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Home  >  Guides to grow your business  >  Global business expansion  

What to consider when starting a business in Canada

 

If you’re looking to expand your business overseas, Canada offers bustling cities, captive small towns, low corporate tax rates and some of the world’s biggest marketplaces.

 

 

Small and medium businesses account for almost half of all employment across Canada, and with low corporate tax rates and some of the world’s most stable banks, it is often cited as one of the best places to start a new business. 

So, if you’ve decided to go global with your side hustle and set up in Canada, here are a few things to think about.

 

Consider the pros and cons

 

Though commonly listed as one of the top destinations outside of Europe to set up a new company, it’s important that you weigh up the pros and cons of venturing across the Atlantic to set up shop, whether that be in physical form, an online store or via a marketplace.

With 37 million inhabitants – some in densely populated cities, others in icy, far-flung corners – Canada may not seem like the most manageable market in the world, but it has plenty of attractions. Business people in the UK will appreciate the similarities in legal and business practice, the strength of its economy and its use of the English language.

One obstacle that an outsider must consider when looking to set up a business in Canada is the autonomy each province has in terms of taxation and company registration. Registering your new corporation under federal law may seem simpler than registering it individually in each province, but if you don’t have Canadian residency, the provincial option could prove easier.

Under federal law, at least 25 per cent of a corporation’s directors need to be resident in Canada and if there are fewer than four directors one of them must be resident in Canada. The alternative is to take the provincial approach – each Canadian province has its own residency requirements with regards to corporations and there is no residency requirement at all for directors of corporations registered in British Columbia, New Brunswick, Nova Scotia, Prince Edward Island or Quebec. 

To help those looking to get started, several provinces have dedicated programmes designed to make it easier for people to move to Canada and set up a business

 

Work out your costs

 

Thinking about costs early on will mean business struggles are less likely to occur further down the line. Your location can impact your expenses greatly – as with anywhere else in the world, some of Canada’s cities are more expensive than others. If a big city start-up is the route you want to take, be prepared to part with more of your money than if you found a small town location. One could offer greater footfall, better logistics and exposure, whereas the other presents a more captive audience, less competition and possibly more opportunities.

As a non-resident, you may need to factor in permit and licence costs, as well as registration fees for the province in which you’ve chosen to set up. It’s important to separate outgoings in order to identify your essential, optional and ongoing costs, on top of initial one-off payments, especially when breaking into a new, overseas market. 

Initial business costs in Canada can be as low as CAD$1,000, though the average small business owner spends between CAD$5,000–10,000 to initially set up their small company, according to Canada Startups.

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Is there a demand for your business?

 

Once you’ve crunched your numbers, it may seem affordable to start a business in Canada, but without demand for your offering, the effort you put into budgeting could be wasted. To get an idea of how well your business could perform, it’s well worth taking a look at Canada’s business sector performance. The Government of Canada website houses business statistics that can be used to give you a better idea of the competition and financial performance of your industry.

If Canada represents new territory for you, canadianvisa.org lists five of the top business sectors for immigrants in Canada, which includes:

  • Agriculture
  • Accommodation and food services
  • Wholesale and retail
  • Construction
  • Professional, scientific and technical services

Such broad coverage presents great potential to establish your brand. 

Research further to gain an insight into supporting sectors that may also help attract your desired audience and take an informed view on how the competition operates – are they online, do they supply larger stores, are they small independent businesses.

 

Identify your marketplace

 

If you’re looking to sell online, Canada could represent a viable market, with 96 per cent of Canadians now connected to the internet. Though slow adopters, eight in 10 shop online and, according to Canada Post’s 2016 research, more than half are happy to make cross-border purchases. 

It’s no surprise that Amazon and eBay account for two of the country’s top five e-commerce sites, but in the marketplace space, there are a number of other players.

Kijiji attracts almost 56 million visitors per month and is Canada’s number one classifieds site – and the eighth biggest in the world. 

Newegg was established in Canada in 2009 following success in the US. With 3 million monthly visitors, Newegg Canada appeals to online shoppers looking for electrical, home, automotive and health products.

Perhaps better known are Best Buy Marketplace and Walmart Canada Marketplace, with 32 and 33 million monthly visitors respectively. Though the former is a giant when it comes to consumer electronics in the US, Best Buy Canada offers products in a wealth of categories, from travel and baby products to home appliances and furnishings. Walmart prides itself on being the world’s largest omnichannel retailer, and as such puts product quality at the forefront of its operations. Though it takes a referral fee from sold items, it doesn’t charge set-up or monthly fees.

 

Find a location to suit your brand

 

The best place to start a business in Canada largely depends on what its nature will be. Some cities boast geographical advantages, such as Vancouver’s relative proximity to Seattle and Silicon Valley, while others are beacons for start-ups, such as Waterloo, believed to have the densest population of start-ups outside of Silicon Valley.

With a multicultural population of a little more than 6.2 million, Toronto has many powers at its disposal. It’s home to Canada’s financial, industrial, tech and commercial sectors and houses a major centre for the arts. What’s more, it can be found less than a two-hour drive from the aforementioned start-up hub of Waterloo, and a 90-minute flight from New York.

Further west, Alberta plays host to Edmonton and Calgary. The former, most commonly associated with the energy sector, is a fast-growing city with lots of room for small businesses. The latter arguably offers a more established business landscape, so could offer more of a solid platform from which to launch.

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