How to Start a Business in Newfoundland and Labrador: Step-by-Step Guide for New Entrepreneurs
In Newfoundland and Labrador, business ownership is an important part of the economy. And small businesses constitute the majority of business ownership in this province.
Of the 15,200 small businesses in Newfoundland and Labrador in December 2021, more than 13,400 of them employed fewer than 20 people. More than 8,200 small businesses employed fewer than five people.
If you are thinking of joining the ranks of small businesses in Newfoundland and Labrador, our comprehensive guide on how to start a business in Newfoundland and Labrador will help you move from idea to your first paying customer. (We even have advice for coming up with a winning business idea!)
Step #1: Generating a Winning Business Idea in Newfoundland and Labrador
Putting together a great business idea is challenging. But don’t let fear and frustration leave you frozen in place. Let the business ideas flow freely. Some of them might be terrible. But some might end up being great!
Everything starts with generating an idea for your Newfoundland and Labrador business. Here are some tips that can spark your creative side.
Start With Newfoundland and Labrador’s Top Industries
Newfoundland and Labrador is known as having a unique culture that nowhere else in the world can quite match. Its rugged beauty is like a postcard for eastern Canada.
Newfoundland and Labrador is also known for having an economy focused on primary industries that rely on natural resources found in this province, including:
Some Newfoundland and Labrador businesses focus on manufacturing that involves these natural resources. Exporting these natural resources is a common business plan as well.
Additionally, the NL provincial government has identified six priority industry sectors that could provide a great foundation for entrepreneurs looking to start a business here. These sectors include:
Small Businesses Niches to Start in NL
If any of these industries seem interesting to you or seem to match your skills well, you may want to try to develop business ideas within that industry sector.
For a small business, tackling the industry sector in a general sense, where you are trying to serve all aspects of the industry, typically is a recipe for disaster. You’ll often be competing with large businesses if you try this.
Instead, you may want to start out by focusing on a niche area of the industry sector. Admittedly, you will have fewer potential customers in the niche area, but you should have fewer (and smaller) businesses competing with you, too.
For example, if you want to work in the fishing industry, rather than doing everything from selling fishing boats to servicing boats to selling fishing equipment to trucking harvested fish to the desired destination, you might want to focus on one segment of the fishing industry.
Maybe you would start with boat repair as your niche. You then could expand into more areas as your business grows and as your customers demand it.
Where Do I Start My Newfoundland and Labrador Business?
According to the 2021 census, Newfoundland and Labrador had a population of about 510,000 across the province. Of that population, about 40% of residents live in rural areas.
If your NL business idea focuses on industries that exist primarily in rural areas, such as farming or mining, you may want to try to locate close to your rural customers.
However, if your business idea in Newfoundland and Labrador requires access to technology, high-speed internet, and a large pool of employees with specific training, locating your business in an urban area may be the better option.
St. John’s is the capital of Newfoundland and Labrador, and it has a population of more than 185,000 people. It’s in the southeast corner of the province.
The island of Newfoundland does not have any bridge to connect it to Labrador or any other Canadian province. If you need vehicular access to the rest of Canada, you must travel by ferry.
Labrador, meanwhile, shares a border with Quebec, simplifying vehicular travel to other areas in Canada for your business. The Expedition 51 Highway, completed in June 2018, helps tremendously with traveling by vehicle between Quebec and Labrador, although it can be a rugged trip in spots with limited cellular service and amenities.
Step #2: Decide on a Type of Business in Newfoundland and Labrador
The next step involves choosing what you want your business to offer and how you want the business to appear to customers.
Offer Goods or Services
Businesses tend to offer items in one of two categories, although some operate in both categories.
When a business offers goods, the business sells tangible products. You might offer food, retail items, or photographs.
When a business offers services, the business does tasks for its customers. You may provide appliance repair, tutoring, or consultancy services.
Some businesses offer both goods and services. These businesses might sell the parts to repair small engines and then also install the parts.
Think about the skills you have when deciding between goods and services. If you are good at making things, you may want to offer your own products. If you have a knack for fixing things, offering services may be a better choice.
Some businesses that offer goods create the products themselves or assemble the products from parts they purchase. Others may purchase finished goods from elsewhere and sell these goods at retail. Services work in a similar manner. You could offer services that you perform yourself, or you could hire others to perform services on your behalf.
Offline or Online
Next, decide whether you want your primary means of interacting with customers to be in a physical location (offline) or digitally (online).
