You’re finally ready to take the plunge and start your new business. Congratulations, what an exciting time! While there is much to think about and do, don’t worry. This blog post will step you through setting up your business so you can plan wisely for long-term success.
Before you start
Every decision you make before starting your business will likely have a lasting impact on your venture. That’s why taking your time and considering the best options as a business owner is essential.
1. Physical or virtual, assess your business idea
So you’ve got the perfect business idea for a physical or online enterprise, one your family and friends love. While no one wants to dampen your enthusiasm, asking yourself some hard questions before investing time and money into your business is essential. For example, ‘Is my business idea one that could revolutionise the market?’ ‘Who are the brand leaders?’ ‘Are my business’ products or services able to improve on the market leaders?’ If not, can I offer my products and services at lower prices to make them stand out? Read more about creating your own Business Model Canvas.
The four questions our experienced business advisory team often ask are:
- What problem is your product or service trying to solve?
- For whom (target customer) are you solving this problem?
- Are potential target customers likely to want and pay for your products or services?
- Can people get the same products or services elsewhere faster and cheaper?
Researching the answers to questions like these is the best way to gauge the competitive market your products or services will enter. Ultimately the ‘make or break’ of your business will depend on the quality of your market research.
2. Write a solid business plan
With thorough market research supporting the viability of your business idea, the next step is to write a solid business plan. Here are three reasons why
Not only is your business plan a roadmap to business success, but it also saves you money. How? Many entrepreneurs uncover potential pitfalls and discover ways to increase profits when writing their business plan’s marketing, operational strategy and financial forecast sections. After all, finding operational, cash-flow or marketing snags on paper is far cheaper than when your business is up and running.
Just as your business plan can save you money before you open the doors, it can also make you money. Investors and lenders gauge a new venture’s ability to repay a loan on the financial forecasts projected in the business plan.
Lastly, periodically referring back to your business plan when you’re deep in the throes of running your business is a godsend because it helps you check whether or not you’re still on track. Similarly, it reminds you why your business is unique and your potential to stand out from the competition.
3. Register your business name, IP and domain name
With a solid business plan supporting your new business venture, the next step is ensuring your products or services are legally protected.
Is your business name available?
First and most important, is your business name available to use? Completing a check name availability search before registering your business or company name is a necessary first step. Once you have confirmation that your business name is available, you’ll need to apply for an Australian Business Number (ABN) via the Australian Securities and Investments Commission (ASIC). Alternatively, if you’re starting a company, you’ll need to apply for an Australian Company Number (ACN) via ASIC.
Check that your domain name is available
Do you intend to create a website for your business? If so, check if the web address (domain name) you intend to use is available before registering your business. Doing so ensures that your potential customers won’t be confused by a similar or identical web address used by another company.
However, note that you’ll need your ABN to register a web address that ends with .au.
To check your domain name availability, conduct a quick Google search for your proposed business name and see what businesses show in the results. Alternatively, use a free domain name checker. Although, you don’t have to register a web address to start your business. However, owning the domain name associated with your business future-proofs your online presence and protects you from any potential product name infringements – either by you or another party.
Are your product or service names yours to use?
Lastly, ensure that your business name or product name doesn’t infringe on someone else’s intellectual property (IP) or Trademark. The IP Australia website provides a tool to search for trademarks in Australia and internationally.
Why is this important?
Recently, there was a David versus Goliath trademark dispute between Eddie Oygur, an ugg boot maker from Western Sydney and the US retail giant Deckers Outdoor. The US giant sued Oygur after he sold 13 pairs of his boots branded UGG to American customers online.
For many Australians, the term ‘ugg boot’ is generic, referring to the iconic sheepskin-lined boots you either love or loathe. But Deckers owns the trademark UGG in the USA and UK. They claimed Oygur’s use of the word UGG on his products was a trademark infringement when sold in the United States. In 2019, a US court ruled in favour of the Deckers’ claim. As a result, Oygur was ordered to pay statutory damages of $643,000.
4. Choose your business structure
Once your business plan establishes the viability of your business idea, you’ll need to decide on the most appropriate business structure. In Australia, there are four main options, all of which depend on the size and type of business you plan to operate.
- Sole trader: A sole trader is an individual running a business. It is the simplest business structure and relatively easy and inexpensive to set up. You are legally responsible for all aspects of the business.
- Partnership: Involves two or more people going into business together, sharing the income and risks proportionately to ownership ratio. The ratio depends on the partnership agreement, and these are governed by state and territory partnership laws.
- Company: A company is a legal entity separate from the owners. Run by its directors and owned by shareholders, the business structure is complex and comes with high set-up and reporting costs.
- Trust: A legal entity where an individual or company is appointed as the trustee to manage assets on behalf of the trust’s beneficiaries. Profits from the trust go to the beneficiaries.
So before you register your business name, we recommend discussing your proposed business with experienced accountants and business structure experts like our team at Carbon. After all, the business structure you choose determines your:
- Tax liabilities
- Personal liabilities (as the owner)
- Business responsibilities
- Asset protection
- Ongoing costs, and
- The volume of paperwork required.
5. Open a bank account
With the correct business structure and registrations sorted, it’s time to open a dedicated bank account for your new venture. Keeping your private finances separate from your business transactions ensures accurate recordkeeping and can make tax time less stressful. Most big banks offer business banking solutions tailored to meet different sizes, industries and needs.
6. Smart bookkeeping
Establishing a successful business takes more than just seeing an opportunity. Careful financial planning and management play a crucial role in your business venture’s start-up and long-term success. From managing initial capital investments to obtaining financing for future growth initiatives, you should consider all aspects of your financial landscape, including bookkeeping.
Smart bookkeeping is about establishing a reliable accounting system, like Xero, monitoring cash flow and creating financial reports to track the business’s progress. That way, you can monitor your financial performance and make better decisions to increase your profitability or grow your market at the click of a mouse.
7. Build your support network
For your business to reach its full potential, it’s essential to build a circle of experts whose advice you trust. From accountants, bookkeepers and lawyers to financial advisers, finance and insurance brokers, website developers and marketing experts, these professionals provide invaluable guidance as you learn about and grow your business.
Considering starting a business? Our financial experts can help
While starting a business may seem daunting initially, it doesn’t have to be. By following the steps outlined above, you can ensure that your new venture gets off on the right foot. And once you’re up and running? Be sure to check out our blogs on tips for small businesses and how to manage cash flow to keep your new venture moving in the right direction. Alternatively, our expert business support team will have all the answers you seek regarding accounting and tax, bookkeeping, virtual CFO services, financial planning, start-up investments, insurance brokers, and finance and lending. Just give us a call on 1300 454 174 or fill out the contact form below.