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How to run a small business in Australia? Flipbook PDF

How to run a small business

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How to Run a Small Business in Australia? Josh Martin Bond University of Gold Coast

Key Terms: Australia's business economy, How to manage a new business, manage your small business finances

Introduction: Australia's economy could be described as prosperous. Population growth will help propel Australia to become the world's 11th biggest economy within a decade, a report predicts. Australia's economic growth has been fuelled by resources in recent years; the centre also noted that it's become one of the most popular countries in the world for inward migration. Australia took in just under 190,000 permanent migrants during the 2015-16 financial years, the majority of whom were skilled. Being a small business owner comes with challenges unique to the size and function of the business. The small business owner has to handle all the challenges of selling, delivering, financing, managing and growing the business with little or no staff, while trying to make it a success. The most important of all is to retain the interest of all stakeholders like customers, vendors and team to build momentum in a short span of time. Running a small business can be hugely rewarding both personally and financially. Here are some tips that will help you in running a small business:

Drafting a Usable Business Plan Put your idea into writing. It is important to take the ideas in your head and get them down on paper. Most successful businesses offer a new product or service or fill an existing niche in the market. Whatever your reasons may be for starting a small business, make sure to clearly and concisely put them in writing. • It can be helpful to go through many drafts or iterations of your business plan. • Include as many details as you can in your business plan. Over thinking the details is never as damaging as ignoring the details.

• It can also be useful to include questions in drafts of your business plan. Identifying what you don't know is as helpful as listing things you are sure about. You do not want to present a business plan with unanswered questions to potential investors, but laying out relevant questions in your initial drafts will help you identify questions that require answering in your final business plan. Meet with your local Small Business Development Center. SBDC's provide help during all stages of the business life cycle. They can help you create a stellar business plan to approach a lender with and their counseling is always free. Identify your customer base. In your business plan, you need to identify who you think will buy your product or service. Why would these individuals need or want your product or service? The answer to these questions should help to determine all other aspects of your business’ operations. • Here, it useful to ask questions of your service or product. For example, you may want to ask questions like, does my product/service appeal to younger or older people? Is my product/service affordable for lower-income consumers or is it a high-end purchase? Does my product/service appeal to people in specific environments? You won't be selling many snow tires in Hawaii or beach towels in Alaska, so be realistic about the appeal of your product. Outline your finances. In your business plan, you need to address key questions about your business’ fiduciary situation. • How will your product or service generate money? How much money will it generate? How much does it cost to produce your product or service? How do you intend to pay operational costs and employees? These, and others, are critical question you need to answer in planning your small business’ financial future. • Be realistic with your growth potential. Keep in mind that growing your business requires a growth in investment capital as well. Projecting too much growth in too short a time period can quickly deter potential investors.

Establishing Good Fiscal Practices Make your bank work for you. Run your small business with financial efficiency by exploring all the options that banks offer small business owners and choosing the right bank for your business' financial plan. Many financial institutions offer accounts with low fees, loans with discounted rates or free direct deposit programs for small business account holders. Banking with the institution that gives you the best deals will help you stretch every dollar.

• Use banking options against one another to secure the largest upfront capital and lowest interest rates. For example, if one bank offers you a $10,000 loan at an interest rate of 4%, you may be able to take that offer to a competing bank to see if they can provide more upfront capital or a lower interest rate. Secure a loan or other type of investment. Successful businesses need capital to get off their feet. Be sure that you have arranged and secured enough fiscal backing to cover all of your small business’ operating, production, and marketing costs until your business is in a position to generate and operate on its own profits. • Be sure to investigate the various interest rates applied to small business loans. Ensure collection methods are in place. Be sure to account for how your business will collect on bills due and outstanding debts to your company. A successful business needs constant cash flow. Being unable to accept customer payments or waiting on those who owe you money will disrupt your business. • You will need to decide if you will accept cash, credit cards, checks, or some combination of the three from your clients and customers. • Cash transactions are easiest to deal with on a day-to-day basis, but are often difficult to track over longer periods. Also, dealing with cash makes securing your company's incoming cash flow more difficult, as it is easier for employees to steal from a cash-based businesses. • While accepting checks helps to prevent theft from within the business, checks can bounce, leaving you to handle outstanding issues with the bank. • Credit cards and debit cards are generally the most secure forms of payments, but accepting them requires your to take on additional fees paid to various credit card companies which, depending on the size and complexity of your business, may not be worthwhile. Consider using a credit control app. These are apps that help small businesses improve their cash flow through better management of day-to-day cash collection and customer credit control tasks. This would allow you to take-on new customers or monitor existing ones, chasing invoice payment or running cash collection more safely. There are several software providers that can help you with this such as iKMC from where you can also get a free trial.[9] Manage your inventory efficiently. Inventory management can make or break a small retail business, so manage it carefully to ensure that you're maximizing every dollar spent. Invest in small inventory quantities at first and continuously monitor inventory numbers so you know what's selling and what isn't. Rotate inventory frequently to remove slow sellers and replace them with new items.

