4ABLE OF #ONTENTS
)NTRODUCTION
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4HE GOLDEN RULES OF BUSINESS
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!RE YOU READY FOR THE CHALLENGES OF BUSINESS
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"UY OR START FROM SCRATCH
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%VALUATING THE BUSINESS YOU WANT TO BUY
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0LANNING TO SUCCEED
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,OCATING YOUR BUSINESS
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'ETTING THE SHOW ON THE ROAD
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#HOOSING AN OWNERSHIP STRUCTURE FOR YOUR BUSINESS
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-ONEY MATTERS
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4O MARKET TO MARKET
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+EEPING SCORE
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4AXATION
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3OME DOS AND DON TS
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$)3#,!)-%2
4HE INFORMATION IN THIS GUIDE HAS BEEN PREPARED WITH CARE BUT NO WARRANTY EXPRESSED OR IMPLIED IS GIVEN AS TO THE ACCURACY CORRECTNESS OR COMPLETENESS OF THE INFORMATION OR FOR ANY ADVICE GIVEN OR OMISSIONS FROM THIS GUIDE 4HEREFORE READERS RELYING ON THE CONTENTS OF THIS GUIDE DO SO ENTIRELY AT THEIR OWN RISK AND THEY SHOULD SEEK THEIR OWN INDEPENDENT LEGAL AND FINANCIAL ADVICE 4HE INFORMATION IS PROVIDED TO INTENDED PARTIES SOLELY ON THE BASIS THAT THEY WILL BE RESPONSIBLE FOR MAKING THEIR OWN ASSESSMENT AND UNDERTAKING SUCH INVESTIGATIONS AS THEY SEE FIT TO VERIFY ALL RELEVANT INFORMATION TO ENABLE THEM TO COME TO THEIR OWN CONCLUSIONS
" E 9 O U R / W N " O S S
4HE GOLDEN RULES OF BUSINESS
s $EVELOP A BUSINESS PLAN AND USE IT AS AN ONGOING MANAGEMENT TOOL
s +EEP YOUR BUSINESS SIMPLE FRESH AND EXCITING &OCUS ON WHAT YOU DO WELL
s .EVER RUN OUT OF CASH )N SMALL BUSINESS CASH IS ALWAYS KING
s +EEP ACCURATE RECORDS AND MONITOR KEY FINANCIAL INDICATORS REGULARLY
s ,ISTEN TO YOUR CUSTOMERS 3EEK TO SOLVE YOUR CUSTOMERS PROBLEMS A LITTLE BETTER AND A LITTLE MORE CREATIVELY THAN THEY HAD EXPECTED
h"EING YOUR OWN BOSS GIVES YOU INDEPENDENCE AND GREATER WORK SATISFACTION KNOWING THAT YOU ARE CREATING SOMETHING FOR YOURSELF 9OU EVEN FIND YOURSELF WORKING HARDER WITHOUT REALISING IT v
s 3ELL A QUALITY PRODUCT OR SERVICE )NSIST ON EXCELLENCE
s "USINESS IS PER CENT PERSPIRATION AND PER CENT INSPIRATION
s +EEP AN EYE OUT FOR OPPORTUNITIES AND MAKE THE MOST OF THEM
s 'ROW CAREFULLY AND CAUTIOUSLY 'ROWTH MUST BE PLANNED
s -AKE EVERY ASPECT OF YOUR BUSINESS STAND FOR FAIRNESS HONESTY AND INTEGRITY
s "UILD A SWITCHED ON WINNING TEAM WITH A STRONG CUSTOMER FOCUS
s ,IVE A BALANCED LIFE 2EMEMBER THAT LIFE EXISTS BEYOND YOUR BUSINESS
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3TAN (ARDCASTLE 0ROPRIETOR
%ZYEATIN $EVONPORT
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$O YOU UNDERSTAND THE BUSINESS 3PENDING TIME AND EFFORT ACQUIRING INFORMATION AND
