Thinking of buying or starting a business?
Bruce Coudrey • August 17, 2021
What you need to know before starting a business.
Are you sure that you are ready to own your own business?
Are you prepared to do what you need to do? Many people, with all levels of expertise and enthusiasm, don’t take time to make sure that they are ready to be a business owner.
Here are a few questions (and tips) that may help you to ensure that you really are ready to “be your own boss”.
As a business owner there are things that you must be prepared to do.
Here are a few examples of the things that a business owner must be prepared to do:
- Pay others before yourself
- Work longer and harder than anyone else (especially your competitors)
- Only take holidays and leave when it suits the team
- Pay for great advice
- Find the best advisors
- Take time to sit down and make plans (don’t “wing it”)
- Be prepared to invest in advertising and marketing
- Get rich slowly
- Turnover is not as important as “leftover”
- Know yourself (some people are employers and some are employees)
As a business owner you need to be many things.
Many talents are required. If you are deficient in any of these areas, you really need to do something about it… You must be:
- A leader
- A diplomat
- A marketer
- An accountant
- Have basic legal knowledge
- A planner and problem solver
- Have vision for the business
- Set standards
- You have to be a “giver” not a “taker”
- Ask yourself if you are an “employee” – or if you are an employer. If you are not instinctively an employer – business ownership may not be for you.
Start a business – or buy an existing business?
Many people like the idea of starting a business, rather than acquiring an existing business. I have done both, and I in my experience it is much better to buy a business rather than “starting from scratch”. Really think about the benefits of acquiring an existing business and improving that business – rather than starting a new business.
Be prepared for the risks.
If you look at the statistics, most people who start a business will fail. Of course failure is not guaranteed, because if it was the world of business and entrepreneurship really would be dead, but the statistics are not encouraging.
Almost 70,000 new businesses and start-ups commence operation with great enthusiasm and optimism each year in Australia. Unfortunately, 60 per cent of them will be gone within the first 3 years. The reasons for failure are many, one big reason is failure to address the points listed above.
Remember that even a turtle has to stick its neck out to make progress. Business is a risk, and to get the rewards – you must take risks.
So take time to critically analyse yourself. Think about your strengths and your weaknesses. Do you have what it takes to be a business owner? What do you need to change to give yourself the best chance of success?
Here are some resources that may be helpful
- https://www.smallbusiness.wa.gov.au/business-advice/starting-your-business/business-skills
- https://www.failory.com/blog/startup-failure-rate
- https://www.asbfeo.gov.au/resources/small-business-counts#
- https://www.bizfilings.com/toolkit/research-topics/launching-your-business/planning/do-you-have-the-right-stuff-to-run-a-small-business
- http://www.benchmarkbusiness.com.au
Position your business for maximum value while you're still in control.
Understanding Earn-Outs: A Smart Strategy for Bridging Valuation Gaps in Business Sales
Understanding the Risks and the Rewards of Working with a Business Broker
Practical Ways to Make Your Business More Attractive to Buyers
Small Business Exit Strategic Planning
You Can’t Run a Great Business if You’re Running on Empty
Timing is one of the most critical factors in achieving a successful business sale.
Three Ways Business Owners Profit from Their Business
You Should Sell When You Want To, Not When You Have To
The Business Lifecycle comprises: Start Up Operation and Improvement Wealth Management Exit. Business Purchase or Start Up Whether starting a new, or buying an existing, business, the following should be considered to ensure you make an educated decision before proceeding: Pro's and Cons of the industry Business Planning Marketing strategy Registration and licence requirements Name registrations (including ASIC and Domains) Tax Structures and Asset Protection Workplace Health and Safety Tax Office Compliance Intellectual Property / Trade Marks Insurances – Prof Indemnity, Contents/Building, Public Liab, Workcover, Life, Income protection, Key Man Finance & cash flow requirements Staff and employment requirements and obligations Fixed and Variable expenses, break even analysis Management and reporting systems. Operations and Improvement Sound business operations require the right foundations. This means access to accurate numbers and key measurements in a timely manner so you know what is happening in the business at any point in time. Business owners must be able to regularly review and monitor performance, and make changes quickly. Three main areas for business improvement are: Increasing Gross Profit margins Reducing overheads, and Growing sales. Regular meetings, monitoring and implementation of your strategies enable you to quickly see improvements to your profits. Many businesses fail because of a lack of planning. It is imperative that business owners manage, monitor and measure business performance to know where changes can be made, and to see that business plans are working. Wealth Management What is wealth? To be wealthy simply means you can afford your lifestyle, now, and into the future. Business owners should manage their affairs to grow and build wealth. They should also aim at reducing their input into the business and ultimately retiring. Exit There are many ways that this can be achieved. A succession plan or exit strategy will help your business transition smoothly to the new owner – and derive more value. It clearly outlines your timeframe, expected sales value and who your targeted purchaser is. It is highly recommended to plan your exit early, the sooner the better. That way, you have time on your side to maximise the value of your business for sale. Once your timeline is set you can then clearly set measurable targets to reach your business’s full sale potential. It’s also important to know who your targeted purchaser is, being your family, an investor, a new working owner or your business team. There are many different strategies and planning solutions depending on your ideal purchaser… So start planning your exit strategy now! If you’re thinking of selling your business, send an enquiry to admin@benchmarkbusiness.com.au. One of our brokers will be happy to assist you. If you would like more information, please see tips and advice from the ATO here: https://www.ato.gov.au/Business/Privately-owned-and-wealthy-groups/Tax-governance/Tax-governance-guide-for-privately-owned-groups/Starting-your-business/