WHAT IS A BUSINESS ?

          A business is an organization engaged in the trade of goods, services, or both to consumers. Businesses are predominant in capitalist economies, where most of them are privately owned and administered to earn profit to increase the wealth of their owners. Businesses may also be not-for-profit or state-owned. A business owned by multiple individuals may be referred to as a company, although that term also has a more precise meaning.

         The etymology of "business" relates to the state of being busy either as an individual or society as a whole, doing commercially viable and profitable work. The term "business" has at least three usages, depending on the scope — the singular usage to mean a particular organization; the generalized usage to refer to a particular market sector, "the music business" and compound forms such as agribusiness; and the broadest meaning, which encompasses all activity by the community of suppliers of goods and services. However, the exact definition of business, like much else in the philosophy of business, is a matter of debate and complexity of meanings.

           Although forms of business ownership vary by jurisdiction, there are several common forms:

• Sole proprietorship: A sole proprietorship is a business owned by one person for-profit. The owner may operate the business alone or may employ others. The owner of the business has unlimited liability for the debts incurred by the business.

• Partnership: A partnership is a business owned by two or more people. In most forms of partnerships, each partner has unlimited liability for the debts incurred by the business. The three typical classifications of for-profit partnerships are general partnerships, limited partnerships, and limited liability partnerships.

• Corporation: A corporation is a limited liability business that has a separate legal personality from its members. Corporations can be either government-owned or privately-owned, and corporations can organize either for-profit or not-for-profit. A privately-owned, for-profit corporation is owned by shareholders who elect a board of directors to direct the corporation and hire its managerial staff. A privately-owned, for-profit corporation can be either privately held or publicly held.

• Cooperative: Often referred to as a "co-op", a cooperative is a limited liability business that can organize for-profit or not-for-profit. A cooperative differs from a for-profit corporation in that it has members, as opposed to shareholders, who share decision-making authority. Cooperatives are typically classified as either consumer cooperatives or worker cooperatives. Cooperatives are fundamental to the ideology of economic democracy.

         The efficient and effective operation of a business, and study of this subject, is called management. The major branches of management are financial management, marketing management, human resource management, strategic management, production management, operations management, service management and information technology management.

         Owners engage in business administration either directly or indirectly through the employment of managers. Owner managers, or hired managers administer to three component resources that constitute the business' value or worth: financial resources, capital or tangible resources, and human resources. These resources are administered to in at least five functional areas: legal contracting, manufacturing or service production, marketing, accounting, financing, and human resourcing.

           Most commercial transactions are governed by a very detailed and well-established body of rules that have evolved over a very long period of time, it being the case that governing trade and commerce was a strong driving force in the creation of law and courts in Western civilization.

         As for other laws that regulate or impact businesses, in many countries it is all but impossible to chronicle them all in a single reference source. There are laws governing treatment of labor and generally relations with employees, safety and protection issues, anti-discrimination laws (age, gender, disabilities, race, and in some jurisdictions, sexual orientation), minimum wage laws, union laws, workers compensation laws, and annual vacation or working hours time.

         In some specialized businesses, there may also be licenses required, either due to special laws that govern entry into certain trades, occupations or professions, which may require special education, or by local governments. Professions that require special licenses range from law and medicine to flying airplanes to selling liquor to radio broadcasting to selling investment securities to selling used cars to roofing. Local jurisdictions may also require special licenses and taxes just to operate a business without regard to the type of business involved.

          Some businesses are subject to ongoing special regulation. These industries include, for example, public utilities, investment securities, banking, insurance, broadcasting, aviation, and health care providers. Environmental regulations are also very complex and can impact many kinds of businesses in unexpected ways.

          When businesses need to raise money , more laws come into play. A highly complex set of laws and regulations govern the offer and sale of investment securities (the means of raising money) in most Western countries. These regulations can require disclosure of a lot of specific financial and other information about the business and give buyers certain remedies. Because "securities" is a very broad term, most investment transactions will be potentially subject to these laws, unless a special exemption is available.

         Capital may be raised through private means, by public offer (IPO) on a stock exchange, or in many other ways. Major stock exchanges include the Shanghai Stock Exchange, Singapore Exchange, Hong Kong Stock Exchange, New York Stock Exchange and Nasdaq (USA), the London Stock Exchange (UK), the Tokyo Stock Exchange (Japan), Bombay Stock Exchange(India) and so on. Most countries with capital markets have at least one.