An offline business has a building that customers visit and that employees work from, such as a retail store, manufacturing facility, or restaurant. Offline businesses still need to have a digital presence, including a website, but this is not the primary means of customer interactions.
An online business operates primarily through a website, where customers would make appointments or order products from you. You might interact with customers at their location, such as with a mobile pet grooming business, but meeting customers face-to-face is less common.
The type of business you are running will play a role in choosing between online and offline. If you want to run a restaurant, trying to operate an online business only through deliveries would be a challenge, for example.
If you want to run an online business, you need a strong internet connection. Newfoundland and Labrador’s Connectivity Strategy is working to improve broadband internet and cellular availability throughout the province.
Things to Think About for Your Offline Newfoundland and Labrador Business
The most important aspect of an offline business in NL is the location. You want to be located near your customers as much as possible, making it convenient for them to visit you.
If you need access to shipping or major roads to move your products or to have access to goods, these considerations also should be part of your selection of a location.
You may purchase or rent your location. If your initial funding is limited, renting will be cheaper at first. However, you have less control over the configuration of the building when you are renting.
When customers are visiting your location, you must pay attention to things like building accessibility rules. Snow and ice removal must occur on the property to keep visitors safe.
Maintenance on the building is part of the ongoing cost of running an offline business. You also may need equipment, office furniture, and security, and costs are associated with all of these items.
Examples of Newfoundland Offline Businesses
Things to Think About for Your Online Newfoundland and Labrador Business
One of the biggest benefits of operating an online, digital-only business in NL is the ability to work from home. You can save money, because you don’t need a store or building where you can host customers.
If your home doesn’t have storage for inventory that you need for a digital store or a solid internet connection, you may need to rent space elsewhere. But you can still run a digital business, even if you must rent a location other than your home.
Although running an online-only business has quite a few advantages, it is important to be a great communicator in this type of business. Because customers don’t meet you face to face all that often, you must communicate well via telephone, email, social media, and text.
When customers don’t see you regularly, they may be less forgiving regarding mistakes or missed deadlines. You need to be disciplined about delivering what you promise to your customers, and you must communicate well.
Examples of Newfoundland Online Businesses
Seek Online Business Development Help
If you plan to operate a digital-only business, having a high-quality website is non-negotiable. If your website looks like you designed it in 15 minutes on a Saturday, your customers will give up on you even faster.
If you don’t have the skills to create your own website, you have a few options to find help. You could hire a local website developer on a freelance basis – thereby helping someone else’s small business in Newfoundland and Labrador!
You also can make use of a subscription website hosting service that runs in the cloud. These services help you from start to finish, including establishing a web address and putting together a sharp-looking website. Some cloud software services even focus on creating an online storefront.
Social Media and Digital Marketing for Your NL Business
Whether you are running an online or offline business, social media and digital marketing is vital to your hopes for success. Customers are far more likely to check your business out on the internet before they come into your store.
An active social media presence keeps your customers engaged, even when they aren’t actively using your goods and services. You can use humor on your social media posts, but avoid humor that people may find offensive.
The Newfoundland and Labrador provincial government offers help with digital marketing for business owners.
Try to use social media to interact with your customers, especially for an online business. If people see that you are responsive on social media, they are more likely to trust you.
Step #3: Prepare to Enter the Business Market in Newfoundland and Labrador
Starting a business in Newfoundland and Labrador can involve a few different avenues to success. There’s no one path that is a guarantee of generating profits. Select your path based on what fits with your lifestyle, your goals, and your skill set.
Finding Businesses for Sale in Newfoundland and Labrador
If you have focused your ideas for becoming an entrepreneur in Newfoundland and Labrador on starting a business from scratch, you may not know much about buying an existing business. However, this option is a good one for people who simply don’t have the time or energy to go through the process of creating a business out of nothing.
Multiple resources are available to help you figure out if purchasing an existing business is a useful option for you.
For example, you can check multiple websites that list businesses for sale throughout the NL province. You may find something interesting by researching these websites, and you can gain an idea of the cost of businesses.
For a bit more hands-on help, reaching out to a business broker is a great idea. A business broker focuses on the business market in Newfoundland and Labrador. This person knows exactly what is available, helping you match your preferences to an uncommon niche business.
Additionally, the broker may be able to help you facilitate the purchase of the business, working as a go-between to move the negotiations along faster.
Newfoundland and Labrador business brokers
Newfoundland and Labrador online marketplaces with businesses for sale
Newfoundland and Labrador businesses for sale by owner
Newfoundland and Labrador online real estate brokers
Step #4: What Government Business Regulations Must You Follow in Newfoundland and Labrador?
