By Hannah Nicholas, ninemsn Money
Got a great idea for a new business? Thinking of branching out on your own but not sure where to start?
We’ve got the low-down on all you need to get started in establishing a small business. After all, a great idea isn’t all it takes, think careful planning, research and execution it’s vital you get the basics right before you start.
1. Researching your business idea and developing a business plan
Before starting a business, you need to answer the following fundamental questions.
- Is your business idea viable?
- Is there a market for your product/service?
- What is that market?
- Who are your competitors?
- Do you have the financial capacity to get the business up and running?
These questions will be answered once you begin to research the market into which you wish to enter and when you set about establishing a business plan.
Researching your market
Whatever the product or service you are going to be offering, you need to be sure there’s a market for it and that you can reach the right target audience too.
Take a good, long look at the market you wish to enter. In the long run, this research will also help you to evaluate the best forms of marketing for your business.
Research and look at the following:
1. Competitors. Examing your competitors will be vital for ensuring the success of your business. Find out:
- Who your direct competitors are?
- How successful are they and why?
- What are their strengths and weaknesses?
- What marketing do they undertake?
2. Reports and statistics. Look for information in market reports, government statistics, journals and industry association publications.
Once you’ve conducted this initial research and ensured your business idea is feasible, it’s time to formulate a business plan.
Establishing a business plan
A business plan is essential for any business, no matter its size. Generally a business plan should cover the following:
- your business goals
- marketing initiatives
- industry research
- operations/management plan
- financial plan
Remember, your business plan should be an ongoing initiative which is reviewed regularly. After all, it’s the blue-print for getting things right.
Having finance and the right amount of it is crucial for the ongoing success of your business. Your business plan should cover you financial arrangements for start-up.
Be sure to contact your local banking or financial institution for finance options. Consider other sources of finance too. For the best advice, consult a business advisor and accountant and have a solicitor look over any loan contract.
2. Naming your business
The name of your business could have big impact on its future. So take the necessary amount of time and steps, to get it right.
When choosing a name, consider the following:
- Competitors. Look at what your competitors have named their businesses and try to set your business apart.
- Business goals. What do you want to achieve with a name?
- Branding and marketing. Will the name work in the marketing and branding initiatives you have set out in your business plan?
- Market/customer appeal. Choose a name that’s easily remembered and one that’s easy to spell and pronounce too.
Get others involved and brainstorm ideas around the room. Once you have a few options, try them out on different people to see their reaction. Check with the Australian Securities and Investment Commissions National Names Index to see whether your chosen name has already been registered this way you’ll know whether the name can "officially" be used.
Once you’ve decided on a name, do not forget to register it with the proper channels (see below for how to register a business name). You should also ensure that your chosen business name does not conflict with any registered trade marks. This can be done through IP Australia.
3. Choosing a business structure
There are several different types of business you can operate under here’s a brief overview of your options.
Sole trader: a type of set-up whereby the business has no separate legal existence from its owner. You can use a business name or your own name and as a sole trader you are responsible for the liabilities of your business.
Partnership: unlike a sole trader, a partnership involves two or more people starting a business. All partners legally share profits, risks and looses according to the partnership contract (which is established at the onset of the business).
Company (Pty Ltd): a proprietary limited company is the most common type of company used by small business. Unlike partnerships and sole traders, it has more regulatory requirements and is a legal entity separate from its shareholders/owners.
In order to choose the right business structure, it's best to seek legal and professional advice before making a final decision.
4. The regulatory requirements of starting a business
Registering a company
All companies need to register a company name and Australian Company Number through the Australian Securities and Investments Commission (ASIC).
According to ASIC, when a company is registered under the Corporations Act 2001 it is automatically registered as an Australian company. This means that it can conduct business throughout Australia without needing to register in individual State and Territory jurisdictions.
Registering a business name
You are required to register your business name with the appropriate State/Territory authority (you can find a list at http://govforms.business.gov.au/). However, this is not necessary if the business is conducted under your name or your business partner(s); that is, first name and surname, or initials and surname.
Registering your business name as a trade mark
At the start of your business, you might want to consider registering your business name as a trade mark to give you the right to use your business name as a means to distinguish your product/service from that of other businesses. IP Australia has more information on this.
GST, ABNs and TFNs
If you expect to have annual sales over $50,000, you have to register for Goods and Services Tax (GST). If you register for GST, you will need to apply for an Australian Business Number (ABN), register online with Australian Business Register.
