Do you want to know how to legally open your own storefront business? Here’s the entire technical process from finding a location to zoning to getting your business license. First, I highly recommend you read the 2020 Ultimate Guide to Starting Your Own Business. Once you do that, the following procedure will make more sense. The following article is adapted for Halton Region but it will act as a template no matter where you are in Canada, and I believe, the United States.
As an important note, this article won’t talk about the specifics of your industry, which is why it is imperative you complete your business plan. That plan will outline all the industry specific steps you need to take.
Before looking for a storefront location for your business
Go to the city and see what you need to open your business
Visit the town/city hall and ask the front-desk clergy what you need to open your business. They’ll request a bunch of paperwork (the definitions are covered in the 2020 Ultimate Guide) before you can open a business.
Then walk to the zoning department (you can ask the clerk where to go as the zoning department is usually in the same building). Ask the zoning department what is necessary to get a zoning certificate of occupancy (the definition is provided in the guide as well).
Now, head on over the health department (again, you can ask the front-desk clerk). Ask the health department clerk what you need to be mindful of to open your business. The health department is usually very helpful and will give you lots of informative documents to ensure your business is safe for the public. Further, depending on your business, you may need a health department inspection prior to opening your business. Find out everything you need for them to pass you when it comes time for the inspection.
Make your business official
If you’re starting a sole proprietorship or general partnership, you simply have to register your business. This is around $60. If you’re starting a corporation, find a lawyer and they’ll take care of everything. Expect to pay roughly $1,500 for this service.
Begin looking for a storefront location
Find your real estate agent and let him find the location for you. Expect this to be free. The seller will pay the agent’s commission so his services are free for you most times.
While you’re searching for a good location
Find all the experts to help you open the shop
Find your accountant. He/she will be necessary for taxes. Meet with him/her to see how you should organize your files and receipts for bookkeeping. Determine what your tax year start and end dates should be and note that down somewhere. Expect this initial meeting to be free.
Find a few good contractors who’ll handle everything from construction to acquiring the building permit and inform them of your interest in opening a location. Ask for a quote if you already have a location and interior design idea in mind. Expect this initial meeting to be free.
Start working with the banks to get financing for your location
Open your business bank account at a bank. This can range from $6/month to $25/month. You need to this for 3 reasons. One, it’s easier for your accountant if your business and personal bank accounts are separated. Two, it’s required by law if you’re corporation. Three, it creates a “depositor relationship” with your bank. Because you’re depositing money with them, they become more approachable when it comes to getting a loan.
Talk to bankers about getting your business loan. Look for repayment terms that you can afford and that fit within your 2 year cash flow forecast (see the guide). Further, your loan should be large enough to start you up and cover you for 6 months of expenses (I’ll go into more detail in another article). Bring up everything you find with your small business consultant as well to get their opinion. The bank will ask for your business plan and 2 year cash flow forecast to check for feasibility. Basically, they’re looking for a zero risk deal for them. Convince them there’s virtually no risk to providing you a loan and they’ll hand it to you. The whole process of applying for loans shouldn’t cost you anything but blood, sweat, time and gas.
Start working on your marketing plan
In your down time, begin your marketing plan and knocking off as many tasks from your business plan as possible. There’s no reason to wait until the dead line to complete as many tasks as you can. For Dan “The Trillion Dollar Man” Peña, the only deadline is “as fast as humanly possible.”
At the same time, if you’re buying equipment for your shop, get as much of the specifications saved to your computer as you can. Your contractor will need those when working out how to install everything.
Once your real estate agent finds a place for you
Evaluate the location
Evaluate the storefront location to see if it’s to your liking. This will take a while, so spend time on it. The location of your business will be paramount to its success. Refer the location to your small business consultant to get their opinion of the area. Evaluating location is a whole article to itself. I’ll be working on that.
Get in touch with the zoning department again
Contact the zoning department to see if you can open your business there. If they allow it, go to the next step. If not, find another location. However, if you’re really set on this place, talk to the zoning department about getting a zoning variance so they can make an exception for you. This is an arduous process that I never undertook (I also don’t know the cost of this process), but if your location is worth it, go for it.
