Have you ever thought about setting up a small business in Australia but never quite followed through? Well now may be the best time for you to become that entrepreneur you have always wanted to be.
Business success is the outcome of a strong business model and a unique idea that has been purposefully built to solve problems. Let’s take General Motors, Airbnb and Uber as examples. All three businesses were created to solve a problem and what makes them even more interesting is they were founded during economic downturns.
As Australia enters its first recession in three decades, could now be the time to enter the market? The current business climate is extremely hard to navigate, so it’s incredibly important that you surround yourself with a number of professional advisors before taking the leap.
By no means are we suggesting to just go out on a limb and start a business right now, there are many steps you should follow before doing so. And although the excitement can take over, it’s important to maintain a logical approach.
8 Steps to setting up a small business
1. Research, research and more research
No doubt you have a great idea, but without putting in the research to assess your idea you won’t know if it has the potential to succeed. Ask yourself:
- Is my idea solving a problem?
- How many people will use/want my idea?
- What is my competition in the current and future (predicted) market?
- How will my idea fit into the market?
- 2. Develop a business plan
A business plan is a key necessity to creating a successful business. It plans your business strategy from start up all the way to establishment and hopefully eventuating in prosperity.
A business plan includes, but is not limited to: a marketing plan, succession plan, management plan and a contingency plan.
The more information and effort you put into your business plan, the easier your life will be in the long run. And it provides a plan to always refer back to if you feel like you might be veering off track.
3. Determine how you will obtain finance
This can be a daunting factor of starting a business. Whether you’re using your personal savings, finance from investors or using a loan facility, there are many different ways you can finance your small business.
At Ledge, we have a complete suite of business and commercial finance products which include:
- SME, Commercial and Corporate Lending
- Insurance Premium Funding
- Cash Flow Finance
- Surety Bonds
- Funding of Significant Change in Business
- Banking Facilities; and
- Commercial Property
4. Choose a business structure
Once you have established that your idea is in fact viable you can determine your business structure. Four common business structures include:
- Sole trader
Be practical but also strategic in what business structure you choose as this will determine the licenses you require, how much tax you pay, how much control you have over the business, and so on.
5. Choose a business name
Your business name needs to be captivating as it plays a huge part in the success of your business. Think of how you want to be known in the market place… how your business name will be associated with your product/service offering and linked with your branding.
Make sure you check to see if your business name is already taken or trademarked. Once checked, you’re good to go register your business name.
6. Check legal obligations
Before you start trading you need to know your legal obligations, these include, licences, registrations, taxation and insurance. It’s vital you know and understand what obligations your business structure requires, which is why we recommend you speak to a professional advisor.
7. Finalise reporting and accounting systems
This step is so important and one that we cannot stress enough. Without adequate reporting systems you will loose track of what products/services you have sold. And without the correct accounting systems in place you may fail to manage your cash flow successfully.
Choosing an accounting system that allows you to analyse your financials using a 3-way forecast (cash flow statement, profit and loss statement and balance sheet) enables your business to prepare for any losses you may incur.
This is something we harp on about a lot at Ledge, as it’s incredibly important for all businesses to maintain a deeper understanding of the business.
8. Market and promote your business
You’ve come up with a great idea but no one knows about it. Reaching your potential customer is key to creating a successful business. There are traditional forms of marketing, such as:
- Print advertising;
- Print out brochures;
- Radio advertising;
- TV advertising;
- Cold calling;
- Direct mail advertising;
- and so on.
- Then there’s the new media methods, known as digital or online marketing, which include:
- Search engine optimisation (SEO);
- Pay-per-click advertising (PPC);
- Social media;
- Email marketing;
- Content marketing;
- and more
Online marketing methods are essentially used to generate more leads to your website in hope that these potential customers convert into actual customers.
As the world becomes more and more digitalised, it makes sense that there has been an increase in businesses starting to invest in digital marketing.
Take Covid-19 as an example… Businesses that adapted to the changes in the market, such as retail businesses who created an e-commerce website, were able to continue operating.
The current climate has demonstrated the need for businesses to have an online presence and more importantly be discoverable.
Checklist for setting up a small business in Australia
- Put in adequate research to assess your business idea
- Develop a business plan
- Marketing plan
- Succession plan
- Management plan; and
- Contingency plan
- Determine a business structure
- Know how you will obtain finance
- Understand the registrations and licences required (i.e. ABN, TFN, GST, PAYG Withholding, etc.)
- Ensure you are aware of superannuation entitlements and obligations
- Know your taxation obligations
- Ensure you have adequate protection of intellectual property
- Know how you are going to keep records and what accounting systems you are going to use, to ensure you manage your cash flow
- Find out what Government grants and assistance incentives are available
- Ensure you have secure IT systems and platforms
Please note: this is a short checklist summary of what is required when starting a business and there are many more points you will need to cross off before entering the market. To find a more comprehensive checklist we suggest you speak to your business advisor or head to the Australian Government Business website which offers an interactive checklist. If you require further help setting up a small business, please speak your Ledge account manager who will be able to put you in touch with a trusted professional advisor.
Where to find advice and support in Australia
Here are some helpful links to find advice and support when starting a business:
- Australian Government Business Contact
- Government Grants & Assistance
- Small Business Expertise and Advice Program
- Business Expertise Centres Australia
- Department of Infrastructure, Transport, Cities and Regional Development – Infrastructure investment
- Access to Justice
- Events & Training