Whether we want to be our own boss, have the best idea ever or are following in the footsteps of our forebears, Australians are leaders in starting their own business.
However, this entrepreneurialism does not always translate into a successful business. This is what you need to be business ready:
1. Self-motivation is essential
Possessing a passion for what you do is absolutely essential, but you also need to be self-motivated. In many 'start-up' instances, chances are you'll be taking on multiple roles, including:
- The boss (think, chief decision maker)
- The worker (think, chief "do-er")
- The mentor (think chief encourager)
- The investor (think "it's my money on the line!").
And without having the courage to take on all these roles - often simultaneously - your business dream is less likely to become a reality.
2. Ask yourself the tough questions
After all,no matter whether you think you have a great product or service, your prospective business will only be successful if there are customers out there prepared to buy your product or service at a price that is going to make you a profit:
- What need or want does the product or service satisfy?
- What raw materials are required?
- What is the process to turn them into the end product or service?
- How will the product or service then get to the purchaser?
- How do you package/present it?
- Will potential customers pay the price you need to charge to make a profit?
- What marketing strategies will be needed to inform then entice buyers?
Having established that there is a market for your product or service, the next step is to put together a detailed plan on how you're going to bring it to market.
3. Bring it to market
This planning process is one that's often brushed over, but when done well, can provide clear benefits. It can be approached in a number of ways, one of which is a framework called the 7 P's:
Clearly defining the purpose of the business will provide a foundation for many of the upcoming business decisions. Identifying the values that the business will stand for and articulating those in a "Mission Statement" provides a valuable tool to maintain focus in a busy environment.
Information on your "Product" should include not only what it is (and isn't) but should also detail what customer need or want it satisfies, and how. Details of the technical specifications, production and distributions processes also form a valuable component of any business plan.
Said to be the greatest asset of any business, but they need to be cleverly managed. By recording the various roles required, and the skills and behaviours necessary to perform them well, you're better placed to successfully recruit, develop, and retain your workforce.
Choosing the 'right' location can be the difference between success and failure. You need to consider access to customers, to labour, and to suppliers when selecting and maintaining your 'Place'. It's also becoming more imperative to have a "virtual" place as well as a physical place as customers do more and more of their research on the Internet. And a great deal of those interactions will increasingly be conducted via their smart phone.
Not just advertising: Promotion is about how you connect with customers and create a desire to purchase. The plan should clearly define who the target customers are and how you're going to communicate with them.
Is influenced by a number of factors, including quality, the speed at which your product can be provided, the actual production costs, and finally the value placed on that product by the customer.
Encompasses measuring whether the business is achieving what it set out to achieve in all of the above areas from a qualitative, quantitative, and financial viewpoint. By detailing in the plan what performance measures are most important to the business, you're better able to maintain focus to help ensure you're achieving what you set out to do.
4. Decide on your legal structure
Having completed your plan now it's time to actually 'put the rubber on the road'. One of the first decisions you'll need to make is what the most appropriate legal structure for the business is.
In deciding whether to be a sole trader, partnership or proprietary company, you need to take several issues into account:
- Your tax position
- The cost of establishing and maintaining the chosen structure,
- How easy it is to transition to another structure as the business grows
- The ease with which changes to management and ownership can be implemented.
The paperwork to get yourself legally registered to operate a business may seem cumbersome, however there is plenty of help available online:
- Search available business names at ASIC Connect
- Register your business and obtain an ABN
- Register for GST
- Obtain information on required licences
- Check for any trade mark or patent options and obligations at IP Australia.
5. Ensure you're insured
As essential as planning is, you still need to insure against accidents or unexpected events. Determining what assets or processes could be impacted or damaged in various scenarios will help to develop a suite of insurances that commonly cover assets, income, key people, and third party liabilities.
6. Get your financials in order
Even if you're a sole trader, business finances should be kept separate from your personal finances by having separate bank accounts for each.
It's also necessary to keep records of all income and expenses, not only for tax purposes, but to ensure the business is making a profit. By implementing and consistently using an accounting software package this process can be much simpler than at first thought. It will also make life easier for your accountant come "tax time".
7. Open for business
Then finally comes opening day! How are you going to launch the business to let your customers know you are open for business? Whether it's a party, a grand gesture, or a simple bargain, whatever you decide to do should:
- Showcase your product or service
- Highlight your point of difference
- Ensure people can find you
- Convince them to buy from you.
Making the dream a reality can be a lot of hard work but by planning well you are much more likely to reap the rewards and enjoy the experience of "being your own boss".
We also have a 'Ready for business' guide that includes hints and tips, as well as checklists to help you get started.
Next steps: Watch Getting Started in Business webinar
- Turning your vision into a plan
- Statutory obligations
- Business structures
- Risk management
- Cash management
This webinar is produced by the Davidson Institute, Westpac's home of free financial education resources, building confidence today for a better financial future.
Things you should know
To be eligible to apply for Business One – Low Plan, your business must be registered in Australia.
General advice: This information is general only and does not constitute any recommendation or advice. It is current at the time of publication, and is subject to change. It has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on the information, consider its appropriateness, having regard to these matters. Consider obtaining personalised advice from a professional financial adviser and your accountant before making any financial decisions in relation to the matters discussed in this document, including when considering the finance options for your business.