          Businesses that have gone "public" are subject to extremely detailed and complicated regulation about their internal governance (such as how executive officers' compensation is determined) and when and how information is disclosed to the public and their shareholders. In the United States, these regulations are primarily implemented and enforced by the United States Securities and Exchange Commission (SEC). Other Western nations have comparable regulatory bodies. The regulations are implemented and enforced by the China Securities Regulation Commission (CSRC), in China. In Singapore, the regulation authority is Monetary Authority of Singapore (MAS), and in Hong Kong, it is Securities and Futures Commission (SFC).

         As noted at the beginning, it is impossible to enumerate all of the types of laws and regulations that impact on business today. In fact, these laws have become so numerous and complex, that no business lawyer can learn them all, forcing increasing specialization among corporate attorneys. It is not unheard of for teams of 5 to 10 attorneys to be required to handle certain kinds of corporate transactions, due to the sprawling nature of modern regulation. Commercial law spans general corporate law, employment and labor law, health-care law, securities law, M&A law (who specialize in acquisitions), tax law, ERISA law (ERISA in the United States governs employee benefit plans), food and drug regulatory law, intellectual property law (specializing in copyrights, patents, trademarks and such), telecommunications law, and more.

          Businesses often have important "intellectual property" that needs protection from competitors for the company to stay profitable. This could require patents, copyrights, trademarks or preservation of trade secrets. Most businesses have names, logos and similar branding techniques that could benefit from trademarking. Patents and copyrights in the United States are largely governed by federal law, while trade secrets and trademarking are mostly a matter of state law. Because of the nature of intellectual property, a business needs protection in every jurisdiction in which they are concerned about competitors. Many countries are signatories to international treaties concerning intellectual property, and thus companies registered in these countries are subject to national laws bound by these treaties. In order to protect trade secrets, companies may require employees to sign non-compete clauses which will impose limitations on an employees interactions with stakeholders, and competitors.

THINKING OF STARTING A BUSINESS

          Are you thinking about starting a business of your own? Congratulations! It’s a huge step, and you’ll need to be prepared. That’s where SBA comes in: Learn the aspects of starting a business, plus get the answers and information you need to startup.

• Thinking About Starting

This guide helps you learn if you are ready to start your own business, understand market conditions and offers a 10 step plan for getting started.

• Find a Mentor or Counselor

As you get started, take advantage of free training and counseling from experienced business owners who’ve already walked in your shoes. Learn about government-sponsored mentorship programs and resources.

• How to Write a Business Plan

Get tips on how to organize your thoughts and develop a business plan that puts you on the road to success.

• Establishing a Business

What type of business should you set-up and how should you structure it? Read about various business types, how to incorporate your business, purchase an existing business, and more.

• Prepare Your Business Finances

How much does it cost to start a business? At what level of revenue will your business break even? Do you need a loan? This guide can help you build a picture of your business financing needs.

• Explore Loans, Grants & Funding

This guide explores options for financing your small business. From loans to venture capital investments, find out what’s available and how to tap into these sources.

• Understand Business Law & Regulations

A variety of laws and regulations govern how you manage employees, conduct business, and ensure a healthy workplace. But the law can also protect your small business interests in areas such as intellectual property. This guide explains what you can do to comply and use the law to your advantage.

• How to Market Your New Business

Get tips on how to build your marketing budget and develop a plan to grow your business.

• Local Resources That Can Help

Looking for small business counseling and training close to home? SBA can help! SBA provides small business counseling and training through a variety of programs and resource partners across the country.

FREQUENTLY ASKED QUESTIONS !

• I'm thinking about turning my hobby into a business. Do I have to form a company so I can test out my concept?

No, you don't have to form a company to start testing your concept. There are three basic business structures in New Zealand: sole trader, partnership and company. Most businesses start as sole traders, then progress to partnership or company status later.

You can 'test the waters' as a sole trader (the simplest way to start), choosing whatever trading name you like, provided it does not conflict with an existing business name or brand, or is confusingly close to an existing name or brand. For example, you might decide to trade as 'Susan Brown Craft Products'. Provided no one else is using this name, or something very similar, you should be able to order your signage and stationery.

Find more information on business structures.

• How do I check if someone else is using my preferred trading name?

