A lot of Australians dream about starting their own businesses that are indeed among the most fascinating things you can try in your life. However, in 2022, NAB conducted a survey involving 2000 Aussies and asked them whether they wish to start their own business. Although covid has crushed many small businesses, about forty-one percent said that they would like to have a business, with nine percent starting their business. Small and medium businesses account for about 56 percent of production in Australia. As such, it is attractive for many people to work there.
But where do you begin? Many aspects are involved when starting a business and there are various approaches you can take. Our business tips on how to start a business will help you to eliminate wild guessing and increase your probability of success. We will take you through all the stages, starting from determining your business idea for the Australian market to the registration stage, launching and growing your business.
Before Starting: Adopt the Proper Mindset
Such is the case for overnight success stories in the newspapers that make for a good headline. Nevertheless, it is usually not as simple, since they never feel the years of dreaming, building and positioning prior to public exposure. Therefore, concentrate on your business trip and ensure not to compare your achievement to another person. Many times, the outside view of other people’s lives seems successful, but it is rare that such a picture is a true reflection of life.
Staying Consistent Is Crucial
New business owners tend to feed off their motivation initially but get frustrated when that motivation wanes. This is why it’s essential to create habits and follow routines that power you through when motivation goes away.
Move Forward with the Next Action
Some business owners just jump into it without even looking and make things up as they go along. There are also business owners who get caught in analysis paralysis and never take off. Maybe, you are both and that is exactly where you should be. One should write all steps needed to achieve any business or personal goal in order to succeed in the best way. Finally, arrange those steps according to their priority. Certain processes might take minutes while others are time-consuming. Take the next step every time.
1. Define Your Business Concept
Most business advice tells you to monetise what you love, but it misses two other very important elements: the business should be profitable and in your niche. For instance, you might be keen on music, but is it possible to operate a profitable venture if you cannot perfectly sing or write songs? For example, if you make coffee and want to set up a small cafe near to your neighborhood where there are already four, chances of you cornering the market will be slim.
If you don’t have a firm idea of what your business will entail, ask yourself the following questions:
- What do you have passion for?
- Is there anything you dislike doing?
- Is it possible to think of something that will make those things more comfortable?
- What are you good at?
- What do people turn to you for advice on?
- What five-minute speech would you deliver if you had ten minutes to prepare for it?
- Have you ever wished to do something, but lacked the financial means?
Answers to these questions may prompt you to get an inkling of an idea for your business. Thus, if you already have an idea, they might assist you to develop it. With your idea, measure how good you are at that idea and if it will help you in making profit.
Also, your business idea does not need to be another Cotton On or Linktree. Rather, you could enhance the existing products.
What type of business venture should you consider launching?
Before you choose the type of business to start, there are some key things to consider:
- Do you have grants or loans?
- How many hours will you be involved in your business?
- At home, an office or a workshop?
- What are your interests and hobbies?
- Can one offer the information (e.g. course), rather than a product for selling?
- What are your skills and expertise?
- How quickly do you need to grow your business?
- How does your startup process look like?
- Who are you working with?
- Does the franchise model now appear better to you?
To set up a company, contact FastLane Group.
2. Competitors Analysis and Market Research
Many entrepreneurs are more concerned about the product they offer rather than the competition. If you ever apply for outside funding, the potential lender or partner wants to know: what makes you or your business idea different from others? Think about a new approach if your market analysis shows that products similar to yours are oversaturated in your area. Consider the area of housekeeping where instead of offering general cleaning services, you would focus on homes with pets.
In this case, the analysis of a competition study begins with the primary research that implies data collection from the potential customers themselves instead of relying on previous data. Questionnaires, surveys and interviews are some of the tools that one can use to find out what the consumers want.
You only survey friends and family if they’re your target market. Those people who claim to have intended to buy a thing and people who actually do the purchase, are totally different. This might result in creating a product that doesn’t align with your buyers’ preferences, leading to a bad sales performance.
Where secondary research is conducted, use existing sources of information like for example census data to gather information. However, even though the current data may be studied, compiled and analyzed in several ways in order to meet your specific needs, they may not be as extensive or as detailed as your first research.
Conduct a SWOT Analysis
SWOT implies strengths, weaknesses, opportunities and threats. Through conducting a SWOT analysis, you are able to consider the facts about whether your product or concept would work in the market, and it may assist you in deciding where your idea may head as well. You may discover some weaknesses in your business idea that you had not previously thought about or have some strengths that would make you improve on your competitors’ product.
During a SWOT analysis, you should also be able to ask crucial questions that will enable you to address weakness in your new business before it tanks.
