Last updated: September 27th, 2024
If you’ve been considering starting a small business in Australia, I’m here to help with a step-by-step blueprint. As someone who has started 5 businesses in the last 15 years (and currently running 3 of them), I am very familiar with the process.
Starting a small business is simultaneously exciting, terrifying, rewarding and exhausting. Don’t listen to people who wax on about delusions of:
- Work-life balance.
- Financial freedom.
You won’t have either of those in your first few years.
The good news is that the small business journey is more predictable than most people think – and by building the right processes, hiring the right people and making (mostly) good decisions, you can experience significant rewards. I’m here to show you how.
(Related: 11 Best Web Hosting Providers In Australia).
1. Choose The Problem Your Business Will Solve.
Can you summarise your business idea in one to two sentences? What sets your small business apart? If you feel the temptation to use superlatives, you need to think harder.
Examples of terrible small business ideas:
These ideas are impossible to defend. Anyone can claim to be the best, and you’ll never out-compete Amazon or Rebel Sport on price – because you won’t match their economies of scale.
Here are much better alternatives:
Important!
You won’t believe me when I say this, but your current business idea probably sucks. It will improve over time, as you collect more data points from the marketplace, your competitors and your mentors.
Key takeaways:
- Decide who to tailor your product or service to them.
- Conduct market research to determine if there is a demand for your product or service.
- Analyse industry trends, competition, and potential customers to identify market problems or opportunities.
2. Decide Whether You Have The Guts.
Most people fail in business because they block their own success. For example, they’re unwilling to:
- Fire their startup cofounder.
- Performance manage an underperforming cousin in the family business.
- Raise the price of the product, losing some customers in the process.
- Drive people to work harder because you have an aggressive competitor in the space.
- Start doing uncomfortable things (e.g., making cold calls).
- Give away control (e.g., seek funding from an angel investor to fuel growth).
(Related: How To Pay Overseas Contractors From Australia).
People who win in business are extreme, willing to make great sacrifices and hard decisions.
The quickest way to fail is to buy into the nirvana of work-life balance and expect not to face difficulty.
The #1 Mistake People Make When Starting A Business.
Most businesses fail because founders are unprepared for the sacrifices the business will demand from them.
3. Build A Basic Business Plan.
Resist the temptation to write an exhaustive, detailed business plan for your small business. Like your business idea, your business plan will change and evolve rapidly.
Anything you plan will be obsolete within a few weeks.
Expert Tip.
If you catch yourself spending days on your business plan (and creating pretty graphs), you’re procrastinating. You’re avoiding the hard and scary part of starting a business, which is driving revenue.
When starting a small business, all you need is a basic business plan that outlines:
- Your business’ reason for existence (its vision and mission).
- Your business’ values (what behaviours are acceptable?)
- Financial goals your business plans to achieve (1, 3, 5 and 10 years).
- Organisational chart that defines areas of accountability and reporting lines.
The need for a simple business plan is captured well in this tweet by the CEO of Strategyzer, Alex Osterwalder:
The only exception to this rule is when you fund your small business using private equity or a bank loan. Your financiers will ask for a detailed business plan to help them understand risks and opportunities.
A good business plan in that scenario must also include the following:
- Your business model and structure.
- Details of the service or product you will provide.
- A run-through of the manufacturing and logistical details.
- A marketing plan / strategy you will utilise in the early phases.
Bonus points for including the following:
- An outline of the revenue streams you intend to use and how they will work.
- Projected returns to show your investors how they will benefit from lending to you.
- Financial outlines for the next three to five years, including income statements, balance sheets, and cash flow statements.
- An outline of your business’s daily operations, including details about your supply chain, production process, and distribution strategy.
You can explore business plan examples here.
Expert Tip.
Keep all information clear, concise and quantified. You want to hook your investors in with a clear point of difference and ROI calculations. Show them how they can 5X their investment in 5 years.
4. Choose Your Business Structure.
Whether you start your own business or work for a start-up, deciding the proper structure for your small business is essential.
The options are as follows:
1. Sole Trader (sole proprietorship).
A sole trader is a business structure in which a single individual owns and operates the business.
2. Partnership.
This is an organisation of two or more individuals running a business (how to choose the right business partner?)
Important!
Partnerships carry risks of limited lifespan or termination, as they rely on a mutually beneficial and positive relationship between partners.
3. Company (Pty Ltd).
This a legal entity in which people own shares in a business.
The downside – it has limited liability protection compared to other business structures. Those who own a stake are also liable for debts.