This is a bit trickier, because there is no central register in New Zealand of 'sole trader' trading names. For companies it's different. You can find out if someone else is already using your proposed company name by visiting the Companies Office website completing a name search.

We suggest you search this site first anyway to see if a company is using your proposed trading name. Then search the trade marks register to ensure someone doesn’t already have rights to the name. This is because trading names can often be trade marks. Search the Yellow Pages website to make sure there's no similar or identical listing in either the White Pages or the Yellow Pages. Double check by searching at least your local phone book. As a final check, search for similar names through Google or other local search engines. If all these avenues show no one is using your preferred trading name, you should be in the clear to go ahead. If by some unfortunate chance someone else is using the same name, you can at least show that you've made a serious attempt to find a match.

• Must I register somewhere before I start?    

If you form a company, then various formal steps are required. But even if you start as a sole trader, you should notify Inland Revenue so that they can record you are self-employed. There are three good reasons for this:

1. Firstly, to register for accident cover. Inland Revenue will in turn notify ACC to provide you with the appropriate cover. Otherwise, if you have an accident, you may not have your claim accepted from the date you say you went into business unless the date has been recorded somewhere (with Inland Revenue in this case). This applies both to the start of a full-time enterprise and to the start of a part-time business (such as in the evenings) while you're still employed.
2.  Secondly, so that Inland Revenue can correctly code the computer to send you the appropriate Business Tax forms at the end of the financial year. These forms will help to remind you of your obligations.
3. Thirdly, to help you with your claims for business expenses. The reason for this is that Inland Revenue is unlikely to let you claim for equipment you bought some time ago when you were operating as a hobby. So if you want to claim legitimate business expenses, such as extra equipment you might need to buy, stationery, signage, etc., start keeping proper records immediately and let Inland Revenue know you're 'in business'.

You can then give your records to your bookkeeper or accountant at the end of your first financial year. Note: the most common ending for a financial year is the 31 March. Even if you haven't been trading for a full 12 months before the 31 March, you should still give your records to a bookkeeper or accountant for them to prepare a return for Inland Revenue.

The best way to let Inland Revenue know of your intentions is by phone. But remember that Inland Revenue phone lines are open until 8 pm each weeknight, and to 1 pm on a Saturday. So ring after normal business hours: it's quicker.

• If I'm starting as a sole trader, should I open a separate bank account?

Yes, this will make life much easier for you and for your accountant, because this step allows you to separate clearly your business income and expenses from your private income and expenses. Visit your bank and ask for a separate account. Before the bank can open a separate business bank account they will need a business Inland Revenue number.

As a sole trader your business Inland Revenue number will usually be the same as your existing personal one (but check this out with Inland Revenue beforehand).

This separate business account will typically be named something like 'Susan Brown trading as Susan Brown Craft Products' (or whatever). The bank statements are usually the prime source of information for your accountant or bookkeeper when they come to put together your accounts at the end of your first year's trading.

Make life even easier for yourself by getting a cash card from the bank in your trading name. This way, instead of running a separate petty cash account, you can use the cash card to pay for minor purchases (like stationery) through EFTPOS. All these transactions will be neatly listed on your business bank statements and you can just staple the relevant EFTPOS till receipts and invoices to the bank statement every month. No need to carry cash around or worry about balancing a petty cash account.

A similar tactic is to use a business credit card. Make sure, though, that you receive and keep proper GST invoices for all your purchases.

• Should I use an accountant or lawyer?

You can trade and put in your own tax returns, or you can use a bookkeeper (someone skilled at keeping books who is not a fully qualified chartered accountant). I recommend, though, that you find an accountant. Very few successful small businesses function without one. You're unlikely to be aware of all aspects of the tax system. Ask friends already in business for recommendations, and choose an accountant who works with other small businesses. Your accountant should be able to save you money and stress by advising what you can claim and how, as well as giving you advice on how to set up a basic bookkeeping system.

It's also a very good idea to consult a lawyer about your business intentions. Certainly do so if you intend signing a lease or any legal document. Depending on your business, a lawyer might advise you to take out public liability insurance or other forms of protection

• Should I approach Inland Revenue?

