Do you have a good business idea but aren’t sure where to start? Starting a business requires a lot of time, effort, and dedication, so it’s crucial that you know what’s involved and are prepared to take on the challenge. But with the right goals in mind, anything is possible.
Steps to starting a small business
If you have a great idea or passion that you’re ready to explore, knowing where to start is key. Here is our leading advice on starting a small business.
1. Analyse and investigate your business idea
Starting up a company is all about providing value. The key thing you must consider is the problem that your business will solve for people; how will your service or product make life easier? If your business idea doesn’t address a specific need, it’s unlikely to have long-term success. This might be a difficult thing to face, but it’s better to thoroughly question your idea before you’ve put significant time and money into it. Be as critical as possible and identify all the possible flaws.
This can include identifying if other companies are already doing something similar and how you could differentiate yourself. Similarly, you need a detailed plan to move from concept to reality. The following steps will help you develop that plan.
2. Research your competitors and market
With a solid business concept, you can move on to researching the market. Thorough research is crucial to ensure your business will be unique enough to stand on its own, and be perceived as different from competitors. As you research, it’s important to keep customers at the forefront of your plans but to also think two steps ahead on how to disrupt the market. As Steve Jobs says,“You can’t just ask customers what they want and then try to give that to them. By the time you get it built, they’ll want something new.”
To be successful, explore innovative approaches to differentiate your venture, conduct a SWOT analysis to look at the facts about how your business idea might perform, and understand your competition so you can identify your potential business concept’s strengths and weaknesses. This will allow you to find opportunities to offer something unique to your customers.
3. Develop your business plan
“Good business leaders create a vision, articulate the vision, passionately own the vision, and relentlessly drive it to completion.” – Jack Welch
A solid business plan is key to finding success, and convincing others that your business is worthwhile for their support. A business plan should outline key details of your organisation and a pathway to financial viability. Your plan should include these key areas:
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- Executive Summary: A detailed company description explaining how your business fits in the market and fills a need.
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- Market Analysis: How you are positioned against your competitors.
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- Organisation and Structure: What does leadership look like, and what will the business look like?
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- Mission and Goals: What you want to accomplish and how you plan on getting there.
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- Business Operations: The products and/or services that will be offered.
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- Background Summary: Data, articles or research studies that could positively or negatively affect your business.
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- Marketing Plan: How you plan to market and promote the business once the product or service is created.
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- Financial Plan: This plan outlines how the business will move forward financially, along with a proposed budget and/or funding requests.
During this stage, you must develop a scalable business model to handle potential growth and demand as your business expands.
“Think big, start small, then scale or fail fast.” – Mats Lederhausen
It’s also recommended that you plan an exit strategy in case you decide to step away, whether through selling the business or transferring ownership.
4. Choose your business structure
Next, you’ll need to evaluate whether your current skills are sufficient or if partnering with someone else is necessary. The structure you choose for your business affects your tax obligations, paperwork requirements, and financial considerations. You must register your business with ASIC. Then, investigate all of the licences you will require to legally operate. You can find an easy guide to the regulations and permits online.
There are four main business structures to consider:
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- Sole Trader: This structure grants one person complete control over the business but also means they are personally liable for its debts and obligations.
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- Company: Operating as a company provides limited liability protection, as the business is a separate legal entity from its owners (shareholders).
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- Partnership: In a partnership, two or more individuals share ownership and management responsibilities, with each partner being personally liable for the partnership’s debts.
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- Trust: A trust involves a trustee who manages the business on behalf of beneficiaries, providing flexibility in how profits are distributed and potentially offering tax benefits.
Each structure has its own implications for taxation, legal requirements, and operational flexibility, so choose the one that aligns with your business goals and future plans best.
5. Register your business and get licences
Starting a small business in Australia requires a number of licences and permits. Start by choosing a memorable business name and register it with ASIC. Then investigate all of the licences you will require to legally operate. You can find an easy guide to the regulations, permits and licences relevant to you here.