If you’re happy with the location
Get the lease agreement in place
Ask the real estate agent to get you a lease agreement from the landlord. Ask the real estate agent to ensure the following contingencies are in the contract:
- Two to four months of free rent. Explain that you’re a new business and would like to stay in the unit for a long time, but you need to save as much money as possible in the beginning to weather the first few months of business. Four months would be very helpful. Hopefully, you get it.
- Get a zoning contingency. If you sign the lease and the city refuses to give you zoning permission, the zoning contingency allows you to annul the lease contract. Usually, the landlord gives you up to a certain date to find out if the place is zoned, so get a verbal approval from the zoning department prior to this date.
While you’re getting the agreement worked out, you’ll be interacting with the landlord quite a bit. Check your gut when it comes to working with them. Getting stuck with a bad landlord is like getting stuck with an arrow in the middle of a sword fight. In other words, starting a business is already difficult. Having to deal with a difficult landlord only makes things harder.
While the lease is being worked out, start on the following
Apply for the zoning certificate of occupancy. In Halton Region, the application costs $100.
Call an insurance company to get your commercial insurance for general liability. Expect to pay about $1,000 per year.
Have the lawyer review the lease agreement. This will cost you extra, but if he catches anything funny in the agreement, you can ask your real estate agent for those clauses to be changed. Expect to pay another $1,200 for the lawyer’s help.
Schedule the contractors to visit the site and give you an updated quote and potential start time. With any down time, work out the interior store design with the contractor and perhaps, an interior designer. Make sure you design the interior so that it’s compliant with the health department’s requirements. The reason you want to work on the interior design so early is because you want the contractors to start as soon as they can after you get the keys. Otherwise, one or two months in free rent will go by while you’re designing your store.
Finalize the bank loan so can pay the contractors, the rent and any other start up cost outlined in your 2 year cash flow forecast.
Once the lease agreement is good to go
If you’re happy with the location, landlord, lease contract, and payment terms, and if you got zoning approval (at least verbal) and have access to the money to pay the lease, sign the contract! You’ve got your storefront location in your hand and you’ll be able to open it soon.
You have the location
I want to congratulate you. There are very few people around you who have accomplished what you just did. Look up and down the street of where you live. There are countless people who hate their jobs and yet continue to work there because they didn’t have the mindset or opportunities you currently have. Yet, you (yes, you!) get to start a future for yourself. It’ll be hard work, there’ll be pain and sadness, but in the end, the joys of success will outweigh it all if you can hold on.
Choose your contractor and send him off to get you the building permit (if it’s needed). You only need a building permit if you’re doing structural changes, but check that with the town’s building department.
Prior to starting construction, ask the contractor if there will be a lot of noise generated. Determine how long the noise will last for per day and how many days it will last for. If there is noise, ask your landlord to send out a notice to all residents informing them that there will be intermittent noise for a specific number of hours per day until a certain day. Before the noise actually starts, pay a courtesy visit to your neighbors and personally inform them of the noise situation. This will prevent any complaints between you and the other tenants (learned from experience…).
Now start the demolition and construction. Expect to put down 10% of the total construction cost upfront to the contractors.
While construction is ongoing, check your business plan to see if there are any tasks you can knock down while you’re waiting, such as purchasing equipment, executing your marketing strategy and finding suppliers / vendors for any of your supplies.
When construction is over, ensure you get your building permit (if it was needed), electrical permit (if any electrical work was done) and plumbing permit (if plumbing was done).
Call the health department and schedule an inspection of your unit. If you’ve already contacted them and designed your store to comply with their requirements, they’ll pass you quite easily.
Acquiring the business license
Head to the city and submit all the paperwork they requested. Expect to pay $222 (per year). Once that’s done, you can legally open your business. Your shop is ready to open, you have your finances to buoy you up, you are executing your marketing strategy and you have your business plan to keep you on the right track.
That’s it! You can now open your storefront business!
As before, talk to your mentor and execute your business plan and you’re on your way to a successful business.