want to save some bucks, you can consider DIY.

Also, I would encourage you and your wife to go independent contractor rather than employees. First of all, being employees defeat the whole idea of starting a business (as you have put it correctly). In addition, since you and your wife will be "incorporated employees", the Canadian tax rules will punish you for that, at least until your business is big enough to go into the exception rules. Also, if your "employer" is a foreign company there are tax considerations for them as well. So I think at this stage it is better to stay independent.

Just my $0.02 for now.
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