At the moment, Australia is a haven for startups and small businesses, which means that if you have any entrepreneurial spirit in you, now is time to act. For some people, this is a chance to finally become completely independent and be their own boss. For others, the idea of depending on your own ability to generate profit instead of being paid by the hour is what this is all about. Then, there are some who want to build a name for themselves in the business world or create a legacy. All in all, here are six important things to consider before starting a small business.
Idea validation
The first question you have to ask when you consider starting a small business is – is it really going to work? Sure, you might have thought of a product or a service that people want, however, are they ready to pay for it? In other words, you need to check if there’s a market need for the product. Needless to say, this is No.1 reason why so many startups fail (as many as 42 percent of them fail for this very reason), and just by eliminating it you’ll put yourself in a much more favorable position.
Business structure
The next thing you need to do is decide on what kind of organization you will run. We’re, of course, talking about the shareholder ownership structure of the business. If you own the business in its entirety, you can either run as a sole proprietor or as an LLC (limited liability company) in order to protect yourself from the consequences of failure on your private assets. If you’re not on your own, you can run as a partnership, etc. Keep in mind that this also affects the way in which you pay taxes by determining the tax scheme that applies in your case.
Making it official
As soon as you’re done with these two basic things, you need to start taking steps to make your business official. First of all, you need to think about registering and there is a number of ways that you can get around this. The simplest one is to find a platform to register a company in Australia, seeing as how this will eliminate a lot of paperwork involved in the process. Most importantly, you need to get your tax ID after which you’ll considerably be considered a business. Finally, you need to start working towards using mechanisms that will allow you to protect your IP (intellectual property).
Can you make it
Running a business requires a great sacrifice, which is something that you need to be ready for when starting a business. Sure, you might have worked long hours before but this is nothing compared to the amount of work that awaits those who decide to micro-manage their business early on. Needless to say, this can seriously disturb your social life and make a work-life balance substantially more complex. Just keep in mind not to give up on too many things you care about because this could end up in a loss of motivation, as well.
Maintaining a cash flow
Another thing that could ruin your business is the problem of operational expenses. A surprisingly large number of new entrepreneurs falsely believe that their business can become self-sustainable a lot sooner than it really can. This means that they believe their profit will be enough to cover the cost of the lease on the office space, paychecks, bonuses, materials and supplies. This, unfortunately, isn’t always the case. For this reason, you need to have a bit more money in reserve or the ability to apply for a loan/sell an invoice in the moment of need.
Finding the right team
Lastly, the majority of enterprises in Australia have between 3-19 employees, which means that you have a limited number of positions in your company to fill. This is why you need to be 100 percent sure that the person that you’re hiring is the right one for the job. Remember, you shouldn’t just be looking for someone with work experience and resume to match, what you also need is someone who can fit your corporate culture.
Even though the above-listed may appear to be quite daunting, the truth is that the end result is more than worth it. The longer you remain in the business, the more challenging the tasks will get but you’ll also gain experience and acquire skills that will make it easier to perform these tasks. You should also keep in mind that once your business gains momentum and starts growing, you’ll have plenty of motivation to invest extra effort.
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