• Inventory management is often dictated by the "shelf-life" of the product you are selling. For example, if you are dealing with perishable items, it is critical to move the oldest products out of your inventory first to maximize the profits of your business. Consider hiring a financial professional. It may be fiscally worthwhile for you to hire a dedicated staff member who can control the financial affairs of your small business. Accountants can help you identify areas of your business that are not running efficiently from a fiscal standpoint, allowing you to maximize your profits. • You do not necessarily need a full-time employee to handle financial responsibilities. For example, if you have a solid grasp on your inventory flow and cash flow management, you may only need a CPA when tax time comes around.

Managing Your Small Business 1. Educate Yourself One of the first things that you should do is educate yourself about the various aspects of finance. For starters, learn how to read financial statements (if you don’t already know how). This is one important statement that tells you all about your money – where it originated from, how many hands it changed, and where it is. Financial statements contain 4 essential details – cash flow statement, income statement, balance sheet, and statement of shareholders’ equity. The cash flow statement analyzes operating activities, investments, and financial in/outflow. The balance sheet provides information related to the company’s assets, liabilities and shareholder’s equity. The income statement reflects the revenue earned within a specific period of time. Shareholder’s equity represents the amount by which the company is financed through common and preferred shares. 2. Separate Personal and Business Finances Always keep your personal and business finances separate. This entails getting a business credit card and putting all related expenses on it. This should help you track your outlays and keep you in control. You will also do well in opening a savings account dedicated to your business, wherein you can transfer a certain amount of money from each payment that you receive and gradually build a considerable corpus. You can use this money to pay taxes.

3. Cut Costs It is important that entrepreneurs stay tight-fisted to keep their expenses in check without hampering customer satisfaction. This, especially, holds true for small businesses. Every business endures 2 types of costs – fixed and variable. While fixed costs have to be borne irrespective of whether your business is making money or not, there is scope for savings in variable costs. For example, instead of buying costly branded software, you could work with free, cloud-based, open-source software, which is equally good. Conduct free online calls, video conferences instead of travelling lost distances. You could also try bartering your services with other professionals and cut costs. 4. Invest in Cloud-based Accounting Software While you can definitely download regular accounting software to manage your finances, it will never give you the kind of convenience cloud-based accounting software can. Web-based software provides you with real-time insights as most allow you to store, update, track, and access data from anywhere at any time. Whether you’re at home, office or are travelling, you can conveniently work with your data from anywhere you like. It is error-free, hassle-free and dependable. 5. Monitor and Measure Performance It is crucial that you, as a business owner, keep tabs on the movement of your money, especially when large amounts are involved. Keep looking at your company’s financial performance in comparison to the past financial statements to project your future revenue, expenses and cash flow. Being aware of these aspects will help you make informed decisions for your business. 6. Hire Professional Help Everyone needs help, especially a budding entrepreneur interested in making a huge success of his venture. Sometimes, it pays off to engage the services of an expert, even if it is on a parttime basis. They can help you determine where your business is, where it is heading by using and analyzing your data. Make sure you hire someone you trust, though. Whether it is tax planning for the next financial year, or payment for the current year, their expertise can go a long way in guiding you and bringing you peace of mind.

7. Properly manage your accounting. You can hire a good bookkeeper or purchase DIY accounting software. It is crucial that you keep accurate track of your income and costs. 8. Review your costs. Keep track of all of your small business expenses. These can add up quickly, but reviewing them allows you to fine-tune where your money goes. 9. Make financial projections. Having clear financial projections is important. Your main business plan will help you to anticipate and address possible future obstacles. 10. Don’t get slack on invoicing.    

Send out invoices as soon as possible after providing goods or services. Set payment terms of seven days to make sure that payments are not forgotten or lost in the process. Always follow up on sent invoices. You can make this easy by creating set templates for email or SMS follow-ups. Reference invoice numbers and cross-reference these with payments.

