There are a plethora of benefits to running your own business: flexibility, independence, satisfaction in honing your own idea and the potential for building an asset that you can then pass on to your children.
But there is a lot of hard work that goes in to running a business. You have to put in the long, hard hours to make your business sustainable. There is also a great financial risk involved in running your own business. You will be leaving behind company benefits such as superannuation and paid leave, as well as a secure pay packet from your current job. Your personal assets might also be put at risk.
Before you start your own business, you need to consider some serious questions.
The Checklist: Are Your Ready to Enter the Business World?
Before you start your own business, you need to consider the following questions to ensure that you are ready to enter the business realm:
1. Do you have the motivation and discipline to continue when the times get hard?
2. Do you have the relevant experience in the industry?
3. Can you afford an accountant or have the solid understanding of how to control your own books? Should you hire trusted bookkeepers Melbourne?
4. Are you a clear and effective communicator?
5. Are you efficient with problem solving? Especially when there is a lot of pressure?
You must be able to plan your new business venture effectively; you need to ask your yourself the following:
1. Have you conducted enough research into the current state of your idea’s market? Do you understand the customers you will be targeting as well as your competition?
2. Is there a clear market for your business venture? Are you filling a gap or entering a market where demand outweighs supply? Are you providing a point of difference from your competitors?
3. Do you have the proper funding to cover the initial costs? What about the first couple of years of operation where the cash flow may not be too steady?
4. Do you have an effective business plan for the first 12 months of operation? This includes the cash, marketing plan and projected costs of operation?
If you found yourself answering ‘yes’ to the above questions, it sounds like you may be ready to start your business. However, if you answered ‘no’ to many of them, you might have to find the suitable support before you continue.
Where You Can Find Help for Starting Your Business
There are plenty of places you can find help to greater understand starting a business. These places include:
• Existing Research: If you want to learn more about your industry, look for existing market research and, of course, conduct your own. IBISWorld provides independent analysis and research reports for more than 500 business industries. You can also gain access to IBISWorld reports at Victorian Government Trade and Investment (VGTI) offices. They are free and simple to navigate.
• Upskill: You can attend a Small Business Victoria workshop on financial management, business planning, marketing and more.
• Mentors: Mentors provide sound advice on how to start and manage a business. They also provide specific industry insights which are incredibly valuable for people starting their own business. Small Business Mentoring Service will help you find a mentor with valuable experience in the industry.
• Contact a Business Adviser: If you require financial help, it’s a good idea to contact someone who is professional accredited. Accountants who are registered with the Institute of Chartered Accountants can help with financial statement and taxation. Financial planners who are registered with the Financial Planning Association of Australia will help create short and long-term financial goals, including estate planning and investment advice. They can also help you prepare a financial plan for your business.
• Work Experience: It’s never a bad idea to gain some work experience in your chosen industry whilst maintaining your current job. If you’re looking to open a retail store, for example, consider taking a position at a clothing store to find out if it is definitely something for you.
How to Get Started
Your experience and personality can help put you in the direction of the type of business you should create.
You can do the following:
• Start a New Business from the Get-Go: This is, of course, the riskiest method of starting a new business, but can also provide the biggest reward. Marketing, pricing, legal requirements, staff, stock and other necessities like business cards printing are just a few of the big decisions when starting a business from scratch.
• Purchasing an Existing Business: Purchasing an existing business provides you with a proven track record for its operation. You’re buying the crucial contacts (customers and clients) as well as the business’s physical assets. It is essential that you ensure that financials of the business are in order before purchase. Consider speaking with a finance professional to see if buying the specific existing business is for you.
• Purchasing a Franchise: Franchises are existing ventures that have a successful business model. Purchasing a franchise reduces some of the risk for the business owner. A renowned franchise will have a proven track record in business, will provide support for marketing and operations as well as having an established market. You purchase the rights to an existing franchise or create a new one. However, franchises are expensive to invest into, so ensure that you have the proper finances before investing in one.
Understanding Long Service Leave in Small Business
Long service leave is also something that needs to be considered when starting a small business. Although you may not have any liability for long service leave until your employees have worked with you for seven years’ service, it’s still important to plan ahead for long service leave. You also must ensure that the necessary records are kept for your staff and their long service ambitions.
Example: Sarah Starts Her Own Small Business
Sarah is ready to start a small business. She will employ three casual staff initially.
She has researched tax, pay rates, workers compensation insurance and superannuation but she figures she will put off long service leave until down the line. She also thinks that long service leave doesn’t apply to casual employees regardless.
Because she hasn’t planned ahead, Sarah is at risk of financial liabilities a few years down the line.
Buying a Business and Long Service Leave
If you are a person wanting to purchase a business but will continue to employ the current staff, you likely have to acknowledge their services from when they began working at that business.
Example: John Purchases a News Agency
John has purchased a news agency. He continues to employ the pre-existing staff from the previous owner. However, he has opted not to acknowledge to employees’ pre-existing service with the news agency’s previous owner, as that owner paid out all annual leave to employees before John purchased the business.
John didn’t realise and as a result is legally required to acknowledge the pre-existing service of employees at the news agency which transferred over for the purpose of long service leave.
An employee who has stayed at the business for over 10 years has requested that they use their long service leave. John has to somehow find the money to finance the leave.