Where to Begin? How to start your business

Lasting success comes from a series of well-planned steps, not a flash of inspiration - Judy Hartcher examines the necessary building blocks for creating solid business foundations.

Many people dream of starting their own business but they don’t always plan ahead before taking the plunge. Planning is a key element in establishing a successful business and it pays to research the desired market.

Market research will provide information on your product, pricing, costs, competition and suppliers, and it will also help to determine the feasibility of your business idea. This information is crucial to preparing a business plan. Going though the planning process will clarify your business goals and lead you through SWOT (strengths, weaknesses, opportunities, threats) analysis of your product or service, customers, the industry, the competition and business environment. Your business plan should set down the strategy for achieving the goals and the finance for operating the business. It is the document requested by prospective lenders if they are approached for business loans.

Once satisfied that your business idea is viable, you should then consider the most appropriate operating structure. Factors such as taxation, asset protection, flexibility in the distribution of income and capital to family members and estate planning, should be taken into account when deciding whether you should operate as a sole trader, partnership, company, or trust. At this stage, you should consult an accountant with experience in business advice and taxation. If legal contracts such as partnership agreement, trademark registration, or franchise agreements are required, you should seek counsel from a legal adviser.

The next step, deciding on the location of the business premises, will depend on your target market, product or service, space requirements, and budget. For example, a bakery, confectionery manufacturer, and food writer, have different requirements. The bakery needs to be located in a shopping precinct frequented by shoppers, the confectionery manufacturer requires larger premises to house bigger equipment and stock, whereas the food writer can work from a home office.

Cash & Flow

A business can’t operate without funds, so it is important to prepare a budget to start or purchase the business, to buy assets, and to operate the business. It is also important to forecast your cash flow to ensure that you have sufficient cash coming in to cover expected outgoings. Always consider unexpected events and build in a margin for contingencies. Remember, cash and profit are not the same-—a profitable business can still run out of cash. Take the time to review your resources and if you find you don’t have enough financial resources to cover your business operation in the first year, consider other sources of finance such as sale of personal assets, family contributions, investors or banks.

Appropriate records should be kept to check on performance. Record-keeping is essential for managing your business so you know what is happening and can react to emerging situations quickly. These records are also essential for tax compliance.

Give thought to staffing, marketing, insurance, local and state government requirements such as zoning requirements and health regulations, and business registrations such as business names and the Prescribed Payments System.

When employing staff, you should look into award requirements and legislation such as the Superannuation Guarantee Charge Act, Occupational Health and Safety Act, Payroll Tax Act and Workmen’s Compensation Act.