Make sure you plan before jumping in to your new business
Setting up a new business from scratch is a really exciting time and the temptation is always there to simply jump in and start doing things, making decisions as you go along. While it is great to get in there and start doing things we think that there are a number of things that you should think through in the planning stages to ensure that you don't get yourself in to trouble later down the track. Here is a list of 10 areas that we think that you should think through in advance of starting up.
1) Structure
Structure is extremely important. If you get it wrong at the outset then you could end up with all sorts of tax and legal issues further down the track. Many small business startups will be tempted to go with a sole trader or partnership style structure however this will not afford you the same protection that you would get if you were to set up a Pty Ltd company or were to operate your new venture via a trust.
Our advice in terms of structure would be to seek professional legal advice up front. Talk to your lawyer about who the stake holders are going to be and how the business is going to be funded going forward. Also talk to an accountant about your own personal situation and find out from them if there is a way to minimise your tax liability and protect any existing assets that you have.
In addition to getting your structure right, you should talk to your advisers about any permits you might need or any specific licensing that is required for your style of business. Your lawyer should have a good idea in terms of what the requirements are from a national, state and local council level.
As well as obtaining any permits and licenses that are required you will also need to register for a variety of taxes such as PAYG and GST. Once you have your new structure in place with the appropriate registrations then your accountant should be able to help you to put all of these registrations in place.
2) Market Intelligence
Before launching into a new market it is essential that you gather as much information on that market as you can. If you have already been working in the area elsewhere then you probably have a good overall understanding however you may not be familiar with the specific location that you are considering launching in.
A good first step is to get out and talk to as many people as you can in your target market. This may involve physically visiting local businesses or knocking on doors or it may also involve getting an external company to carry out surveys or telephone interviews. Either way, it is important that you try to gather as much information as possible about your target market and your target customers.
Another suggestion in relation to determining the viability of a particular location or market is to put together a SWOT analysis. SWOT stands for strengths, weaknesses, opportunities and threats. The SWOT process is a system where you spend time assessing each of the components and then weigh up the relative impact of these components. The idea of the SWOT analysis is to ensure that the strengths and opportunities far outweigh the weaknesses and threats. One of the major benefits of doing a SWOT analysis is that it forces you to focus on some of the negatives rather than simply thinking about the positives.
3) Accessing Your Market
Once you have a good understanding of your market and the economic forces that are at play you need to get a feel for how you are going to bring in the actual business. If you already have a customer base that you can target then you are one step ahead however for the majority of businesses out there you will need to work out how you are going to get your business name in front of decision makers.
Traditionally, accessing your market would have been done by physical sales people, either mobile individuals who go out and visit clients or a telesales team who make and recieve telephone calls. These days it is much more likely that you will generate sales for your new business via the internet. If your intention is to generate the business via the internet then you need to have an idea of how you will be driving this internet based traffic, will it be via emails, pay per click advertising or from SEO.
4) Physical Presence
Back in the old days there was very little choice in terms of physical presence. Either you got yourself an office or you operated your business from home. If you opted for an office then you would need to guess in terms of just how much space you need, how many people you will have in the office and what general areas you need to service your customers. If you opted for a home based business you would need to work out how you are going to meet with your customers and where the work is going to get done.
Nowadays there are a whole range of options for potential business owners. You can still opt for a physical office if you want however you could potentially opt for a virtual office, a serviced office, a shared workspace or a hot desk environment. From our perspective we think that it makes sense for a startup to go virtual while they are getting an understanding of the size of their market and their requirements in terms of people. With a virtual office you can get the benefit of having a prestige CBD address without the added cost. Also, with many virtual office offerings today you can also get the option of using meeting rooms and hotdesking facilities (at a small fee) when you need them.
5) Staffing
How long is a piece of string? Quite often when you start a new business you have absolutely no idea how many people you will need. Unfortunately, Australian employment laws don't make it particularly easy if you employ too many people and then have to let people go. An easier option for a new start-up business is to opt for virtual employees for the first few months or years. There are a whole range of tasks that you can outsource to virtual staff including your telephone answering, your bookkeeping, cleaning, marketing, general assistant work and more.
Our advice is to keep all of your core tasks internal. You don't want outsourced staff making key strategic decisions however once you have made those key decisions you can get your outsourced staff to carry out the tasks.
6) Cash Flow Planning
Poor cash flow management is one of the major causes of business failures for small to medium sized businesses. It is vital that from the outset you put together a cashflow forecast and then manage that cash flow going forward. While it is unlikely that you will know all of your inflows and outflows from the outset it is important that you formalise the tracking of these items.
If you are not particularly accounting minded then it may be an idea to get your accountant involved or find yourself an accountant or bookkeeper who can help you to piece it all together.
7) Website, SEO and PPC
Everything is on the internet these days. We see it as absolutely imperative that all new businesses should have a web presence and it is something that you should be thinking about once you make that decision to start your business. Getting a professional website built can take anything from one week to several months so it is something that you need to start earlier than later. Also, don't scrimp on the cost, having a great website versus having an average one could be the difference between your business working and not working.
Integral to the development of your website should be the development of an SEO plan. SEO stands for search engine optimisation and refers to the way that you structure your website such that it will be found by Google and the other search engines. SEO is vital if you want to drive organic traffic to your website and if you don't understand how it works it is probably advisable to get some advice from someone who does.
The other way of marketing your business through the internet is via PPC. PPC refers to pay per click and encompasses a number of different technologies like Google Adwords, Bing Adwords, Google Shopping and banner advertising. PPC is a great way to drive quick traffic to your website and if you do it properly you can really hit the ground running. Like SEO, if you don't understand PPC or can't learn it quickly then it is probably a good idea to talk to a professional.
8) Accounting System
Prior to launching your new business it is a good idea to have already decided on the accounting system that you want to use. Most of the big accounting software providers these days like Xero and MYOB are now online so you have the opportunity to access your information from a variety of platforms and a variety of devices. If you are unsure of which system is going to be best for your circumstances it might be an idea to talk to your accountant or your bookkeeper and get their advice on the best platform to use.
9) Social Media
Whether you like it or not, social media has become a huge part of business, especially in the technology and online sector. While it is not absolutely imperative that you have your social media strategy sorted by the time you launch your business it is probably a good idea to launch your social media accounts at the same time as launching your website. Prior to setting up every different platform however, it is probably a good idea to think through what type of platform is going to appeal to the types of customers that you want to target. Once again, if you don't have a lot of experience in this area then it would be advisable to get some advice from someone who does.
10) Work/Life Balance
While it is not overly important when you first start your new enterprise it is extremely important once you get 6 months in. If you don't maintain a reasonable work/life balance you will quite quickly burn yourself out and your new venture will end up being more of a burden than a blessing. One way to ensure that you have a good life balance is to make sure that you have adequate support when it comes to the administrative side of the business. Make sure that you have good competent people that you can outsource to and that you can bring in when you really need them.
Summing Up
Starting a new venture can be an extremely rewarding task however, to ensure that your new venture is viable in the long term we would suggest that you make sure that you structure things correctly from the outset.