If you have a great idea and have decided to turn it into a business then good for you! Did you know that you are not alone; every week hundreds of Australians begin the start-up business journey but having a great idea and having a great business are two different things, so let’s not get ahead of ourselves.
The idea of being your own boss and starting your own business is an attractive one that many budding entrepreneurs wish to undertake. And us Aussies have always applauded the one who decides to have a go! However, more than 60% of small businesses in Australia close within the first three years. A significant factor in this, is failing to adequately research and prepare in the early stages.
Below, we have outlined some – but certainly not all – key things to consider prior to starting your business ownership journey.
Before starting your own business you need to determine how you will structure your business. Will you be a sole trader, a partnership, company or trust? All have different legal obligations and are taxed differently.
For example, if you operate as a sole trader you can use your individual tax file number (TFN) whereas partnerships, companies, and trusts need a separate TFN.
You will also likely need to apply for an Australian Business Number (ABN), and potentially register for Goods & Services Tax (GST) and if you will be employing people Pay as you go Withholding (PAYGW) and Single Touch Payroll (STP.)
As you can tell, there are a lot of new terms that you, as a business owner, will have to become familiar with. This is where seeking expert advice prior to starting your journey, is invaluable.
Have you given any thought to your business name? Is it easy to understand and will people know what you do when they see your business name? What about colours, a logo and potentially even a catch phrase? This is a very important step in starting your own business as it is the first thing potential customers will see and will play an important role in all future marketing material. There are also legal aspects to consider such as registering your business name with the Australian Securities and Investments Commission (ASIC) and any trademarks with other relevant legal authorities.
Business Advice and Support
Starting and building your business can be a lonely experience. So, before you start your business make sure you have access to advice and support from people who have started and built their own successful business. Whether it is a family member, friend or former colleague that has been through their own journey, it is important to find a person who can act as a mentor.
Looking at similar businesses can be helpful in determining your pricing structure and marketing strategy as well as identify any gaps in the market your business might fill. Does your product or service stand out from current market participants? Are your planning on a lower cost strategy or trying to differentiate from what is currently available?
Record Keeping & Compliance
Accurate and up to date financial records are vitally important. Not only are they necessary for complying with Income Tax Return (ITR), BAS and STP lodgement requirements they also assist you in understanding how your business is performing. Will you have enough cashflow for the next 3 months? Is Widget A making a profit but Widget B causing a loss? By understanding the ins and outs of your business, you are more likely to be able to optimise the profit making areas and reduce excess costs.
Having a separate account for your business can make record keeping easier and help you see at a glance the financial health of your business while helping you to manage your cash flow. It can also be a good idea to set up another bank account that you only use for the purpose of putting money aside for GST. So when your BAS is due you’ll have the money there to pay it.
Technology and Equipment
Technology plays a vital role in almost every business these days. The right technology can set your small business on the path to success. You need to think about how you’ll do business to know what kind of software or apps to employ. For example; Does your idea require a mobile and customer focused work force? There are a multitude of different apps available at minimal entry level cost to help you manage both your work-force and your customer service; at the same time even.
If you don’t have the funds to buy all the IT equipment you need you may be able to subscribe to some of it (with infrastructure as a service). If you already have all the equipment you need you might wish to look at ways of protecting such assets through business insurance, and the all-important data therein with putting in place back-ups and other disaster recovery measures.
Advisors such as accountants can give you more clarity about how to structure and start your business, so you avoid some of the time consuming and costly mistakes.
They can also be helpful in ensuring you meet tax and legal obligations. Sitting down and speaking with an accountant before starting a business will help ensure your business is set up properly and has the foundations in place to help you succeed.
Prepare as well as you can before you start, seek advice and support from people who have started a business and guidance from a professional accountant and be prepared to make tweaks and changes as you learn.
Also, there are no shortcuts however with the right support, advice and structure in place before you start your business, you’ll eliminate a lot of the mistakes many businesses make which results in them failing.
Please keep in mind there are many other factors to be aware of before starting your business such as business plans, marketing and so on. If you would like in-depth advice based on your own circumstances to give your business the best chance of success call us at CHN Partners on 03 9870 1300 or email us here