For many, it’s been a long-standing dream to start a business, be your own boss and grow an idea into an enterprise. For others, it’s about the joy of working from anywhere, saying goodbye to office politics and eluding awkward water cooler encounters.
Whatever the reason for going out on your own, starting up your own startup is well worth the effort when you’re up and running. But getting there starts with a plan. We know the road ahead is long and windy but it’s a well-travelled path paved with success stories of the well prepared. In this small guide, we offer valuable tips, questions you should ask yourself and a plan of attack to help you create, grow and prosper in your new business.
Just because your name’s not Rinehart, Pratt or Farquhar doesn’t mean you’re considered small fry. Even big businesses start small.
According to the Australian Bureau of Statistics, a small business in Australia is defined as one with fewer than 20 employees. The Australian Tax Office (ATO), however defines a small business as an individual, partnership, company or trust (we’ll get into these more later) with less than $10 million in business turnover, excluding GST.
Using the same definitions, medium sized businesses have between 20 and 199 employees (yes, large businesses start at 100 employees – you’re getting the hang of this) and an annual revenue of over $10 million excl GST.
Put them together, and ‘small to medium enterprises’ are often referred to by their acronym SMEs (sometimes pronounced “smees” by overly busy marketing peeps). Fun fact; SMEs account for over 99% of businesses in Australia. But don’t assume all the big cheese is across the ocean. The figures are the same in the UK and the USA. Making SMEs big business after all.
If you’re looking to join the 99%, this guide is for you. Whether you’re a fintech futurist or an ecommerce giant in the making, we’ll look at how to start a business – from nutting out your big idea and developing a business plan to funding, launching and marketing. And answer the question of how to start a company with no money (hint: it’s not impossible).
The question “Why do we exist?” is an existential pondering that we may forever mull over. But it’s also a critical question to ask when you’re starting a business. What problem are you solving, and how does your company plan to solve it?
This is where you ask yourself the why, how and what of business. We don’t mind referencing author Simon Sinek’s principal that you need to determine why you do something before you start doing it. In fact, we were so clear on why we started Archa, we’ll share our answers to the questions you should now be asking yourself.
You can see how knowing what problem we were trying to solve led us to our product offering (put these sentences together and you have your elevator pitch). Once you’ve answered these for your business idea, it’s time for the creative part.
Deciding a name for your company can be fun to brainstorm (and you can use a free online business name generator to get you started) but keep a few things in mind. Make it meaningful to the business you’re delivering, memorable and easy to communicate. Imagine reading out the URL, or web address, for your business on a radio ad. You might like the sound of those hip tech names without all the usual syllables (think Tumblr), but you’ll have to spell it out each time for your audience, losing precious seconds in which you could be communicating your unique selling proposition.
Once you have a list of potential names (don’t get precious about it just yet), you’ll need to ensure a domain, or the name of your website, is available for purchase. Search any domain checker online and secure the available name you want.
No, not promotional models (wait for the marketing bit). A business model sets out your company’s plan for making a profit. The basic elements? Identifying the products or services you intend to sell, your target market and any anticipated expenses.
Hopefully you worked out your offering above. Now who is your business going to serve? It might be broad (say an online bookstore) or niche (say vegan protein shakes) but get into the mind of your target market. Understanding their needs, issues and even language will help you successfully create more tailored products and services, grasp how people make purchase decisions, plus convey and sell your offering – which is why starting a business that you’d a be a customer of is a huge advantage.
When it comes to expenses, you’ll want to look at any costs you’ll incur in delivering your offering, and your projected revenue. Consider any partners you may need to engage (for example, the printing company an advertising agency will use), how much income you’ll draw and how much tax you’ll pay.
You’ll want to test and validate your offering and pricing structure through online research, tailored surveys or simple focus groups.
Now, whatever the vision for your company, remember flexibility is key too. At Archa, we began as a consumer neobank and pivoted to focus on the business market where we saw a greater need. If COVID has taught business anything, it’s the importance of adaptability – and being ready starts with a plan.
One of your key decisions when starting a company is choosing your business structure. This can determine the tax you pay, any licenses you require, your potential personal liability and even the amount of paperwork you’ll need to complete, sigh. Your business structure will depend on your size and type of company, your personal circumstances and your plans to grow the business, and it’s a good idea to engage a financial, legal or business adviser to help you determine this. The four main business structure in Australia are:
Once you work out your business structure, you can get to work developing a business plan. Putting this ‘on paper’ will help you define your priorities, stay on top of finances or find investors – and can be the key to a successful business.
How detailed your plan should be will depend on your business type and finance needs. You can kick off with a lean business plan but if you’re starting a riskier business or putting together a pitch deck to look for funding, you’ll need a more comprehensive business plan.
If you’re not starting out with a lottery win, sizeable inheritance or grants you might be eligible for, you’ll need to look at your funding options, and there are three main types.
Debt funding requires security (such as property) that the lender will hold onto until your loan is paid. You’ll also need to be sure your business will have enough cash flow to make repayments, and be aware of how borrowed funds can impact on your profit margins.
Equity funding enables you to obtain finance without security, but it can take time to raise, and increase pressure for high returns from investors, or conflict if you’re not on the same page. The process can include additional costs and your dividend payments won’t be tax deductible.
There’s no security required when you use internal funds. By not being exposed to creeping interest rates or investor influence, you’ll retain control over your business operations and potential to increase your bottom line.
