Starting Your New Business – 10 Critical Steps
So, you’ve decided that the 9 to 5 grind just isn’t for you, and being your own boss is a dream you want to achieve. You take something you love doing or are really good at, and decide that your business will revolve around that. That’s all you need to start, right? Unfortunately, things are rarely so simple, and there are some critical steps to be taken before starting your new business. These are wide-reaching and involve a fair bit of homework, but neglecting to undertake these important steps can have a significant impact down the track. Let’s start it off on the right foot with 10 critical steps.
Conduct a Self-Assessment
If you are planning on owning and operating a business for the next few years, it stands to reason that you don’t want to be stuck doing something you don’t enjoy, aren’t particularly good at, don’t understand or cannot perform to the highest standard. Self-assessing your strengths, weaknesses, likes, dislikes, and experience is an important place to start, so long as you can do so honestly. From here, you should be able to determine that starting a business is really what you want to do, and move onto the next step.
Research the Market
Before starting your new business, you will need to be sure that there is a demand for your product or service, and that there’s viable room in the market for a new business. Thorough examination of your competitors, industry, consumer behaviour, pricing, trends, and other relevant data is a good place to start. Impartial and accurate information is the way to go, not just opinions from family & friends.
Buy Established, Franchise, or Start from Scratch?
As they say, there’s more than one way to skin a cat – just like there are a few ways to go about starting your new business. Rather than hopping head-first into a start-up, consider the other options available to you. Buying an established business will generally be more expensive, however it can come with premises, equipment, inventory, and an existing customer base. These are all things that take time and money to build up, so depending on the industry and the business itself, it might be prudent to consider this option. Franchising is another, where a company will sell you established products and operating methods in exchange for a franchising fee. This reduces some of the legwork in setting up a business, and franchisees benefit from the existing advertising and public profile of the company from day one.
Get Across the Legal Stuff
The legal side of setting up and running a business certainly doesn’t inspire much enthusiasm, but neglect it at your own peril. The laws that govern small businesses in Australia can be tricky to navigate, especially for new business owners, so make sure you are aware of your obligations and licenses as they apply to your business and industry. To find out which Local, State and Federal licenses apply to your business, you can use the Small Business Development Corporation’s (SBDC) Business License Finder. Registering a business name can be done through the Australian Government’s Business Registration Service, however, as the process can be complex, McKinley Plowman can assist with this.
You will also need insurance for your new business – this might include equipment insurance, accident and illness cover, public liability, and so on. Employing people will bring with it further legal considerations, such as employment contracts and award rates, workers compensation, OHS requirements, and more.
Locate Your Premises
It goes without saying (but we’ll say it anyway) that you’ll need somewhere to operate your business. It should be affordable for you at this early stage, allow room to grow, and be located in an advantageous location that’s appropriate for the type of business. Some start-ups operate out of the business owner’s home – make sure you are aware of the local government rules pertaining to home businesses and that you can run things effectively from there.
Devise Your Marketing Strategy
Marketing your new business tends to be a bit of an afterthought. This is understandable given the wide range of tasks that need to be undertaken before pulling the trigger on this new venture, however having a plan in place before you kick things off can be beneficial down the line. A marketing strategy for a new business doesn’t have to demand a significant portion of your start-up capital, as a logo and branding suite, functional website, social media strategy, and printed advertising and collateral can often be set up for only a few thousand dollars. Further to this, the benefits of having a solid marketing foundation will put you in good shape for promoting your business in the future.
Money Talks – Do the Maths
Before launching your new business, you will need to have financial projections in place to give some assurances as to the viability of the business, and know what you’ll need to spend in the short-term. Consider the following:
- Start-up capital – initial outlay on stock, equipment, advertising, wages, insurance, leases, vehicles etc.
- Finance – How much you’ll need to borrow, what loan facilities are available for new businesses, and what the lenders need to see to be able to approve finance. Consult a broker.
- Projections – projected profit & loss for the upcoming year, and cash flow projections. This will be especially important for any finance applications.
This covers only a portion of the financial side of starting your new business and keeping it going for years to come. Partnering with an adviser in the early stages is critical to ensure you get off on the right foot.
Prepare a Business Plan
A business plan is a document that outlines the above, ties it all together and acts as a blueprint for the future. A sound business plan will help you identify the viability of your business in the early stages and give lenders the tools to assess finance applications. You can find a comprehensive business plan template on the McKinley Plowman Free Resources page.
Seek Professional Advice Early
We’ve touched on it above, but there’s no getting away from it – the most successful businesses have a team of advisers on their side who can provide advice and specialised professional services from the early stages. Great advisers assist with the start-up phase (e.g. due diligence, business registrations and structure formations), support businesses through growth phases (e.g. structural changes, bookkeeping, ongoing advice, efficiency improvements); and can help facilitate the sale of a business (e.g. succession planning, increasing business value). Access to professionals when you are starting your new business, and all throughout its life cycle is crucial to seeing sustained and meaningful success.
We’ll wrap it up with something that we can all apply, whether in starting and running a business or just in our daily lives – PATIENCE. Not only do good things take time, but many businesses that are run poorly and are likely to fail are those born out of impulsiveness and impatience. Make sure you do your research and plan everything thoroughly as above, and if it doesn’t look viable, see what changes you can make to your business plan. For instance, you might have to push back your plans for a couple of years to build up some capital and then go about starting your new business.
Starting Your New Business – What Now?
If you’re ready to take the leap and start your business, make sure your first call is to the team at McKinley Plowman. Our diverse range of services and advisers cover tax, accounting, due diligence, business improvement, marketing and much more to ensure your new venture has the best start possible and a network of support as it grows. You can reach us via our website or on 08 9301 2200.
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