How to Decide Where to Start Your Online Business

It dawned on 21-year-old Alex Lewkowict that the 9-to-5, and college, was not for him, one day in an American History class. “It was my absolute favourite topic to learn about and we spent 15 minutes talking about the civil war before moving onto the next topic,” he says. “I was uninspired and just felt like I was wasting my time.”

Instead, he traded the relative stability and predictable trajectory of college life for the freedom—and much longer hours—as his own boss. “Now I usually get to work at 9:30 or 10 am and we’ll stay most days past 10 o’clock. Some days, 11 pm,” he says.

Three years ago, he and his older brother Sam both dropped out of college in Montreal to start up an e-commerce men’s skincare business. It’s been a bumpy ride. They spent their first two years with no revenue while they figured out a business plan, a name, and secured funding from local investors. Their company Black Wolf launched in June of this year and they say they’ve tripled sales every month since.

It’s the kind of move that involved a major risk-benefit analysis. “I wouldn’t do it 10 years from now when I have a family. I mean, I might, but it’s much more risky. At 23 when we have no family, no responsibilities, very few expenses, to us it was a no-brainer to get started,” says Sam.

One of the many things the Lewkowict brothers considered was where to base their business. E-commerce ventures can be run from nearly anywhere. Black Wolf manufactures its product in the US and sells most of it in America, with about five percent sold into Canada. Where you set up shop can be just as important as what kind of business you’re starting.

Research out this week ranks Montreal, the place where the Lewkowict brothers started their entrepreneurial journey, as the third best place out of the 7 best Canadian cities for launching an online business. The study selected places with a strong existing community of web entrepreneurs and online infrastructure. Other factors include the cost of living as well as unemployment benefits.

According to their metrics, Quebec City is the best city to be in if you want to quit your job and launch an e-commerce venture. People there need to save $24,618 or the rough equivalent of 4.6 months salary, based on the average wage in that city.

Although they started in Montreal, Sam and Alex decided to move the business to Toronto last November—a city that ranks only seventh in Canada and doesn’t even crack the global top ten. Even though relocating doubled their cost of living, they felt that they needed to tap into a bigger talent pool to be able to grow their business. They virtually eliminated their overhead costs by sharing existing office space with their branding agency (rent-free), which is invested in their company. And to deal with the exceptional price tag that comes with living in Toronto—they got creative by couchsurfing. They eventually found a more sustainable fix in August by getting a roommate.

“That solved all of our cost issues and as a result we have much better talent available to us here in Toronto. As an entrepreneur you want to find the best city to go to, the best talent.” He adds that “the costs are higher but you have to figure out a way to get around it. You live in a closet if you have to. Because ultimately it will pay off.”

Alex and Sam are part of a growing trend across Canada, with an increasing number of people who identify as self-employed. Canada-wide, the number of self-employed was at 12 percent in 1977 and has risen gradually to 15 percent in 2017, with peaks during recessions and ensuing troughs when they’re over, before resuming a slow upward climb. To give you an idea of the general trend, in 2013 there were more than 2.7 million self-employed Canadians and that number rose to more than 2.8 million in 2017.

But the increase in so-called precarious employment and the rise of the gig economy may be skewing the statistics. It’s not clear from the data how many are choosing self-employment. “Many ‘entrepreneurs’ are taking this route simply because there are fewer decent jobs that provide a living wage and benefits,” Canadian Labour Congress Senior Researcher Emily Norgang told FREE.

The way that employment statistics are collected in Canada means there are cases where Uber drivers and telephone technicians are being incorrectly classified as ‘self-employed’ when in reality they are working for someone else, but without the benefit of a guaranteed minimum wage, paid vacation, EI and CPP. Norgang says the gig economy related to platforms like Uber and Skip The Dishes is more prevalent in urban centres where those services operate, like Toronto and Montreal.

Alex and Sam say they feel “150 percent” satisfied with their decision to forego the 9-5, but they’ll be the first to tell you that straying from the beaten path has been a real challenge. “It’s a roller coaster of emotions. There are a lot of dark days. There are days where you feel like it’s the end of the world,” says Sam. “You have to push through and persevere through the great days and the shit days because eventually, if you have a good product and you’re competent enough, you have a good shot at being successful.”

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