This can be a very exciting time and there are a number of areas in which we can help, and not just with finance and business banking solutions.
Not everyone has what it takes to run a successful business (big or small). But there are some common characteristics.
Successful small business owners generally:
- are very good at what they do (they already have strong skills and experience in their industry because it is more difficult starting a new career and a new business at the same time)
- know there’s a gap in the market and have identified an opportunity
- have support and understanding from their family and friends to help them out when things get tough
- have enough money to outlast a cash crisis and not be undercapitalised
- have a network of experienced business people to talk to
- have the entrepreneurial spirit (passionate, determined, persistent, flexible)
- are prepared to change their strategy when they need to
- are able to convince other people that their idea is good.
The thrill and potential of starting a business from nothing is what drives many new start-ups. When starting from scratch you make all the choices. So think about every aspect of the business, as success is often in the detail and you should always have a business plan.
There are a number of advantages for starting a business from scratch.
- You have freedom of choice
- You have the satisfaction of starting a business
- You can move at your own pace
- You don’t have to pay for goodwill
- You avoid the previous owner’s negative influences
- You can choose the best location
- You select the premises
- You buy the best equipment
- You negotiate new deals with suppliers
- You appoint your own staff
- You invent your own operating systems
- You create the business image you want
However, there may be some disadvantages.
- Researching viability takes time and money
- Building goodwill takes time
- You may choose the wrong location
- The premises may be unsuitable
- Equipment can be costly or prove unsuitable
- Your suppliers may not extend credit at first
- You may select the wrong staff
- Developing effective systems can take time
- It can take a long time to make a profit
You shouldn’t consider going into business without a thorough business plan. You can find help to develop your plan at The Small Business Hub.
One reason to buy an existing business is that there’s a proven track record. Another may be because it’s struggling due to bad management. These are two very different purchase scenarios.
When analyzing a business, some things to discover through research and working with your advisers are:
- Are there established customers, and will they be happy to continue to do business with you after the purchase?
- Is the necessary equipment and infrastructure already in place?
- Are systems already in place, including stock levels, purchasing arrangements and production level?
- Is it in the right location?
- Are the books easily understood and can you determine the previous profit after all wages and other associated costs?
- Are the staff right for the business and will they stay?
- Does the business have a good or bad image? In some cases there could be negative goodwill.
- Are you acquiring any debt?
- Is the business owed money and are these debts likely to be paid?
- Why is the business owner selling?
- Is a competitor about to open nearby?
- Is there a development that may have a negative impact on your trade?
- Is the business catering to a shrinking market?
- Are there other threats to the health of the business?
- Is the business facing possible litigation?
- Are regulatory changes likely to affect the industry?
- Are there any environmental issues relating to the business?
You shouldn’t consider buying a business without a thorough business plan. You can find help to develop your plan at The Small Business Hub.
Franchising is where a business has found that it can replicate its success in different regions by selling franchise rights to former staff or outside buyers.
The professional reputation and competence of the franchisor is the key. Look for a proven track record and a history of solid performance. Some things to consider are:
- Does the franchise have an exclusive product, service or system?
- Are there many successful franchisees?
- Will you gain access to a proven business system?
- Is the brand well known, popular and profitable?
- Will the franchisor provide the necessary initial training and on-going support?
- Will the buying power of the franchisor give you advantages over other types of businesses?
- If you make a success of the franchise, can you purchase other franchises?
- Are you comfortable with the level of control exercised by the franchisor?
- Will you be able to introduce your own ideas and systems?
- Under what circumstances can the franchise be taken from you? (i.e. failing to operate under the existing pricing model)
- Are you comfortable with the on-going fees and share of profit you will pay the franchisor?
These are just some questions to consider and there are many others. The Franchise Council of Australia provides information about franchising and contacts for franchise specialists.
You’ll find further information and assistance on going into business at the following sites:
- www.business.gov.au Along with help for existing business people this site has information and advice specifically targeted to people thinking about starting a business, buying an existing business or buying a franchise.
- www.ausindustry.gov.au can provide general advice and mentoring
- Your local business enterprise centre provides a range of services to small business
- The Federal Government website Smart Start has information regarding the steps you should take when starting or buying a business, including registering and valuing your IP
There’s also a range of websites with state or territory specific information:
Going into business is an exciting period. It’s also a busy one and we can help you minimize the risk.
An ANZ Small Business Specialist - can help you establish business accounts and systems, from an EFTPOS facility to business lending. Why not book in an appointment for an A-Z Review to tailor a solution for your needs? Speak to your local ANZ Small Business Specialist today.
Our Small Business Specialist can also talk to you about the following:
The Small Business Hub - Provides you with valuable information and advice about starting, managing and growing your business. Plus, free access to hundreds of articles, downloadable guides, templates and advice from industry experts to help your business succeed. Visit The Small Business Hub.
ANZ Business Insights – Provides retail businesses with access to valuable information about your customers and the performance of your business compared to local industry. Visit ANZ Business Insights.
Xero – An easy to use, online accounting system that provides real-time data, online anywhere, any time. Find out more about Xero.
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