The following article is a guest post.
It can be very tempting to set up on business on your own instead of spending all your time working for someone else. However, you need to be aware that it’s not a simple process and you will have to put in a lot of hard work if you want the business to survive and thrive. It’s also worth considering the fact that what you love as a hobby may not have the same appeal if you do it for a living.
Once you have made the decision to start up in business, you need to do your research. It’s important that you know something about your competition and the demographic of potential customers before you start out. Then it’s all about practical considerations such as premises, finances, marketing, furniture, IT equipment; the list is long. We are going to try and make things a little easier for you by looking at some of the things you will need if you are starting a business in 2017.
Obtaining an ABN and registering the business name
If you are starting a small business, you will most likely be a sole trader or a partnership. If this is the case you need to apply for an Australian Business Number (ABN). This number helps to identify you as a business. It can also provide benefits when it comes to the payment of tax. Once you have an ABN you should register your business name. The two are then linked together so that your business can be easily identified. It’s important to note that if you are a sole trader operating under your own name you do not have to register a business name.
Setting up finances
Working out what finances, you need is a vital aspect of setting up any business. You need to be realistic about the cost of premises, furniture, equipment and stock. If you need help it may be a good idea to speak to a financial advisor. Once you know what you need, and you have drawn up a business plan, you can make an appointment with your bank. They will be able to tell you what business financing is available. It’s helpful if you know what to expect before requesting a business loan.
One of the biggest concerns for many small businesses is how much to spend on marketing. Many experts suggest that you start by investing 2-3 percent of your revenue, with an increase to as much as 20 per cent if your business is in a highly competitive industry. If you look at advice from experts such as the U.S. Small Business Administration, this suggests that you should invest between 7 and 8 percent, assuming that your profit margin is around 10%.
Another significant expenditure is likely to be purchasing or renting business premises. Let’s take a look at that aspect.
Ensuring you have the right premises
If you are used to just going out to work in someone else’s premises each day, it can come as a bit of a shock to the system when you need to find your own. If you are a sole trader you may decide to work from home. If you do this it’s a good idea to have a home office, or at least a separate space, so that home life does not encroach on the business.
If you need to secure a business premises there are several things you need to think about.
- Cost – you need to be realistic about what you can afford to spend on premises; overstretching could get your business life off to a sticky start.
- Buy or rent – it can be a big risk to go straight into buying premises when you first start out. Renting might be a better option, at least to start with.
- Space – you do not want to waste money on premises that is too big, but you need to consider space for potential growth.
- Customer base – if you are trading from the premises you need to consider the potential to attract customers in the area where you are located.
All of these things are important to think about when you are looking for business premises.
Buying furniture and equipment
If you are setting up in business, it’s not just premises that are important; you also need to think about furniture and equipment. Again, you have to be realistic about the amount of money you spend; so it’s a good idea to make a list of essentials which need to be purchased first.
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Making sure you have analytics in place
One of the most important things you need to do, as a new business, is measure your performance. You need to establish who your customers are and measure satisfaction levels. You also need to analyse marketing, sales and expenditure. There is little point running your business blind as you have no way of knowing what is working and what is not, if you do.
You have a couple of options when it comes to analytics; you can purchase a software package for the business or you can hire a professional company to analyse data and compare reports for you.
You can see that there is a lot work to do if you are setting up in business. This list is just a start, but it’s a good way of establishing where your priorities should be if you want to give your business the best chance of succeeding.