3. Come Out With Business Plan
Business plan is a document, which can be referred to as a road map for launching a new business. The document simplifies comprehension of the material by prospective investors, financial institutions, and the management. Even if one intends to self-finance, a business plan can assist one in filling in the idea and possible faults. When writing a well-rounded business plan, include the following sections:
- Executive summary: The executive summary should be the first section of the business plan but it should be written at last. This explains the new business introduced by the company and outlines the objectives of the company with the strategies used.
- Company description: Your business or idea should be the best to solve problems concerning your product or service, and this is what the company description entails. For instance, you are an AI engineer who uses your competence to develop improved customer service workflow and automation.
- Market analysis: In this part of the business plan discusses about how effective or competitive a company is placed against its competitors. The market analysis should contain information on the target market, segmentation analysis, market size, growth rate, trends, and an environment assessment.
- Organisation and structure: Involve some information regarding the expected type of business organization, the suggested risk management strategies, and the individuals who will be in the management team. What are their qualifications? Is your company going to be one-member or a corporation?
- Mission and goals: The mission statement or a brief narrative stating what the business aims to achieve and how it should be included in this part. The SMART approach should therefore be adopted in setting these goals.
- Products or services: This part explains the way your business runs. In this stage will indicate what products you’ll sell to market at starting business, how differ your goods from other competitors, how much your goods cost and who is responsible will manufacture goods, where you source your raw materials and will cost to manufacture goods.
- Background summary: Writing this part of business plans usually takes longer than other parts. Gather and synthesise any data, articles or research reports relating to trends that may have a positive or negative impact upon your business or sector.
- Marketing plan: A marketing plan includes describing features of the product or service, summarizes the SWOT analysis and competitor’s analysis. Apart from the product, it also considers how your products are going to be promoted, how much budget is allocated for marketing and for how long your marketing campaign will run.
- Financial plan: Perhaps, the financial plan is the heart of the business plan because without money the business cannot proceed further. Consider incorporating a proposed budget into your financial plan as well as an income statement, a balance sheet and a cash flows statement. The common practice is that projected financial statements for five years are okay. You should also state your funding request here if you are seeking external funding.
What is the Exit Strategy
If you are seeking funding, it is important to show that you have an exit strategy. This strategy will explain how you intend to sell the enterprise or transfer the ownership if you decide to retire or move on to other projects. Additionally, an exit strategy helps you obtain the highest potential value of your business before you sell. Leaving a business is usually done in one of several ways; the most ideal option should depend on your aims and situation.
The most common exit strategies are:
- To sell the business to a third party
- Succession plan of passing the business down to family members
- Liquidating the business assets
- Company dissolve and leave
A More Sustainable and Scalable Business Model
When your small business starts growing, you should come with a scalable business model which enables you to get extra customers. A business model that can be scaled up provides services to more customers at almost the same cost.
Some common scalable business models are:
- Subscription-based businesses
- Businesses that sell digital products
- Franchise businesses
- Network marketing businesses
When starting a small business, one of the most vital activities one should start with is planning for taxes. There is a wide range of taxes, which include income tax and Goods and Services Tax. Besides, some of the taxes you may be required to pay will depend on your business type like the payroll tax. In Australia not all businesses pay payroll tax. For additional details, see How payroll tax works.
FastLane Group offers payroll and HR administrative services that comply with Australia legislation. Owing to our expertise in HR and payroll policies, we ensure that all the specific requirements and tax compliance are met.
4. Decide On Your Business Structure
It is also important to think of how different structures affect the taxes you pay, the way you run your business, and whether your personal assets are liable for your business debts.
A sole trader means a one-man company also referred to as a sole operation, which is the simplest form of a business structure. Normally, one only needs an ABN to trade as a sole trader unless there is a separate bank account required.
- Simple, low-cost business structure
- Full control of your business
- Will you be able to file tax returns using just one tax file number alone
- A period of five years is required to retain financial records
- Less tax benefits
- Owner will be held personally liable and personal assets will be at risk
Partnership is a business form involving two or more persons who have equitable claim on the profits. There are three kinds of partnerships in Australia: A general partnership whereby the partners are liable equally for the business debts and have an unlimited liability for the same; a limited partnership made up of passive investors’ who have restricted liabilities and limited partners who have unlimited liability; incorporation of limited partnerships where in partners have limited Nevertheless, in the last business structure, one of the general partners is obliged to have unlimited liability. For more information, read here.
