Business startup

4 key questions to ask yourself before starting or buying your own business

- February 26, 2019 4 MIN READ

Are you ready?

The first step towards owning and running a successful business is to make sure that you’re ready. This venture is going to be a marathon, not a sprint, and you will need to assess if you have the endurance to see it through.

The responsibility that comes with your own business will undoubtedly involve a significant lifestyle change, not to mention a large financial commitment.

First, take a thorough personal analysis of your strengths and weaknesses. Then, consider whether or not you possess the following skills that are essential for running a successful business:

  • Management expertise and business planning for the future
  • Strong interpersonal skills and the ability to communicate and network well to grow your business
  • Proficiency within the industry
  • Knowledge about the product or service you are selling
  • Marketing savvy and the ability to promote your products and services
  • Finance skills

Once you’ve assessed yourself, take some time to analyse your business idea and plan. Some questions to ask should include:

  • What product or service will you provide?
  • Is there a market for your product/service?
  • What skills do you need to develop your business idea?
  • Who are your competitors?
  • What difference will you bring to the market?
  • Do you have the financial capacity?
  • Are there specific business laws or regulations within your industry you need to be aware of?

Analysis of both yourself and your idea is a great way to help you anticipate any challenges you may face throughout your journey and help you overcome them. After you’ve gone through this initial process, you will be ready to start compiling your business plan.

What’s your business plan?

Organising a thorough business plan is the first step in thinking through your business concept and deciding on your goals and objectives. Researching all aspects of your business idea involves gathering, analysing, and evaluating information. This will help you define how you will meet the goals you’ve outlined in your plan.

As you create your business plan, decide on the overall structure you are hoping to implement. This will have a direct effect on things such as:

  • Your level of control
  • The amount of tax you need to pay
  • Regulatory obligations
  • Health and safety requirements in the workplace
  • The level of personal liability you will incur

After taking these into account, there are four structures you can consider building your business on:

    1. Sole trader: As the sole trader, you have complete control and ownership over your company, receive all of the profits, and have minimal tax and legal formalities. However, this means you’re also responsible for all legal and financial aspects of running your business.  
    2. Company: This is a commercial business or entity that has a separate legal existence to its shareholders.
    3. Partnership: A partnership is when more than one person and/or entities run a business together, but not in the form of a company.
    4. Trust: A trust is an entity that is in possession of property, income, or any other assets for the benefit of a third party.

After you decide on the structure that’s right for your business module, you are ready to start taking the steps towards registering your business. Another point to keep in mind is that the structure of your business may change as it grows and evolves over time.

What type of business do you want to own?

Once you have the business structure in place, you are now ready to decide what type of business it will be. There are a variety of business types to choose from; however, the main ones include:

  • Online business
  • Franchise
  • Independent contractor

Every industry has a different set of legal obligations and regulatory requirements, so it’s crucial that you pick the business type that best suits your industry and your business goals.

Are you registered?

There are several steps involved in making sure your business is properly registered. First, you can’t legally start a business in Australia unless you own an ABN. This is an 11-digit number that is unique only to your business and acts as a government identifier for the business.

Once you have an ABN, you’ll be able to:

  • Register your business name.
  • Identify your business to other entities for things like ordering goods and services or sending invoices.
  • Claim taxes such as Goods and Services Tax (GST).
  • Secure available credit for things like energy grants.

Also, keep in mind if you end up creating your own business logo, it’s worth considering if you should patent it to protect yourself from any copyright infringement. Registering for all of the various licences and tax compliances is crucial for starting your business out on the right foot. For a full list of licences, taxes, and permits you may need to register for, visit here.

This is just a quick summary of information that will hopefully help you begin realising your dream of owning or buying your own business. Although it will take time, patience, and a lot of hard work, the reward will be worth it.

I will leave you with one piece of advice: Build a solid network of peers and partners to travel with you on this daunting and exciting journey. A great way of doing this is to set up shop in one of Australia’s many coworking spaces. You’ll save money on office costs and also open the door to networking opportunities that can lead to other benefits down the line.