Starting a business is no easy task and requires hard work, insight and planning. To understand the underlying process of a business, we first need to understand the meaning of a business. A business is an enterprise aimed at achieving a monetary profit. It might be of any type, depending upon the needs and availability of products and services.
A good business always works on the concepts of supply and demand. If the demand for a particular goods increases rapidly, a good business owner will try to increase its supplies too.
A business is also based on innovation, need, and creativity. Choosing your business type is also essential. You can make your choice by keeping your best abilities in mind.
How to Start a Business in Australia
If you want to start a business in Australia, you might want it to be something that is massively in demand. Or you can provide something entirely new based on your creativity. This new product or service should have the capability to stand out among the already existing ones.
The following is a guide on how to start a business in Australia. These steps simplify the complicated process of creating a business.
1. Maintain a Plan of Action
Planning is the most essential part of starting a business. Always try to plan the steps for your business to grow. Your plan should include an overview of your business structure, how you will operate it, and the available market opportunities. It should also include information regarding the people involved in executing your plan.
The plan should be a strategy that makes your idea understandable to investors. A program that describes your business structures will always keep you one step ahead.
It will help you in making the budgets for your business structure. Also, if it is your first business, it might help to overcome the lack of experience as it displays the clarity you have in your mind.
2. Understand the Law
All businesses in Australia come under The Competition and Consumer Act 2010. It is the law that regulates and governs trading in Australia. It checks the dealing patterns and legality of all the businesses in Australia.
This law protects customers from illegal and unjust business tactics. It ensures that all the businesses are transparent to the government and that no criminal activity is happening.
Another law that governs companies and partnerships in Australia is The Corporations’ Act 2001.
If you want to start a business in Australia, you should first understand these two laws and learn about Australia’s taxation policies. Only then can you make sound decisions regarding your business.
Learning about the law will prevent you from unknowingly doing something against it and losing your reputation.
3. Pick a Product or Service
The core of a business lies in the product or service it provides. To start a business, you should first analyse your capabilities, assets and liabilities. After examining these things, you can choose the best products or services you can provide.
For example, if you are a good dancer, your business can be based on teaching your dance moves to people. This can be done online or offline. If you are good with words, you can be a blogger.
Similarly, if you own farmland, you can be a farmer and own a business that sells organic quality vegetables.
4. Select the Appropriate Business Structure
Another one of the most important steps is choosing the appropriate business structure for yourself. The most suitable business structure might depend on various factors—the factors like available goods, funds, contacts, workload, etc.
Some of the most widely used business structures in Australia are:
4.1 Become a sole trader:
Becoming a sole trader is the easiest and the most widely used business structure. Small business owners widely use this type of structure. Such businesses are spanned over shorter ranges and do not require a large capita. Only one single head of the company is responsible for these. All the legalities and penalties regarding the business are the responsibility of this one person.
4.2 A company structure:
In this type of business structure, a company, instead of a single individual, is responsible for the outcomes of the business. The company can be sued if the “business” ends up in any legal obligation. Also, the company can sue those who intend to harm its reputation. The company and not an individual own the products of such businesses.
4.3 Business partners:
In this structure, two or more people, called partners, are responsible for the business. These partners spend their money in the industry and get the proportion of the company’s revenue or loss.
The trust structure is somewhat difficult to understand. In this type of business structure, a trustee is responsible for the profit and loss of the beneficiaries or members of the trust.
5. Choose a Business Model
After choosing the business structure, select a business model. This model will be based on your business plan’s end product, target audience, and market conditions. Some of the most famous business models are:
This is a retail business model in which the sales medium is entirely online. There is no need for the customer to meet the seller physically. The customer can buy any product sitting at home.
Since most of the work is done online, this model saves a lot of task force that would otherwise need to be hired by the seller. Also, since there is no need to be there physically, the reach of the business expands. People from distant parts of the world can buy your products and services.
However, since there is no physical meeting, the chances of mistakes, fraud and issues related to wrong delivery are higher.
Examples of eCommerce-based businesses are Amazon and Flipkart.