- Owners can choose to have limited liability for certain kinds of partnerships
- They are easy to form as they do not need any paperwork
- There are no limits regarding the number of partners
- Business income is not subject to income tax, with each partner instead paying tax on their share of the net partnership income
- In some partnerships, partners will need to be active as far as assuming liabilities is concerned
- Each of the partners will take charge of superannuation contributions
- Each partner is personally liable for any claim of malpractice against the business
- Every year, they must submit a partnership tax return to the ATO
- Separate regulations govern each state and territory. For more details on this, check here
A company is seen as a separate legal entity. Although the process of setting up a company is more sophisticated than forming partnerships, the owners have no liability for the company’s debts. However, directors may face personal liability for failing to perform their duties. Consider FastLane Group company secretary services to help with your company formation.
- Company director have limited liability
- Suits companies with variable incomes
- Have access to a larger funding for finance expansion
- Higher setup costs, and running costs than other business structures
- An annual review by ASIC at a cost
- Must comply with Corporations act 2001
Trust is defined as a business that involves a trustee who has the authority to undertake the business activities on behalf of the trustees’ members or beneficiaries. Normally, a trust structure is installed to safeguard member’s property and it is usually elaborate and costly when instituting it.
- Business assets are protected
- The trustee determined how business profits were to be paid and thus had full dictatorship power
- The disbanding or amending of trusts may not be easy
- Wide scope of preparatory administrative work, prior to formation, during the formation of the trust
Talk to FastLane Group prior to settling for a business structure. It is crucial to note that each type of business structure has specific tax treatment, requirements, and obligations that ultimately affect your bottom line.
5. Establish Your Business and Obtain the Necessary Licenses
After choosing the business structure, there are several legal issues to deal with to begin a business. The following is a good checklist of items to consider when establishing your business:
Select and officially register the name for your business
It should be memorable but not overly challenging. Get a domain name that is similar to the one you chose during creation of your website. A business name is not allowed to be identical to another registered company, and it is also prohibited from infringing another existing trademark or service mark.
Once you have paid the prescribed fees, you will be asked to register for a business name for one or three years. For beginners, maybe you should start with the one-year plan and see where you will land as you develop your business name. In Australia all business names are registered with ASIC, and you can use its online checker to see if your business name is available. However, the law prohibits the use of certain words which may lead consumers to question what your small business is all about. For more information, read Checklist for Company Registration in Australia
However, the obligations will be higher and harsher in cases where you decide to start a company compared to where you operate as an individual. You must incorporate the company with ASIC and renew the business name prior to its expiry date. ASIC needs to be updated on any changes to your company within 28 days to avoid late fees that would be imposed for failure to do so. You will receive a yearly statement from ASIC each year and you should ensure the accuracy of the statement and pay an annual review fee.
Get Appropriate Licenses and Permits
These determine the legality based on your sector, your business operation and its structure. Most companies require a combination of licenses and permits to run. The Australian Government has a useful tool for searching for the permits you need for your type of business structure. For starters, in case you are at least having some doubts, seek the services of an experienced business consultant.
6. Organise Your Finance
Open a Business Bank Account
It is better to separate your business finances and personal finances. For taxation purposes, if your business structure is a company, trust or partnership, then you need to have another bank account that is separated from other ones. You should open a separate bank account even if you happen to be a sole trader in order to control your financial activities and check your incurred expenses and obtained revenues. While different Australian banks offer dedicated business accounts free of monthly fee, it is worth checking out which one suits you the most.
You can use this business bank account in your business transactions, including payment to suppliers and customer invoice. In most cases a bank will demand that the business has its own business bank account so that it can grant a business loan or line of credit.
Bookkeeping Services or Accounting Software
Inventory should be effectively managed when selling products and so inventory functions should be incorporated in accounting software. Inventory management, ledger and journal entries, and finally financial statements – this software should do all that.
There is some accounting software that is also complete bookkeeping tools with abilities, like managing the payables and receivables, issuance of invoices, tracking incomes and expenses, calculating taxes, and preparing reports.
Bookkeeping can be available online or offline. FastLane group uses cloud based accounts software Xero which offer packages designed for small businesses. Consider using any of this accounting software or make your decision whether to do the bookkeeping on your own.
Know Your Break-Even Point
Startup costs should be known to you before starting funding your business. In your listing, identify all the physical supplies that you may need, estimate any professional services cost, determine the cost amount of licenses and permits for operation, as well as the real estate cost, such as an office space. Include the payroll and other overhead costs.
A start-up can take many years before they make a profit. So, it is better to overestimate their startup costs and then have too much money, rather than too less. Experts advise to have sufficient cash as to cover half a year of operating costs.