Yes, don't be afraid to contact Inland Revenue. Too many small business people view Inland Revenue as a bogeyman best left as undisturbed as possible. "Send them money regularly and hope they leave me alone!" seems to be a common attitude. In fact part of Inland Revenue's job is to offer help and information, particularly for new businesses. You'll find the Inland Revenue web site very useful for answering your basic questions about setting up a business and by phoning 0800 377 774 you can also arrange to speak to a Business Tax Information Officer. Their web site lists various helpful publications you can order, pick up from your local Inland Revenue office, or download from the site itself. There's also a good FAQ (Frequently Asked Questions) section. Your tax dollars fund this service, so why not make full use of it? You can ask for free advice even if you're just thinking about starting a business.

• Can you briefly explain the pros and cons of the different business structures?

At the risk of oversimplifying, here's a broad outline of the differences.

1. As a sole trader you are the business and the business is you. Most people start this way because it offers low-cost, easy entry, but the disadvantage is that you are totally responsible for the debts and liabilities of your business. You'll be taxed on your income from the business at individual tax rates.
2. Partnerships are usually formed when two or more people, perhaps with different or complementary skills and resources, get together to run a business or to share office space and overheads (the partnership structure is popular with accountants and other professionals). As a partner, you are liable both separately and jointly with the other partner(s) for the liabilities of the partnership. You split the profits according to the partnership agreement (for example, two partners agree to split the profit 50%). You are taxed at individual tax rates on your income from the partnership. The disadvantage is your liability not only for your own debts, but also for those partnership debts incurred by your partner(s).
3. When you form a company, you create a legal entity quite separate from yourself. The company can continue long after you have departed, because your shareholding in the company can pass to someone else. The 'Limited' part of a company's name stands for 'Limited Liability'. This means that as a shareholder in the company you are not personally liable for the company's debts (beyond the paid-up capital) unless it can be shown that you have acted recklessly (for example, continuing to trade when the company is insolvent). You'll be taxed at a different rate from the company.

Companies carry more credibility in the marketplace than sole traders, because taking the trouble to form a company shows that you are thinking about the long-term future of the business. The disadvantages are that a company costs more to run because more compliance paperwork and registration costs are involved. Also, in practice the 'limited liability' advantage is offset by the fact that a bank or other lender will typically require your personal guarantee before advancing finance of any significance.

• How do I register a company and can I do it myself?

Your accountant, business adviser or lawyer will be able to set one up for you and advise you on a suitable structure and constitution. There are some wrinkles that you need to be aware of so at least discussing your intention with an accountant or lawyer is a good idea.

If you're a confirmed 'do-it-yourself' type, then visit the Companies Office website and browse the options.

• Should I write a Business Plan for my business?

We certainly recommend you complete a Business Plan. Three good reasons: firstly, the research and thought you'll have to put into writing the business plan will help you to sharpen and/or adjust your ideas.

Secondly, any lending institution that you might approach for funds, such as a bank, will want evidence that you're done your homework and properly thought through your business concept.

Thirdly, the business plan provides a road map for your business. It lays out what you intend doing, how you intend to do it, the resources you need, and your action deadlines for each stage. The business plan forms a 'living document' that you can then revisit at regular intervals and modify according to your progress or changing circumstances.

Check out our information on business planning.

• Must I register for GST?

Not unless your business turnover is likely to exceed $60,000 in the next 12 month period. But our advice is yes, go ahead and register. There are very few small businesses that would benefit from not registering (if necessary phone Inland Revenue on 0800 377 774 and arrange to speak to a Business Tax Information Officer about the pros and cons).

Why do we say register? Four reasons. Firstly, let's get real! You do want to turn over more than $60,000 a year, don't you? If not this year, then soon! Start with the right, positive attitude and take your business seriously.

Secondly, you'll be able to claim back the GST back on all your business expenses that have a GST component, such as equipment, supplies, etc. So that computer that is priced at $3,000 including GST in fact costs you only $2,550 ($3,000 less the GST of 15%). Of course, you have to add GST to all your invoices and pay this to Inland Revenue (less the GST you're claiming back on expenses), but this shouldn't be a problem as long as you have enough self-discipline to remember that this GST component belongs to the government and is not your money.

To make life easier, it's a good idea to start a separate bank account (still under your trading name) and channel sufficient funds into the account to meet your various tax obligations. Your accountant will give you advice on how much you should tuck away each month to meet your obligations. This way you'll sleep much better at nights.

Thirdly, the discipline of doing a GST return every two months (you can choose a six-monthly return if your turnover is low, but we recommend you choose the two-month option for the discipline reason) will let you know how your business is doing. It's like generating a quick Profit and Loss report every two months.

