How do you run a business?
There are no limits on who can become a great entrepreneur. You don’t necessarily need a college degree, a bunch of money in the bank or even business experience to start something that could become the next major success. However, you do need a strong plan and the drive to see it through.
If you’re on the entrepreneur, odds are you already have the drive, but you might not know how to start building your empire.
How to Start a Business: A Step-by-Step Guide
Talk to any entrepreneur or small business owner, and you’ll quickly learn that starting a business requires a lot of work. An idea doesn’t become a business without effort.
Some budding entrepreneurs understand the effort necessary to create a business, but they might not be familiar with the many steps required to launch a business venture. If you’re willing to put in the effort to build a business, you’re going to want to know the steps needed to reach your goals.
Tasks like naming the business and creating a logo are obvious, but what about the less-heralded, equally important steps? Whether it’s determining your business structure or crafting a detailed marketing strategy, the workload can quickly pile up.
Refine your idea.
If you’re thinking about starting a business, you likely already have an idea of what you want to sell, or at least the market you want to enter. Do a quick search for existing companies in your chosen industry. Learn what current brand leaders are doing and figure out how you can do it better. If you think your business can deliver something other companies don’t (or deliver the same thing, only faster and cheaper), you’ve got a solid idea and are ready to create a business plan.
Another option is to open a franchise of an established company. The concept, brand following and business model are already in place; all you need is a good location and the means to fund your operation.
Regardless of which option you choose, it’s vital to understand the reasoning behind your idea.
During the ideation phase, you need to iron out the major details. If the idea isn’t something you’re passionate about or if there’s not a market for your creation, it might be time to brainstorm other ideas.
Choose your business structure
Choosing the right business structure is important, as each of the four options below has pros and cons. Which one you choose affects your:
- Ongoing cost and amount of paperwork.
- Number of licenses needed.
- Personal liability (in case the company is sued or goes bankrupt).
- Level of control.
- Tax obligations.
Australians have these business structures to choose from:
As a sole trader, you are legally responsible for all business debts or losses. You must pay super for all workers (except yourself).
A company has higher setup costs and more paperwork. This structure is run by directors (you) and owned by shareholders (those who fund your business). You must pay super guarantee contributions for any eligible workers, including yourself.
A group of people who run a business together, with the partners sharing income, losses and control. This is inexpensive to set up and run.
This is an entity that holds property or income for the benefit of others. This can be expensive, as it requires a formal deed. There are also yearly administrative tasks for the trustee.
Keep in mind that you’re not locked into any one structure; you can change the structure as your business grows. If you’re not sure which one is right for you, talk to a tax, business or legal adviser.
Understanding the Basics of Business
Whether that entrepreneur comes from a family of business owners or is starting out on their own with no previous experience, running their business requires a set of key skills. But what are the skills you need and how do you acquire them?
Your Key Business Skills
Running a small business often requires that you become a jack-of-all-trades. It is therefore important to know early on the skills that you have and those that you will either have to learn or delegate to others. The key business skills to consider include:
- Strategic Management. Creating a business and strategic plan for your business and making sure you keep to it.
- Basic Accounting. Which records to keep, how to keep them and how to file them.
- Financial Management. Where to find financing and how to manage it once you’ve sourced it.
- People Management. Hiring your first employee and how to manage them.
- Marketing. How to market your business through traditional channels, web and social media.
- Sales. How to complete a sale and look after your customers.
- Operations Management. Choosing and managing your suppliers.
When considering the skills that you lack, there are three avenues you can take:
- You can hire employees who are strong in those specific areas.
- You can engage in professional business advisors.
- You can take the time to learn these key skills yourself.
Apply for an Australian Business Number
Applying for an Australian Business Number or ABN is the next step to setting up your own business — it’s also free. Your 11-digit ABN is different from your Tax File Number. An ABN makes it easy for the government and other businesses to identify your business.
Register your website domain name
If you’re serious about your small business, you’ll want to build a website.
More and more Australians are looking online for everything from the nearest takeout to where to buy gifts. A website is a good way to make sure your business shows up when they search.
True, many site builders offer free domain names. But if you intend to make this venture a success, you’re better off with a website domain name of your own.
A couple of golden rules apply when choosing a website domain name. Ideally, it should:
- Describe your business.
- Be easy to spell and remember.
- Not contain abbreviations, dashes or numbers (unless there’s a number in your company name).
As with business names, you won’t be able to use a domain name that someone else is using.
Understand the marketplace and define clear KPIs.
Don’t underestimate the importance of conducting careful, detailed market research.
You need concrete data on your ideal customers, the existing competition, expected growth and demand, market trends, and more. These types of insights are invaluable and help you make informed business decisions and goals.
And you need to be clear on the 4 Ps: product, price, promotion, and place. They can guide the creation of your market research, marketing plan, and customer personas, and serve as a fantastic jumping-off point if you’re not sure where to begin.
The 4 Ps of the marketing mix is evolving, and you might want to explore the 8 Ps that more accurately reflect modern marketing. They include product, price, place, promotion, people, process, physical evidence, and performance.
With business goals and research in hand, don’t forget to think about what you want personally, too. There’s a reason why airlines instruct us to place our own oxygen mask on before helping others: if we don’t take care of ourselves, we can’t take care of someone else.