If you are hoping to start your business “under the radar” in Newfoundland and Labrador – and hoping the government might not notice you – we have some bad news for you. Government oversight and regulation are a part of operating a business in NL and elsewhere in Canada!
You don’t want to invest a lot of time and money moving in one direction for your NL business, only to find that you are violating laws and rules for business owners in the province. Instead, take note of the regulations we’ve listed here. If you need additional help, hire an attorney to keep you operating in a legal manner. Taking care of these issues now will save you a lot of headaches in the future.
Certainly, a few legal structures require far less government oversight than others, which may be good news for the type of business you want to start.
Select the Legal Structure for Your Newfoundland and Labrador Business
When creating your business structure in Newfoundland and Labrador, you have four options.
In Newfoundland and Labrador, businesses operating as a sole proprietorship or partnership do not need to register with the provincial government.
You can register a corporation with the NL provincial government. You also can incorporate a co-operative and register with the provincial government.
Select Your Newfoundland Business Name
If you need to register your business with the NL government, start by creating your official business name through the Newfoundland and Labrador Registry of Companies. According to the provincial government, the name needs to be descriptive, so customers can understand what your business does.
The name also needs to be distinctive, both in the words you use and in the phonetic pronunciation of those words. A business name like “Don’s Donuts” would not be legal if someone is already operating “Dawn’s Doughnuts,” for example.
If you are using the provincial name inside your business name, you can use “Newfoundland and Labrador” or “Newfoundland & Labrador” in the name.
You can create your business name in English only, in French only, or in English and French.
You can use the Companies and Deeds Online website from the NL provincial government to search for existing business names. This ensures you can avoid having a name that’s too similar to something that already exists.
Figure Out What Taxes Your Newfoundland Business May Owe
For business owners in Newfoundland and Labrador, the tax rate ranges between 3% and 15%.
A small business receives the rate of 3% for the first $500,000 of income earned for the business.
The general corporate tax rate for larger businesses is 15% in Newfoundland and Labrador, but you may qualify for a number of tax credits in the province.
For some additional information regarding business taxes, the federal government has advice for small business owners and those who are self-employed. Hiring an accountant or a CPA to help with managing your taxes is a good idea, too.
Figure Out What Licences and Permits Your Newfoundland Business Needs
Newfoundland and Labrador makes use of BizPaL to give business owners a database they can search for required licences and permits in the province.
If you are operating in St. John’s, you may need to comply with local permits and licences for businesses.
Figure Out What Business Laws Apply to Your Newfoundland Business
To operate legally as a business in Newfoundland and Labrador, you must follow the province’s laws and regulations. Here are some common regulations you should consider.
You probably will want to consult with an attorney about how these rules affect your new business – or if they apply to your business at all.
Step #5: Make an Estimate on Your NL Business’ Startup Costs
All entrepreneurs want to start making money as quickly as possible. Unfortunately, you probably won’t start seeing income until you spend some money. Nearly all businesses have startup costs before they can begin offering goods or services to customers.
Your startup expenses will vary quite a bit, depending on the business you are running. If you are operating a freelance writing business, you may be able to spend $300 on a used laptop and start working immediately. In a large manufacturing business, you may need hundreds of thousands of dollars of equipment before you can start.
Estimated Cost to Start Your NL Business
We put together some broad estimates of what it may cost to start and operate common businesses in Newfoundland and Labrador. These are simply estimates based on likely scenarios. Your costs could be significantly higher or lower, especially if you are in a niche area of an industry or if you have some equipment already in hand.
Startup Business Costs for Newfoundland and Labrador Businesses
When you are starting a business in NL, you may have certain startup costs, depending on the type of business you have in mind.
Once you are running the business in NL, you then will have costs that recur on a regular basis.
Step #6: Develop Your Business Plan
Although the provincial government in Newfoundland and Labrador does not require businesses to create an official business plan, this is an important docment for all entrepreneurs.
When some other people are skeptical about your idea for a business – and they will be – you can use the research you developed for your business plan to justify your business idea.
Why a Business Plan Is Important
A business plan takes a detailed look at your business idea, allowing you to make projections about income and expenses. The plan also lets you explain how you believe the business will operate and why it is an important option for the market in Newfoundland and Labrador.
The idea of starting a business can be exciting and scary at the same time. When people disagree with you or even mock you, you may become quite emotional and defensive about your idea, which is understandable.
One of the best parts of a business plan is that it takes emotion out of the argument for why you believe your business will be successful. It forces an analytical look at the market in Newfoundland and Labrador for your business’ industry and at how you believe your business will fit into it.