If you're not paying any GST to Inland Revenue at the end of every two months, then you've probably made a loss (unless perhaps there was a large equipment purchase or some other one-off factor during this particular two-month period).

This is because you pay Inland Revenue the different between the GST you're claiming back (supplies and expenses, like that computer purchase) and GST you've collected on your invoices or cash sales. Obviously to stay in business you hope to sell more than the cost of your expenses, so every two months you'll be hoping to send a fat GST cheque off to Inland Revenue. The bigger the cheque, the more money you've made. If those cheques aren't being sent on a regular basis, there will be a problem that needs correction. So the two-monthly return also offers you a quick check on the health of your business and a regular chance to correct things before a minor problem becomes a major problem.

The fourth reason for becoming GST registered is that larger businesses will take you more seriously. If you're not registered, the signal is that you're possibly too small.

Find out more about GST.

• What help and/or funding is available for small businesses?

There is not much I am afraid. New Zealand Trade and Enterprise have some funding but it is usually tagged for existing businesses, and NZTE usually know who they want to work with. You could contact your local Economic Development Agency but we suggest you operate on the premise that there are no major grants for most start-up businesses in NZ.

• Do I need business skills or experience to start a small business?

The failure rate of small business start-ups is high. One major reason is lack of business skills. Therefore yes, you should systematically set about improving your business skills.

Perhaps the most important ingredient you need to succeed is enthusiasm and drive, backed by persistence and a determination to achieve your goals no matter how much hard work is involved.

But you'll greatly improve your chances of success if you have good business skills. These include the skills to market your business in a creative and sustained way and the skills to build and manage efficient business systems that enable the business to operate smoothly.

Many people start small businesses because they're very good at something, like making things, or being an electrician, or offering specialist knowledge, like computer installations, or public relations work. They often fail because their other business skills are poor, or they couldn't be bothered with them. It seems more fun to do what you enjoy doing than to keep the book work up to date, chase debtors, invoice promptly, do a cash flow forecast or manage tax liabilities, so these tasks are neglected, and the business suffers.

Another major reason for failure is lack of experience in the chosen industry. The solution is to work in the industry before you start or buy that business - even if you have to work for low wages or just for the work experience. The idea of running a Bed & Breakfast might sound dandy, until you've actually tried it and learned about some of the difficulties. Buying a hot bread shop with all those fresh pastries on display might seem great until you realise that bakers often have to get up around 3 am to start the baking process for the day. My advice is to learn about the advantages and the disadvantages of the industry you're interested in before you take the plunge.

MANY IDEAS ON STARTING A BUSINESS FROM SCRATCH

Business plan - 1

• Act like you know what you are doing even when you don’t.

Boasting is nothing to be ashamed of. If you move full speed ahead with aplomb, people are bound to move with you despite the fact that you have no clue as to what you are doing. You won’t always feel confident, but that doesn’t mean you can’t perform.

• Be patient if you want BIG clients.

Landing the BIG one takes time. It’s like fishing. You bait the hook and swing it high and mightily, but it can take hours to catch a big one. The same holds true for landing a corporate giant. Finding strategic customers or vendors who know your industry and believe in your product or business is manna from heaven. But it won’t take days or months to woo them. Count on years.

• Believe in yourself.

If you do not believe in yourself, who will? Every day, look in the mirror and say, “I am the best I can possibly be and I am going to do great things today!” You have to convince yourself first before you can convince others.

• Build a core team of people unlike yourself.

When the going gets tough, you want people at your side who are responsible, accountable and reliable. Look for people who complement you, compensate for your weakness or offer a fresh perspective. Impose on them to challenge you constantly by taking a critical or contrasting position. How else will you and the organization grow?

• Create luck.

Sure, we all run into bad luck at some time or another but the secret is learning how to squeeze out the negative and only work with the positive. In other words, search for ways to turn a misfortune into a benefit. Give yourself plenty of time to turn things around. The key to creating luck is to seek opportunities. Think about the good things happening in your life and work your way toward making every day an even better day.

• Define your business but remember to put the customers first.

Refer to Henry Ford’s classic statement, “An American can have a Ford in any color so long as its black.” The business is not about you, it’s about the vision you have that should serve customers. Theodore Leavitt had it right when he said, “The purpose of a business is to get and keep a customer.” Peter Drucker stated, “Companies are not in business to make items, but to make customers.”

