Once you have identified a Business Idea that is right for you, the second step in starting a business is undertaking research to confirm the merit of your idea and your capability of progressing it.
Here are 5 items to consider and research. The following is Australian-based information, though the basic principles apply to most businesses regardless of location. It’s critical though to always check your local requirements and regulations with the relevant professionals and authorities. Your state or territory most likely has a website with small business resources and further information on the below items. A list of such sites in Australia and New Zealand can be found here.
1. Business requirements
- What licences will you need? What regulations apply to your business and industry? What key legislation do you need to be aware of? Do you need advertising signage approvals, and footpath usage approvals from your local council? Do you need to lodge a development application to operate from home permit? Do you need a commercial vehicle permit, commercial vehicle registration?
- What International Standards will you need to follow? Do you need a music broadcast licence? Do you need food inspections?
- What insurances do you need? public liability, contents insurance, building insurance, public liability, professional indemnity.
2. Business set-up
- What kind of business structure do you want? A company, partnership, sole trader, trust.
- Do you need employees, what skills do they need, can you afford them? Keep in mind ongoing costs such as superannuation, leave loadings, long service, sick leave and equipment for staff – these could add an extra 25-30% to your wage costs. Could you use contractors? apprentice/trainee? Do you need casual, part-time, temporary or permanent full-time staff?
- Are you considering being an Independent Contractor, or hiring contractors?
- Do you want to buy an established business or franchise?
- Are you planning on importing or exporting?
- Where will you be located and what region will you cover? Will you work from home? What will the impacts be on neighbours? Do you have parking? Do you need an office and equipment? What hours will you work? Will you lease or buy premises? If you are buying think about stamp duty/solicitor fees, real estate commissions.
- Do you know your tax obligations? You may also need to register for GST.
- Do you have enough money to cover start-up? How much money can you risk? You may need to research some costs, get some estimates or quotes from suppliers. You will need to keep accurate and up-to-date financial records on your cash flow. Think about everything phone rental, printing costs, printer cartridges, fuel, electricity, memberships for professional associations, subscriptions to trade publications, stationery, licences, insurance, business name registration annual fees, domain and webhosting, admin systems. What is an absolute must and what is a nice to have? Use our FREE budgeting templates to forecast your sales and costs as well as your break-even point.
- Where will you get your funding?
- Are you eligible for government assistance through schemes such as NEIS (ask your Job Service Provider) or financial grants? If so you may be able to get help to scope the above and put together a business plan.
- Do you want to trademark your name or visual identity (logo)? Are you interested in an unregistered trademark TM or a registered trademark ®. Do you want to patent a design or invention? Remember your own written work may be automatically protected under Copyright laws. On your web and other printed material insert ‘© [Insert Year and your business name.] All rights reserved’
- Check the availability of your preferred brand name(s)
- Choose a name, unique to you that says enough about what you do or how you want your business to be perceived. Google it to see if it is already in use. You may also want to see if the same domain name is available. Check out our article here on getting a domain name and setting up a website.
- If the name is free you need to go to asic.com.au to register your business name and see if it is formally in use. An ABN (Australian Business Number) or ACN (Australian Company Number) will be required to secure an .au domain name. These can also be obtained through ASIC.
- Decide whether its worth securing your business name and your domain name now (you can build the website later) or once you are convinced of the merit of your business idea and brand name.
5. Target market
- Do you know if there is a market/or people willing to buy your product or service? Know your target market and market segments inside out. Who are they? What do they like? What is their age? What can you offer them? How will you reach them?
- How much marketing may you need to do to reach your customers?
- Who are your key competitors (search on the web using Google, Yellow Pages or business directories such as TrueLocal)? What do you offer that is different? What is your brand or Point of Difference?
- At this point you may be interested in learning more about marketing. You can watch a free 1 hour training video on How to Market My Small Business here (no email registration required).
It’s worth noting that it can take some time to source this information and later develop the business plan, but the better informed you are now, the more confidence you will have in whether your business idea will work and the likelihood of its success. Starting a business without first doing this research can result in costly mistakes.
Once you have completed what you can of this research you should consider the next Step in Starting a Business and consult Experts for the parts you couldn’t answer or to verify what you have learnt.