Starting a small business is an exciting venture, but comes with numerous challenges. Let’s take a look at how you can make this process simpler and more gratifying.
- Many lenders offer small business loans, so explore any hidden fees and prepare your documents before applying or accepting an offer
- Family businesses in Australia account for almost 70 per cent of all businesses, employ over half the population
- Small businesses make up nearly 35 per cent of Australia’s GDP, 44 per cent of its workforce
In Australia, a small business is identified as a venture or a company that employs less than 19 people. Most small businesses are owner-operated, also known as sole trader-operated.
But before you plan a new business, you must find out if you're eligible to start one. The Australian government bars certain people from owning a business. This includes people who have claimed bankruptcy or have been convicted for a crime.
Once you have a concept for your business in place, you’ll need to register a name with the Australian Securities and Investments Commission (ASIC).
Bruce Mcfarlane is CEO of BlueRock, a professional services firm in Melbourne. His team provides advice to budding entrepreneurs on their finances, accounts and offers practical support to get their business off the ground.
Mr Mcfarlane says if you want to start a venture, you need to ask yourself a few hard questions, such as, 'what is the problem I’m going to solve with my business?'
Or, if it's an existing idea that you have a different take on, you must ask yourself, 'will my idea attract enough attention and bring in money?'
"The starting point is what's the vision for the business. Then once they’ve decided what they want to do, there might be some legal or other requirements to set up a business in a certain way for certain people,” Mr Mcfarlane says.
As an entrepreneur, you need to work out who are your potential customers and what sort of resources you need to develop the business. This could include renting out a space or an office, or, employing staff.
Alexandra Sinclair is the owner of Pot Dispensary, a ceramics studio and design store. She launched her business in Melbourne just over a year ago and says that while the concept of her store was very clear to her, getting it going took months.
Often, small business owners struggle towards the launch of their business because they are trying to do everything themselves. Some may have little knowledge about where to seek financial and logistical assistance to make sure their business opens up on time.
Ms Sinclair says she got a lot of information and support from the New Enterprise Incentive Scheme (NEIS) course which helped her understand the finances required in regard to business ownership.
If anyone wanted to start a business, I would recommend doing that or at least chatting with someone who runs the course
Australia has a large set of rules for all types of businesses that every owner has to comply with. These can be very challenging to manoeuvre, but seeking assistance from a lawyer can be very helpful.
Rahul Kumar, Director of Allied Legal, says most startups and innovation ideas these days are technology-based. And although they have all the information behind the business venture, they might not have the capacity to build the technology to get the business kick-started.
"In terms of just the basic legal structure and the vehicle through which the business venture is to be operated - this can happen quickly, but there's a lot in terms of making the venture come to life and getting it started that really does depend on the complexity of the venture," he says.
Small business loan
A majority of small and medium business owners opt for a loan to get their business going. But it is often tricky to find a lender who understands the specific needs of the business.
“A savvy financer will require you provide a business plan to ensure you know that when it is lending you money, it is safe, because it obviously wants a return on the money. It's not like loans are readily available to any business,” explains Mr Kumar.
Due to such complexities, most small businesses are offered much less than what they initially hoped to get.
A small business loan is different from other loans and interest rates are likely to be higher than what you may expect.