6. Get your finances aligned
Maintain strict separation between your business and personal finances. This separation not only makes it easier to see where the charges come in but is also a legal requirement for structures like companies, trusts, and partnerships. Keeping the two finances separate helps to track business expenditures, monitor potential profits, and ensure compliance with tax regulations.
Adding a skilled bookkeeper or using software will help you accurately record and categorise transactions and monitor checks, income, expenses, and more. It’s vital to know how much money will need to be spent before you see a return on your investment and break even. Adding in all the costs for setting up your business plus the inventory costs, it’s recommended to have enough cash to cover six months without external support.
And if you don’t have that money ready…
7. Get funding
“Growth is never by mere chance; it is the result of forces working together.” – James Cash Penney
When you’re just starting out as a business owner, you can bootstrap and finance your venture using personal savings, contributions from family and friends, or by operating on a lean budget. In most cases though, you will need to secure external funding from investors, grants or other sources. Securing the right funding is crucial, as it provides the necessary capital to invest in resources, scale operations, and sustain long-term growth.
The funding process can get you the money you need to support your business, though you may need to enter agreements with different investors or groups. Read more about the funding process in our guides to pre-seed funding and seed funding. Choosing the right funding source depends on your growth plans, risk tolerance, and the stage of your business.
8. Secure business insurance
One of the primary small business essentials is insurance. In Australia, there are three kinds of compulsory insurance that you must get for your business: workers’ compensation for employees, personal injury insurance, and public liability. Make sure to get these plus add on others depending on your needs. Learn more about the types here.
9. Have all the necessary tools
As you approach the final stages of your business launch, implementing essential, online tools can streamline your business operations. Consider integrating a customer relationship management (CRM) software to manage interactions and relationships with customers effectively. Utilise merchant services to facilitate smooth payment processing and transactions or invest in reliable email hosting to create efficient communication and professional correspondence with clients and stakeholders.
10. Market and scale your business
Now that everything is set up, it’s time to announce your business to the world through a well-crafted marketing strategy and promotion plan. Develop a website, get posting on social media, optimise your content with SEO, and make use of any paid advertising avenues you can afford. Once you start to earn and your business grows, scale your marketing to keep up and continue increasing demand and brand recognition.
Here’s our checklist for starting a business.
Where to next?
It’s very rare for businesses to become instantly successful; instead, it takes significant planning and a lot of dedicated time. Consistency establishes a strong foundation to help carry you through. Commit to making steady progress every day, and consider looking at where you can learn and get support from others. This could include joining a startup accelerator, pitching for government grants, speaking to business mentors, or networking with peers in your industry.
Hear from some of our Melbourne Connect Co-working members about their experience starting:
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- “Working in the office allows me to build stronger relationships with colleagues and clients, and it provides opportunities to gain diverse insights from various organisations.” – Simon | Cornerstone Global
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- “We should be less concerned about where people work, what time they start work, how much holiday they take and focus more on the quality of the work they produce and the conditions they need to facilitate that quality.” – Megan | Cell Bauhaus
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- “Continuous learning is critical when it sharpens and refines our skill set, as this enhances our value to our customers.” – Jon | University of Melbourne
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- “It’s as simple as looking back as recently as a few years ago, how we do things has changed significantly and there is no reason to think that innovation won’t continue well into the future. Upskilling will help keep individuals at the forefront of innovation.” – Frasier | Wave Consulting.
Connect with Melbourne Connect Co-working
Here at Melbourne Connect Co-working, we provide a collaborative environment designed to support small business founders at every stage of their journey. Our memberships offer access to modern workspaces, networking opportunities, and business development resources to help you turn your idea into a successful venture.
Whether you’re looking for a dedicated office space or a dynamic co-working team office environment, we’re here to empower you with the tools and connections you need to thrive. Connect with us to make a membership enquiry.