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Starting a Business

In contemplating or actually starting a business, there are a number of issues for your consideration. We have raised a number of these issues for you briefly, and over time, will be expanding upon them for the benefit of those wishing to pursue the challenge of starting a business. We encourage all those commencing a business to undertake thorough research and questioning.

For further articles and issues, please see our Fact Sheets.

However, we advise quite strongly that before you continue, please read carefully our Disclaimer.

Business Plan

Before you start a business, you are going to have to plan what you are going to do. What you are going to sell, for how much, from where, how, what you want out of the business. To achieve this, and to get the hop on your competitors, commence to logically plan your business that you have in mind into its basic constituent parts:

The Products and Services that you will be selling.
How you will be Marketing and presenting the image of your products and services and of your business.
How you will be Staffing and Managing the business.
And the Financial implications of running the business, including the business structure, banking, insurance, profit forecasts and money in your pocket.

Legal Structure Of The Business

Consideration of the type of business, commercial reality, the stage of development of the business, the size and aims of the venture and financial costs will generally be the main criteria in deciding which business structure will be chosen. Oh yes, and tax considerations do play a part too.

The main business structures employed by businesses are:

Companies
Partnerships
Sole Traders
Trusts
Some combination of the above

In addition to these basic structures, if your organisation is of a welfare and/or non-profit nature, other business structures that may be employed are:

Incorporated Associations
Aboriginal Corporations
Registered Clubs

Tax And Other Legal Implications

Taxation impacts upon a business in all its transactions and life cycles. Immediate thought will have to made with regards to:

Obtaining an ABN for the business, and
Registration of the business for GST and PAYG Withholding Taxes

Furthermore, there should be consideration as to how the profits of the business should be taxed - in the hands of the business or in the hands of the owner(s)? What happens with Capital Gains Tax if the business is sold?

Other Legal considerations include:

Superannuation and the SGC requirements;
Ownership of business names, trademarks and other forms of intellectual property;
Partnership, Shareholders and/or Unitholder agreements;

Insurance

In the 18th Century the French believed that every time a thunderstorm arose Church bells had to be rung. Unfortunately the bell towers, being a very high point in the local township, and with gleaming metal conductors to boot, were sometimes struck by lightening.

For the 33 years to 1786, when bell ringing was finally outlawed by the government of the day, some 100 French were fried by the lightening strikes.

Although you can not plan for the lightening strike or any other mishap, you can plan to cushion the financial blows of these events.

Insurance is an important consideration - it could save your house. Accordingly, your insurance should be set up before you commence trading.

Employing People

Employing your first person will typically be both an enjoyable and a harrowing experience. Usually, the first-time business person will have come from a position where they were once an employee - now the roles will be reversed as you now will be the employer with all the responsibility that goes with that position.

How will you act and react? What are your legal responsibilities and liabilities? How do you hire the right person, and fire the wrong person? How do you motivate and improve productivity? There are thousands of questions.

Premises

Location, Location, Location. This is the criteria usually associated with the purchase of a property. Should it be any different for a business? Probably. However, the buying or leasing of your premises is not just about image or the potential of selling your product or sales from the absolutely most perfect position. The buying and leasing of premises have other problems unassociated with location. How should the lease agreement be stated? What are the effects of a long or short lease on the value of the business should you decide to sell it? How should your premises be used? Are there any council restrictions?

Finance

One of the main reasons why a business fails is financial mismanagement. Most business owners caught with this failure will automatically blame someone else, yet they were there own worst enemy.

How should a business be financed? What are some of the simple but effective financial guidelines that should be employed by the business owner on Day 1 of commencement?

Some of these finance issues are mundane. They are usually clerical in nature - but for the business professional, these issues of the mundane, of the clerical, can be treasure chests of profit just waiting to be discovered.