NEWS & BLOGS

This is a series of six tips about starting up and running a business – By Pat Hoey

#1- Why run a business

1. Note down why you want to run a business, and write a simple business plan of ideas, operations, etc.
2. What is the 3–5-year vision of the business
3. Complete a simple SWOT analysis. Know what the business risks and rewards are
4. What is the business idea, and how will it make money?
5. Note what things you will be good at or like to do
6. Note down the things you won’t be good at, so will need help with
7. What staff do you need?
8. What marketing will you need to get enough work?  Website, social media, advertising, customer feedback, etc
9. Who is your competition, what are they doing well/unwell and how will you differentiate price/product/service
10. Discuss this business plan/idea/notes with your spouse/partner so they understand what your plans are

#2 – Business Tips – Business Set Up

1. Decide of best tax structure to help minimise tax, and also give you personal asset protection
2. Will need business ABN, GST registration, maybe wages tax withholding, business name, etc (Accountant will normally register for these)
3. Have adequate insurances in place (general business insurance for public liability, income protection, etc)
4. What licences, registrations, permits, etc do you need?
5. What technology will you need and use, to help make things easier?
6. What record keeping is to be used, and who will help in this area?
7. Do you have financial capacity to start a business?  As may need cashflow at start, and in the first few months.
8. Are you taking over an existing business? If Yes, need to consider the next area

#3 – Buying or taking over a New Business

1. What price are you paying for the business?  And what is the split between goodwill and stock, asset and equipment?
2. Have you completed a thorough due diligence of the business, so understand their income levels, profit figures, suppliers, customers, employees, etc
3. What is the advantage of buying someone’s business, compared to starting a business from scratch?
4. What is happening with employee’s leave entitlements?
5. Will need to get new employee agreements
6. Check any existing lease agreements with the option to renew down the track
7. Will need to get new credit terms with suppliers

#4 – Running the Business

1. Set aside weekly time to work ON the business, and not just always IN it.  So time for invoicing, paying accounts, following up debtors, organising job workload and schedule work timelines, etc
2. Know your key financial numbers – monthly income, direct costs, wages costs, profit, bank balance, debtors, ATO owing, etc
3. Set monthly income targets, and know what your minimum monthly income is to be, to pay for monthly expenses and finance repayments
4. Set up second bank account to put aside wages tax, employee’s super, and some GST (and business profits tax).
5. Pay super monthly – and avoid getting behind and paying late – as will result is extra super and penalties, and loss of a tax deduction.
6. Pay yourself a set weekly amount, to live off that, and keep rest in the business
7. Have a business ideas and projects list – and focus on 3 things at a time
8. How will you have an adequate work/life balance?

#5 – Employing Staff

1. Have employment contracts and practical role descriptions
2. Have KPIs to go over every 6-12 months (use ‘SMART’ goals system)
3. Set aside a month each year, to do annual staff reviews
4. What sort of work culture do you want?  And how will you try to achieve this?
5. Register for Workcover, and maybe payroll tax
6. Set up payroll system.  And who is to complete the pay runs?
7. Understand super annulation obligations
8. Will staff require training & what should be put in place for future training needs
9. Are there any Government incentives for this? i.e. Apprentice subsidy
10. Will you have any subcontractors paid at an hourly rate?  As maybe classified as employees, so super and workcover is payable

#6 – Going into Business with family or friends

1. What money is to be put into the business?
2. And when is this to be repaid
3. What is the ownership split?
4. What roles and responsibilities will each owner have?
5. How many hours is each owner expected to work?  And agree on annual leave amount
6. What pay rate is each owner going to receive?
7. If there is a difference in working hours, will there be a payment for this time?
8. How long do you plan to stay in business together?  And what happens if someone wants to get out?
9. Is their adequate insurance cover, if a tragic circumstance occurs to an owner?
10. How often will you meet to discuss how the business is going, and what formal communication will be used, to ensure everyone is on the same page?

If you are thinking of starting up a business and would like to chat further about any of the above give us a call and we can arrange an appointment to talk more in depth about your plans and help  with your future goals.

By Pat Hoey