Before You Start Your Business Engine
Over the past two decades we have literally helped hundreds of clients negotiate their way through the business start-up phase which can be a bit like a maze for the uninitiated. In the process we have identified some key elements you need to address and they extend way beyond your choice of business structure, accounting software selection and various tax and business registrations.
When selecting your business structure (sole trader, partnership, trust, company etc.) you need to consider asset protection, the potential admission of new partners and your eligibility for the discount capital gains tax concession. With accounting software the wrong choice can be disastrous and there are so many options out there with price tags to match. While we certainly have a preference for programs like Cashflow Manager, Xero and MYOB we need to assess your business needs and level of accounting skill before we make a recommendation. It's certainly not a ‘one size fits all’ approach that some accounting firms push. In my view that is lazy and the software needs to match the client not the skills of the accounting firm. Incredibly, we still pick up new clients who have been using the same software since the introduction of GST in 2000 and for thirteen years they have struggled to cope, paid excessive accounting fees and produced nothing but computerised shoebox records. Part of our client brief is to minimise the cost of compliance and this means every business uses software that matches their business needs with the owners level of accounting skill.
Of course, during the start-up phase there are simple things like GST, ABN and TFN registrations to complete and if you are employing staff you also have to consider HR issues plus register for WorkCover and the Superannuation Guarantee. According to 2011Doing Business Report by the World Bank, Australia is the second easiest place in the world to start a business with entrepreneurs needing only two days to get a business registered and operational. That supports how simple the process is but before you pull the trigger you need to assess the viability of the business which necessitates the preparation of budgets, forecasts and cash flows. This might mean identifying your best and worst case scenarios and potentially canning the idea or possibly refining the product, prices or offering. We do a lot of financial modelling with clients to get all this right before the official launch because it can prove catastrophic.
While starting or buying a business necessitates research, risk, passion and courage, the most important ingredient is planning. Clearly, the old saying, ‘people don’t plan to fail, they just fail to plan’ still applies. It remains both valuable advice and a warning for people intending to start a business. A business plan that outlines the 'big picture' for your business usually incorporates a marketing plan and supporting financial projections. We give clients our start up expense checklist to identify all their business start-up costs and they usually get a shock when they miss items costing thousands of dollars. From there we help them produce revenue estimates and financial forecasts based on a number of assumptions. During this phase we play devil’s advocate by constantly asking ‘what if?’.
The GFC, technology and the internet have changed the business landscape in this country. Websites are the 21st century business card and depending on your target market, social media could be your most important marketing channel. The harsh reality is that enthusiasm, money, hard work, talent or a great idea is not enough to guarantee success in business. You also need to have a marketing plan and blueprint for the future of your business.
Over the years we have developed a number of practical tools and checklists to help clients fast track through the start-up phase but unfortunately many people starting or buying a business fail because they don't seek or receive the right professional advice from the outset. A new tool we have just created is our Checklist for Business Start Ups that will guide you through some key issues with links to help you source more detailed information. We hope you find it useful and we are very proud of our reputation as a business start-up specialist. Financial aspects aside, we enjoy helping clients with their marketing, branding, slogan, logo, website, search engine optimisation and social media strategy. Our role is to support and guide you through the process and it starts with the right advice.