(Related: Ultimate Checklist For Starting A Business).
5. Check Your Legal Obligations.
I highly recommend engaging a professional to assess your legal obligations before starting a small business. The business structure you choose will determine your operation’s rules and regulations.
Establishing a small business in Australia has different requirements and demands. You must:
- Acquire licenses and permits such as the Australian Business Number (ABN) to operate legally. Apply here.
- Undergo registration under various authorities – for example, ensure you comply with the regulations of your particular state or territory.
- Check how you are applicable for tax. As an entrepreneur, you are responsible for paying your taxes.
Important!
Small businesses must check if general insurance policies are required. This is a must-have to protect yourself, your employees, and the public.
6. Build Your Core Team.
A successful small business requires experienced team members with a growth mindset. You will add immense value by hiring the right employees from the start.
Here is my #1 rule for acquiring the best talent. Look for:
- Smart people.
- Who want to work hard.
- And are honest.
Here’s why ALL of them are non-negotiable (nod to Naval Ravikant):
Once you find the right people:
- Ensure they’re clear on their roles and responsibilities.
- Outline the goals and targets they need to achieve.
- Invest in the right tools to support efficient work processes. These could include customer relationship management (CRM) software, accounting software and collaboration tools.
7. Leverage Freelancers.
You will save time by having on-demand help from people who possess skills that you don’t.
Instead of spending hours or days learning how to do something, or wasting time on hiring contractors each time, start Upwork contracts with the following types of freelancers, and dip into their expertise as needed.
Developer.
Find a generalist full-stack developer (Eastern Europeans offer the best balance of skill and cost – you can hire one for $20-30/hr) who will help you with website setup, hosting, basic WordPress modifications and troubleshooting.
Virtual Assistant.
This is one of the most critical early hires you will make. Philippine VAs are remarkably rigorous and will pick up administrative, repetitive, research-centric aspects of your workload for about $10/hr.
(Related: Best POS Systems In Australia).
The Philippines is about 3 hours behind the east coast of Australia, which works well from a workload perspective as there’s a lot of overlap in business hours.
Expert Tip.
You can finish your workday by delegating tasks to your Philipinnes-based VA, and finding them complete the next morning.
8. Choose A Business Name.
Choosing a business name can be difficult. It is a crucial part of your brand identity and can make a great first impression on new customers, so it is important to get it right.
Don’t choose a name that’s similar to other competing businesses.
It’s a good idea to avoid using complex words or phrases that are difficult to spell or pronounce. Also, choose a business name that reflects the services or products you offer. Vague and abstract names are easily forgotten.
9. Figure Out Your Finances.
Your small business will thrive or perish on finances.
You must calculate the fees associated with starting and running your business, including upfront and ongoing expenses. The total amount should be above your break-even point.
- Base your budget and start-up costs on costings from the industry.
- Clarify a figure you need to finance your business.
- Consider small business loans, friends and family investments, or personal savings.
Once your business is up and running, keeping track of your financial performance is essential. This includes:
- Issuing invoices correctly.
- Tracking your income and expenses.
- Analysing your profits and losses.
- Making necessary adjustments to your budget or business strategy.
Tools such as Xero, Expensify and PlanGuru will help automate many of your processes.
(Related: How To Accept Credit Card Payments In Your Business).
10. Develop A Marketing Plan.
A marketing plan will increase your visibility, establish a presence in the market, and capture market share.
Below are different angles you should consider:
- Search Engine Optimisation (SEO):
- Identify the keywords customers will use to find products or services like yours to rank well in search engines.
- Employ the targeted keywords throughout your website content (page titles, headings, and meta descriptions).
- Social Media Marketing (SMM):
- Ensure your content is targeted to each specific audience on various social media platforms.
- Schedule your content to roll out daily with planners like Later. The algorithm favours consistency over perfection.
- Adapt and create future content to suit the analytics on your best-performing posts.
- Advertising:
- Traditional advertising and the press are effective tools for reaching a large audience quickly.
- Consider TV, radio, newspapers, and magazines for campaign launches or specific offers.
- Utilise online strategies such as paid ads to target users searching for similar products.
Bottom Line On Starting A New Business In Australia.
The steps to starting a small business in Australia may be overwhelming, but I hope that this guide will help you feel in control
Once you’ve prepared a detailed business plan that addresses the above elements of structure, finances, operations, and marketing – you should feel empowered and excited.
At every stage, continue to ask yourself one question, ‘How can my business make a greater impact?’ Then – get to work.
Steven