Once you have known how much it takes to begin your business venture, you must be familiar with the breakeven point of your enterprise. This is your point of breakeven.
Break-even point = Fixed cost ÷ Contribution margin
In contrast, the contribution margin = total sales revenue – cost to make product
Taking an example, for instance, you intend to start a small venture dealing with Gelato booths. You have come to a conclusion that startup costs will amount to $500. For every gelato that you sell at $1.50, you incur a cost of $0.40.
Let’s write these out so it’s easy to follow:
|$500 for the first month
|$0.40 per gelato
|Price per Gelato:
|$500/($1.50 – $0.40)
|$500 ÷ $1.10 = 456 units
Hence, in order to recover, you must at least sell 456 units. As long as you sell more than 456 units in the first month, you earn.
7. Business Funding
Funding your business can be done through a variety of ways—some are easy while others are tough to acquire. Two categories of funding exist: internal and external.
Internal funding includes:
- Personal savings
- Credit cards
- Funds from friends and family
However, if you finance the business with your money or using credit cards, then the debt has to be paid at the end and you’ve lost a fraction of wealth when the business fails. When you share your business with other people like relatives and friends, it is possible you can ruin a relationship even to the extent of getting enemies because they can develop hatred towards you. To reduce these risks, business owners can approach external funding.
External funding includes:
- Small business loans
- Small business grants
- Angel investors
- Venture capital
As such, some small business may need to combine several sources of capital. Consider, for instance, how much money, how long it will take for the company to repay it and how risk-averse, or tolerant you are. Regardless of where you get your money from, make sure that it’s a project whose revenue will surpass cost. Why should one take a six-figure salary if they can take the seven-figure and have $70,000 of it back?
Funding ideas include:
- Business loans: Taking a business loan is the same as getting a personal line of credit. Your business’s revenue, credit score and financial history shall guide the credit limit and interest rate.
- Equipment financing: There are so many ways to finance equipment used by business; for instance, you can lease or borrow.
- Grants: These include grants offered by the federal government for innovative businesses that are also working towards growing exports, and which have been set up in socially marginalized districts. Moreover, there are small regional and local organisations that offer grants.
- Crowdfunding: In crowdfunding, you source funds from many individuals through donations and selling shares.
Consider how much money you require, your time frame for repayment and your level of risk when choosing which funding source is most suitable for your business.
8. Business Insurance
In fact, you will probably require insurance for your business, even a home based business, or where there are no employees at all. Depending on your business model, the kind of insurance that suits your organization is determined by the kinds of risks you face. As your business develops, you may require several types of policies, and extra coverage. In Australia, there are three kinds of compulsory insurance, these are:
- Worker’s compensation insurance if you employ individuals who get injured at work.
- If you own a car, compulsory personal injury insurance for parties. This is often, and usually paid as part of a vehicle’s registration fee or green-slip.
- Third party death or injury public liability insurance is vital if operating out of a public setting like a market stall.
There are other forms of insurance that you may also wish to take out, including:
- If there were an interruption to your business because of damage to property this insurance is for you. This can help the business go on running smoothly.
- There is also something called income protection insurance, which pays your typical income from the business if you become sick or disabled during a specified time.
- This includes professional indemnity insurance that is very essential for knowledge-based work and will protect you in a defamation suit.
- TPD disability, otherwise known as total and permanent disability insurance, that may be accessed through superannuation and provides a pay out when injury results in permanent disability.
- Among other forms of hazards affecting your business, they include fire, storms, floods, malicious damage, among others.
There are numerous types of insurance that your business could require and these are just a few examples. For complete information of the Australian Government’s Business Insurance.
9. Business Tools and Software
Business tools will help ease your life and help run your business more efficiently. The right tools can help you save time, automate tasks and get better decisions.
Here are some of the useful tools:
- Accounting software: Record your financial transactions, make financial statements and submit tax returns. Some examples are Xero cloud accounting software provided by FastLane.
- Customer relationship management (CRM) software: This will enable you to manage customer relations and keep close track of sales and marketing data while also automating processes such as customer services and follow-ups. Example Hubspot and monday.com.
- Project management software: Plan, execute and track projects. Also, it can help schedule employees’ tasks as well as resources. For example, asana.com
- Credit card processor: This will enable customers to pay using their credit cards. Examples include Stripe and PayPal.
- Point of sale (POS): This is a system that allows you to receive payment from customers. This can be inbuilt in some accounting software, and also some CRM software has POS features in them.
