So you’ve decided to venture out on your own and start a business. First, congratulations on taking the plunge! Being in business for yourself has personal rewards above and beyond any monetary success you might achieve. There’s independence and autonomy — and knowing that every major achievement is the result of your own blood, sweat and tears.
Whether this is something you’ve been dreaming about or just an idea that’s recently struck, you need to make a plan before you fully dive in. This guide will walk you through the steps required to start a business. Once you’ve checked all these off, you’ll be ready to hit the ground running.
Five Frequently Asked Questions About Starting a Business
How do you start a business?
There are several critical steps involved in starting a business. They include writing a business plan, securing financing or funding, researching and choosing a location, registering your business, complying with tax requirements, and filing for any licenses or permits you may require.
How do you write a business plan?
A business plan is like a structured blueprint for how you’re going to start, run and grow your business. Key components include an executive summary, business description, market and competitive analysis, your service or product scope, an operations plan and any financial considerations.
Our guide to writing a business plan is a great place to start.
How do you finance your business?
There are a various ways you can finance your new business venture, including traditional bank loans, Square Loans, asking your friends and family, or other sources such as alternative finance providers.
How do you decide on a business structure?
Your business structure may vary depending upon what you’re offering. In Australia, there are four main types:
Sole trader: This is usually the most appropriate when you’re a freelancer or running solo.
Partnership: An association of people who carry on a business as partners or receive income jointly.
Trust: This is when a trustee holds property or business assets for the benefit of others (known as beneficiaries).
Company: A distinct legal entity that is regulated by the Australian Securities & Investments Commission (ASIC).
Speaking to your accountant, solicitor or business advisor help you determine the right business structure, taking into consideration your access to finances and tax implications.
What paperwork do you need to do to start a business?
To start a business, you need to register your business and your business name with the Australian Taxation Office (ATO), get an Australian Business Number (ABN), register for Goods and Services Tax (GST) if applicable, and then obtain any licenses or permits your business type may require.
Write a business plan
A unique business idea is great, but you can only see it through to its full potential if you lay the groundwork. That’s why a solid business plan is the first crucial step in starting a new business.
There are two core reasons why a business plan is a great foundation from where to start your work. First, it’s a blueprint for how you’re going to start, run and then grow your business — something you can look back on for reference, and to measure your successes and failures against. Second, if you’re looking to raise funds externally for your venture, you need a business plan to show that you’ve thought things through carefully.
A solid blueprint is critical for your prolonged success.
When it comes to writing a business plan, there’s no one size fits all. To land on the plan that fits your business, there are a plethora of options to help get you started. You could enroll in a course in a local TAFE, investigate an online course or look at online examples from other entrepreneurs who are sharing their experience and lessons.
Although business plans may vary from business to business, each will typically contain several key components. The following sections follow a standard business plan template — and can also include visuals, graphs or projections where you feel they’re appropriate. Length may fluctuate depending on what you’re trying to do, but typically, business plans are between 15 and 20 pages long. Here are some of the key sections to include:
An executive summary
As the first section of a business plan, an executive summary should be a top-line synopsis of your business and how you plan to accomplish the goals you’ve set out to achieve. As the executive summary is often the first impression of your business idea on your audience, it’s also considered to be the most critical. You might consider writing your executive summary after you’ve completed all the other sections of the business plan — so you know which key elements to highlight.
Think of this section like your elevator pitch; how would you concisely answer the question “What’s your business all about?” This section should also include detail around your market opportunity, where you see the most potential and why.
Here’s where you dive deeper into the specific marketplace that your business is entering. What relevant data points would help people get an idea of your business segment? What’s the total audience size? Where are the weaknesses in the market and how will you fill that gap? Be specific and concise here so that your analysis and data points do not overwhelm your audience.
Walk through your competition — what are other businesses in the space doing well and where are they falling short? Competitor analysis is a critical part of your marketing plan, as it gives you a 360-degree assessment of your current and prospective competitors’ strengths and weaknesses. A good competitor analysis is both offensive and defensive — it should help you identify healthy opportunities as well as potential threats. If you don’t currently have competitors, walk the reader through how you’ll continue to stay ahead of the game should another business choose to enter the market.
Service and product line
This section details exactly what type of service or product you’re offering. Be sure to include any copyrights, as well as research and any associated development that might be required to offer your product or service.
Operations and management plan
Present a clear picture of how you’ll actually run the day-to-day operations within your business. Will you need employees — and if so, how many? A space for shipping or inventory? Describe all of that within this section.
