Start your Own Business
Starting up your own business is exciting, but can also be challenging if you are not prepared.
This guide will take you through each step of start a business and help you understand what’s ahead.
You don’t have to believe everything you hear about opening a business. Know to differentiate the myths from the facts and save yourself the trouble. Are you looking to open up your shop but are getting confused from all the advice offered to you by well-meaning friends? Know fact from fiction, myth from reality, when it comes to opening up your own business.
What the Starting your business checklist covers
When setting up a new business, there’s a lot of information you’ll need to consider. Our checklist for starting a business can help you make sure you cover important steps like:
- choosing a business structure
- registering for your Australian business number (ABN), goods and services tax (GST) and business name
- setting up record keeping and accounting systems
- ensuring you understand your tax and legal obligations
- arranging insurance
Use this checklist for the early stages of business – before you start, when buying a business and when you’re running your new business.
Here are six common business myths—busted:
1. Having your own business means time & freedom
Most, if not all, wannabe entrepreneurs have this notion in their head that once they own their own business, they can be free to do whatever they want, whenever they want. After all, they are their own boss, and there’s no one else to tell them off, or otherwise.
This myth, however, cannot be farther from the truth. Remember, opening up your own company or business means that you are the one ultimately responsible for its success or failure. Of course, if you want it to succeed, you will have to put your back into it. That means getting to the office first and, sometimes, leaving last.
That’s not to say that you won’t get that time & freedom you’ve been yearning for, though. It’ll just have to come later, but when it does, it will be all worth it.
2. It’s MY business, therefore it’s MY income
To a certain extent, yes, that is true. However, note that just because you are the owner, it doesn’t mean that you can go ahead and sign blank checks every payday for yourself. For one thing, that’s plain irresponsible. Even assuming that your company is earning more than enough to fund your blank checks, you should pay yourself a minimal salary and take dividends at the end of the year if you have a lot of cash in the bank.
Be responsible with the finances. Although it’s technically your earning, it’s still also the company’s, which essentially runs on those funds. The cycle simply cannot end with the money going straight into your pocket; it has to flow around to continue the life chain of the business.
3. You need a good credit rating to get a business loan
Understandably so, anyone wanting to open shop will have a lot to worry about, indeed, especially when their available funds don’t come close to what is needed for their projected capital.
The answer to this dilemma is easy, though, right? All they have to do is get a small business loan. Sounds easy enough—but only as long as you have a perfect credit score… right?
Not really. After all, while it is true that banks can be pretty hard to please when it comes to meeting their requirements in order to be eligible for a loan, there are existing alternative lending opportunities that require much less security. They will have requirements, too, such as the rudimentary documents, but apart from that, they can be counted on to offer relief to the worried businessman. Granted, of course, that although your credit rating may not be absolutely perfect, it is something that can be presentable enough, such that the applicant will be deemed worthy of getting his or herbusiness loan application approved.
4. Cash outflow bigger than cash inflow is normal
No. The plain fact about this is that if your cash outflow is bigger than your cash inflow, then there is something seriously wrong with your operating budget and revenues.
Having big capital is not always necessary for a business to succeed. What is certain; is that the bigger the capital, the bigger the risk, which could translate to either big rewards or big losses. Infusing money into the business every time something becomes amiss is also not an ideal way of dealing with the problem. Ironically, in the world of business, not everything can be solved with money. You have to know when you need to work out an alternative solution, or if you can afford to just cover the problem with the promise of money—which you will most likely run out of fast if you don’t set your finances straight immediately.
5. The bigger the loan, the bigger the chances of getting denied
It’s probably borne out of sheer financial insecurity, but a lot of people tend to think that the amount of money they are asking for is inversely proportional to their chances of either being denied or accepted. There is this dominating feeling for the need to justify why they deserve such a big loan, and how they’re planning to pay it back, although the scenario with the lender shouldn’t be all that terrifying in reality.
As long as the amount that the borrower is asking for is a reasonable and equitable one, commensurate to the scale and needs of the business, then if the qualifications are met, there should be no reason for the lender to deny the loan application.
6. ROI should come in at least a year from opening shop
Most folks fall into the trap of delusion, thinking that whatever it is they have invested in should come back to them two- or three-fold, at least, in as little as six months to one year. This, however, is a very unlikely timeframe. Unless you’ve managed to hit the payload by becoming some sort of internet sensation or driving crowds of people to your shop, it’s going to be a pretty slow, uneven climb. Then again, slow and steady does it, as opposed to a meteoric rise only to crash land just as fast.
Or call 1300 760 930 to speak with one of our friendly Lending Consultants now.