The business plan lets you sell your idea to skeptics and potential investors. Others can read the business plan and, ideally, come to share your vision for the business.
How to Make a Business Plan
The Newfoundland and Labrador branch of the Canadian Agricultural Partnership has an example of the minimum requirements you should have in your business plan. CBDC also has some advice for creating a business plan.
Some specific items you should include in your business plan include:
Why You Need a Business Plan
Even though the provincial government does not require that new businesses file a business plan, you may need one to take advantage of things your business may need.
For example, if you want to apply for business grants in Newfoundland and Labrador, you may need a business plan. Banks and investors likely will want to see your business plan before they would consider lending you money for your business venture.
If you need to hire employees with special skills or an office manager, such people may want to see the business plan to give them confidence that you are well-organized and that your business can have success.
Step #7: Seeking Funding for Your Business Venture
Ideally, people with plenty of money would be extremely willing to give you startup money for your new business idea. However, those people didn’t accumulate plenty of money by just giving it away haphazardly. You will need to convince investors of the viability of your business idea and about your trustworthiness as an entrepreneur.
Finding the seed money for your new business may end up being one of the most challenging aspects of starting a new business. We have some ideas of sources you can consider to find the funding you need.
Money You Don’t Have to Pay Back
If you can collect funds that you don’t have to pay back, your business will have a greater chance at success. If you have to borrow every penny for your business’ startup costs as loans, your business could drown in interest and principal payments before you have your first customer.
There are a few options for sourcing money that is not part of a loan.
Creative Sources of Money
Multiple sources of money for business startups are available, but you may need to do some work to find them. This type of money would not need paying back, much like your own money that you are placing in the business.
Loans
Loans are a common source of startup funding for businesses, but traditional business loans aren’t as easy to obtain as you may think. You may have to get creative in how you borrow money for the business.
Offering an Equity Share in Your Business
If you simply can’t raise enough money through the means we listed here, you may want to consider selling equity shares in your business. Through this method, you would sell partial ownership in the business to raise money.
This isn’t easy to do when you have a new business with no history of income or expenses. Most investors want to see a financial history for a business before they try to buy an ownership share. However, if you have a compelling business idea and a detailed business plan, you may be able to make it work.
Understand that when someone buys equity in your business, that person likely will want to have a role in running the business and in making business decisions. Choose your equity partners carefully.
Step #8: Don’t Be Afraid to Ask for Help
Starting a business in Newfoundland and Labrador almost certainly means you will be wearing numerous hats. However, that doesn’t mean you naturally are an expert in everything related to running a business.
When you don’t quite understand something, or when you are spending too much time on things that are not of interest to you, reach out to experts.
Step #9: Celebrate the Little Wins and Find Advice
When preparing to start a business in Newfoundland and Labrador, you have dozens of tasks to complete. As you focus on the big picture, it’s easy to forget to celebrate your accomplishments along the way.
Very few people have the fortitude to try to make a business idea become a reality. Keep moving forward, but don’t forget to give yourself credit for what you’ve accomplished already.
One of the ways to feel better about how the process is proceeding is by seeking advice and inspiration from other NL entrepreneurs. These people can share real-world experiences in the local business market that may help you quite a bit.
Business Networking Opportunities in Newfoundland and Labrador
Start by finding other business owners who like to network with each other. Networking can help you flesh out ideas and seek advice in an informal setting.
Business Associations and Organizations in Newfoundland and Labrador
Joining associations and organizations aimed at business owners in the province can provide additional networking opportunities. These memberships also may help you promote your business and gain more notoriety.
Business Awards and Competitions in Newfoundland and Labrador
Multiple types of business awards are available throughout the province. You may need to have some time operating as a business under your belt before you are eligible for awards, but receiving nominations for and winning awards can give your business a boost in the eyes of clients and customers.
Business Directories in Newfoundland and Labrador
Having your business appear in internet-based business directories makes it easier for customers to find you. Some options for directories in NL include:
Regularly check these business directories to ensure they have the latest information about your business, including contact information. If the directory has an old phone number for you, customers aren’t going to find you. Unfortunately, errors on these directories are common, so you may need to request corrections.
Step #10: Guard Against These 10 Common Business Mistakes
Learning from the mistakes of others sometimes can be a tremendous benefit for new business owners. Rather than making the mistakes themselves, the new owners know which pitfalls to watch for and avoid. Here are 10 common business mistakes that occur in Newfoundland and Labrador.
