What it costs to quit your job to start a business

Anyone who has ever daydreamed about being their own boss only has to watch an episode of Dragon’s Den to see just how challenging launching a business from scratch can be.

While many great companies start with little more than a basic idea, in many cases it’s how those ideas are developed, articulated and then pitched to people with venture capital or some other source of funding that can make a real difference. In other cases, though, technology has matured to a point where the ability to set up an online shop of some kind or another has been essentially democratized and open to everyone.

You’ll still need money to make a go of an online business, especially if you give up your day job. The question is how much, and how you’ll learn what you need to do with whatever savings you can put together.

The difficulty in answering those questions has probably stopped more than one entrepreneur in his or her tracks. However, there is a growing body of data available, along with services like Planswell and Course Compare, that any entrepreneur can use to start developing a more informed strategy that will lead to a viable online business.

Earlier this month, an e-commerce software firm called Sellics released a benchmark study that offered a cross-Canada look at the various numbers that should be factored in depending on where you decide to set up an online shop.

This might seem a bit strange at first. After all, one of the advantages of creating a digital business is that it can theoretically operate on a global basis, right? Behind the scenes, however, entrepreneurs need to think through everything from how much salary to sock away to the moment they should walk into their boss’s office and declare, ‘I quit!’

The Sellics study began by pinpointing cities with a strong existing online business presence, as well as locations that are becoming increasingly popular with web entrepreneurs. The research is split into two sections; the first section looks at the online venture infrastructure, and the second section looks at the cost of both living and launching a new business. Cities are scored on factors such as access to financing, average setup fees, potential unemployment benefits and (not surprisingly) how popular online shopping is in that area.

Here are the overall results, with Quebec City emerging as the best place to start an online business when you balance all the various factors together:

What’s great about this research is that it looks at launching an online business based on putting money away rather than going cap-in-hand to VCs or a bank. If you’re living in Quebec City, for instance, you could get started in less than six months, or just over four and a half months to be precise, if you were able to save just over $19,000 to get started.

If you can get unemployment benefits, the picture changes significantly. In fact, based on the global versions of this research, Sellics concluded that 17 cities across Canada, France, Belgium, Italy, Norway, Finland and Switzerland offer sufficient unemployment benefits so that if an individual was laid off from his job, they could launch an online business without any savings.

As with any research, of course, you need to look beyond the surface to really make use of the data. While Toronto ranked last in the overall study, for example, it’s by no means a bad place to start an online business. Its position is based in part on the higher cost of living versus, say, Winnipeg. What’s not mentioned here is the access those in Toronto might have to accelerator programs and other resources that be highly useful when launching any kind of startup.

The second gap here is the role of financial planning in positioning a would-be entrepreneur for success. Relying on unemployment benefits or money stashed in a shoebox is one thing, but doing the groundwork to understand what it really costs to maintain your lifestyle will allow anyone with a dream to have a better chance of realizing it. Financial planning gives you a head start on entrepreneurialism because it means you’re better prepared for the unexpected — like when you suddenly realize you have to go all-in on an online business rather than maintain it as a side-hustle.

Finally, it takes more than money to succeed in business. It takes knowledge, especially in an area like e-commerce where developing a great online customer experience is essential. That’s why Course Compare helps accelerate the process of learning what you need in everything from UX design to web development, data science, product management and more.

Hopefully more Canadians will look at this data and realize that starting an online business is more doable than they realized — and then work with Planswell and Course Compare to actually make it happen.

Course Compare is Canada’s marketplace for education. If you’re interested in learning in-demand digital skills, you can explore web development courses, data science courses, digital marketing courses, social media marketing courses, UX design courses and more at CourseCompare.ca.