If you are considering starting your own business, especially during a pandemic, you may be wondering what you need to do to make your venture a success. While each business is different, there are some essential steps that all prospective entrepreneurs will need to take. The following will introduce you to those steps and provide some insight into each one. From writing a business plan to filing the correct forms with the ATO, this guide will provide a brief overview of what it takes to go into business for yourself.
Step One: Narrowing Your Business Idea
Some people know that they would like to run their own business someday but they are unsure of what kind of business they would like to have. People who need to make extra money or those who have obligations such as children or loved ones to care for, are often on the lookout for a great business idea. Others may have an idea of what kind of business they want to start but are unsure how to pinpoint their own unique niche. If this sounds like you then please begin with this first step.
To properly narrow down your ideas you may want to start with a brainstorming session, either alone or with your prospective partners. Gather a notebook and a pen and right down all of your ideas. Then make a pro and con list for each one. This will help you to eliminate ideas that are not immediately feasible. Once you have a few key ideas, you are going to want to start researching. Look to see what your potential market is, what your competition is and what you think you will need to get started. In this first stage you should not need to put a lot of time into the research. You are just looking to get a rough idea of what you will need.
Once you have made your list, you can really start to look at what ideas are feasible and which ones are not. If you have a general idea you can brainstorm to fine tune it to a more specific goal. For example suppose your dream is to start a restaurant, brainstorming will help you to decide on which type of foods you would like to offer. This may also help you to see potential ideas for starting out and then expanding your business as you go.
Step Two: Write a Business Plan
This is one of the most important steps to starting a business, even if you do not plan to seek financing. Making a business plan sets clear goals, defines your business and helps you as you move toward making your dream a reality. Plus if you are seeking a business loan or talking to investors, the business plan is the most important thing they are going to want during negotiations. A business plan should clearly define the business, including the specifics of what products or services you will offer and what will set your business aside from the competition.
You will need to include your expected income and expenses, including your startup costs. After all banks and investors want to see the potential to make money and they want reassurance that their faith in you will not result in a loss. If you are self-financing, think of yourself as the investor and write the plan in a way that keeps you on track. After all you want to make money, not throw it away. Make sure you include the cost of a website in your business plan, you can go to a Website Builder to get an idea of how much it will cost.
Step Three: Get the Necessary Licensing, Training and/or Certifications
This step may not apply to everyone but all prospective business owners do need to look into what licenses, certifications, and training requirements they will need for their business. This step needs to be done early on because if you cannot get the correct licenses or you are not properly qualified, you will not be approved for a business license. This can also be time consuming, especially if a degree or extensive training is required. It is also your responsibility as an owner to see what training your employees will need. You may have to hire someone who is already qualified or consider the cost of training your workers. Knowing what information you need ahead of time will save you a lot of time and headaches in the future.
Step Four: Deciding on a Business Type
Before you apply for a business license, you need to know if you are going to be a sole proprietor, an limited liability, an incorporation, or a partnership. There are pros and cons to each type of legal structure so do your homework on the requirements set by your state and those that apply specifically to your business. A sole proprietorship means that you alone run and operate the business. This is appropriate for someone who makes and sells their own products, or someone who provides a service. Many of these operators are home based businesses or small shops. Sole proprietors are responsible for company liability, meaning that you risk losing personal assets if the business fails or gets sued.
A partnership is like a sole proprietorship except that it is shared between two or more people. Each person takes a share of the responsibilities and liabilities and also the profits. Corporations and S Corporations utilize shareholders to fund money or property in exchange for stock. S Corporations follow different taxation laws than general corporations and it is recommended to speak with a tax attorney when considering these options.
Limited liabilities are a common choice because they limit the amount of legal and financial responsibility held by the owners. Limited liabilities are governed by state regulations and so you will want to look into state requirements. There is usually no limit to the amount of owners or investors and many single person operations qualify. The advantage here is that the liability reverts to the company assets and does not include personal property.
Step Five: Seeking Financing
Now it is time to show the banks and investors that you can make money with your venture. The key to financing is itemization. You want to be able to show each and every expense and the profit margin for each product and service you will offer. You will want to have this information detailed and presented in a way that clearly offers the bottom line and that supports your ideas with details and research. You may also want to look into government backed funding and grants because you may qualify for funds that you do not have to repay or ones that have very low interest rates. Frequently new owners do have to fund a portion of their start-up costs on their own. If you do not have the capital to do so you may have to seek personal loans to cover these expenses.
Step Six: Making it Official
You have written a quality business plan, detailed your expenses and secured financing and you have all of the personal certifications that you need to get started. Now it is time to make it official. You will need to file for a business name in your state. This process involves making sure that you have a name unique in your area and filing out the proper forms with your state officials. The small business administration has information on where to locate these forms. Next you are going to need a business license and any necessary permits. This too is going to require that forms be filed with the Australian Business Bureau and there are fees that you will need to cover.
Step Seven: Get a website
An essential must nowadays is having a professional website and ensure you can be found online. You can use a website builder to make your website easily with a low cost barrier. If you are an online store, ensure the software you use has a Shopping Cart. Make sure your online brand matches your offline brand and gives off a professional representation of your business.
Step Eight: Tax Preparation
Your next goal is going to be communicating with the ATO to find out what taxation laws apply to your business. You will need a Tax File Number which is obtained by filing the necessary forms with the ATO. This number will be used to identify your business when you do your taxes and is also used to obtain products and services. For example if you are starting a retail company you will need you ACN or ABN number in order to secure wholesale prices on your products. Many product manufactures will not even speak to a person claiming to be from a business without this number. Be prepared because all of these things carry fees and taxes that are either paid up front, quarterly or annually.
Now that you have handled the most important steps you are ready to start your business. It is a good idea to double check that you have filed all of the necessary forms and that all of your licenses and permits have been acquired. It is highly recommended that you hire an attorney to help you with these processes and to ensure that you are able to operate legally in your state. It can be a challenging road but the rewards are endless. With hard work and dedication you can make your dream of becoming a business owner a reality. Good Luck.