- Virtual private network (VPN): Secures and protects an open channel between your computer and internet. Businesses dealing in vital information should consider this. Examples include NordVPN and ExpressVPN. You may visit that page and see our top rated VPNs here.
- Merchant services: Money that is deposited in your business account when customers make a purchase. Merchant services can also be used to establish recurring billing or subscriptions. Examples include Square and Stripe.
- Email hosting: This helps you to have an email address with your domain in a professional way. These include products like G Suite and Microsoft Office 365 among others.
Numerous business owners use up their resources in production and they do not allocate any money for marketing in the beginning. Focus a lot of time on the development of a product while considering marketing as not being necessary.
A web presence is vital even if you’re a brick-and-mortar business. Building websites also does not take time — it takes only a weekend. You can build a simple informative site, or an e-commerce site in which you market your goods online. If you sell goods or services offline, include a page on your site where people can find your locations and hours. One can also include an about us page, product/service pages, FAQs, blog, as well as contacts.
Optimise Your Website with SEO & SEM
Ensure you optimise your SEO after getting a website or e-commerce store. As a result, the search engine can direct customers who use particular keywords to your site whenever they want such products or services. SEO is a long-term strategy; therefore, do not expect much traffic from search engines even if all the correct keywords are used.
Create Engaging Content
Ensure that you offer high-quality digital content on your site that gives customers the right answers without difficulty. The content marketing ideas will entail videos, customer testimonials, blog posts and demos. Think of content marketing as the first thing you should do on your daily checklist. This is done alongside posting on social media.
Online directories such as Yelp, Google My Business and Facebook are used by customers to locate local businesses. Business directories are also present in some local councils and chambers of commerce. Involve your company in several appropriate online directories. Besides, listings for your businesses can be generated in certain directories that concentrate on your sector.
Social Media Strategy
Social media is used by your prospective customers each day; you also need to use social media. Create engaging content that appeals to your target audience. Drive traffic to your website where customers can find out more about the business and buy products or services.
You do not have to have a presence on all social media platforms. Despite the fact, you should be there in Facebook and Instagram as these platforms provide e-commerce functionality that enables you to sell directly from your social media page itself. Marketing your business is made more easy on both of these platforms thanks to the free ad training.
11. Business Expansion Strategy
In order to scale your business, you have to expand your customer base as well as revenue. Expanding your marketing, improvisation in your product and service, joining hands with content makers and addition of supplementary products are also an integral part of it.
However, consider how you can use technology or hire some people elsewhere to carry out some tasks so that you can pay attention to expanding the business. For instance, if your social media marketing activities are consuming most of your resources, use an automated tool such as that provided by the Hootsuite to save your precious time. Outsourcing the whole time-consumer should be an option too.
Technology can also be applied to automate some business processes, such as accounting, email marketing and lead generation. Taking this step will afford you time to deal with other business issues.
When expanding your business make sure you monitor your profits and that you are still in the green. If your expenditure is more than what you earn, then either reduce your expenses or enhance your revenue.
Form a Team
In order as your business expands, you will have to create a team that can help you manage daily operations. It could involve bringing in new employees, contract workers or freelancers.
Resources for building a team include:
- Hiring platforms: Various hiring platforms including Indeed and Glassdoor can be used to post job descriptions, screen résumés, and hold video interviews in an effort to determine the right candidates.
- Indeed: You could post job openings on Indeed for free.
- Social media: However, you can also search for prospective employees through various social media sites such as LinkedIn and Facebook.
- Freelance platforms: One-time or short-term projects are possible by using Upwork and Fiverr and finding a good freelancer. You can also hire other people to do some specific tasks such as customer service, social media marketing and bookkeeping.
Having a business partnership with other companies within your industry can prove very effective. For example, the association of a fitness trainer and a nutritionist or healthy food store. This collaborative approach provides clients with integrated fitness programs that give out tailored nutrition counseling and availability of supplements. These partnerships help simplify the operations process that may result in reduced shipping and storage costs as well as easier communication.
Consider Professional Employer Organisation (PEOs) to facilitate recruitment, onboarding, payroll, and HR compliance when expanding your business. FastLane Group provides specialized knowledge, affordable services, and total HR solution, which ensures smooth expansion and administration of a growing human resource. See how Malaysia Talent Unveiled: A Strategic Move for Australian Enterprises.
FastLane Group, your reliable business partner, helps small businesses aspiring to global growth. FastLane provides corporate facilities, accountancy, audit, taxation and company formation assistance to guide businesses through local progress and into global eminence. Working together allows us to provide you with full-fledged solutions all the time.