5.2 Direct Sales Model
Contrary to the e-commerce model, the direct sales model is the model in which the primary sales are made through store visits by the customers. In this model, the customer has to pay a physical visit to the shop.
They can choose their product and pay for it right then. Unlike the e-commerce model, since the customer is physically present there, chances of error are reduced.
5.3 Hybrid Model
This model is the combination of two or more models. For example, A restaurant may sell its food over an online app. It can also allow the customers to visit their outlet and purchase. Since it works on both kinds of business models, it is said that it is based on the hybrid model.
One significant advantage of the hybrid model is that it is accessible to both customers. If you live near the outlet and want to visit, you can do so.
Also, if you live far away from the store and still wish to purchase, you can do it online.
5.4 Advertising-Based Model
In this business model, the majority of revenue is produced by advertising the services of other businesses. If you have a good audience, some brands will pay you to promote their product or services to that audience. They will continue their contract with you based on the profit from your advertisement.
In this way, you can make a business that profits by helping other companies to grow. You only need to create a good and engaging social image.
This method is commonly used by bloggers, vloggers, social media influencers, magazines, etc.
5.5 Franchise Model
In this method, the franchiser can sell the outlines or blueprints of an already successful business. The person who buys it can copy this blueprint and set up a company. In this way, the customer can establish a proper way to run an already in-demand business.
The franchiser offers a tried and tested business plan and gets a fair share of revenue from all the franchises.
5.6 Subscription Model
In this model, the customer has to provide periodic payments to access the services provided by the company. The term subscription means a customer has subscribed or paid the fees to access a service for a particular time. Once this period ends, the customer has to renew the subscription by paying the amount again.
This model is often paired with the e-commerce Business model.
One prominent example of a business based on this model is Amazon Prime Video, an entertainment platform. This platform demands a particular amount for its subscriptions. In return, it provides incentives like free delivery on the Amazon Seller app.
6. Secure a Funding Source
After selecting the right business plan, business structure, and business model, the next thing to do is find a funding source. For most businesses, personal savings can not be a secure funding source. A safe source of money is the one which comes in handy during the hour of need. It should not majorly disrupt your personal life.
The best secure source of funding is a business loan. This is funding that a bank or any other organization provides to help you with your business-related finances. These loans are based on repayment agreements that contain details like interest rates, collateral, etc.
There are various types of business loans available. Business owners can opt for these according to their needs.
Some of them are:
6.1 The Business Line of Credit
This type of loan usually benefits small businesses that are not yet established. A person is allowed to borrow a maximum limit amount. They can use as much money as they need and return the rest. They can repay the used cash over some time with some added interest.
Example: A shop owner needs some money to renovate his shop. But, he does not have a defined budget amount. He can go for the business line of credit and use the money he needs. After his work, he can repay the money in a specified period.
6.2 Equipment Loan
In this type of loan, you can ask for money that can be repaid throughout the expected life of your equipment. Like, if you are a saloon owner, you can take a loan to buy the equipment you need to do your work. You can repay this loan by the end of a specific period.
6.3 Business Term Loan
This is a lump sum of money provided beforehand, which can be paid over time. This type of loan provides you with large amounts of money. But, here, a great risk is also involved. Since comparatively more significant amounts of money are given, they usually ask for collateral to keep at stake.
You will have to give up the collateral if you cannot repay the amount in the said time. This collateral can be anything from your house to any expensive things you own. This is something that can be used as a substitute for money.
The collateral damage can even be more than the money loss itself. So, Business Term Loans are good for established businesses that can take and usually overcome the risk.
There are many other secure sources of funds, but those mentioned above are the most widely used.
7. Make Wise Financial Decisions
Though taking loans can help you with your business a lot, one thing to remember is always to borrow the money you can repay. People often end up in large debts, failing to refund the loan or interest amounts.
To avoid that, always calculate the amount you can pay and the time you need to pay it. Apply for a loan only when you are sure about your calculations.
7.1 Avoid taking Loans from Moneylenders
Many people who want a significant sum don’t have collateral for the banks to keep at stake. Out of helplessness, these people ask for money from “moneylenders”. Moneylenders have large deposits of money which they lend to others.
