7 steps to starting a small business

What you need to know to turn your business dream into a reality.

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Starting a small business can be an exciting journey, but it's easy to get overwhelmed if you fail to plan correctly. You need to be quick to learn from your mistakes, ready to innovate and lots more. Read on to find out everything you need to know about starting a new business venture.

On 22 March 2020, the Australian federal government announced that small-to-medium-sized businesses will receive cash payments of between $20,000 and $100,000 as well as government-guaranteed loans of up to $250,000. These announcements complement earlier measures that will encourage banks to continue lending to small businesses as well as deferring loan repayments for six months. Read more on the government's national stimulus package.

1. Do your research

Make sure you undertake lots of research on your target market. When it comes to starting a small business, you cannot plan ahead enough. For a small business to succeed, it must solve a customer problem or offer something that the market wants. Being honest with yourself about how feasible and profitable your business idea is going to be is key to your success. Having a thorough look at the competitors that operate in your space can be a good starting point for your research.

2. Make a business plan

A comprehensive business plan can guide your business from its first phase as a startup, through to getting off the ground and eventual business growth, including the actions that you need to take to ensure continued success. A business plan sets you up for success. The business plan doesn't need to be too detailed or long-winded. However, if you want to get financial support from an investor or a bank, a full business plan is a must. The government has a range of resources to help with the process of business planning.

3. Register your business's name

Once you've worked out the type of business structure you will use – such as sole proprietorship, partnership or a limited company – you'll need to choose a suitable name for your company and get your business registered with the appropriate authorities. You should check whether your business's name is currently being used or is already trademarked. It's crucial that you register your domain name too. After this, you should complete the legal formalities required to start your business.

4. Set up your business as an entity

If you plan to start a company in Australia, you need to register it with the Australian Securities and Investments Commission (ASIC) and get an Australian Company Number (ACN). Small business owners will need to apply for an Australian Business Number (ABN) for tax purposes, registering for GST, plus other types of business registrations such as PAYG, work cover, FBT, superannuation and Payroll Taxes – whatever applies to your individual business circumstances.

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5. Open a business bank account

Once you've got adequate finances in place, you should open a business bank account that offers everything you need. It's always a good idea to keep business and personal expenses separate from one another. In fact, it's a legal requirement if you intend to register as a partnership, company or trust in Australia. Finder has information on a wide range of business bank accounts that can help you pay for day-to-day business expenses, invoices and staff wages and also to receive payments from clients and customers.

6. Raise funding for your business

Developing your business idea into a market-ready product or service is going to be expensive and typically happens at a time when the business has no revenue. If you're looking to raise capital, there are a number of ways to do so that can help you meet your financial goals. There are various other business financing options available to you in terms of banks, venture capitalists, crowdfunding, small business lenders and others. Our guide to loans for startups explores the main finance options that are available to new companies.

7. Get business insurance

Business insurance can protect you against losses from a range of unexpected events over the course of your business operations. Start by asking yourself: what are my business assets and what cover do I need for them? The right business insurance can include cover for if you're sued, cover for damages to your commercial property and more. The main types of business insurance include:

  • Public liability insurance. This can protect you financially if your business activities lead to the injury or death of a member of the public, or you damage their property. Public liability insurance typically covers your legal costs and any compensation that you might need to pay.
  • Workers compensation insurance. This cover is legally required for Australian employers. It is bought by business owners to protect themselves and their workers, and it pays benefits in the event of a workplace or work-related accident, injury or illness. If you fail to have this type of insurance in place, you could face very heavy fines. Our guide has more information on how workers compensation works.
  • Professional indemnity cover. This type of insurance is designed to cover the potential costs of unforeseen mistakes for both self-employed workers and businesses across many different industries. For instance, it can cover you if a client makes a complaint that you've given them the wrong advice and they take legal action against you. You may be asked to have professional indemnity cover by other companies you work with.

There may be other kinds of business insurance to think about, such as business interruption cover. Plus, if you intend to use one or more cars for work, you will need to get motor insurance. It's always a good idea to shop around for cover given how competitive the insurance industry is.

If you run an online business, you should also be thinking about getting the right cover in place to mitigate the risks you could face. This can include stock that needs protection or cover for your employees.

Frequently asked questions

Will I still need business insurance if I work from home?

That depends on the type of business you want to run. If you keep stock or equipment at home, you may find a regular home insurance policy won't cover you for loss or damages. If you have customers in your home, then you may need to look into public liability insurance to protect you in the event that a client gets injured or damages their property and makes a claim against you.

Is it better to buy my business insurance from the same provider?

Bundling your insurance with one provider might seem more convenient, but it can be less cost-effective. You may find more competitive rates if you take a bit of time to shop around for business insurance for each risk separately.

How can I make sure I adopt the right marketing strategies?

There are numerous ways to do marketing in a cost-effective way that can still give you an advantage over your competitors and help you to connect with your target audience. Read about the marketing tools that you should consider to help you build out your marketing strategy.

More guides on Finder

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