Ask yourself 10 key questions to see if you're on track to launching a successful business:
1. Is my idea viable?
2. How do I develop a business plan?
3. How will I finance my business?
4. What are my tax obligations?
5. What are my legal requirements?
6. Do I need insurance?
7. What accounting systems and internal controls do I need?
8. How will I promote my business?
9. Do I need to employ staff to implement my business plan?
10. Do I need professional advice?
This is a tough place to start. No-one wants to think their idea isn't viable, particularly if they've spent a great deal of time developing it. BUT, it's better to discover it now before you invest even more time and money on something that could ultimately fail.
As a bare minimum, for your business idea to work, you must be able to produce and deliver a product or service at a cost which is below the price you will charge for the product or service. It sounds simple but people often miss this point.
Writing a business plan is one of the best things you can do to enhance your chances of business success. However writing a great plan isn't going to bring business walking through the door - you need to execute your plan effectively and at the same time, have the flexibility to change your plan to respond to any unexpected circumstances.
A good plan must be specific, realistic and measurable and it will require detailed research of the industry you intend to enter. Each year you should spend some time considering what you are doing and reevaluating where you are going. Ask yourself questions such as:
- Does the company fit with my long-term personal goals?
- Am I spending too much time with my business, or too little?
- What was my goal when I started the business - have I fulfilled it?
- What is my current goal?
Taking some downtime to contemplate is useful way to assess and re-prioritise where you are your business are going.
There are a range of options available for financing a business however most SMEs will use a combination of their own funds and debt financing. If you have the funds to go it alone you'll save yourself a significant amount of interest however the reality is that most new businesses will need assistance.
Make sure you have sufficient capital - not just for your initial outlays but also for working capital. Your business plan should show you just how much funding you will really need. Also, make sure you use the right source of funding. There are a range of options available to businesses - including an overdraft, a loan and a line of credit - make sure you select the source of funding that best suits your needs.
Various federal, state and local government taxes and rates can apply, depending on the size and location of your business. Federal government taxes that may apply to you include: Goods and Services Tax, Pay As You Go withholding tax and Fringe Benefits Tax.
State government taxes may also apply. These include: pay-roll tax, land tax, duties and debits tax. As rates vary from council to council around Australia, you need to contact your local council to find out which taxes apply to your business. It can be extremely important to access professional advice when it comes to your tax matters.
One of the first things you need to find out when you're starting out is what laws apply to you. You may need to comply with a range of legal requirements, such as licences and registrations, contracts and leases, so it's probably best if you consult a legal professional to help you navigate this area.
Few people get excited about insurance but adequate business insurance provides a good safety net against potential loss. Your basic policies should cover a wide range of possibilities however you should also consider insuring your business against unlikely, but tremendously significant losses which could wipe out your business.
Record keeping is essential to successful small business management - without records, you won't even know how well your business is going. By putting the appropriate record keeping systems and internal controls in place you can keep a close eye on what is happening within your business and you'll know immediately if something isn't quite right and needs to be examined or changed.
Your business will also require an accounting program. Probably the most common is MYOB, however there are a range of programs on the market - try them out and select the one which works for you.
Another important control that you need to put in place is the credit management process. If your business is going to extend credit to its customers (rather than being a cash only operation) then you need a system to determine who you are prepared to extend credit to and a process to invoice and follow-up your accounts.
We all know that we have to be able to sell our product if we are going to be a successful business. So how will you generate your sales? Who are your potential customers? How will you reach them?
Your sales and marketing plan may form part of your business plan or it may be an entirely separate document. Either way, it doesn't really matter. The key point is that you take the time to research and develop a plan that is right for your product or service.
As with your business plan, it's also important that you take the time to reflect on how different tactics have worked. Is there are part of the plan that worked exceptionally well - why did it work? What didn't work and why? What do our customers think about our products? You should continually be seeking new and better ways to reach your customers and your prospects.
The longer you are in business, the more you should know about your customers and how best to reach them.
There is only one of you and there are only so many hours in a day. So, it's highly likely that you'll need some help implementing your business plan (particularly if you want to do it successfully). Hire your people carefully. Good employees (and bosses) are important in every organisation however, in a small business their skills and cultural fit will play an absolutely critical role in ensuring that your business runs effectively.
When you're facing situations which are new, it's often very helpful to seek professional advice. It's no secret that tax, accounting and legal requirements are complex issues to those of us who aren't experts in these fields, so rather than getting it wrong and potentially being exposed to heavy penalties, its best to seek expert advice.
D&B's Guide to Cash Flow and Credit Risk
Credit risk. Cash flow. Global Financial Crisis. These words dominate the daily news. Yet what do they really mean for business owners who just want to win new customers and get paid on time?