Starting a Business in PEI: Step-by-Step Guide for Prince Edward Island Entrepreneurs
Although some people may think of Prince Edward Island as being primarily rural, it remains a great environment in which to start a business.
PEI’s economy traditionally relies on fishery, agriculture, and tourism. However, new entrepreneurs here don’t have to stick to those industries to have a chance at success.
Growing industries and segments of traditional industries that are going through modernization techniques work well for starting a business.
When you need some advice for taking your plan for a new business from the idea phase to the making money phase, our step-by-step guide on starting a business in PEI can help. (And if you don’t even have a business idea yet, our tips can help with that, too!)
Step #1: Come Up with Your PEI Business Idea
It’s important to note that not all business ideas are winners from the start. Some need a little tweaking and massaging to move toward the success stage.
Still, even a bad business idea is better than no idea at all. You can’t move forward with trying to start a new business in PEI until you have some sort of idea that you can begin researching and studying.
If you’re struggling with formulating a business idea, we have some tips you can use to spark things.
Know the Top Industries in Prince Edward Island
One of the most trusted ways to come up with a great business idea is to study the best industries in Prince Edward Island. These strong industries are already established, so you can piggyback on them when trying to find your footing.
Some established industries in PEI include fishing, agriculture, and tourism. PEI farmers have involvement in both plant- and animal-based agriculture. Those involved in fishing in PEI harvest fish, crab, lobster, oysters, and more.
Additionally, the Prince Edward Island provincial government has a list of nine emerging industries that are expanding and are ready to grow further. The industries are:
Ideas for Prince Edward Island Small Businesses
If one of these industries appeals to you, the next step is to try to figure out which area of the industry is worth considering as a business venture.
Rarely will a small business want to tackle the industry in a general manner, because most competitors in this area will be large businesses. Instead, it may be better to focus on a niche area of the industry where competitors will be fewer and where you can focus your investment dollars.
For example, because tourism is such a big part of the economy in PEI, you may want to work in a niche area of tourism. Maybe you create tours on the island for visitors. Maybe you can set up tee times at various golf courses and lodging for visitors to the island, so they can try different courses during a week-long golf trip. Maybe you want to start a restaurant that caters to tourists.
Where Is the Best Place to Start a Business in Prince Edward Island?
Prince Edward Island consists of many rural areas. At a population of about 154,000 people, the island has only one city of more than 17,000 people, which is Charlottetown that has a population of more than 52,000.
If you need to have access to high-tech resources or to large numbers of employees and customers, you may want to stick close to Charlottetown.
Locating a business that focuses on tourism or agriculture may be more appropriate in a rural area of Prince Edward Island. However, because PEI is easily Canada’s smallest province, covering about 5,700 square kilometres, traveling across the island for business doesn’t take a long time, regardless of where you are located.
If you need easy vehicular access to the Canadian mainland for your business, Prince Edward Island and New Brunswick connect through the 12.9-kilometre Confederation Bridge. Charlottetown is 55 kilometres from the Confederation Bridge. If you want to locate your business near the bridge, you’ll be in a rural area.
Step #2: Select a Type of Business
Once you have a few potential business ideas in mind, you are ready to think about what kind of business you may want to run. Choosing to be part of the fishery industry or the ag industry in PEI is only part of the process.
Products, Services, or Both
As a general rule, businesses provide goods or services. Some even provide both. Deciding whether you want to offer goods or services is a key step in moving things forward with your business idea.
Running a Business Offline or Online
Another option is to determine whether you want your primary means of business to be online or offline.
Some PEI businesses may sell products in a physical store and through a website. However, the majority of them will primarily work through either a digital location or a physical location.
If you are planning on running primarily an online business, you must have excellent internet reliability and speed. The provincial Prince Edward Island government has a plan in place to greatly expand high-speed internet availability on the island by 2025.
Considerations for Your PEI Physical Location Business
Some things to keep in mind for locating your business in Prince Edward Island include:
Examples of Offline Businesses in Prince Edward Island
Considerations for Your PEI Digital Business
Some items you should keep in mind when operating a digital business in Prince Edward Island include:
Examples of Digital-Only Online Businesses in Prince Edward Island
Seek Online Business Development Help in PEI
High quality websites are vital to any business in Prince Edward Island, but especially for online-only businesses. If your website doesn’t have a professional design, potential customers are likely to skip your site for another option.
Fortunately, you can find plenty of help with developing your website. Website hosting services give you help with purchasing a web address and with designing your website.
Should you want to develop an online store where you sell products sourced in Prince Edward Island, setting up an online storefront is also an easy process when you subscribe to a service.
Don’t Forget About Social Media and Digital Marketing
Modern businesses rely heavily on a strong social media presence and on digital marketing. Businesses in PEI are no different. Not only can digital marketing introduce you to local customers in PEI, but it may introduce your business to others across Canada.
Some of the items you should focus on when trying to build your social media presence include:
The Prince Edward Island provincial government offers assistance to new businesses and non-profits in developing a digital presence.
