The Basics

The following a summary of the basics of getting the doors open and your first customer. More detailed information is available under the specialist headings in this section and in the external links provided.

Reasons for starting
Location and premises
Financial necessities
Legal requirements
Marketing key questions
Set up formalities

Be clear on your reasons for starting the business

Many people start a business because they don’t want to work for anyone else, or because they want more “freedom”. Running a business can meet your needs in these areas, however unless you do it well you will have neither freedom, nor time for anything else and it will feel that you are a slave to the business rather than just having a boss.

It is important that you are clear about the reasons why you want to be in business and are realistic about the benefits and drawbacks. In particular, you must not let your own motivation become more important than creating value for your customers or you will not last long. A business is a commercial enterprise that exists to serve its customers in return for payment. Remember, your customers will not care about why you are in business or whether you are realising the benefits, they will only care about what you can do for them.

Location and premises

Have you found suitable premises? If you are not a home based business, finding the right premises at the right price will be one of the most important decisions you will need to make. Some considerations might include:

Is there enough foot traffic in the area?
Is there adequate parking?
Is there easy access for deliveries?
Do you need a development application to be approved before you can start the business?
Who are the other nearby businesses? Will they enhance or detract from yours?
What are the appropriate lease terms and conditions?

Make sure to seek professional advice before signing any important documents such as a commercial lease.

Financial necessities

Prepare a budget for the set up cost phase of your business operation. This might include rental bond and stamp duty if you are acquiring a lease on premises. Other costs could include a website, IT programs, furniture, trading stock or raw materials, vehicles

Prepare a cashflow projection for at least the first two years of operation. This should include the total set up cost and all ongoing expenses such as rent, wages, marketing, stationery, insurance, professional fees, motor vehicle and other leases etc. On the revenue side, list all of the sources of revenue, e.g. split by product or customer segment.

A simple template is provided here for you to download and use.

Doing this will enable you see at a glance how much your business will need to generate in order to cover your costs and meet any profit requirements you have.

Can you afford to start in business, meet the business costs and support yourself until the business becomes self sustaining? Many people underestimate the time it takes for their business to become successful enough to provide an income. You should figure on needing 6-12 months of cash buffer to keep you going until then.

For more detailed information on the financial aspects of running a business, see the section on Finance, Accounting and Tax.

Legal requirements

Do you know what legislation affects your proposed business? Are you aware of the registrations and licences you may need? The Australian Business Licensing and Information Service is a one stop shop for the licensing, permit and compliance information you need to conduct business in Australia.

Check with an accountant and a solicitor regarding the best business structure for your proposed venture after considering how you will conduct business and whether limited liability is important to you.

You will have to comply with the local council regulations and zoning requirements concerning both your type of business and premises. Check with your council before entering into any lease of premises.

If you are hiring staff, make sure you are fully across your obligations. Check with Fair Work Australia to learn about what you need to do to be compliant.

For more detailed information on business legal requirements see the section on Legal Matters

Marketing key questions

Have you done your research to determine what the opportunity is for your business? Consider consumer needs and tastes, trends in service and delivery, pricing and areas where the market may be underserved.
How strong is your customer value proposition? Will people pay you for what you offer and if so will they pay well? If what you are selling is a commodity you will be competing on price and service alone. If so, there are probably a number of market incumbents that you will need to compete with; if they are long established with good brands and products, this will be difficult.

If you are able to position yourself as being different in a way that solves your customer’s problems you will be able to grow your revenue more effectively.

Have you prepared a marketing plan for the business? Your marketing plan should include research you have conducted and your assumptions about the opportunity and the customers who will buy your product. It should also include how you will reach them and how they will do business with you, e.g. online, face to face, telephone etc. You should also conduct a SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis and outline the actions you will take in each area.
Have you developed a compelling pitch that clearly and concisely explains who you help and how you help them? Further details are available in the Promoting Your Business section under Marketing.