Time to start your own business?

Business Considerations

The time has come to venture out and be your own boss.

You have the enthusiasm and the drive to make your own business work. Before you do anything it is essential to consider all the pros and cons of what can and will lie ahead. Starting a business is a big commitment and there is a lot to think about, including longer hours and the additional financial responsibility of generating an income.

The first, and toughest step, is to prepare a strategic plan and set timeframes. Your business plan must address the following:

• Is your business idea commercially viable?
• What are your proposed business objectives and goals and their timeframes?
• Who is your proposed target audience or customer base?
• What do you consider your proposed business’s strengths and weaknesses will be?
• What potential opportunities and competitive threats can you foresee?
• Which legal structure will be best for the business? Will you be a sole trader, operate through a trust or have partners or shareholders?

Do your homework

Market research

The economic viability of your business needs to be considered in light of the industry sector you are considering entering. How will you compete as a new entrant against more established brand names or businesses? Are there significant barriers to entry and, if so, how do you propose to overcome them? You will also need to clearly define the market your product or service will be targeting. You may need to carry out some market research on the environment, competitors and your target market before you develop our strategic plan.

Legal structure

How should your business operate? You will need advice to help select and implement the legal structure for your business for tax, asset protection and growth, so that you understand your rights, obligations and duties. For instance, should you operate:

• As a sole trader?
• As a partner in a partnership?
• As a company?
• As a trust?

Location, location, location

Right idea, wrong position? The best ventures can fail to attract customers thanks to an inconvenient location. Equipment and office furnishings are also key factors in creating a welcoming atmosphere. Make sure you prepare a lease/buy/hire purchase analysis before you sign any agreement.

Source of funding

How much cash is available from your personal resources and/or, if relevant, your business partner(s)? For the best chance of obtaining additional finance, you will need to prepare a budget of funding needs and a cash flow forecast for at least the next twelve months, ideally two years. You should also include a profit and loss projection for at least the next three years. Your CPA can help you prepare these.

Marketing

To what extent are advertising and other promotional activities necessary? Identify which media are the most effective to reach your target customers and prepare a budget that convers your business launch and request ongoing activity. Also consider the timing of your marketing to achieve maximum results.

Staffing

Is it going to be a family business or will you need additional, possibly more experienced staff? The hours you operate will also impact on your overtime costs and penalty rates. Check industry award rates and other employment requirements so you understand your obligations to staff.

Your business start-up checklist

• Are you going into business for the right reason (financial vs emotional)?
• Is this the right ’economic’ time to start your own venture?
• Have you established a clear set of business objectives?
• Have you written a business strategy covering the next three years?
• Have you checked industry requirements?
• Have you reviewed insurance cover needs and relevant legal issues?
• Have you looked into local government restrictions and zoning requirements?
• Have you prepared a break even analysis, cash flow projections and a series of budgets?

Starting a business - Essentials


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