Before You Hit the Business 'Start' Button
According to the 2011 Doing Business Report by the World Bank, Australia is the second easiest place in the world to start a business with entrepreneurs needing only two days to get a business registered and operational. This suggests that starting a business is simple, however, it is a process and can be quite involved. To help you work through the start-up process we have built a new interactive tool that we have labelled the Business Start Up Checklist.
We have built this tool because over the years we have assisted numerous clients get their business off an running and follow a common pathway. We have earned a reputation as a business start-up specialist and along the way we have identified some of the key issues that every budding entrepreneur needs to address in the start-up phase. Don’t believe everything you read because the process can be more involved than simply choosing a business structure, buying an accounting software package from OfficeWorks and then filling in some business registration forms.
Before you press the ‘start’ button there are some things you need to understand. For example, when choosing your business structure (sole trader,partnership, trust, company etc.) you need to consider issues like asset protection, the possible admission of new partners, your anticipated profits and your eligibility for discount capital gains tax concessions. Accounting software selection isn’t as simple as picking a package off the shelf at your local Harvey Norman or OfficeWorks store. There are numerous options and the wrong choice of software can be disasterous.
We certainly have a preference for programs like Cashflow Manager, MYOB and Xero but we always need to assess your business needs and level of accounting skill before making a recommendation. Too often we pick up a new client who has been using the same software for years and their records are best described as a ‘computerised shoebox’. They are still struggling to manage their basic bookkeeping and have paid excessive accounting fees for years to their previous accountant who has simply fixed their computerised shoebox. The lesson with software is don’t try to push square pegs into round holes. You need to match the business needs with your level of accounting skill to minimise the cost of compliance.
Of course, during the start-up phase there are simple things like GST, ABN and TFN registrations to complete. If you are employing staff you also have to consider HR issues plus register for WorkCover and the Superannuation Guarantee. However, before you start the registration process you need to assess the viability of the business which necessitates the preparation of budgets, forecasts and cash flows. This might mean identifying your best and worst case financial scenarios and if the business model isn't viable in that format we often help clients 'pivot' which can involve refining the product, the marketing mix or tweaking the prices. In some cases we do some financial modelling to help clients get their pricing right.
Starting or buying a business necessitates research, risk, passion and courage but the most important ingredient is planning. Clearly, the old saying, ‘people don’t plan to fail, they just fail to plan’ still applies. It remains both valuable advice and a warning for people intending to start a business. A business plan that outlines the big picture for your business usually incorporates a marketing plan and supporting financial projections. We often give clients our start up expense checklist to identify all their business start-up costs and they usually miss significant items. You need to nail your set-up costs and identify how much funding you might require. Get that wrong and you could be chasing your cash flow from the get go and lack of cashflow or finance is a business killer.
The next stage is help you produce revenue estimates and financial forecasts based on a number of assumptions. During this phase we often ask the question, “what if?”. The harsh reality is that enthusiasm, money, hard work, talent or a great idea is not enough to guarantee success in business. You also need to have a marketing plan which provides a blueprint for the future. Courtesy of the GFC, technology and the internet, the business landscape in this country has changed. Websites are the 21st century business card and depending on your target market, social media could be your most important marketing channel. Financial aspects aside, we enjoy helping clients with their marketing, branding, slogan, logo, website, search engine optimisation and social media strategy.
Unfortunately many people starting or buying a business fail because they don't seek or receive the right professional advice from the outset. We are very proud of our reputation as a business start-up specialist and our role is to support and guide you through the process that starts with the right advice. Over the years we have developed a number of practical tools and checklists to help clients fast track through the start-up phase and you’ll find our new Business Start-Up Checklist very helpful. It provides a process to follow with links to guides, registration forms and will help you manage the various registration costs. We hope you find it useful and if you need any help just contact our office.