Starting your own business can be an exciting and rewarding experience. But there’s a lot to consider and you’ll need to be prepared to put in the work to get your business off the ground.
Part of this will involve writing a business plan, deciding on the legal structure of your business and getting funding to help your business expand and grow.
So, take a deep breath, grab a cup of tea, and check out our comprehensive guide that covers all you need to know about how to start a small business.
There are multiple reasons why you might want to start your own business. Perhaps the most attractive one is that you get to be your own boss. This means you can work more flexibly, pick your own hours and decide what type of work you want to do.
Going it alone can mean you get to focus on something you’re interested in while also having a varied role. One minute you could be dealing with suppliers, the next you could be tackling accountancy spreadsheets. Working for yourself can also be very profitable, provided you have the right business idea and the right mindset.
To give yourself the best chances of success, you’ll need to give some serious thought to the type of business you want to run. Think about what you’re interested in as well as what you’re good at. Do people regularly come to you for advice about certain topics and what do you already have experience in?
Also consider whether there’s a gap in the market that you could fill. It’s important to conduct some market research and check whether a service is viable by looking at Google Trends.
Once you’ve got a business idea, you need to think about whether you want to set up an online business or whether you’d prefer to have physical premises.
When you’ve decided on the type of business you want, you’re ready to start getting it up and running.
Naming your business can be a bit of fun but it can also be frustrating if you find someone else has the same or similar name to the one you wanted. Your business name needs to be unique, it must not be offensive and it must appeal to your target audience.
It’s worth carrying out a search on Google and checking the ASIC register before you become set on a particular business name. That way you’ll know whether anyone else has a similar name to yours.
The next step is to choose your legal structure. The structure you choose will impact how your business is taxed and how much tax you’ll pay. Setting up as a sole trader is the simplest option. You’ll need to register with HMRC so that you can pay income tax through your self-assessment tax return each year. Note that being a sole trader means you’re personally liable for any business debts.
If you’re starting your business with a partner or partners, setting up a partnership will be more appropriate. You’ll share responsibility for your business’ debts and its profits and losses. Each partner pays tax on their portion of the profits through their own personal self-assessment tax return. A partnership tax return will also need to be submitted to HMRC by the nominated partner.
Alternatively, you might prefer to set up a limited company. This means your business finances will be separate to your personal finances and you’ll need to pay corporation tax on your profits. This could work out cheaper if you’re a higher rate taxpayer.
Setting up a limited company can also be more suitable if you plan to hire employees as you can pay salaries through the Pay as You Earn (PAYE) scheme.
A business plan is an important document that outlines to potential investors what your business does and what your future plans are. Even if you don’t plan to apply for finance yet, a business plan can help you get a better idea of your strategic goals and any potential problems that could arise.
A business plan should include the following:
When starting a business, unless you have a significant sum of savings lurking in an account somewhere, it’s likely you’ll need to borrow funds to help get your business set up and later expand.
You could think about approaching friends and family to see if they would be willing to loan you the money as this can be cheaper than going to the banks. But this also has the potential to ruin your relationship if your business fails to take off and you can’t afford to repay the money.
Another option is to find out whether you qualify for a startup loan. This type of loan is designed to help new businesses launch and expand and will give you a lump sum that you then repay in monthly instalments over a set term, with interest on top. To qualify, your business must have been trading for no more than 36 months and you must be able to prove that you were unable to obtain a loan from alternative sources and that you can afford the repayments.
Further finance options to consider include:
Once you’ve got your funding in place, it’s time to think about how you’re going to market your business.
As a first step, it’s important to build a website for your business. Website builders such as Wix and Squarespace can help guide you through the process and you can choose to have a standard information website or an e-commerce site if you’re selling products online.
You’ll also need to optimise your website for search engines so that people can easily find your website and understand what it offers.
Additionally, it’s worth building a social media presence through platforms like Facebook, Twitter, LinkedIn and/or Instagram. Post content that’s interesting and relevant to your target market and also helps drive customers back to your website.
Finally, consider writing regular blog posts, sending emails and newsletters and using flyers and print marketing to advertise your business.
Having the right insurance in place is crucial to running a successful business. Some of the business insurance policies to consider are outlined below:
Before you start trading, you must register your business. If you’re a sole trader you’ll need to register to be able to file a self-assessment tax return. If you’re a limited company you will also need to register with ASIC, file a company tax return and pay corporation tax on the profits you make from your business.
If your VAT taxable turnover exceeds $75,000 in any month over the last 12 months, you’ll also need to register for VAT and complete a VAT return each quarter.
Finally, if you’re hiring staff, you will need to register for PAYE.
A big part of making sure you pay the correct amount of tax is to stay organised and keep accurate business records. Without this, completing your tax returns can be extremely time-consuming and you’re more likely to make mistakes.
Opening a business bank account will help you keep your personal and business accounts separate, making it much easier to see what’s what when it comes to completing your tax returns. There’s also a wide range of accounting software that can help make record-keeping a lot easier. These include Xero, QuickBooks, and Zoho Books. Many of these tools will also help you streamline your invoicing process, helping you to chase late payments and make paying invoices a lot quicker and hassle-free for your customers.
In Australia, you must register your new business for goods and services tax (GST) if your annual turnover is $75,000 or more. If your business is a non-profit organisation, the threshold is $150,000.