Ensuring adequate cash flow is key for all new businesses. If you’re buying fixed assets (tangible things that last a year or more) like furniture or phones, this can affect your short term cash flow. And if you’re funding current assets (that can be converted into cash within a year) like stock inventory or account receivable, you’ll need to ensure future cash flow that can pay down that debt. Business credit cards exist to help companies manage their cash flow, spread out costs and keep track of expenses. But banks don’t make it easy for new businesses to get the credit they deserve.
Archa was designed as an alternative to business banking to help with rapid company growth and short-term cash flow issues. Our smart business credit card helps simplify expense management and accelerate cash flow so (and here’s where we go back to ‘why’ we exist) you get the credit you need, when you need it. Apply now.
You’ve named, created and funded your business. Welcome to the 99% club! Now, to let people know where to find you.
Gone are the days of an A-board being your sole calling card, even if you have a physical store (what’s that you ask?). Today’s potential customers are everywhere.
But before you look into Facebook ads or eDMs or ambient footpath guerrilla marketing, employ a SMART strategy – ensuring your objectives are Specific, Measurable, Achievable, Relevant and Timely.
You’ll also want to be smart with your marketing channels, and this can depend on your business type, location and audience.
If you’re running a community coffee van, local area marketing such as door drops or signage will be cost effective. A meal delivery service with a broad audience might include newspaper ads or timely radio spots (someone say lockdown?). While an online fashion store would benefit from engaging an audience on social media, search engine marketing and prompting purchase with regular email marketing.
Completing a marketing plan will help you launch your business to the right people at the right time.
Being an official company means being officially recognised. And that means being registered.
As new business in Australia, you’ll need to register:
Registering your trademark is also recommended to protect your business name and brand by being used by others. The sooner you do this, the sooner your business IP is protected. And you can do it all in one official place.
Preparing for tax time now will also help you keep on top of your responsibilities and avoid penalties. You’ll need to keep all your tax and super records, understand tax types and requirements for your business, and how you should lodge and pay tax.
Not into numbers? You’ll probably want to employ helpful resources like an accountant or legal adviser to help you nut out all the stuff you’d rather not worry about (but still have to do).
And if you’re going to hire employees for the first time, you’ll want some tips for choosing them, inducting them and paying them correctly with this handy hiring checklist.
No-one starts a business for the accounting (except accountants). For many new business owners, particularly creative ones, it might be the most boring business task, but one you can’t escape. Staying in control of business transactions, taxes and financial statements isn’t just an ATO requirement. It will also make managing your business easier.
Some of the boringly important things you’ll need to do? Set up a budget, decide payment terms, create accurate invoices, open a business account and keep on top of cash flow.
Did you know, almost half of Australia’s SME owners introduced innovative new funding options in 2020? Many found traditional bank funders were difficult to deal with, didn’t provide a feeling of security and were unable to meet their business needs. With the cash flow difficulties of the pandemic and the popularity of tools that offer more reassurance to small business owners, cash flow forecasting is also considered a critical business trend beyond 2021.
Archa exists for companies like these. Back to ‘how’ we do it, our expense management solution makes life easier for small business.
Our business credit cards help growing SMEs pay for what they need, manage business spending and make receipts a thing of the past by tracking every dollar spent in real-time. By reducing admin so business owners can focus on the things that matter (like a long term vision), our product is designed to help grow business, not slow business. Apply now.
You don’t need a skydiving franchise to face risks – not all are obvious.
Business risks can include creating a product that doesn’t sell. Buying property in a location that doesn’t serve you. Stock loss due to fire or flood. Physical hazards by faulty machinery. Or threats to cyber security. In any business, challenges are to be expected, but risks need to be managed.
If finances are the challenge, you have options.
While traditional lenders and investors can enable access to initial and ongoing finances, be aware of the application requirements, insurance needs and unexpected costs like late payments that can test your patience and your cash flow. And with little startup capital or security, be prepared to hear the word ‘no’ before you get to a ‘yes’.
An innovative spend management solution like Archa can help new businesses get off the ground faster, control spending and stabilise their cash flow without the risk of investor demands and surprise charges. Apply now >
So. Entrepreneur, founder, CEO, the big cheese or whatever you want to call yourself. Starting a business can be exciting, challenging and rewarding. If you have passion and a plan, it doesn’t matter where you start – in the living room (like Airbnb), garage (Amazon, Apple, Disney, Google) or bedroom (Tumblr again) – just that you do.
With solid planning, flexible financing and smart managing, you can still have a big vision for your small business.
You can do anything. Melanie Perkins started Canva in her mum’s living room in Perth. Airtasker too began on a lounge floor in Sydney. While Atlassian’s founders financed their Sydney startup with a $10,000 credit card.
With your big idea, some planning, the right registrations and control over your finances, anyone can start a business from home. You don’t need plans to be the next big thing. If you just want more freedom and flexibility than you have in your 9-5 (or 10 or 11pm) job, you might want to start and keep running your business from home too.
No need to open your doors at 8am or deal with pesky humans. The world really is your oyster with an online business, and you can work in your time, at your own pace, in your own pyjamas.
You don’t need to be an IT whiz to start an online biz either. There are many tools to help make the tech part easy. You can set up a website for free using WordPress. Leverage a third-party platform like eBay to sell goods with no inventory costs. Or start an online store on Shopify. Once you’re feeling a little more tech savvy, there are many website builders designed to help new businesses set up their own digital business, easily and intuitively.
Just like having a baby (and this will be your new baby), there’s no right time to start a business. If you think the market is ready for what you have to offer, ask yourself if you’re ready. Running any business takes time and tenacity, so passion, determination and preparation are personal assets that will get you started and keep you going.
Ready? We can’t wait to see what you do.