Archive for category Accounting and Tax

Starting a New Business: What do I Need to Consider?

Having a vision for a new business venture is one thing. The preparation and execution is something entirely different.

Before you can start to live out your dreams of becoming a successful business person, you must first build the foundations.

Ask yourself the following fundamental questions:

• Is the idea for your business viable?
• Is there a demand for your services in the marketplace?
• What or who exactly is your market?
• Have you researched any competitors?
• Are you in a financial position to get the business off the ground?

Developing a Business Plan and Researching the Market

Use reports and statistics from government websites and industry specific publications and journals. When you have carried out this initial research, and are confident the idea is feasible, you should then look at creating your business plan using the following steps:

• Business goals
• Marketing initiatives
• Researching your industry
• Operations and management planning
• Financial planning

Given that your business plan is going to be your blue-print for the future of your business, you’ll need to factor in reviewing it regularly.

Keep in touch with me and I will highlight the indepth creation of a Business Plan over the coming weeks.

Researching the Market

Consider the products and services you’ll have on offer. You will need to establish if in fact, there is a strong market for it, and if you are able to successfully reach that market. By undertaking such research, you’ll be in a better position to evaluate the best options for marketing.

The Competition

By thoroughly researching your competition you can establish:

• Your most direct competition
• If or why they are successful
• Their strengths and weaknesses
• Their marketing strategies

Finance

Obtaining the right amount of financial assistance, is the backbone for the viability and success of your business. Within your business plan, you’ll need to factor in sufficient funding for start-up costs, as well as cash flow (depending on your inventory needs and other projected out-goings).

Naming Your Business

The name you choose for your business will have an impact on its future. You can consider the following points:

Competitors. Assess the names of your competition, and make an effort to be unique from them.
Business goals. How can you merge your business name to compliment your goals? How Can You Differentiate?
Branding and marketing. How will the name work-in with the marketing initiatives set-out within your business plan?
Appealing to the market. Select a business name that is easy to spell, can be remembered easily and can be easily pronounced.

Before you become too attached to your chosen business name, undertake the relevant availability checks with the Australian Securities and Investment Commission to ensure the name you chose is available. Make sure there are no trademarks on your business name by searching IP Australia.

Business Structure Options

Sole Trader. As a sole trader, you cannot separate any legal existence between you and the business – you are personally responsible for any liabilities.
Partnership. This involves at least 2 people starting a business. Partners of the business equally share the risks, loses and profits.
Company (Pty Ltd). A company set-up, involves more regulatory requirements, and is considered a separate entity.

Seek professional advice from an accountant to help choose the better option. You should plan this from the start as this is the best time. Waiting can cost you money.

GST, ABNs and TFNs

If your annual turnover is expected to be greater than $50,000, you must then register for the Goods and Services Tax (GST). This then requires you to also apply for an Australian Business Number (ABN) via the Australian Business Register.

Registering your Domain Name

Even if you decide not to launch a business website initially, you should definitely make sure you register and secure your preferred domain name for the future.

Other important elements to add to your new business start-up checklist should include:
• Business premises
• Insurances
• Business vehicles
• Taxation requirements
• Legal obligations
• Familiarizing government bodies for quick reference guides

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Bite the bullet, Tell your boss to…..

Well it’s all been said before, that’s true. Leverage is such an important thing to lifestyle and often financial freedom.

I wanted to share my story in relation to this matter because I very much aspire to maintain and increase leverage in my financial situation.

Now I was an extreme example of the “hours work for an hours pay” type of person. My background is in accounting and tax and so I was employed within chartered accounting firms for 15 years. They are a very strict working environment to say the least. We had to, (and I believe it is still the same now), mark down our day of work in 6 minute blocks, ALL DAY! I know, it is extreme. We were monitored beyond belief and it was not something you could get out of. Every employee had the same 6 minute block worksheet that had to be filled out.

That is bad enough right? But what is really the issue, and this is the same for all employee situations, is that for me to obtain more money via my wage I had to do more hours. It isn’t new I know but it is a trap we can get locked into.

Safety V Freedom.

SO, I reached the end of my tether and realised that I would continue to make somebody else rich if I stayed on the treadmill. There was never a way for me to break the fact that I always had a ceiling on the amount I could earn because that decision was made by employer. Don’t get me wrong, I know that some situations call for this secure, lack of risk financially. I wanted more.

I was introduced to the telecommunications industry and the whole thing hit home. LEVERAGE! Suddenly there was an option for me to be able to leverage my time. A way to have money being earned while I was “sleeping”. The telco industry is a wonderful example of having the freedom to move with my business aswell becuase it is so automated and internet based. As long as I have good internet I can maintain vigilance on my business.

But the biggest benefit is the freedom and ability to expand my financial wealth, through my choices not somebody elses. If I want to increase the wage afforded to me via the company then I need to only create expansion in the company. It is my responsibility and my choice for me.

I am sure there are many versions of this solution to leverage and I very much encourage you to seek it out and grab it. I know there is risk involved and you need certain skills. The first 2 years of operation for me was difficult financially and personally but the rewards now and fantastic.

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Cash Flow is King

My success in business has, from my oppinion, partly come from the fact that I monitor cash position like my life depends on it, and well I guess it does!

For me, knowing where every dollar is and what the company actually has in terms of available funds to work with or to secure future downturns (a cash buffer), is paramount. I believe a business needs to know this on a detailed level by considering existing debts, future debts and future incomes.

I find that completing a schedule at least monthly has given me the peace of mind to know just what the cash in the bank account really is available for. Its amazing that what has flowed with that is successfully creating a cash buffer that allows me to feel secure and use funds to market and expand further.

Suddenly, paying the BAS each quarter, or the superannuation costs each quarter, (which let’s face it, always are paid with an ounce of anger because they feel like wasted money that is bringing us no gain right?!), become less stressful because I know the funds are available. In fact that that the funds for my compliance payments are available and there is still more for my business and my lifestyle.

Remember, “Paying Tax Means You Are Making Money” – It’s a good thing! This view is very important. Almost as much as ensuring we do not live beyond our means. If you have a profit of $100K, it’s just the way of the world, $30K is not available to the business, (excluding other deductible considerations of course).

Anyway, I have attached a copy of the early template for a cash position calculation I use within my business every month, and still do. It’s tailored to my retail telecommunications company of course which may not suit many businesses but it maintains a structure that can certainly lead you in the right direction to knowing your cash position and monitoring “every dollar”!

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