Starting a business is no easy task and requires tons of hard work, accumen 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 demand and supply. 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 a blend of things like innovation, need, and creativity. Choosing your business type is also important. 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 behind starting a business.
1. Maintain a Plan of Action
Planning is the most important part of starting a business. Always try to plan the steps ahead 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. Having a plan 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 also 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 the customers from illegal and unjust business tactics. It makes sure that all the businesses are transparent to the government and no illegal 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 the taxation policies of Australia. Then only you can 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 analysing 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 good 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:
- Become a sole trader: Becoming a sole trader is the easiest and the most widely used business structure. This type of structure is widely used by small business owners. Such businesses are spanned over shorter ranges and mostly do not require a large capita. Only one single head of the business is responsible for these. All the legalities and penalties regarding the business are the responsibility of this one person.
- A company structure: In this type of business structure, a company instead of a single individual is responsible for the outcomes of the business. If the “business” ends up in any kind of legal obligation, the company can be sued. Also, the company holds the right to sue those who intend to harm its reputation in any case. The products of such businesses are owned by the company and not an individual.
- Business partners: In this type of structure, two or more people, called partners are responsible for the business. These partners spend their money in the business and get their proportion of the revenue or loss incurred by the business.
- Trust: 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, choose a business model. This model will be based on the end product of your business plan, your target audience, and the market conditions. Some of the most famous business models are:
This is a retail business model in which the medium of sales is entirely online. There is no need for the customer to physically meet the seller. The customer can buy any product sitting at their homes.
Since most of the work is done online, this model saves a lot of task force that is otherwise needed 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 more.
Examples of eCommerce-based businesses are Amazon, Flipkart etc.
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 make the purchase. Since it works on both kinds of business models it is said that it is based on the hybrid model.
One major advantage of the hybrid model is that it is accessible to both kinds of customers. If you live near the outlet and want to visit, you are free to do so.
Also, if you live far away from the store and still wish to make a 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 for advertising their product or services to that audience. Based on the profit they get from your advertisement, they will continue their contract with you.
In this way, you can make a business that profits by helping other businesses to grow. The only thing you need is 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 business of his own. 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 in return 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 for that period.
This model is often paired with the e-commerce Business model.
One major example of a business based on this model is Amazon prime video, which is 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 to find a funding source. For most businesses, your personal savings can not be a secure funding source. A secure 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 is usually beneficial to small businesses which 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 money over a period of 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 is done, he can pay back the money in a specified time period.
6.2 Equipment Loan
In this type of loan, you can ask for money that can be repaid over the period of 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 of time.
6.3 Business Term Loan
This is a lump sum of money provided beforehand, which can be paid over a period of time. This type of loan provides you with large amounts of money. But, here a great risk is also involved. Since comparatively larger amounts of money are given, they usually ask for collateral to keep at stake.
If you cannot repay the amount in the said time, you will have to give up the collateral. This collateral can be anything from your house to any of the 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 the above-mentioned are the most widely used.
7. Make Wise Financial Decisions
Though, taking loans can help you with your business a lot, one thing to keep in mind is to always borrow the money that you can repay. Many times people end up under large debts on failing to repay the loan or interest amounts.
To avoid that from happening, 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 large sum of money, don’t have collateral for the banks to keep at stake. Out of helplessness, these people ask for money from “moneylenders”. Moneylenders are people who 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, they demand ten times the interest rate as that demanded by the banks.
In short, they make their money multiply exponentially by exploiting your needs. Most of the time, they will pressurize you to take other loans and pay their interests 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 end up selling your own business to pay for these loans. So, stop yourself from falling into bigger debt and problems, you should never take money from such lenders. Otherwise, you will be losing the precious things that you have worked for.
8. Decide on a Business Name
After you have planned everything else, it is now time to choose a good name for your business. The name of your business should be something that describes 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 difficult word. It should be a self-explanatory term. For example, the company Amazon’s name describes the wide range of products available on the site.
9. Apply for an Australian Business Number (ABN)
Finally, when you are done with all the prerequisites, the most important step of starting a business in Australia comes. To establish a business in Australia, you have to first register an Australian business number.
9.1 What is an Australian Business Number?
An Australian Business Number or ABN, is an 11-digit number issued by the Australian Businesses Register. It is a unique number that acts as an identification for your business. The Australian Businesses Register is operated by the Australian taxation office.
The Australian Business Number is the identification used by the Australian government to identify businesses and organizations.
9.2 Who Can have an Australian Business Number?
To be eligible for getting an Australian Government Business Number, you have to fulfill some criteria.
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 businesses 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 business should have a business plan containing an outline of its views, functionality, and aims.
- A business’s main aim is to make monetary profits.
- It should be a majorly commercial activity, including commercial sales and purchases.
- The size and scale of these sales and purchases should be reasonable.
- The activity should be repeated and not be a one-time thing.
- There should be a systematic framework similar to that of other already established businesses.
9.3 Things You Need for Your ABN Application
If you want to apply for ABN you have to first decide the best suited structure for your business plan. To complete the further steps, you will need to provide the following details.
- You have to provide the tax file numbers(TFNs) of the people associated with your business eg: Partners, Trustees, etc.
- If you are taking help from a professional adviser, you have to provide the professional adviser’s number. This can be their license number, eg: AFS license.
- If you have any previously registered ABN, you have to provide that too.
- Australian Company Number or Australian Registered Body Number should also be provided, wherever necessary.
- The date for ABN should also be specified. This is the date that marks the official starting date of your business.
- You have to provide a name for your business to be written on all the legal documents.
- You have to 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 you have these things in hand, you can go and 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. Each of your activities is now recognized by the government of Australia through your ABN.
Starting a business is a great idea if you have done the right amount of homework and research for it. The most important thing is to identify your strengths and plan the path you are going to follow.
For your business to excel, it is very important that you choose the best business structure for it. You can apply some mathematics and finalize a structure with which your profit maximizes and the losses are minimal.
After selecting the structure, you should keep in mind, a secure source of monetary support. This can be anything you are comfortable with. But, make sure to borrow only the amount which you can repay.
After planning everything, you now have to go for all the legalities to not fall into trouble later. Always remember that businesses do not work only on hard work.
Another one of the important aspects of a good business to work is how smart your approach is. Therefore, keeping the smart work at pace with the hard work will eventually make your business grow.