• Delegate when you can.

Control freaks, perfectionists and compulsive people are “out.” Delegators are “in.” Who’s going to get more done, the gal who delegates the work to 100 people or the guy who does it all himself? By delegating responsibilities early on, you will have time to consider the needs of the business as a whole.

• Don’t quit your job until you have your first BIG customer.

What’s a business without at least one rock-solid customer? It’s a frustrating hobby. Before you even think of starting a business and running it full time, you better have a BIG customer or a handful of small ones who pay well and are committed for the long haul.

• Evaluate the source when you seek advice.

If you ask a homeless person whether you should launch a new product and he shouts, “Full speed ahead,” and then burps -- would you heed his advice? Pose the same question to the CEO of a publicly traded company and her answer will differ greatly. Respect and trust your source.

• Exude enthusiasm and positiveness.

What turns you on -- an enthusiastic and positive person or one who never smiles and never jumps up and down at your new idea? Start jumping up and down and look for people who will happily join you.

• Figure out how to get around or through an obstacle.

If you can’t get around it, then prepare yourself to go through it. Each of us has experienced problems that won’t go away. The best solution is one that allows you to break an “issue” down into manageable parts until nothing is left unsolved. Another method is to talk it over with friends, colleagues or family. You’ll be surprised at how many people have faced a similar situation and are more than happy to share what they have learned.

• Get a grip on cash.

To run a lean, alert and ready-for-challenge business, you have to tidy up your balance sheet and have enough money at your disposal. Know where your money is coming from and where it’s going. Most new businesses fail, and many do so because they are undercapitalized. Small businesses by definition tend to be thrifty even in good times, and bad times are all the more the reason to keep belts tight.

• Go to the bank when you don’t need to.

Just like going to the store when you are hungry makes you buy more than you intended, going to the bank penniless places you in a very vulnerable position. Get the paperwork for a loan done well in advance of being in a desperate situation and build a relationship before the economy sours. You want to always be in a position to weather the storm.

• Have a mentor.

Nothing beats turning to someone who’s been there and can provide you with perspectives that you are unable or unwilling to see. Mentors spare you from making costly mistakes or learning lessons the hard way.

• Hire the best team you can afford.

Don’t be cheap. Don’t be stupid. Offer what you can afford and be willing to explain why. If there is more to come, tell them so. If that’s unlikely, then say that too. No one ever walked away from a great opportunity just because the money wasn’t there. They turned it down because the person behind the offering wasn’t a straight shooter.

• Learn from all of your successes.

Don’t be defined by one moment. If you learn only one lesson, you‚re destined to fail because you will apply it in every situation. However, if you learn many important daily lessons, you will have a war chest of material from which to draw.

• Invest in the people you hire.

Think vacation and flex time, bonuses, health clubs, recognition for performance, opportunities for growth and advancement and the need for respect, sponsors and mentors. Employees look at both the “soft” and “hard” sides of the job before they decide to take it. Invest in your people. They are precious assets that will appreciate as you grow.

• Keep your business plan simple and clutter-free.

Don’t over-complicate your business plan. It should be easy to follow, easy to execute and easy to modify. Clarity is more important than bulk. Use the plan as a compass to guide your business. Keep it clutter-free.

• Live more like a farmer than a parachute salesperson.

A parachute salesperson drops in and stays for a moment. A farmer, on the other hand, plants different seeds to mature at different times and harvests them constantly. Properly nurtured crops (customers) can take care of you for the rest of your life.

• Overhaul your business to survive.

Given the choice between staying with a sinking ship or finding a new boat to float, overhauling your existing business may be your only chance for survival. For example, if you already have a website, start a monthly online newsletter. If you already have one that has become popular, offer its content to customers or vendors in your industry. You want to increase the odds that your customers will find your business offerings valuable.

• Prepare yourself to work hard.

Remember the days when you took long walks in the park, picked up seashells by the seashore or watched television for a couple of hours in the evening? Those days are gone forever. Starting a business takes lots of hard work. Don’t be in it to make fast money. Be in it because you love what you do and it doesn’t feel like work.

• Stay focused, do something sensational and keep going.

Blah, blah, blah and more blahs. That’s what people are sick and tired of -- the same old thing and too much of it. People are tuning things out like never before. Focus on your business, do something sensational and keep doing it until people buy into it. Sooner or later the blahs will turn into WOWs, you’ll get noticed and your business will turn into a yellow godzilla. Hard to ignore that, right?

