From a side hustle to a success: The basics of starting a small business in Australia
Starting a business is one of the most exciting decisions you can make in your life. It can also be one of the scariest. Having a side hustle or big business idea is great, but how do you take it to its full potential? What kind of team do you need around you to make it happen?
It’s extremely important to lay strong foundations and build the right structure for your business from the start. This will determine how and when it can grow.
In this article, we’ll tell you what steps to take and what team to assemble to take your business idea to market.
The first important decision to make is to choose a business structure? Will you be a sole trader or create a company? Will you need to register for GST, PAYG and other insurances?
There are different types of business structures and each one provides different benefits, depending on the circumstances of the business owners or partners.
Here are some of the more common business structures in Australia:
If you’re a sole trader, there is no legal separation between your personal assets and your business assets. This means you’re personally liable for any debt or damage in your business.
It’s quite a risky structure to have if the business becomes successful, as there’s no infrastructure in place around it.
A partnership structure doesn’t require registration with ASIC (Australian Securities & Investments Commission) and there’s no limit on how many partners you can have.
As the sole trader structure, the business’s assets and liabilities are not separate from your personal assets. Additionally, each partner is liable for all the debts the business incurs, even if they’ve only contributed a small amount to it.
A company structure needs to be registered with ASIC and the business is a separate legal entity. This means you’re not personally liable for any debts incurred or damage done to the company by you or someone else in the company.
There may be fees associated with setting up different types of entities, including registration fees, legal fees or others.
Growing your team
Finding a tax accountant
If you’re ready to get your business structure set up, it’s important to you get yourself a tax accountant. They will help you set up the structure correctly and advise you on whether to register for GST and PAYG. They’re an essential part of your team.
Hiring your team
Once you’ve set up your chosen business structure, it’s time for the next step in taking your business from an idea to a success – building your team.
The level of your business success will depend on the people you bring in and their roles in the team and business. You usually need different types of people to build a successful team:
- Employees: These are people you hire to do specific tasks. They may do all different roles in the business, depending on what needs doing.
- Contractors: They have a similar role to employees, but their work is contracted for a specific task or time frame. There are fewer costs associated with contractors, as they don’t come on as permanent employees.
- Business partners: These people have an equal share in the business with you. They will be involved in running, growing and making decisions for your business. This is beneficial if they bring new skills and ideas to the table, but is a greater risk and reward for them if the business becomes successful.
- Freelancers: These are people you contract to do specific tasks. They may do different roles in the business, depending on what needs doing, but independently and not as an employee in your business.
All of these people can help you build a great team for your business. It’s important to have these different types to keep the business running well.
The next steps
When you start hiring people, you will have more bookkeeping processes to set up, including payroll, PAYG and payroll taxes.
Pricing your products and services
Factors to consider
As you build your business, you’ll need to determine prices for your products or services. Make sure they’re competitive and that your business will make a profit.
Remember that building your business, setting up the structure and hiring new employees will all come at a cost. Ultimately, your main business objective is to make a profit after all your expenses are paid.
When you price your products and services, consider the average price of similar products and services in Australia. Your pricing needs to be competitive but not too low, as this could reflect poorly on your business.
It’s also essential that you comply with the Fair Work Act 2009.
Pricing tools and resources
Break-even analysis is an excellent tool if you’re unsure how to price your products and services. The analysis will show you the point at which your business has zero profit or loss. This will tell you what price points work for your business.
A cash flow report is another essential tool that can improve your ability to turn a profit.
When you’re setting prices, consider the following:
- Cost of expenses: How much will each product or service cost to produce?
- Labour: How many hours/people will it take to produce each product or service? How much will labour cost?
- The proportion of costs: How much should you charge for each product service? This will depend on what percentage of your revenue needs to be allocated as a cost.
Getting professional help
You don’t have to work all this out for yourself. Business analysis or cash flow analysis done by a professional can help you figure out where you stand, and what you need to do for good cash flow and a path to a profitable business.
Many factors are involved in growing your business in Australia. From the basic to complex tasks, like hiring employees and contractors, it’s important to know how to get started.
You’ll find great resources on our website with lots of useful advice. You can also get in touch with us by filling out the form below. We’re happy to chat with you!
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