Likewise, if you don’t have personal goals and plans for your own mental health, you won’t be as effective in running your business.
Write a business plan.
Once you have your idea in place, you need to ask yourself a few important questions: What is the purpose of your business? Who are you selling to? What are your end goals? How will you finance your start-up costs? These questions can be answered in a well-written business plan.
A lot of mistakes are made by new businesses rushing into things without pondering these aspects of the business. You need to find your target customer base. Who is going to buy your product or service? If you can’t find evidence that there’s a demand for your idea, then what would be the point?
Conduct market research.
Conducting thorough market research on your field and demographics of potential clientele is an important part of crafting a business plan. This involves conducting surveys, holding focus groups, and researching SEO and public data.
Market research helps you understand your target customer – their needs, preferences and behaviour – as well as your industry and competitors.
The best small businesses have products or services that are differentiated from the competition. This has a significant impact on your competitive landscape and allows you to convey unique value to potential customers. A guide to conducting market research can be found on our sister site.
Consider an exit strategy.
It’s also a good idea to consider an exit strategy as you compile your business plan. Generating some idea of how you’ll eventually exit the business forces you to look to the future.
New entrepreneurs are so excited about their business and so sure everyone everywhere will be a customer that they give very little if any, time to show the plan on leaving the business.
“When you board an aeroplane, what is the first thing they show you? How to get off of it. When you go to a movie, what do they point out before the feature begins to play? Where the exits are. Your first week of kindergarten, they line up all the kids and teach them fire drills to exit the building. Too many times, I have witnessed business leaders that don’t have three or four pre-determined exit routes. This has led to lower company value and even destroyed family relationships.”
A business plan helps you figure out where your company is going, how it will overcome any potential difficulties and what you need to sustain it. Check out our full guide to writing a business plan, and when you’re ready to put pen to paper, these free templates can help.
Set revenue and profitability goals.
For a business to be successful, it has to make enough money to sustain operations and turn a profit to reinvest for future growth. As a business owner, you must understand what this looks like for your business.
Factoring in your business costs, including sourcing, production, staff, capital, and more, determine how much money your business needs to bring in on a monthly, quarterly, and annual basis to succeed.
This is also a great time to revisit your pricing structure. Are your products priced appropriately? How many units will you need to sell each period to reach your revenue and profitability goals? Document and lay this information out clearly so you know exactly what you need to do to keep your business running and thriving.
Arrange start-up funding
It takes money to make money, and this is especially true for start-ups. Luckily, you have some options here.
One option is to start your business on the side of a full-time job. This way, you’ll have a steady source of income while you test the waters with the new business.
Another option is to borrow money from your own savings or family, friends or investors.
Australia has many grants and funding support programs to get your business off the ground.
To track down funds that apply to you, search the internet for grants in the state where you’ll operate your business (for example, “Grants Victoria”).
Find your first client
Congratulations! Your business is up and running, and you’re eager to start earning money. But where do you start?
- Your own network of family and friends is a good place to begin. Let everyone know about your new business, what you do and why you’re better than similar businesses.
- Use LinkedIn’s professional network by creating an engaging profile and connecting with potential clients.
- Claim your Google My Business listing and fill it out completely. This will also put your business on Google maps.
- Set up a Facebook business page to promote your products or services. You can even sell directly from Facebook.
- Join a business network and start making connections.
You can also look for local business directories that will list your business, including your website domain name.
Setting up your own business in Australia is as easy as 1-2-3. Just follow the seven steps and enjoy the rollercoaster ride, with its ups and downs. We’ve even offered a couple of suggestions for easy businesses to start.
The Basics of Business Success
So just what are the essentials of business success? There are seven key areas of activity that determine whether your business will live or die:
Your ability to determine and sell the right product to the right customer at the right time
Your ability to acquire the money you need, and account for the money you receive
Your ability to produce products and services at a high enough level of quality and consistency over time
Your ability to get your product or service to the market in a timely and economical fashion
Research and development
Your ability to continually innovate and produce new products, services, processes and responses to your competition
Your ability to deal with the requirements of government legislation at all levels
Your ability to find the people you need, deal with unions, establish personnel policies, training and organizational development
And from this list, comes the very specific, identifiable reasons for business success:
- Having a product or service that’s well suited to the needs and requirements of the current market
- Developing a complete business plan before commencing business operations
- Conducting a complete market analysis before producing or offering the product or service
- Thoroughly developing advertising, promotional and sales programs
- Establishing tight financial controls, good budgeting practices, accurate bookkeeping and accounting methods, all backed by an attitude of frugality
- Ensuring that there’s a high degree of competence, capability and integrity on the part of key staff members
- Having good internal efficiency, time management, clear job descriptions, accompanied by clear and measurable output and responsibilities
- Developing effective communication among the staff and an open-door policy for managers, especially the business’s owner
- Generating strong momentum in the sales department and placing a continued emphasis on marketing your product or service
- Making concern for the customer a top priority at all times
- Putting determination, persistence and patience at the top of the list on the part of the business owners
Once you establish your business and open doors, you’ll have to get used to the process of managing it on a day-to-day basis. Running a small business can be an overwhelming yet rewarding experience. Although every business owner’s experience varies based on the company and its required activities, general concepts usually apply to just about any type of business.