First, know your numbers
The amount of money you need to launch depends on how much your set-up costs are. You should also include the total you’ll need to cover expenses without needing sales. Start with the following.
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Identify your set-up costs. These can include things like equipment, vehicles, initial stock, marketing material and any costs you pay for, before you even start.
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Estimate how much cash you need as a buffer. This is the total you should have in the bank to cover monthly overheads, salaries and drawings, before you begin making sales.
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Conduct a break-even and profit analysis. This will tell you if you’ll generate enough revenue in sales to cover all your costs and profit.
It’s also a good idea to create a cash flow forecast to identify sales and expense fluctuations each month. This will help you predict when you may have too little or too much cash.
Make sure you’re set up
There are a number of things that you will have to do before you can make a start and open your doors for trading.
Get an Australian Tax File Number (TFN)
A TFN is needed for the Australian Tax Office (ATO). If you are a sole trader then use your own personal TFN, nothing more to do.
Partnerships, companies and trusts need a separate TFN, and the easier way to get these is at the same time you apply for an ABN. You can do this if you set up your business with EasyCompanies or at the Australian Business Register.
Check what licenses or permits you’ll need.
The Australian Business Licence and Information Service (ABLIS) can help you find the government licences, permits, approvals, codes of practice, standards and guidelines you need to know depending on your industry.
Review any intellectual property issues
Be aware of anything that could get you into trouble later, such as copying another business name by mistake, or their ideas, logo or process that you didn’t realise was protected. Visit IP Australia for more information.
What else do you need?
All businesses are different, but in general it’s important to do the following.
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Set up an accounting system so you know what’s happening to your money. This way you can get an overall picture of activity. Once you have accounting software you can generally integrate your accounting package with your bank account to make bank reconciliation fast and easy.
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Check with your lawyer, Business banker and accountant – they’ll ensure you haven’t missed anything. They’ll also go over your business plan with you so it’s in great shape.
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Obtain business insurance – it’s important that your business is covered by the right insurance.
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Have a back-up plan. Once you’ve worked out how much capital you require, it’s time to decide if you’ll need financial assistance. Some typical options small businesses adopt include:
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using supplier finance; order product or materials and negotiate to pay for them later
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using credit cards for initial purchases
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accessing Vehicle and Equipment Finance if you need machinery and equipment
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getting a Business Overdraft or a business loan if you’re unsure exactly what your monthly shortfall will be.
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Make it easy to make and receive payments
Offer as many ways as possible to get paid or pay. It’s important to make it as convenient as possible not only for customers to pay you, but also for you to pay suppliers.
Develop and write a great business plan
It’s important to write down what you aim to achieve in business, and how you will keep your business on track and focused on achieving its goals and objectives.
Start organising your business accounts
Comparison tools are available to help you decide which account is right for your business. This simple side-by-side comparison compares the features and costs of our transaction, savings and specialised accounts.
Source: NAB
Reproduced with permission of National Australia Bank (‘NAB’). This article was originally published at https://www.nab.com.au/business/small-business/moments/starting-out/new-business/starting
National Australia Bank Limited. ABN 12 004 044 937 AFSL and Australian Credit Licence 230686. The information contained in this article is intended to be of a general nature only. Any advice contained in this article has been prepared without taking into account your objectives, financial situation or needs. Before acting on any advice on this website, NAB recommends that you consider whether it is appropriate for your circumstances.
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