Tips for entrepreneurs
Small businesses accounted for almost 96% of all businesses in Australia in 2011i and made up a significant portion of the overall industry valueii. However, the exit rate of micro businesses (up to 4 people) and small businesses (up to 19 people) was almost 14% in 2010-11. This rate is high compared to exit rates of medium businesses (4.9%) and large businesses (4.8%)iii. Our tips for entrepreneurs can't guarantee that you will become the next Mark Zuckerberg, but they will give you a better idea about the essentials of becoming a successful entrepreneur.
Spot an opportunity
You think you see an opportunity for a new business? Your job as an entrepreneur is to convert an opportunity into a marketable idea. 83.6% of the customers of small businesses are from the local areaiv, so local demand is important to factor in. Also ask yourself what you can do better than your competitors: Can you offer your customers a better price? Do you have a unique offering? Why should your customers buy from you? Once you have decided that your business idea is worth further investigation, move on to the next step: the business plan.
Develop a business plan
A business plan doesn't guarantee success but it can make a big difference. A business plan describes the offering - your business idea - and lays out how it creates value for your target market. That means your business plan should also describe the strengths of your business and resources you require, as well as how you will generate profits.
The Australian governmentv as well as many financial institutions offer free business plan templates and give tips on writing a business plan. There are also several tools available to assist you with organising your ideas and putting them on paper, such as the Business Model Canvas: a simple one-page document that allows you to describe, design, challenge, invent, and pivot your business model.
Keep in mind that a business is not only affected by internal factors, but also by its external environment, so make sure to do your homework and perform detailed industry research. Statistics on market development and industry issues are widely available, for instance from the Australian Department of Industry, Innovation Science, Research and Tertiary Education.
Premises and Equipment
As mentioned above, your business plan should include details about the resources you require for your business. Premises, equipment and stock are all important, so be sure take these into consideration. Compare the cost of renting commercial property to buying, and evaluate carefully if leasing equipment could be more beneficial for your business than purchasing. Seeking professional advice can help you decide which option to choose.
Registrations and licences
Correct licences and registrations are fundamental to your business. Finding out which registrations and licences apply to you can be complex. State and territory governments as well as the Federal Government handle registration and licensing for various aspects of Australian businessesvi. The Australian Government’s principal business resource provides a list of licences and regulations for you to consider as well as further helpful information, for instance on business structure, company name, trademarks, and taxation matters. Gaining appropriate registrations and licences protects your business from closure from non-compliance and other threats.
Obviously, sufficient funds are essential for you to get your business up and running and to ensure its survival. It is not unusual for a business to use a variety of funding sources. While personal savings are the major source of funding for young firms (51%)vii, alternatives range from the use of personal credit cards, bank loans and angel investors, who provide financing in return for a share in your businessviii.
This is one of the stages where a great business plan pays off: the better and more accurate your business plan is, the better are your chances to win investors or even qualify for governmental funding programs such as grants. A list of grants available in each state is available online, outlining a short description of which businesses are eligible for funding. Once you have managed to raise funds for your business, taking out small business insurance can help you protect your investment and can provide financial security in the event of a range of events like theft and business interruption.
Measure your performance and modify your business model
Once you have kick-started your business, it is crucial to closely monitor its financial and operational performance. Accurate performance measurement allows you to pinpoint weak spots and flag issues that need to be addressed in order to improve future performance. If necessary, modify your business plan - then start measuring again~.