Here’s where you talk money. First off, how much do you need to start? And then what investment is needed to grow? Detail any capital you already have saved, and if you need more, your strategies for procuring it.
Seek additional training and resources
It’s rare that you have all the skills you need to start and run a business — especially if you’re doing this for the first time. For example, if you’re starting a coffee shop, you may want to take a barista training course. On the other hand, you may be skilled in your area of expertise (performing facials in a beauty salon), but might be shooting in the dark when it comes to running the day-to-day financials of your business.
Write a list of all the areas where you could use a little coaching. Then seek out training or education to fill those gaps. Local TAFEs or online courses are a great way to get additional skills and training affordably. Here’s where you may also seek out mentors, or even ask fellow small business owners how they got up to speed.
There may be areas, however, that have too steep of a learning curve to tackle on your own — legal or tax considerations, for example. In these cases, it’s best to seek out professionals who already have years of training and degrees in those disciplines. When hiring these people, be sure to do extensive research and call references to make sure you’re bringing on a reputable source with the right experience to service your needs.
Find a location
Where will you be conducting business? This decision can vary widely based upon what type of business you’re running. If you’re a tradesperson, for example, you may not even need to rent a physical office. If you’re planning to open a beauty salon, on the other hand, you need a space you can use to host appointments with clients.
Choosing a physical location is one of the most challenging aspects of starting a business, but it’s also one of the most important as it requires the most research and planning. First, you have to understand zoning laws and have a solid grasp on all of the financials (like any licensing fees, insurance or hidden costs) associated with renting a space. For help with this, speak with your city and neighborhood councils, or consider bringing on a professional to help.
Aside from laws, fees and regulations, you should also consider your brand image, the safety and accessibility of the neighborhood, your proximity to any goods or service providers and suppliers you plan to work with, and any business expansion possibilities you may explore (for example, if you want to expand your physical footprint, is there potential to do so in neighbouring shopfronts). Talk to fellow business owners in the area and do market research on neighbourhood and city demographics to help inform your decision.
Seek financing (if necessary)
If you don’t have the capital required to start your business, you need to seek financing — this is where your business plan will come in handy. Luckily, there are a number of avenues for securing small business financing, whether you go down a traditional route (such as financing through a bank or alternative provider) or ask friends or family for money. But before accepting money from any of these sources, there are some questions you need to think through.
For example, evaluate how you’d like to structure ownership of the business. If you don’t want to give up a stake, bringing on investors may not be the right option for you. If you’re accepting a loan or financing from an institution, be sure to read all the details. You should be careful about how much money you really need — and do meticulous math on how long it will take to pay it back. It’s also worth running a break-even analysis to gain some insight into how you’ll manage your finances.
Understand the tax and legal implications of your selected business structure.
Decide on your business structure
There are a number of different ways you can set yourself up as a business. Each type of business structure has a variety of tax and legal implications. We recommend consulting your accountant and lawyer before officially deciding on what form of business entity you want to establish, as they will be able to provide you with advice around the structure which will best suit your taxation goals. The Australian Taxation Office (ATO) website also has good information to guide new business owners about the small business company tax rate here.
In Australia, there are four main types of business structures to consider: a sole trader, a partnership, a trust and a company. Check the Australian Government Business website for more detailed explanations of each of these business structures.
Choose a name and do all the required legal paperwork
It’s time to get up and running. First: decide on your business name (a critical exercise in branding) and register it with the Australian Securities and Investments Commission (ASIC). ASIC is a federal-level register, so you shouldn’t need to do this on a state-by-state basis.
Now for all the legal paperwork. You’ll need to determine the tax implications of your business structure (and whether you’ll be registered for GST or not), and whether you’re entitled to an Australian Business Number (ABN). Your lawyer or accountant can advise you on the above decisions, and there is also valuable information available on the ATO website here.
Starting a business requires that your legal paperwork is in order.
Depending upon what type of business you’re operating, you may also need to register for specific licenses or permits (for example, a bar serving alcohol requires a liquor license, which is issued on a state-by-state basis). Be sure you have all the relevant licenses or permits you need, checking on both a federal and state level, before you open the doors.
If you’re planning on hiring a team of employees, now is the time to familiarise yourself with your legal obligations as an employer. This relates to federal, state or territory laws, industrial awards and agreements, and your contracts of employment. Verify what you’ll need to ensure you are dotting your i’s and crossing your t’s from the beginning.