Step #3: Figure Out How You Want to Enter the PEI Market
The process of becoming an entrepreneur in Prince Edward Island opens up a few different avenues to you. Although most people focus on starting a business from nothing, there are other options that may fit your needs better.
New Business from Scratch
Starting a PEI business from scratch gives you the most control over the process from the idea phase to the day you have your first customer.
Advantages:
Disadvantages:
Buy a Business from Someone Else
People sell businesses regularly in Prince Edward Island. Buying an existing business has some advantages for those seeking to become an entrepreneur.
Advantages:
Disadvantages:
If you are buying an existing business, taking the owner’s word for financial performance and what assets are part of the sale is a bad idea. Instead, seek out an attorney and an accountant to verify the agreement.
You may want to seek the help of a business broker to facilitate the process of finding and purchasing an existing business, too. Brokers in PEI have an intimate knowledge of the local business environment, meaning they can help you find great businesses for sale that fit your skills and desires. Some of the best business brokers in Prince Edward Island include:
If you prefer to do some legwork regarding existing businesses for sale in Prince Edward Island before reaching out to a broker, several websites exist that showcase businesses for sale, including:
Businesses for sale by owner
Online marketplaces with businesses for sale
Online real estate brokers
Buy a Franchise as Your Business
Purchasing a franchise means you are buying a brand name business with the right to start and run a new location for that business in Prince Edward Island. The franchiser gives you help along the way.
Advantages:
Disadvantages:
To protect citizens of PEI from potential franchise scams, the provincial government passed the Franchises Act Regulations. Read through these rules to ensure you are protecting yourself when considering a franchise.
Start As a Side Hustle Business
A side hustle in PEI is a type of business that you run on a part-time basis, usually while you work another full-time job. It can involve working for yourself or working for a larger corporation on a freelance basis. You may find that your side hustle is expanding quickly, giving you the opportunity to turn it into a business that you will run full time.
Advantages:
Disadvantages:
Step #4: Government Regulations to Follow in Prince Edward Island
Regulations are just part of running a business anywhere in the world, and Prince Edward Island is no exception. You need to understand how these regulations affect your potential business idea, so you can plan accordingly and avoid problems.
Decide on a Legal Name
In most cases, you need to have a legal name for your business in Prince Edward Island. The name must be unique versus other businesses operating in the province, so you will need to request a name search that shows you can use your desired name.
When naming your business, you need to follow a few rules, including:
If you are operating a sole proprietorship in PEI, and if you are operating the business under your own name, you do not need to register the business. If you want to operate under a name other than your name, you will have to register your sole proprietorship and register your preferred name.
Additionally, Prince Edward Island is operating a new system for business name registration. All companies must re-register their businesses by mid-2023 in the Online Corporate Business Names Registry.
Decide on the Legal Structure for the Business
Pick among four different legal structures for operating your business in Prince Edward Island. You may want to hire a lawyer to help you figure out which legal structure is appropriate for your situation.
Understand the Taxes Your PEI Business Will Owe
In Prince Edward Island, the provincial tax rate for businesses is between 1% and 16%.
If you want to pay as little in business tax as possible – well, you’re not alone. You probably will want to consult an accountant to help you set up your PEI business to create the most advantageous tax structure that fits the type of business you are running. For more information, check out these resources:
The Prince Edward Island government offers several tax credits that may apply to your business.
Decide Whether You Need Businesses Licences and Permits in Prince Edward Island
Another area of government regulation occurs with any licences or permits you must hold to operate your business legally.
Business Laws in Prince Edward Island
Multiple laws are on the books with the PEI provincial government that affect businesses. You need to understand these laws, so you don’t end up violating them inadvertently.
If you find these explanations confusing, your attorney can help you figure out which PEI laws apply to the type of business you are running. For example, if you don’t have employees, many of the laws won’t affect your business.
Step #5: Estimate Your Startup Costs
When starting a new business, you will have multiple expenses before you can open your doors. Such costs are highly variable, depending on the type of business you’re running.
Estimated Cost to Start Certain Types of Businesses
Here are some common small business options in Prince Edward Island and broad estimates about the cost to start these businesses. Understand that your business’ actual costs could be much higher or lower than those listed here, especially if you’re operating in a niche market of a particular industry.
One-Time Business Costs in Prince Edward Island
Some common one-time costs that new business owners encounter in PEI include:
New businesses then have costs that occur regularly once they’re up and running, such as:
Step #6: Create a Detailed Business Plan
It certainly is exciting to have a business idea that you think will work. However, just because you think it will work doesn’t mean others will agree with you. (Especially people like your brother-in-law, who hates all of your ideas.)
You can use the creation of a business plan to showcase statistics and research that verify why your business idea is a good one. With a well-designed business plan, you may have so much proof about your idea’s potential that even your brother-in-law will be impressed.