• Stick to your knitting.

If you are great at marketing snacks, why start selling computers? Stick to what you do best. Make the most of your company’s core strengths.

• Take the long-term view of building your business.

Building a great, enduring business takes a lifetime. Make it your own. Enjoy every moment.

• Use common sense.

Mom always told you to use common sense. Why do it any differently now?

Sure, there’s a lot more to consider in launching a new business, but by practicing even a handful of these tips, you are guaranteed success.

Business plan - 2

 

• Researching your business idea and developing a business plan

Before starting a business, you need to answer the following fundamental questions.
Is your business idea viable?
Is there a market for your product/service?
What is that market?
Who are your competitors?
Do you have the financial capacity to get the business up and running?

These questions will be answered once you begin to research the market into which you wish to enter and when you set about establishing a business plan.

Researching your market
Whatever the product or service you are going to be offering, you need to be sure there’s a market for it — and that you can reach the right target audience too.

Take a good, long look at the market you wish to enter. In the long run, this research will also help you to evaluate the best forms of marketing for your business.

Research and look at the following:

1. Competitors. Examing your competitors will be vital for ensuring the success of your business. Find out:
Who your direct competitors are?
How successful are they and why?
What are their strengths and weaknesses?
What marketing do they undertake?

2. Reports and statistics. Look for information in market reports, government statistics, journals and industry association publications.

Once you’ve conducted this initial research and ensured your business idea is feasible, it’s time to formulate a business plan.

Establishing a business plan
A business plan is essential for any business, no matter its size. Generally a business plan should cover the following:
your business goals
marketing initiatives
industry research
operations/management plan
financial plan

Remember, your business plan should be an ongoing initiative which is reviewed regularly. After all, it’s the blue-print for getting things right.

Obtaining finance
Having finance — and the right amount of it — is crucial for the ongoing success of your business. Your business plan should cover you financial arrangements for start-up.

Be sure to contact your local banking or financial institution for finance options. Consider other sources of finance too. For the best advice, consult a business advisor and accountant — and have a solicitor look over any loan contract.

• Naming your business

The name of your business could have big impact on its future. So take the necessary amount of time — and steps, to get it right.

When choosing a name, consider the following:
Competitors. Look at what your competitors have named their businesses and try to set your business apart.
Business goals. What do you want to achieve with a name?
Branding and marketing. Will the name work in the marketing and branding initiatives you have set out in your business plan?
Market/customer appeal. Choose a name that’s easily remembered — and one that’s easy to spell and pronounce too.

Get others involved and brainstorm ideas around the room. Once you have a few options, try them out on different people to see their reaction. Check with the Australian Securities and Investment Commissions National Names Index to see whether your chosen name has already been registered — this way you’ll know whether the name can "officially" be used.

Once you’ve decided on a name, do not forget to register it with the proper channels (see below for how to register a business name). You should also ensure that your chosen business name does not conflict with any registered trade marks. This can be done through IP Australia.

• Choosing a business structure

There are several different types of business you can operate under — here’s a brief overview of your options.

Sole trader: a type of set-up whereby the business has no separate legal existence from its owner. You can use a business name or your own name and as a sole trader you are responsible for the liabilities of your business.

Partnership: unlike a sole trader, a partnership involves two or more people starting a business. All partners legally share profits, risks and looses according to the partnership contract (which is established at the onset of the business).

Company (Pty Ltd): a proprietary limited company is the most common type of company used by small business. Unlike partnerships and sole traders, it has more regulatory requirements and is a legal entity separate from its shareholders/owners.

In order to choose the right business structure, it's best to seek legal and professional advice before making a final decision.

• The regulatory requirements of starting a business

Registering a company
All companies need to register a company name and Australian Company Number through the Australian Securities and Investments Commission (ASIC).

According to ASIC, when a company is registered under the Corporations Act 2001 it is automatically registered as an Australian company. This means that it can conduct business throughout Australia without needing to register in individual State and Territory jurisdictions.

Registering a business name
You are required to register your business name with the appropriate State/Territory authority. However, this is not necessary if the business is conducted under your name or your business partner(s); that is, first name and surname, or initials and surname.

Registering your business name as a trade mark
At the start of your business, you might want to consider registering your business name as a trade mark to give you the right to use your business name as a means to distinguish your product/service from that of other businesses. IP Australia has more information on this.