%NERGY DEDICATION AND COMMITMENT ARE ESSENTIAL BUT
KNOWLEDGE BEFORE YOU COMMIT YOURSELF IS A SOUND
NOT SUFFICIENT FOR SUCCESS )MPORTANTLY YOU MUST
INVESTMENT
IDENTIFY A POINT OF DIFFERENCE
#HECKPOINT
&
#HECKPOINT 9ES .O
&
(AVE YOU HAD PREVIOUS
$O YOU HAVE A BETTER PRODUCT
EXPERIENCE RELATED TO THE TYPE OF
OR SERVICE
BUSINESS YOU PROPOSE
7ILL YOUR PRICE BE COMPETITIVE
(AVE YOU SOUGHT PROFESSIONAL ADVICE
FROM A BANKER ACCOUNTANT SOLICITOR
7ILL YOUR LOCATION GIVE YOU
AND INSURANCE BROKER
AN ADVANTAGE
(AVE YOU CONTACTED THE APPROPRIATE
)S YOUR PROPOSED METHOD OF
INDUSTRY ASSOCIATION
DISTRIBUTION SUPERIOR
(AVE YOU QUESTIONED OTHERS ALREADY
7ILL YOU BE RELYING FOR SUCCESS
IN THE TYPE OF BUSINESS YOU INTEND
MAINLY ON CAPACITY FOR HARD WORK
TO START
AND ENTHUSIASM
(AVE YOU READ INDUSTRY PUBLICATIONS
$O YOU HAVE SUFFICIENT MONEY TO START
DEALING WITH THE TYPE OF BUSINESS
YOU PROPOSE
(AVE YOU SOUGHT THE OPINIONS OF
POTENTIAL CUSTOMERS AND SUPPLIERS
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h6ERIFY ALL INFORMATION PRESENTED TO YOU ABOUT THE PURCHASE 9OU CAN GET SO MUCH INFORMATION HEAPED ON YOU THAT JUST ISN T RIGHT v *OHN $AVEY /WNER -ANAGER $IAMOND )SLAND 2ESORT "ICHENO
7HATEVER OPTION YOU CHOOSE THERE ARE SEVERAL KEY
%STABLISHING A NEW BUSINESS
POINTS TO CONSIDER 4HERE ARE TIMES WHEN CONDITIONS ARE RIGHT TO START "UYING AN EXISTING BUSINESS #HECKPOINT
UP A NEW BUSINESS RATHER THAN BUY ONE
&
#HECKPOINT 9ES .O
&
!RE YOU SURE YOU KNOW THE REAL
!RE ANY OF THE FOLLOWING RELEVANT IN YOUR SITUATION
REASONS WHY THE OWNER WISHES TO SELL
(AS THE MARKET EXPANDED TO THE EXTENT
(AVE YOU THOROUGHLY CHECKED THE
THAT EXISTING BUSINESSES CANNOT COPE
AMOUNT AND VALUE OF STOCK THE
WITH THE DEMAND
ACCURACY OF THE BOOKS OF THE
BUSINESS AND ANY LIABILITIES OR
!RE THE NEEDS OF CUSTOMERS NOT BEING
LIMITATIONS IN THE LEASE
MET DUE TO POOR INEFFICIENT SERVICE
OR PRODUCTS
(AS A NEW PRODUCT OR SERVICE BEEN
DEVELOPED BACKED BY DOWN TO EARTH
(AVE YOU TALKED WITH CUSTOMERS
SUPPLIERS AND STAFF
(AVE YOU CONSULTED A SOLICITOR
MARKET RESEARCH THAT INDICATES IT
BANKER AND ACCOUNTANT
IS A LIKELY WINNER
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0LANNING TO SUCCEED (AVING A WELL PREPARED BUSINESS PLAN IS ESSENTIAL THROUGHOUT THE LIFE OF YOUR BUSINESS NOT JUST BEFORE YOU START "EFORE YOU START YOUR BUSINESS THE PLAN WILL ENSURE THAT THE BUSINESS IS VIABLE AND THERE IS A WELL LAID OUT BLUEPRINT FOR ACTION /NCE THE BUSINESS IS UNDER WAY
THE PLAN HELPS YOU MONITOR HOW YOU RE GOING 7HAT SHOULD GO INTO YOUR BUSINESS PLAN
#OVER PAGE AND INTRODUCTION INCLUDING PERIOD
COVERED BY THE PLAN WHO PREPARED THE PLAN
AND WHEN AND THE OBJECTIVE OF THE PLAN
%XECUTIVE SUMMARY n A CONCISE ONE PAGE
SUMMARY OF THE PLAN WHICH APPEARS UP FRONT
IN THE DOCUMENT AND IS BEST WRITTEN LAST
"USINESS DESCRIPTION AND BACKGROUND n
NATURE OF PRODUCTS OR SERVICES COMPETITIVE
/PERATIONS INCLUDING PRODUCTION ORGANISATIONAL
ARRANGEMENTS AND RESPONSIBILITIES
&INANCIALS n PROJECTED PROFITS CASHFLOW
