Why go into business?
Running a business is hard work and personally satisfying, but is it for you? It might look like an escape from a job, or a way to spend a redundancy package, but you’ll need to give much more of yourself than a nine-to-five employee. To increase your chances of success you'll need to spend some time preparing and assessing yourself if you are ready to start a business.
'Getting start-up funding can be tough when you’re a solo operator. Investors are often reluctant to stump up the cash... It’s imperative, therefore, that soloists keep start-up costs to a minimum. The pain of an overly-indulgent spending spree will be squarely on your shoulders should things go wrong.'
Read more about which areas are primed for growth and affordable for cash-poor start-ups in Start-up Smart's Five businesses soloists can start on the cheap
One of the crucial questions you'll also have to answer is is whether you want to buy a business with customers, or build one from scratch. The main considerations for this decision are outlined lower on this page.
Checklist for buying a business
Checklist for evaluating a franchise & franchisor (PDF 72.54 KB) PDF icon
Reasons for starting a business:
to develop an idea you think has potential
to earn a better living
greater feeling of control over your work destiny and develop your own creative ideas
to produce a quality product
personal pride and satisfaction
to build an asset you can leave to your children or assist with your retirement
you may enjoy leading a group of people
working hours can be more flexible
Disadvantages of owning a business:
long working hours can cause physical and mental stress, especially in the early stages of the business
high level of responsibility as you are usually the sole decision maker
your income will vary and you may need to live on other income (from family, partner or spouse, loan) until the business is profitable
you will lose some employee benefits, such as holiday pay and sick leave
there may be hidden costs associated with your business, such as public liability insurance, personal injury insurance
your personal assets (someone elses) could be at risk
you may not have the personal qualities you need to be successful and not realise this
Overview of starting a new business, buying a business or a franchise
Your personality, knowledge and level of experience can help make a decision on which type of business will suit you. Each of the three options has its own section on the website with plenty of tools, templates and assistance to help you get started.
Buying or starting a franchise
A franchise is a well-tried business formula with an established name, marketing and operating procedures. You can buy a franchise that is already set up and running today, or buy the rights to set one up. Essentially you’re paying for the rights to run what is often a finely tuned and successful business model.
As most franchisors (the person selling the franchise) are keen to keep their franchise running as a well-regarded operation, this offers more support than other options. However, franchising isn't for everybody, as many decisions will be made on your behalf. The Franchise Council of Australia and the Australian Competition and Consumer Commission oversee the industry and each website has many useful resources, as does Start a Franchise.
Buying an existing business
You’re buying the owner’s assets, stock and customer loyalty. Buying an operating business can reduce the risk of failure, but only if your solicitor, accountant and yourself have done their homework. This means making sure you’re buying at the right price, and doing a careful check for future possible dangers to the business e.g. crucial and expensive equipment wears out, a big contract ends, or the old owner has set up a business across the road. Buy a business has more details.
Tip: A surprising 80% of buyers who did financial due diligence (collecting and checking information about the business before buying it) with an accountant avoided paying too much. (CPA survey)
Starting a new business from scratch
Starting a business from scratch offers unlimited creativity and full control.
This is the hardest, slowest and riskiest way to start a business — but potentially the most satisfying and rewarding. Your abilities, temperament and a business plan are more important here than when using any other approach. Registrations, premises, pricing, marketing, stock, suppliers and staff are just some of the things you will need to make decisions about. Starting new has more help in these areas.