GST, ABNs and TFNs
If you expect to have annual sales over $50,000, you have to register for Goods and Services Tax (GST). If you register for GST, you will need to apply for an Australian Business Number (ABN), register online with Australian Business Register.

Sole traders can use their own personal Tax File Numbers (TFNs) but partnerships and companies need to apply for their own. For more information, contact the Australian Tax Office.

State government licences
All states and territories are responsible for different business licences, permits, registrations and certificates. You will need to check with the appropriate state government body.

Council permits/requirements
You need to check with your local council to find out about zoning, health regulations and whether you need to lodge a Development Application or Building Application before your business can start.

Domain name registration
Whether or not you will be establishing a website for your business in the early days, think about registering your preferred website name early on if you want to have an Internet presence at any stage. You can search for and register a domain name at Melbourne IT. For more information on domain names, visit Australian Domain Name Adminstrator.

• Finding the right premises

When looking for a business premise, you should consider the following.
Location. Do you need to be located close to customers or are you able to service your clients remotely via the telephone or over the Internet? Do you need to be located close to suppliers?
Necessary features. What features must your premises have? i.e. size, street frontage, show rooms, parking or other special facilities.
Lease or purchase. Do you intend to lease or purchase your premises?
Working from home. Do you plan to operate your business from home?
Security. In any premises you consider, you’ll need to look at having the right level of security. Consider things like fencing and gates, lighting, entry and exit points.

• Insurance — protecting your business

Often overlooked but one of the most important parts of setting up a business, you must make sure you have the right insurance in place. After all, your business will be your livelihood.

What type of insurance will you need?
Depending on the type of business you’re running and the place from which you will be running it, you’ll need to consider insurance for the following.

Fire/other events: this is a must-have for any business operating from a premise. Depending on the insurance company, you will generally be covered for loss/damage from fire, storms, malicious damage or vandalism and accidental damage. Cover your business for damage to glass windows, signs and counters at your premises as they are often not included under fire/accident insurance.

Theft: be sure to protect your money, contents or stock from theft.

Legal liability: this type of insurance covers your business if you are sued for causing personal injury to another person (other than employees) or damage to property owned or controlled by someone else(public liability) or in connection with a product sold or supplied by your business (products liability).

Business interruption: this will cover you for a reduction in your business income as a result of damage to your property. There are often different levels of protection on offer.

Business vehicles: cover your business vehicles against accident, theft or attempted theft and fire.

Personal: if you’re going to be self-employed, look at purchasing life insurance and income protection insurance too.

Remember to:
Shop around for the best deal.
Make sure you do not under insure your business.
If you're working from home, don’t assume your general home and contents insurance will cover your business.
If you rent your business premises, your landlord's insurance could leave you out of pocket.
Seek advice to get the right insurance cover for your business.

• Develop a marketing plan

Following on from the ideas raised in your business plan, you should put together a carefully thought out marketing plan. There’s no point having a great product/service if it isn’t going to reach your target market.

Whether you want to build a brand or simply advertise your services, there are lots of initiatives you can take. You might not have the biggest marketing budget, but don’t let that stop you from being creative with your marketing plans.

NSW Small Business says your marketing plan needs to answer the question: why am I in business, what do customers want and why will customers buy from me and not my competitors?

According to the Australian Government’s business.gov.au, “a good marketing plan sets clear, realistic and measurable objectives, includes deadlines, provides a budget and allocates responsibilities.”

Make sure your marketing plan covers:
analysis of your current market
your business objectives
key strategies
steps to achieving your objectives
proposed budget
implementation plan

• Financial records/accounts

In order to ensure the smooth running of your business you should keep financial records to fully understand your operations and financial situation. This should begin from the word go. Think about employing an accountant to help you sort through the piles of paperwork and accounts.

Financial reports: check with ASIC to see whether your organisation is legally required to lodge certain financial reports.

Tax requirements: check with the Tax Office for any tax obligations with which your business must apply.

• Employing staff

Employees will be one of the greatest assets of your company, so spend the right amount of time and investment to find good people.

Legal requirements
As an employer, you have certain obligations under common law. You also have obligations under federal and state and territory laws, industrial awards and agreements, tribunal decisions and contracts of employment.

For information visit;
Department of Employment and Workplace Relations
Australian government small business website.