Starting a Business
I am often asked to help clients establish a new business venture. It is said that the majority of business startups fail within the first year or so of commencement. This need not be the case if careful planning is undertaken.
Often a business owner is very good at what they do (trade or profession) or they have a good product to sell, but perhaps they lack skill and experience in other aspects of running a business. I like to see myself as a resource for quickly empowering a new business owner with the knowledge and skill to address those key business issues. This can be done in a variety of ways depending on the circumstances. Some clients like me to handle the majority of the setup and ongoing administration, others prefer to do it themselves with careful guidance.
A well documented business plan is a very good starting point for a new business. This will help to define exactly what the business is about and will include estimates of market share, projected revenues and costs, options for business premises, the amount and sources of any funding required, cash flow budgets and a summary of strengths and weaknesses. A simple plan not only helps the owners to focus their effort, but it becomes an important part of attracting financial support. Please contact me if you would like assistance in preparing a business plan.
When buying an existing business it is very important to perform a thorough investigation of the reported results of the business. This should include a critical assessment of how much of the business relates to the personal goodwill of the seller. If the existing business is operated through a company structure it is often better to purchase the business rather than the shares in the company, because once you own the company, you own all of its history including any unrecorded or as yet unknown liabilities.
First time business owners are sometimes quite nervous about the administration aspects of running a business. Usually this is nothing more than a fear of the unknown. I have listed below some of the common issues that need to be handled. This list is by no means exhaustive and, as particular circumstances will apply to each business, it should be taken as a general guide only.
- Choosing a business structure is very important – see Fact Sheet on Entity Types.
- A business name may also need to be chosen. In certain types of businesses this is very important in attracting customers.
- Obtaining an Australian Business Number (ABN). See Fact Sheet on Business Registrations.
- Registering for various taxes that will apply (Tax File Number for income tax, GST, if applicable, PAYG Withholding, if employing staff etc). See Fact Sheets on each of these taxes.
- Obtaining insurance for assets, indemnity, public liability and workers compensation.
- Putting compulsory superannuation arrangements in place, if employing staff. This includes superannuation for owners who are employees of the new entity.
Choosing an accounting system that matches the business and will enable proper reporting of transactions. This will be needed to comply with reporting obligations, but it is also a vital tool for monitoring the performance of the business. See Fact Sheet on
Accounting Software.
The government sponsored
Business Entry Point is a very good website for anyone contemplating a new business.