Why a Business Plan Is Important
A business plan forces you to take a look at your business idea without having emotion and excitement cloud your judgment. Use research to show potential income generation and projected costs that are realistic. Some items to include in your business plan include:
Ultimately, your business plan serves as a blueprint for how you believe the business will perform and grow over a period of years. This is your opportunity to convince others of the viability of your business. Consequently, the more details and research-based information you can include, the better.
How to Construct a Business Plan
The Prince Edward Island provincial government has advice for creating a well-researched business plan. It should consist of two major sections.
Some entrepreneurs will want to include a marketing plan as part of the business plan, which explains how you will attempt to source customers. BDC has a marketing plan template you can borrow.
Benefits of a Business Plan
Beyond being able to explain your business idea in analytical terms to other people, you may need a business plan before you can take certain steps in developing your business, including:
Step #7: Finding Business Financing
Now for the really hard part of starting a business in PEI – finding the funding you need.
Although some new business ventures need far less startup money than others, nearly any business you want to start must have money before you are ready to seek clients or customers. Startup money pays for equipment, websites, inventory, and more.
Consider the following sources of business financing that you may be able to use.
Your Own Money
The idea of placing your own money into your business may seem pretty scary. However, if you are going to seek financing from others, such investors likely will be leery of giving you their money if you are not willing to place your own money in the venture. Ideas for contributing your own money include:
“Free” Money
Money rarely is free, but if you can find some sources of funding that you don’t have to pay back, this is one of the best ways to raise startup money. Such funding gives your business a significant boost toward a successful outcome. Options include:
Loans
Finding a source for a business loan, especially for a business you are starting from scratch, can be extremely challenging. If you are purchasing an existing business that has a history of income generation, you may have a better chance at obtaining a traditional bank loan for your business.
Sources for business loans you may want to research include:
Selling Equity in Your Business
Another option is to sell a chunk of ownership in your business in exchange for startup funding. You could incorporate your business and sell shares. You might work with a venture capitalist as well.
Consider this option carefully, as anyone who purchases shares in your business may want to have a significant say in how you operate the business. If you are starting a business so you can have complete control, selling equity may not be a good choice.
Step #8: Accept Help When You Need It
When you choose to start a business in PEI, you probably are looking to take advantage of some skills that you have. If your skills are repairing small engines or shooting beautiful photographs, you may not know all that much about the legal requirements of operating a business or about managing your financial books.
In situations where you don’t have much expertise, hiring professionals to help you is a good idea. Don’t just guess on how to handle certain items and risk making costly mistakes. Some areas where you may want to seek help include:
InnovationPEI has a list of funding options for entrepreneurs on the island province, including Business Supports. The Greater Charlottetown Area Chamber of Commerce has a summary of funding options as well.
Step #9: Don’t Forget to Note Your Accomplishments
Starting a business is not easy. Quite a few people may believe they have the idea for the perfect business in Prince Edward Island, but the majority of them never make it past the idea stage.
If you’re in the process of trying to set up your new business venture, it can feel overwhelming. You may start to wonder if the process will ever end.
When you are having these feelings, take a minute to think about the accomplishments you’ve had to date. You might be amazed at everything you’ve already done, which makes the tasks remaining on your list feel a little less daunting.
Additionally, you can find inspiration and advice in several places around Prince Edward Island. Help from business organizations and fellow entrepreneurs can give you the impetus you need to push you over the finish line, so you can begin serving customers and clients.
PEI Business Startup Resources
The Business Navigator from Prince Edward Island’s provincial government provides quite a bit of general advice on starting a business. Additional options with tips and advice come from InnovationPEI and from Startup PEI.
PEI Business Networking Opportunities
Sometimes, the best way to find advice and inspiration is from other entrepreneurs in Prince Edward Island. Through networking, you also may find other business ideas through which you can expand your offerings.
PEI Business Directories
A business directory is a website that collects a list of local PEI businesses, including contact information. Having your business listed on these directories – with the correct contact information – can help customers find you.
PEI Business Associations and Organizations
Look for organizations in Prince Edward Island that can help you meet fellow entrepreneurs and that can generate inspiration to match their accomplishments. Joining professional associations also can be helpful to your business’ success. You may find some employees or sourcing options for products through these groups.
PEI Business Awards and Competitions
Organizations across Prince Edward Island offer awards in various business categories. Receiving a nomination for an award or winning one can give your business a nice boost in the eyes of fellow entrepreneurs and customers.
If you are a member of a professional organization, such groups may also offer business awards that are worth exploring.
PEI Immigrant Business Entrepreneurs
The PEI provincial government has resources available to those who want to immigrate to Prince Edward Island with the idea of starting or buying a business.
Step #10: Ten Business Startup Mistakes to Avoid
Starting a business requires making some bold moves. However, such moves need to have some thought behind them. Rash decisions based on emotion are sure to lead to problems. If you want to avoid these types of issues in your business venture, start by avoiding these 10 common mistakes new business owners in Prince Edward Island make.
