Thinking about starting your own business? Do you have an idea for a new business venture? Proper planning is the key to turning your dreams into reality.
Market research is an important step and a key decision making tool. Conducting research involves gathering, analysing and evaluating information to help you formulate your business goals.
Some questions to consider are as follows:
- What product/service will you provide?
- Is your idea feasible?
- How will you protect your idea?
- Is there a market for your product/service?
- What skills do you need?
- Who are your competitors?
- What difference will you bring to the market?
- Do you have the financial capacity?
Business Plan
Once you’ve conducted market research into the feasibility of your new business, you are ready to write a business plan. A business plan is essential for any start up business. It sets your business direction and keeps you on track once you’re up and running. It is also likely the bank will request your business plan when seeking finance or any kind of funding.
Noting it could vary depending on your industry, your business plan could include but not be limited too:
- Executive summary: a one-page overview written after your business plan is finalised
- Introduction: explains the purpose and objectives of going into business
- Marketing analysis: looks at the industry you are entering and how you fit in
- Marketing plan: your marketing strategy
- Operating plan: how you’ll set up the business, i.e. structure, location, regulations
- Management plan: how you’ll manage your business
- Financial plan: how you’ll finance your business, including modelling and financial projections
Business planning is an ongoing activity. You should regularly review, update or revise your business plan.
Structuring your business
What type of business structure will you choose? Would you like to carry on your business as a sole trader, in a partnership, a company or a trust?
There are advantages and disadvantages to consider for each. Choosing your business structure is an important decision, so you need to investigate each option carefully. You also need to consider whether what you are trying to create is a real business or just a hobby.
Other factors to consider are the cost of set-up, the taxation implications, the expense of ongoing administration and your personal financial liabilities. Once you have decided your business structure and done the necessary steps to have your new business entity set up, you should apply for an Australian Business Number and a Tax File Number for your new business. You may also need to register your business for Goods and Services Tax, depending on various factors.
Taxation obligations
Understanding your taxation obligation is important when starting up a new business. Various federal, state and local government taxes and rates can apply, depending on the size and location of your business.
A number of federal government taxes apply to business, including Income Tax, Goods and Services Tax, Pay As You Go Withholding Tax and Fringe Benefits Tax.
State government taxes that may apply to your business include payroll tax, land tax and stamp duties.
Rates vary from council to council around Australia – you need to contact your local council to find out what applies to your business.
At this stage we recommend consulting a professional business adviser or accountant for advice.
On-going financial management
Good financial management is critical to the on-going success of your business. When you’re starting out, find out how much funding you need, where you can get it and how to manage your financial arrangements.
Your business plan is important when seeking business funding – it sets out your vision and goals, what you’ll spend the money on and how it’ll benefit the business.
There are several options for financing your business:
- Loans from a bank or other type of financial institution
- Using your personal savings
- Borrowing money from friends and relatives
- Private venture capital services
- Government funding
In general, the government doesn’t provide finance to starting up or buying a small business. However, in some circumstances you may be eligible for a government grant.
Succession Planning
It might seem very early, but it's never to early to start considering what your succession plan looks like.
Nobody likes to think about it, but it’s inevitable that one day you’ll leave your business. Whether you decide to sell up, retire or have to get out of business due to health reasons, it’s important that you plan for that day. A succession, or exit plan outlines who’ll take over your business when you leave.
A good succession plan enables a smooth transition with less likelihood of disruption to operations. By planning your exit well in advance you can maximise the value of your business and enable that return to meet any of your future needs.
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