Despite popular opinion, starting a business from scratch involves far more than settling on a name and throwing open your doors - so what do you need to know?
According to the Australia Bureau of Statistics, more than 60% of small businesses cease operations entirely within their first three years of trading. One of the most common reasons that they fail is due to a lack of cash available to meet their expenses, particularly within the first six to twelve months - and these figures were issued before the arrival of Covid-19.
If you truly want to be the boss, then it’s important to know that it’s not all glitz and glamour. Starting a business requires analytical thinking, determined organisation, and detailed record keeping if you have a hope in hell of lasting six months, let alone turning a profit.
The good news is that with some planning and forethought, there’s no reason as to why you can’t become a homegrown success story - so where do you start?
Ten Things To Do When Starting A Business
Whether we like it or not, starting a business involves far more than one good idea followed by millions in sales. While this isn’t entirely impossible, doing well in business is more so about consistency, organisation, and of course - hard work.
Have A Business Plan - All budding entrepreneurs should think of a business plan as a road map to their goals. On paper, a good business plan identifies where you currently are, where you want to be, and your plan as to how to get there. It is a “living document” that will ideally grow, change and develop right alongside your business. Without identifying your goals, how do you hope to reach them? This is where the importance of a business plan comes into play.
Sort The Legal Stuff - Although it’s certainly not one of the “fun” parts of starting a business, getting your tax and legal obligations right the first time will save you a lot of pain further down the track. This also includes getting it right from the very beginning, such as settling on a business structure, organising an ABN, and registering for any applicable business names or trademarks if required. If you aren’t sure as to what your obligations are, ask for help.
Business Bank Accounts - Do yourself (or your bookkeeper) a favour and actively separate your business and personal spending or banking. While it may be convenient to use your own credit card when on the run to pay for business expenses, it’s not a great bookkeeping practice. If you’re operating as a partnership, company or trust, it’s also a legal requirement to keep a separate bank account for tax purposes in Australia.
Source An Accounting System - Good record keeping can help you protect your business, measure your performance and maximise profits. When we refer to keeping records, the term means the source documents - both physical and electronic - that specify transaction dates and amounts, legal agreements, and private customer and business details. This should be easily accessible and understandable, so invest in a cloud based program like Xero to get it right.
Settle On A Business Premises - While this may not apply to all brands or businesses, getting a business premises organised should be high on your list if you intend on providing physical goods or services. A lease is a legally binding contract, so it's important to thoroughly investigate the premises and lease document before you sign. Give yourself plenty of time to source the best location with the most favourable terms and conditions to avoid future pain.
Protect Yourself With Insurance - Any business faces a broad range of risks every time it opens its doors or even sells a product - think from fire, theft, damage and loss to being sued for injuries by a member of the public. The types of insurance for business available vary, and usually protect things like business assets, customers, employers, business owners and business earnings. When it comes to protecting your brand, don’t wait until it’s too late.
Form A Marketing Strategy - Marketing is the process of getting your brand noticed by audiences who either want or need the services or products that you supply. While many entrepreneurs are brilliant in coming up with a potentially lucrative business model, sadly many fall flat in getting the message out there. With marketing for business, be clear on who you want to reach, what you hope to achieve, and regularly check in on your campaigns.
Form Policies And Procedures - Developing processes, procedures and standards is particularly important if you are in the early stages of establishing a business, or when you are trying to rebuild or grow a brand. Business processes, procedures and standards are vital for training new staff and induction programs, as well as formal processes like staff performance reviews. Think of them as the blueprint as to how your business is supposed to work.
Get Your Team Ready - It's important to include training in your business planning and budgeting. You should also consider whether changes in your business may require you to offer training. As an employer, you are legally obliged to make sure you provide staff with work health and safety training so they know how to do their jobs safely. While you may be riding solo in the early days of starting a business, this is something to think about for the future.
Enlist The Professionals - If you’re in the process of starting a business, it’s safe to say that you’ve already got a lot invested before you even open the doors for day one of trading. If you haven’t done so already, enlisting qualified industry professionals such as business advisers, financial planners and accountants can be a game changer when it comes to ensuring you’re on the right path for success from the very beginning.
Sourcing Help With Starting A Business
If understanding your finances, or the in’s and outs of doing business isn’t your strong point, then it may be reassuring to know that you’re not alone. In fact, many businesses big and small enlist the services of an accountant and business advisor, in order to free up their time while knowing that their financial obligations are already taken care of by the professionals.
What you choose to invest in or shy away from as a business owner can have a domino effect that ripples through your entire team - so are you confident in your financial choices? At Muro, we are more than just accountants. We offer our clients strategic business advice and ongoing support to help them reach their business and financial goals. Get in touch with us at Muro today to ensure that you’re on the right path for success in starting a business in 2021.