Sole traders can use their own personal Tax File Numbers (TFNs) but partnerships and companies need to apply for their own. For more information, contact the Australian Tax Office.
State government licences
All states and territories are responsible for different business licences, permits, registrations and certificates. You will need to check with the appropriate state government body.
You need to check with your local council to find out about zoning, health regulations and whether you need to lodge a Development Application or Building Application before your business can start.
Domain name registration
Whether or not you will be establishing a website for your business in the early days, think about registering your preferred website name early on if you want to have an Internet presence at any stage. You can search for and register a domain name at Melbourne IT. For more information on domain names, visit Australian Domain Name Adminstrator.
5. Finding the right premises
When looking for a business premise, you should consider the following.
- Location. Do you need to be located close to customers or are you able to service your clients remotely via the telephone or over the Internet? Do you need to be located close to suppliers?
- Necessary features. What features must your premises have? i.e. size, street frontage, show rooms, parking or other special facilities.
- Lease or purchase. Do you intend to lease or purchase your premises?
- Working from home. Do you plan to operate your business from home?
- Security. In any premises you consider, you’ll need to look at having the right level of security. Consider things like fencing and gates, lighting, entry and exit points.
6. Insurance protecting your business
Often overlooked but one of the most important parts of setting up a business, you must make sure you have the right insurance in place. After all, your business will be your livelihood.
What type of insurance will you need?
Depending on the type of business you’re running and the place from which you will be running it, you’ll need to consider insurance for the following.
Fire/other events: this is a must-have for any business operating from a premise. Depending on the insurance company, you will generally be covered for loss/damage from fire, storms, malicious damage or vandalism and accidental damage. Cover your business for damage to glass windows, signs and counters at your premises as they are often not included under fire/accident insurance.
Theft: be sure to protect your money, contents or stock from theft.
Legal liability: this type of insurance covers your business if you are sued for causing personal injury to another person (other than employees) or damage to property owned or controlled by someone else(public liability) or in connection with a product sold or supplied by your business (products liability).
Business interruption: this will cover you for a reduction in your business income as a result of damage to your property. There are often different levels of protection on offer.
Business vehicles: cover your business vehicles against accident, theft or attempted theft and fire.
Personal: if you’re going to be self-employed, look at purchasing life insurance and income protection insurance too.
- Shop around for the best deal.
- Make sure you do not under insure your business.
- If you're working from home, don’t assume your general home and contents insurance will cover your business.
- If you rent your business premises, your landlord's insurance could leave you out of pocket.
- Seek advice to get the right insurance cover for your business.
7. Develop a marketing plan
Following on from the ideas raised in your business plan, you should put together a carefully thought out marketing plan. There’s no point having a great product/service if it isn’t going to reach your target market.
Whether you want to build a brand or simply advertise your services, there are lots of initiatives you can take. You might not have the biggest marketing budget, but don’t let that stop you from being creative with your marketing plans.
NSW Small Business says your marketing plan needs to answer the question: why am I in business, what do customers want and why will customers buy from me and not my competitors?
According to the Australian Government’s business.gov.au, “a good marketing plan sets clear, realistic and measurable objectives, includes deadlines, provides a budget and allocates responsibilities.”
Make sure your marketing plan covers:
- analysis of your current market
- your business objectives
- key strategies
- steps to achieving your objectives
- proposed budget
- implementation plan
8. Financial records/accounts
In order to ensure the smooth running of your business you should keep financial records to fully understand your operations and financial situation. This should begin from the word go. Think about employing an accountant to help you sort through the piles of paperwork and accounts.
Financial reports: check with ASIC to see whether your organisation is legally required to lodge certain financial reports.
Tax requirements: check with the Tax Office for any tax obligations with which your business must apply.
9. Employing staff
Employees will be one of the greatest assets of your company, so spend the right amount of time and investment to find good people.
As an employer, you have certain obligations under common law. You also have obligations under federal and state and territory laws, industrial awards and agreements, tribunal decisions and contracts of employment.
For information visit;
10. Where to get help
State Government small business advisory services
- NSW www.smallbiz.nsw.gov.au
- ACT www.business.act.gov.au
- VIC www.business.vic.gov.au
- NT www.nt.gov.au/business/
- SA www.southaustralia.biz
- WA www.sbdc.com.au
- QLD www.sdi.qld.gov.au
- TAS www.development.tas.gov.au
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