Turn a great idea into cash

Starting your own business can be complex but rewarding, writes

Anthony Keane

A NEW financial year is an ideal time to turn a money-making idea into something serious.

Whether you’re looking to start a side hustle, become fulltime self-employed or begin a new small business, there are important factors to consider.

A business idea should always begin with a plan, although not necessarily a large one, say small business specialists.

And you must have some basic financial forecasts.

The Council of Small Business Organisations Australia’s CEO, Peter Strong, said many people had a great idea, got excited and started working on it without knowing how expensive it would be to operate. “Where are you getting the money? What are the costs?” Mr Strong said. “Make sure you’re going to have a business that makes money.”

He said understanding the rules around GST and other taxes was important for many business start-ups, and professional help was crucial.

“Get advice every time,” he said. “If you don’t get advice, you are asking for trouble.”

New business owners often bought into franchises, Mr Strong said, but he warned people some franchisors profited much more than the franchisees.

“A classic personality of a business owner is they are trusting and optimistic,” Mr Strong said. “A pessimist won’t open a business.”

Australia has between 2.2 and three million small businesses, depending on what statistics you read. The lines have blurred in recent years with a surge in people signing up to the gig economy for things such as ride sharing and delivery services.

All fall under the small business umbrella, and it’s an umbrella that loses more than 30 per cent of its participants within four years of starting.

Some move on to other work or businesses, some sell for a profit and others don’t succeed through poor planning.

The Coalition has a policy of creating 250,000 new small businesses within five years, so there’ll be many opportunities.

Xero Australia & Asia’s managing director, Trent Innes, said it was important for anyone with a business idea to avoid getting overwhelmed.

“Starting a business is a process and it will take time,” he said.

Mr Innes said Xero had surveyed more than 2000 businesses to identify recipes for success of business owners, and found four key ingredients: • Maintaining work-life balance and use automation to take over less-productive tasks.

• Forming strong relationships with an adviser, discussing ideas and issues rather than everyday transactions. • Investing intelligently in marketing and technology. • Keeping on top of finances. “Poor cash flow is typically cited as the number one reason for a business’s failure,” Mr Innes said.

“Xero’s own research suggests that only one in two small businesses will survive beyond five years.”

Mr Innes said the initial steps to starting any business were assessing the idea and writing a one-page business plan. “What’s your goal and how do you intend to get there?” he said.

A longer-form business plan with sales forecasts, market research, budgets and financing should only follow once the initial idea is written down.

The Commonwealth Bank’s executive general manager of small business banking, Claire Roberts, said many business ideas started from an interest but required more thinking to turn them into reality.

“Make sure you have a comprehensive business plan to better understand the environment you will operate in, your target customers, your unique value proposition and your business goals,” she said.

Ms Roberts said small business operators were increasingly using data and analytics to help with decision making, staff management, marketing and cash flow.

“Gone are the days where businesses can rely on gut feel.”

Every start-up business owner, no matter how small their operation is, wants to do well.

Ms Roberts said this would require an understanding of the changing expectations

of customers, finding out what set you apart, and being disciplined when spending money. Learning from mistakes is vital.

“Rarely anybody gets everything right the first time, especially in the complicated small business world,” she said.

“It’s important to quickly learn from these shortfalls and make the necessary changes to ensure it doesn’t happen again.”

Business owners always need to listen to customer feedback, and should also listen to mentors and other business owners.

Ms Roberts said people also needed to learn to let go of some control and delegate roles where possible.

“Business owners can get stuck working in the business and not on the business,” she said. “If you can, bring other people in to free more time to work on the strategic direction of the business,