Even if your turnover is below these thresholds, you can choose to register for GST voluntarily. Registering for GST requires you to charge GST on your goods and services, report business activity statements (BAS), and claim GST credits for any GST included in the price of goods and services you purchase for your business.
If your turnover is below the threshold and you do not register, you are not required to charge GST or report BAS. However, it is important to regularly monitor your turnover to ensure compliance with GST registration requirements.
The cost of starting a business can vary a lot depending on various factors such as the type of business, its scale, location, industry regulations, and specific operational needs.
In general, startup costs may include expenses related to business registration and licensing, equipment and supplies, marketing and advertising, website development, inventory, leasing or renting office space, hiring employees, and other different costs. Additionally, entrepreneurs may need to consider ongoing operational expenses such as rent, utilities, insurance, payroll, and taxes.
The total cost of starting a business can range from a few hundred dollars for a home-based or online business to hundreds of thousands or even millions of dollars for larger, more complex businesses. It’s important for entrepreneurs to carefully budget and plan for these expenses to make sure their business is set for success.
You don’t have to have thousands of pounds stashed away in a savings account to get a new business off the ground.
Setting up a YouTube channel or using TikTok are easy ways to start out small and can enable you to earn some cash. You could also think about providing services like dog walking or personal training. Creating a Google Business Profile will help to get word out about your business, as will advertising via social media.
But, as mentioned earlier, there are also a number of funding options you could explore for new businesses. Business grants, for example, are usually awarded by the government or other companies and there are hundreds of different grants you can apply for across Australia. Often they will be targeted towards specific industries, community groups or types of business, so check to see if you qualify.
Alternatively, find out whether you might be able to apply for a startup loan, or look into seeking investment through crowdfunding. You’re more likely to be successful with this if you have a unique business idea and you can show that it has a lot of growth potential. However, you might need to give your investors a share in the company or a reward in return for their cash.
You might also be able to secure investment from a business angel. These are high net worth individuals who prefer to invest in startups and early stage businesses. In return for their investment, they receive shares in the company. They can also offer their expertise and contacts to help your business grow.
Deciding the best time to start a business is influenced by a variety of factors. One consideration is the state of the economy and market conditions. Some entrepreneurs may choose to launch during periods of economic growth when consumer confidence is high and market demand is robust. Others may find opportunities during economic downturns, using innovation and cost-effectiveness to meet changing needs.
Personal circumstances also play a key role. For some, starting a business makes sense at the same timen as life transitions, such as leaving a job, retirement, or relocating to a new area. These transitions may provide the time, motivation, or financial stability needed to start entrepreneurial adventures.
Furthermore, the nature of the business itself can affect the timing. Industries experience cycles of innovation, regulatory changes, and new trends that may create windows of opportunity for new businesses. Entrepreneurs may aim to take advantages of changing consumer preferences or gaps in the market.
Preparation is important regardless of timing. New business owners should conduct thorough market research, make a solid business plan, and assess their financial resources and risk tolerance. Networking with mentors, industry experts, and other entrepreneurs can provide valuable insights and support.
Remember, there is no one-size-fits-all answer to the question of when to start a business. Success often depends on a combination of timing, preparedness, and adaptability. Each entrepreneur’s journey is unique, and the decision to start a business should fit your goals, values, and vision for the future.
Some easy businesses to start typically require low initial investment, minimal specialised skills, and straightforward operations. Examples include:
These businesses are relatively easy to start but still require careful planning, dedication, and effective marketing to succeed.
The most profitable type of business can vary depending on market trends and economic conditions. Generally, sectors such as technology, healthcare, and financial services are known for their high profitability.
Technology businesses, including software development, IT consulting, and e-commerce, often give significant profits due to scalability and the growing digital economy. The healthcare sector, including private medical practices, aged care services, and specialised health services, benefits from the country’s aging population and increasing health awareness.
Financial services, including accounting, investment advising, and financial planning, remain profitable due to ongoing demand for financial expertise and management. Additionally, real estate and property management businesses can be highly profitable, given the robust property market in many Australian cities.
Whether you need a business credit card depends on your specific business needs and financial situation. A business credit card can offer several advantages, such as helping to separate personal and business expenses, providing a way to manage cash flow, and offering rewards or cashback on purchases. It can also help build your business credit score, which is important for securing loans and favorable terms in the future.
However, it is also important to consider potential drawbacks, such as the risk of accumulating debt if the balance is not paid off in full each month. Additionally, some business credit cards come with fees and interest rates that need to be accounted for in your financial planning.
A business credit card can be a useful tool for managing business expenses and building credit, but it should be used responsibly and in alignment with your overall financial strategy.
Keen to get your small business off the ground but not sure how to secure the necessary funding? Our team of experts here at Swoop will be happy to talk through your funding requirements and help match you with the most suitable choice for your new business. Get in touch today.
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Written by
Rachel has been writing about finance and consumer affairs for over a decade, helping people to get to grips with their finances and cut through the jargon. She's written for a range of websites and national newspapers including MoneySuperMarket, Money to the Masses, Forbes UK, and Mail on Sunday. Rachel has covered almost every financial topic, from car insurance and credit cards, to business bank accounts and mortgages.
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