Firstly, think hard about why you want to go into business and if your dreams are realistic. Everyone's reasons for making the transition from tradesman to business owner are different, but some of the common motivations are:
Increased earning capacity
Greater control over your work and its quality
More flexible working hours
Building a business asset that can be passed on or sold
Development of your management skills
So, who wouldn't want to reap these rewards? While all these benefits are attractive, the reality is that three out of five Australian businesses fail over a three year period. This means that the potential pitfalls need to be carefully weighed up against the benefits and the risks you should consider include:
Long working hours are required, especially in the start up phase
Variable income
Increased responsibility can be stressful and difficult to manage, especially when it comes to hiring, managing and motivating staff
You will need to wear many hats – marketing, accounting and human resources, just to name a few
Where to begin
Once the decision has been made to take the plunge, there seems to be an overwhelming number of things to do. The first is to get organised.
Successful businesses have a "road map" to follow, and this is set out in a business plan. This shows where you want the business to go and how you intend to get there. It covers the financial, administrative and marketing elements of the business, and a bank will want to see a business plan before lending money for a start up business. There are a number of good templates available on line that can help with the structure of this important document.
Because so many businesses fail through a lack of customers, often a business plan is supplemented by a separate marketing plan. Wherever it sits, every business need to understand the market within which it operates and have a strategy to obtain and retain a client base. This is the life-blood of any business.
Paper, paper, and more paper
The next step is to take care of registrations. Some of these are dependent on the business structure you choose to operate under, so it is best to decide the most suitable structure early on. Businesses can operate as a sole trader, partnership, proprietary company or trust, and it is important to obtain professional advice about which is the most appropriate structure for you.
As a sole trade you can trade under your name or register for a business name with the Office of Fair Trading in your state. A company must be registered with ASIC and you need to register an ABN with the ATO. Registration must be made for all relevant taxes, and remember, when it comes to the taxman, ignorance is no excuse. If you are running a business from home you may also have to comply with local government regulations.
A big issue for small business owners is under-insurance. Ensure you have adequate insurance cover including public liability, vehicle, fire, burglary, professional indemnity and sickness.
As an employer you need to get information on awards, superannuation, workers compensation and PAYG, to ensure you meet all your obligations.
You may also want to register a domain name and create a website for your business.
Show me the money
Too often, business owners abrogate responsibility for the financial position of their business. Even if you have never considered yourself to be a numbers person, it is important for you to understand the basics of how your business can make money. With the help of a reliable bookkeeper and accountant, learn how to quote on jobs accurately, calculate a breakeven point, create a realistic budget and understand financial statements.
Before commencing business you will need to open bank accounts and credit card facilities, and organise leases for premises, equipment and motor vehicles. Arrange a suitable accounting and filing system that allows you to monitor your financial position easily and accurately.
Are you a Natural Entrepreneur?
Here are some of the qualities evident in successful entrepreneurs:
Self motivated
Good time management skills
An effective leader
A realistic understanding of personal strengths and weaknesses
Willing to continuously network and market the business
Comfortable living with stress and risk
Committed to ongoing learning and professional development
Disciplined
Persistent
Financial Tips
To increase your chances of success, ensure that you:
Begin with adequate working capital
Don't underquote jobs just to get business
Print trading terms on quotes and invoices
Raise invoices as soon as work is done
Take advantage of supplier trade terms
Follow up outstanding invoices immediately
Start Me Up! - To learn more about this author, visit Sue 's Website.
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Sue
(Visit Sue's Website)
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