The Steps to Starting a Business

How to start a business is a question with many answers. There is the big picture stuff like making the space, clarify your vision, get your thinking in order and develop your knowledge and skills.  You can read more on this at the Five Steps to Start a Small Business.  However here I would like to look some of the more practical things you need to do to just get the business going.

 

How much income do you need to generate to make the business viable.

Resolving this issue will help you set you budgets and targets. This will in turn help you focus on your sales. Lets assume for the moment that you are going into a business where you will be on-selling other peoples products. Considering the following factors will help you determine your desired sales level. 

• The profit you need to make

• Overhead expenses

• Gross Profit Margin

 

Lets look at this by way of an example

Desired Net Profit $100000

Overhead Expenses $60000

Gross Profit Margin 40%

 

This would mean you would need to make $400,000 sales per year to meet your objectives.  And your Profit and Loss Statement at the end of the year would look like this:

 

Income                          $400000

Less Cost of Sales           $240000

Gross Profit                    $160000

Less Overhead Exp            $60000

Equals Net Profit             $100000

 

Now you have determine your sales level you are better placed to develop your sales plan.  There is a great business startup calculator that will do these calculations for you.

 

Develop your Sales Plan

What do you need to do gain the level of sales you need?  how much does this work out to be a week, a day, an hour your are open. Do you know what your value proposition is and have you identified your different market segments.  Do you have the necessary sales skills and if not how will you develop your sales skills.

How will you market: website, advertising, cold calls, develop a sales plan.  You could open your doors and just wait for business to come.  this may work if you are in the idea location. However if you are a home based business or a service provider chances are you will be knocking of doors telling people about what you do and asking for their business.

 

Attending to Business Legal Matters.

For most small business operators this area is a real drag.  It can be best addressed by developing a solid list of all the things you need to attend to.  Including in the legal matters are:

Your Business Structure: If you decide you just wish to get started a sole trader is the typical way to start.  In this case you already have your legal structure - that's you. A downside of this is that you have know protection if something went wrong.

Registrations and Licences: Your business name is an example of a registration.  If you are operating under your own name you won't need to register. however if you are serious about a business you will have a business name. 

Taxation: You will have registrations for taxation.  Your taxation registrations will vary from place to place.  Australia is pretty typical of most place.  You will need to get an ABN (Australian Business Number) and use this number when billing people.

Staffing: Many start up business don't expect to employ staff.  But it can come soon enough.  You will find you have significant obligations to staff - especially to provide them with a safe working environment.  Your staff may also be subject to awards that determine their rates of pay and conditions.

Insurances: There are a wide range of insurance options available to your. These include such insurances as Key Man Insurance, Public Liability, Workers Compensation, Professional Indemnity, Property Insurance.