The first 12 months of any new business are almost always the leanest. Revenue takes time to build, unexpected costs have a habit of appearing and there will be periods where cash coming in does not match cash going out.
Before you launch, make sure you have an adequate cash reserve to carry you through. As a general rule, aim for at least three to six months of operating expenses set aside before you open your doors. It will give you the breathing room to make good decisions rather than desperate ones.
One of the most common and costly mistakes new business owners make is starting to trade before they have their structure sorted. Whether you operate as a sole trader, partnership, company or trust has significant implications for your tax obligations, asset protection and personal liability.
Getting this wrong at the start can be expensive to fix later. Get advice from an experienced accountant before you begin and make sure your structure is working in your favour from day one.
GST obligations catch a lot of new business owners off guard. The money collected from customers includes GST that belongs to the ATO, not to you and it needs to be set aside ready for your next BAS lodgement.
Open a separate bank account from day one and transfer a portion of every payment received into it regularly. When your BAS is due, the money is sitting there waiting. It is a simple habit that will save you a significant amount of stress.
A business plan is not a document you write once and file away. It is a living tool that should be reviewed and updated regularly as your business evolves, the market changes and your goals shift.
Your plan should cover your revenue targets, cost structure, target market, competitive landscape and growth strategy. It does not need to be complicated but it does need to exist and it does need to be honest. A plan that reflects reality is far more useful than one that just looks good on paper.
Profit matters. But cashflow keeps your business alive. Many profitable businesses have failed because they ran out of cash at the wrong moment.
Know your cashflow position at all times. Chase debtors promptly and consistently. A friendly but firm approach to accounts receivable is one of the most valuable habits a small business owner can develop. On the other side of the ledger, negotiate payment terms with your suppliers wherever possible. Every day you can extend your payables and shorten your receivables improves your cashflow position.
It sounds basic but it makes an enormous difference. A well-organised filing system, whether digital, physical or both, means you always know where things are, your accountant can find what they need quickly and you are never scrambling at tax time.
The ATO requires businesses to keep records for a minimum of five years. Set your system up before trading begins and commit to maintaining it from the start. Catching up on months of disorganised paperwork is painful, time-consuming and expensive.
For a new business with a limited marketing budget, social media is one of the most cost-effective tools available. Used consistently and strategically, it builds brand awareness, establishes credibility and keeps you visible to your target audience.
You do not need to be on every platform. Choose the one or two channels where your ideal clients spend their time and focus your energy there. Consistency matters far more than volume.
Employing staff for the first time is a significant step and one that comes with substantial legal and financial obligations. Payroll tax, superannuation, single touch payroll reporting, workplace health and safety, awards and enterprise agreements. There is a lot to get right.
Before you bring on your first employee, make sure you understand your obligations and have the right systems in place. Getting this wrong can be costly and time-consuming to fix. If in doubt, speak to your accountant before you make any hiring decisions.
Running a business can be isolating. The decisions are yours to make, the pressure is yours to carry and there is not always someone obvious to turn to for a second opinion.
Build a support structure around yourself early. A monthly meeting with a trusted business mentor and your accountant gives you a sounding board for ideas, an outside perspective on challenges and someone to hold you accountable to your goals. The best business owners we have worked with over the years have always had people around them they trusted to give them straight advice.
The agreements you sign at the start of your business with suppliers, customers, landlords, banks and service providers should not be set and forgotten. Markets change, your business changes and better deals become available.
Make it a habit to review your key agreements at least once a year. Renegotiate where you can. A better interest rate, a lower supplier price or improved payment terms might seem like small wins individually but they add up to significant savings over time. Complacency is expensive.