Running Your Small Business Image can be a huge factor in the success of your small business. So it’s important to manage how customers see your brand. And you may also need to manage your personal brand as well. Here are some tips from members of the online small business community for managing your small business and entrepreneurial image.  Learn How to Create a Successful Small Business Brand Success as a small business isn’t just about the numbers. It can also be about your brand and what it portrays to customers. In this CorpNet post, Rieva Lesonsky shares the steps you can take to create a successful small business brand.  Become an Industry Thought Leader Being a thought leader in your industry can lead to increased trust and a better reputation for your business. But how do you accomplish this feat? Mary Blackiston of SUCCESS Agency discusses further here.  Use These 10 Best Change Management Strategies

Change is often the only constant when it comes to running a business. But it’s important that you really grasp how to manage change so you can make the most of it. Ilana Brudo elaborates in this Connecteam post. And you can see more commentary on the post over on BizSugar.  Develop the Master Skill for Success Every entrepreneur wants his or her business to be successful. But fewer actually consider what it means to be successful. This Prepare 1 post by Blair Evan Ball examines what it means to be successful and how you can develop the skills needed.  Take Advantage of These Overlooked Online Promotional Tactics There are plenty of ways you can promote your business online. But some tactics are more popular than others. So you might have overlooked some of the online promotional tactics listed in this SMB CEO post by Ivan Widjaya.  Learn the Difference Between Content Marketing and Paid Advertising Content marketing and paid advertising both have their place in small business marketing strategies. But they each have their own set of pros and cons too. Learn more in this Wood Street, Inc. post by Jon-Mikel Bailey. You can also see what BizSugar members have to say here.  Ensure People Actually See Your Content With these Promotion Tactics When you create content for your business, you need to make sure people actually see it if you want it to have any impact. The tips in this Marketing Land post by Blaise Lucey can help you make sure your content gets in front of the most potential customers.  Increase Your Authority and Influence as a Marketer Sometimes, marketing messages are only as strong as the person sharing them. So you need to have influence and authority if you want your messages to resonate. Brent Csutoras talks about how you can increase your authority as a marketer in this Search Engine Journal post.

Tips that will help to ensure your business succeed: 1. Have a written plan. Without a plan, it is merely a dream. It doesn't have to be a book, but you need a few pages outlining specific objectives, strategies, financing, a sales and marketing plan, and a determination of the cash you need to get things done. Writing it all down is a crucial first step.

2. Don't marry your plan. Every great military general in history has known that even the bestlaid plan sometimes has to be thrown in the fire when the bullets start flying. Adjust, confront and conquer. 3. Keep your ego in check and listen to others. Advisors are crucial because you need people to bounce ideas off, inspect what you're doing, and push you to greater accomplishments, holding you accountable for what you are committing to do. Always be good to your word and follow through on commitments, even when difficult and challenging. This isn't about you; it's about the business. Don't take things personally and stay out of emotion. Do not let your ego take control. 4. Keep track of everything, and manage by the numbers. Create written systems for everything, because you will reap benefits from them later on. This is how you train your employees and retain consistency. Know your numbers and check them daily and make all decisions based on what they tell you. One of the most important calculations is cash flow pro forma. Determine how much cash you need to do the business, and do not start without the required cash on hand. 5. Delegate to employees and avoid micromanaging them. A manager's job is to delegate and then inspect progress. So don't be a control freak. Keep business organization flat. If you delegate effectively, you will get more and better then you expect. Have an actual written training and orientation plan so your employees know what is required of them. Use an incentive-based rewards system, and maintain a no-problem attitude about issues that crop up. 6. Use the Internet. It is incredibly powerful and very cost efficient, but it takes time and some skill. It is about creating a community, using social media networking such as Facebook, YouTube, Twitter and blogging to build rapport with your market. You need to get on the train and do it, because your competitors are. 7. Reinvent your business. It is net profit, not gross revenue that you want to focus on. Separate yourself from your history and create a new competitive advantage, be it a focused niche or super service, but not by discounting.

Conclusion: While owning and running your own business can be exciting, it can also be nerve-wracking, especially when it comes to handling finances in a lucrative manner. Don’t let your business suffer due to poor money management. Keep the above tips in mind and give your venture a bright future.

References:

https://www.finder.com/small-business-finance-tips https://www.businesses2sell.com.au/australia/qld/brisbane/bottle-shop https://succeedasyourownboss.com/6-tips-managing-small-business-finances/ https://www.wikihow.com/Run-a-Small-Business https://www.businesses2sell.com.au/australia/qld/brisbane/spring-hill https://www.fundera.com/blog/small-business-management https://www.entrepreneur.com/article/223390 https://smallbiztrends.com/2017/07/10-tips-managing-small-business-brand-runningbusiness.html https://www.smh.com.au/business/the-economy/australia-s-economy-closing-in-on-the-worlds-top-10-20171227-p4yy2i.html