Starting and growing a business is a very rewarding experience. You can be your own boss, pursue your passion and enjoy greater flexibility. However, it also involves long hours, frustrations and setbacks.
If you’re reading this article, we’ll assume you’ve already made the decision to start a business and are looking for some guidance on how to get going. Congratulations!
But before you dive in, it’s important to consider what life as a business owner might look like.
Think about your income
Running a business can mean long hours, few holidays and irregular personal income – particularly in the early years. If you can afford to pay yourself a salary, the amount and frequency of payments will most likely be affected by the profits and expenses of your business. Do you have enough capital and flexibility to weather the lean times?
Consider your personal goals
When you run a business, you may find that you simply don’t have the time or money to meet your personal goals. That dream holiday and other goals like paying off your mortgage or spending more time with your family may need to be put on hold while you work towards achieving business goals.
How well do you tolerate risk?
Starting a business is risky and new businesses often fail during the early years. Understanding what could go wrong and how this risk would weigh on you and your family is an important consideration.
Is there a market for your business?
Many new businesses fail because the market for their products or services is too small to support them. Before you start your business, you’ll need to thoroughly research your market. Some things to consider are the size of the market, your competitors’ strengths and weaknesses, your points of difference, and the sustainability of demand for what you’re selling.
Do you have a business plan?
Operating without a business plan can cause a business to lose direction and exceed its budget. A business plan details how you will handle all the important aspects of your business. It maps your current situation, identifies your goals, and allows you to plan for the future. It’s also essential if you’re looking to secure start-up finance from a lender.
If you’re not sure where to start or what to include in your business plan, you can contact your accountant for assistance or check out this downloadable guide from Xero.
Do you have enough capital?
Carefully consider and document your capital requirements when planning your business. You’ll need enough capital to sustain the business until it breaks even and consistently returns a profit. We recommend overestimating, rather than underestimating.
Calculate key figures such as break-even point, gross profit and net profit. These will help you estimate the level of sales you need to cover costs and make a profit. If you’re not confident with your level of accounting knowledge, ask your accountant for help to calculate these. You can find out more about understanding and managing financial metrics in our Business Basics articles:
- The 8 key numbers every business should monitor
- Understanding profit and loss reports
- How to read and use a balance sheet
Do you have all the business skills required?
Once you have decided that your idea could work as a business, you should take the time to consider whether you have the necessary skills to run your new business successfully. While you may have plenty of industry skills, there is a difference between industry knowledge and business knowledge.
If you don’t have all of the necessary business skills right now, that’s fine, but you’ll need to have a plan for how you’re going to address these gaps. Do you have the time to undertake training to improve your business skills? Could you outsource specific tasks? Can you afford to hire the right staff to complement your skills?
Do you have a plan for growth?
Learn more about ways to grow your business in our Business Growth Guide. We cover three key growth strategies to help you win more customers, increase their lifetime value, and improve your effectiveness in delivering your service.
Are you already in business?
Many small businesses start out as hobbies. Perhaps you’ve been selling at markets or online, or perhaps you sometimes use your skills to help family and friends.
While these activities may not be considered a business, the more formal and regular your selling activities become, the more likely you are to be considered a business and subject to the legal and tax obligations that accompany that status. If you’re already undertaking some business activity you may need to transition to a more formal business structure. You can read more about that in this article.
Starting, buying or franchising?
There are several ways to start a business, each with benefits and challenges. There is no right answer and the type of business that’s best for you will be guided by your interests, passions, skills, financial situation and goals. Whichever path you choose, it’s going to be an adventure!
In this article we look at the pros and cons of each way of starting a life as a business owner.
Choosing an ownership structure for your business
There are several different legal structures which can be utilised to own and operate a business.
Choosing the best legal structure for your business is important as each structure has different rules regarding issues such as tax, liability, succession, ownership and disposal of the business.
You can read about the different types of structures and the advantages and disadvantages of each in this article.
For everything you need to know in one comprehensive guide, download our Starting a Business Guide. In this free guide, we’ve put all the information in the one place, so you don’t have to go searching. We’ll take you through each step of starting a business, give you options to consider and help you understand what’s ahead.
If you would like some help to get your business off the ground, we invite you to contact us for a chat. You can reach us on (07) 3023 4800 or at email@example.com.
You can find out more about working with Marsh & Partners here. As your Absolute.Account.Ability partner we’re on a mission to make your business life better. We’ll help you set goals for your business, devise an Action Plan to make them happen and meet with you regularly to ensure you stay on track.
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