These people usually don’t ask for much collateral or credit scores and lend money to business owners without it. But, the catch is that they demand ten times the interest rate the banks require.
In short, they make their money multiply exponentially by exploiting your needs. Most of the time, they will pressure you to take other loans and pay their interest through those.
This will build a mountain of debt over your head, which you will never be able to get rid of. You might even sell your own business to pay for these loans. So, stop falling into more considerable debt and problems, and you should never take money from such lenders. Otherwise, you will lose the precious things you have worked for.
8. Decide on a Business Name
After planning everything else, it is time to choose a good name for your business. The name of your business should describe your products and services in the least number of words.
The name should be as simple and easy to relate as possible. It should not be a problematic word. It should be a self-explanatory term. For example, Amazon’s name describes the wide range of products on the site.
9. Apply for an Australian Business Number (ABN)
Finally, when you finish all the prerequisites, the most crucial step of starting a business in Australia comes. You must first register an Australian business number to establish a business in Australia.
9.1 What is an Australian Business Number?
An Australian Business Number, or ABN, is an 11-digit number issued by the Australian Business Register. It is a unique number that acts as an identification for your business. The Australian Taxation Office operates the Australian Businesses Register.
The Australian Business Number is the Australian government’s identification to identify businesses and organizations.
9.2 Who Can Have an Australian Business Number?
You must fulfil some criteria to be eligible for an Australian Government Business Number.
According to the guidelines stated by the Government, you are eligible if :
- You are starting an “enterprise” in Australia.
- Making supplies related to Australia’s indirect tax zones.
- A Corporations Act company.
To start a business, particularly in Australia, the first criterion is the most important one to adhere to. “Enterprise” includes companies like becoming a trustee of a trust. It also includes other activities like operating a charity, leasing a property, etc.
There is no rule-bound classification of a business, but some of the most widely accepted criteria are:
- A company should have a plan outlining its views, functionality, and aims.
- A business’s main purpose is to make monetary profits.
- It should be a significant commercial activity, including retail sales and purchases.
- The size and scale of these sales and assets should be reasonable.
- The exercise should be repeated and not be a one-time thing.
- A systematic framework should be similar to that of other already established businesses.
9.3 Things You Need for Your ABN Application
You must decide the best-suited structure for your business plan to apply for ABN. To complete the further steps, you must provide the following details.
- You must provide the tax file numbers(TFNs) of the people associated with your business, e.g., Partners, Trustees, etc.
- If you seek help from a professional adviser, you must provide the professional adviser’s number. This can be their license number, e.g., AFS license.
- If you have any previously registered ABN, you have to provide that, too.
- An Australian Company Number or Australian Registered Body Number should also be provided where necessary.
- The date for ABN should also be specified. This is the date that marks the official starting date of your business.
- You must provide a name for your business to be written on all the legal documents.
- You must mention the contact details of all the people working for your business.
- All the business contact details like address, contact number, email IDs, websites, etc
After these things, you can apply for the ABN by visiting this link.
Once you have an ABN, you will become a registered business owner in Australia. Now you are free to run your business according to the law. The government of Australia now recognizes each of your activities through your ABN.
Starting a business is excellent if you have done the proper homework and research. The most important thing is to identify your strengths and plan your path.
For your business to excel, choosing the best business structure is crucial. You can apply some mathematics and finalize a system with which your profit maximizes, and the losses are minimal.
After selecting the structure, you should keep a secure source of monetary support in mind. This can be anything you are comfortable with. But make sure to borrow only the amount which you can repay.
After planning everything, you must go for all the legalities to avoid trouble later. Always remember that businesses do not work only on hard work.
Another critical aspect of an excellent business is how intelligent your approach is. Therefore, keeping the brilliant work at pace with the hard work will eventually grow your business.
I am a physics graduate who loves to travel , explore and learn new things. Through my knowledge of physics, and sciences in general I am able to relate various things that the general public can’t. I share my experiences with the world by writing them as blog posts and articles. Being a keen observer ,I often write things that many people fail to notice.