Congratulations you have decided to take the leap and start your own business, this can be an exciting and daunting experience for most. There are many reasons why people choose to start their own business, whether it be to have a better work life balance, potentially earn more money or whatever your decision, there are common things to think about before commencing to give yourself the best chance at success. We have broken these down into 6 simple steps that we recommend that you follow to set yourself on the path for success.
Step 1 – Develop a business plan
You may associate a business plan with a multiple paged thick report with extreme detail. This does not need to be the case, a business plan can be as simple or as detailed as you like as. A business plan just really needs to be a formal record of what no doubt has been going on in your head for the past weeks, months or even years before you decided to take the plunge and start your business. This business plan should be an editable document like a word document so you can easily update or amend as you go, this is a living document and should be reviewed and updated over the life of your business. Below we have provided a short (not comprehensive) list of some key elements that we suggest you include in your business plan which should help get you started.:
Revenue – How will you be generating your income? How will you determine how much to charge your customers?
Customers – Who are your customers? Who is your target market and why? How will you reach your customers (e.g website, marketing), via contract (subcontractors)
Funding – How will you fund the initial start up costs of your business? Do you need to buy stock? Will you purchase a business? do you need finance to be able to do this?
Staffing – Is this a business that you can run on your own or do you need to employ staff? How will you recruit or select staff? What award is applicable in your industry? Do you need to use the services of an employment consultant?
Insurance – What Insurances will you need eg public liability, professional indemnity, workcover, personal income protection.
Set some goals – Set some long term and short term goals, financial goals are important but also include things like growth goals, customer goals, professional development and training etc. One important goal should be how much profit you intend on making. Make these goals big ambitious goals so you strive to reach them.
Step 2 – Choose you business Structure (Your legal entity that will be conducting the business activities)
What structure you will use to run your business will be what is right for not only the business but for you personally as a business owner. There may be some legal restrictions for your industry that require you to have certain business structures. It is important to research the different types of structures that you can chose from and contact a professional to discuss what would be the right structure for you. There are many options when creating a business structure each with their own benefits. Below is a list of possible structures and some benefits associated with each.
| Structure | Benefits |
| Sole Trader |
|
| Partnership |
|
| Company |
|
| Trust |
|
Step 3 – Licenses & Registrations
Once you have determined your structure you then need to get your registrations in order.
First of all you will need to apply for an ABN & Tax File Number (unless trading as a sole trader)
Next you need to determine whether you will need to register for GST, if you anticipate your annual turnover (sales, before any expenses) will be more than $75,000 then you are required to register for GST (or $150,000 for non-profit organisations). This needs to be reviewed constantly and if you anticipate that in any 12 month period you will exceed the $75,000 limit you need to register. Some other businesses like taxi or limousine travel for passengers are required to register for GST no matter what the turnover is. If you will be registered for GST you then need to decide if you will report and pay on a monthly, quarterly, or annual basis.
Then you need to determine what licensing or registrations you will need to conduct your business, do you need to register with any professional bodies or government organisations.
Step 4 – Find your Zero point
An important step when starting your business is finding your Zero point. Your zero point is how much money you would need to make to cover all your expenses. Prepare an expense budget, list all your expenses either monthly, quarterly or annually (e.g subscriptions, licensing etc) find out what your zero point is.
Step 5 – Record Keeping
How will you be invoicing? How will you be tracking your income and expenses? It is recommended that look into subscribing for some sort of accounting software. These can be quite inexpensive ranging from $10 – $49 per month, there are a lot of products out there now and almost all of them have free monthly trials. Do some research and try them out to see which one you like. Some commonly used ones are Xero, MYOB & Quickbooks. If you are registered for GST it is strongly recommended that you have one of these subscriptions for your business. All of these programs have the ability to link directly with your bank, are highly secure and bring in only transaction lines directly from your bank statements. These programs benefits are amazing, they provide users with up-to-date data, so you can track your business, performance in real time all at one place.
An important step when starting your business is finding your Zero point. Your zero point is how much money you would need to make to cover all your expenses. Prepare an expense budget, list all your expenses either monthly, quarterly or annually (e.g subscriptions, licensing etc) find out what your zero point is.
Step 6 – Open a bank account
Open a separate bank account for the business, a lot of banks at the time of writing are offering low or no fees on new accounts. It is important to open a separate bank account even if conducting business as a sole trader so you can keep the personal transactions to a minimum. The bank account will be the first indicator as to whether your business is doing well. All income and expenses relating to the business should be done via this bank account. It also makes the reporting and analysis functions ion your accounting software above in step 5 easier to maintain.
This is by no means a comprehensive list as each business and industry is unique, this is just a guide and hopefully will give you enough information and guidance to get your business started. Good luck on your future endeavours. If you would like to discuss this further, please do not hesitate to contact us using the contact us section of our website.