BEGINNERS GUIDE TO STARTING A BUSINESS

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Beginners Guide to Starting A Business

People always seem to think successful businesses have a secret. “What’s the secret? There has to be a secret,” right? Well, not exactly. Titans of their industry, your Facebooks, Teslas, Westpacs, and Year13s, all got where they are today with careful planning, a whole lot of sacrifice, and grinding it out day by day. There is no secret to running a business. Success is equal parts preparation and circumstance. So where do you start?

Know your target market and competitors

Are you selling business to business (B2B), or business to consumer (B2C)? What are your customer’s needs, wants, income, and geographic location?

These are important questions to ask when working out who to sell your product or service to. A target market is the group of people your products or services are aimed towards. Understanding who your business is targeting, and where your product or service fits into their lives, is critical to starting a successful business. With knowledge of your target market, you can cater to them and adapt your business accordingly. It also allows you to better assess what the strengths, weaknesses, opportunities and threats of your business are, to create the best plan for the future.

After you have a grasp on who your target market is, you need to start to look at who your competitors are. A competitor, in a business sense, is anyone competing for the same customers as you. Knowing their strengths and weaknesses is important for starting a business, so that you can leverage your own strengths and adapt. Staying ahead of your competitors is a must for a good business.

How to raise funds

So you’ve got an awesome business idea, but might be wondering how you’re going to fund it (sadly, no one has figured out how to get money to grow on trees yet). Capital (that’s ‘money’ in business speak) can be sourced through a range of options - personal savings, business loans, finance leases, venture capital, government funding, crowd funding, etc. – and choosing the right option can be extremely important. Understanding the difference between debt (owing money) and equity (a portion of ownership in a business) is also vital.

If you have access to money, personal funding is one way to go. It gives you full control of the business because you keep 100% of the equity, and you’ll have no debt to worry about. It’s important to remember funding a new business can be risky due to the fact sales and profits aren’t guaranteed and it’s your money that’s on the line, but if you’re successful it might just pay off.

Another option for raising money for your business is to seek funds from investors or banks. If an investor sees potential with your business idea, they will offer you either an equity stake (a portion of the business’s ownership) or a loan (borrowing money to be paid back with interest). Investors are often helpful, as they may give you access to skills, expertise and contacts which could greatly improve your business, however it means you don’t have 100% ownership of your business. Banks on the other hand can be a lot more straightforward, as they loan you money, with an indicated interest rate. They won’t be able to provide you the same advice investors can, but it’ll mean you’ll be keeping the control in your business.

Official government stuff

So you’ve got your idea, and you’ve got your money, now it’s time to deal with the official government stuff. Firstly, you need to choose a business structure. Deciding whether to create your business as a sole trader or a partnership with others is important, as it decides how profits from the business are split, as well as the amount of legal obligations owners have.

Then, it’s time to come up with that killer name and check it’s available here. Once you’re in the clear, register it with the Australian Securities and Investment Commission at http://www.asic.gov.au/for-business/registering-a-business-name/.

You’ll also need to register for an Australian Business Number (ABN). Like most things in the 21st century, you can register online. Make sure you have a tax file number, and read up on whether you will qualify for goods and services tax.

If you don’t want anyone stealing your awesome business concept, then it might also be a good idea to register your IP (that’s your Intellectual Property) online at here. This way you’re protected if someone starts copying your ideas.

Where are any of us without our web space? Register a domain, preferably with the name of your business in the URL, at any number of domain name providers. The cost of having a domain may vary depending on what type of business you wish to run and how much online traffic will be about the site (more money for more servers and all that jazz). Don’t worry about losing your domain by forgetting to renew ownership. Providers will keep messaging you a couple of weeks before this happens like a clingy ex, and even after your ownership expires, there’s a grace period where they let you have first dibs at paying for it before anything is released to cyberspace – but you’re better off staying on top of these things just in case.

To keep things a bit simpler, you can just start a Facebook page and run things from there. That way, you won’t need to be concerned about coding the website, servers, losing the name, or any of that. It won’t be the same, you might have less control, but the option is there.

The fine print

To avoid being in hot water from day one, do yourself the favour of knowing the required legal obligations. Understand the Competition & Consumer Act 2010 (CCA) and Australian consumer law in general. It may seem like another arbitrary list of regulations, but there’s nothing cool about misleading or deceptive business conduct, violating safety standards, or sending out defective goods. Due diligence is key. The CCA sets out to look after the little guy (that’s you!). It prevents contracts, arrangements, and understandings or mergers and acquisitions that give big businesses too much of a monopoly on the Australian consumers. You can also check out the Australian Business Licence and Information Service (ABLIS) for info about all the licences, permits, approval, registrations and codes of practice you need to know about. Another useful tip would be to keep an electronic copy of your records. Revenue, investments, salaries, receipts – keep it all.

This is just the basics of starting a business; more information can be found here or visit Westpac’s Davidson Institute This information is intended to be general in nature and should not be relied upon for personal financial use.
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