CAPITAL REQUIREMENTS ASSUMPTIONS AND
BREAK EVEN POINT
3TAFFING REQUIREMENTS
POSITION THE MARKET YOUR NICHE
"USINESS ENVIRONMENT n TRENDS AND OUTLOOK IN
YOUR INDUSTRY PROFESSION ECONOMY AND REGION
0ROFESSIONAL ADVISERS
3TRENGTHS WEAKNESSES OPPORTUNITIES AND
)MPLEMENTATION TIMETABLE
THREATS 37/4 ANALYSIS OF YOUR BUSINESS
!PPENDICES BROCHURES FLYERS LETTERS OF
REFERENCE CONTRACTS EXPRESSIONS OF INTEREST ETC
-ARKET ANALYSIS n MARKET OVERVIEW WHERE
YOU FIT AND WHO YOUR POTENTIAL CUSTOMERS
AND COMPETITORS ARE
-ARKETING PLAN INCLUDING SELLING STRATEGIES
PROMOTIONS PRICING DISTRIBUTION
ARRANGEMENTS GOALS
h!PPRAISE ANY PROPERTY AND EQUIPMENT TO BE INCLUDED IN THE PURCHASE VERY THOROUGHLY INCLUDING INDEPENDENT ASSESSMENTS BY SPECIALISTS WHERE NECESSARY )T S ONLY THEN THAT YOU KNOW THEIR CONDITION STATE OF REPAIR AND WHAT YOU MAY BE UP FOR IN THE FUTURE v *OHN $AVEY /WNER -ANAGER
$IAMOND )SLAND 2ESORT "ICHENO
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'ETTING THE SHOW ON THE ROAD 3O YOU HAVE MADE THE DECISION TO START YOUR OWN BUSINESS #ONGRATULATIONS 4HERE ARE SEVERAL TASKS THAT YOU SHOULD NOW PROCEED TO WORK THROUGH SYSTEMATICALLY TO GET THE SHOW ON THE ROAD #HECKPOINT
&
5SE THE FOLLOWING CHECKLIST TO HELP IDENTIFY THE TASKS THAT WILL REQUIRE ATTENTION IN YOUR CIRCUMSTANCES !DD OTHERS THAT ARE RELEVANT TO YOUR SITUATION 4ASK
9ES
.O
!CTIONS ) NEED TO TAKE
!DVERTISING "ANKING FACILITIES "USINESS NAME REGISTRATION "USINESS PREMISES "USINESS STRUCTURE #APITAL n DETERMINATION OF TOTAL REQUIREMENT AND RESULTANT NEED TO BORROW #OMPUTER SYSTEM n HARDWARE AND SOFTWARE #REDIT POLICY n TERMS AND CONDITIONS )NSURANCES ,EASE OF PREMISES ,ICENCES ,OAN n DETERMINATION OF LOAN PACKAGE AND PREPARATION OF APPLICATION 0LANT AND EQUIPMENT 0OWER UTILITY n CONNECTION OF POWER AND SECURITY DEPOSIT 0RICING STRUCTURE 0ROFESSIONAL ADVISERS 2ECORDS TO BE SET UP 3IGNAGE FOR PREMISES VEHICLE ETC 3TAFF n RECRUITMENT RECORDS JOB DESCRIPTION STATEMENTS ETC 3TATIONERY 3UPPLIER RELATIONSHIPS 4AXATION n REGISTRATION REQUIREMENTS 4ELEPHONE FACSIMILE AND EMAIL CONNECTION 4RADEMARK REGISTRATION /THER TO BE SPECIFIED
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-ONEY MATTERS )F IT IS LOVE THAT MAKES THE WORLD GO ROUND IT IS MONEY
4YPES OF FINANCE
THAT GREASES THE WHEELS 4HE KEY TO FINANCING A BUSINESS IS TO MATCH 4HE MONEY YOU PUT IN TO START YOUR BUSINESS IS KNOWN
SHORT TERM FINANCE WITH SHORT TERM NEEDS
AS CAPITAL 4HERE ARE TWO KINDS n FIXED CAPITAL AND
MEDIUM TERM FINANCE WITH MEDIUM TERM REQUIREMENTS
WORKING CAPITAL 9OUR BUSINESS NEEDS FIXED CAPITAL
AND LONG TERM STABLE SOURCES OF CAPITAL TO LONGER TERM
TO FINANCE LONG TERM ASSETS SUCH AS LAND BUILDINGS
NEEDS )N MANY CASES THIS MATCHING PRINCIPLE WILL
PLANT EQUIPMENT VEHICLES FIXTURES AND FITTINGS
RESULT IN A PACKAGE OF SEVERAL DIFFERENT TYPES OF
!DDITIONAL FUNDS WILL BE REQUIRED IN THE FORM OF
LOANS TAILORED TO THE NEEDS OF YOUR BUSINESS
WORKING CAPITAL TO FINANCE RAW MATERIALS
WORK IN PROGRESS FINISHED GOODS AND DEBTORS
3HORT TERM FINANCE IS AVAILABLE IN THE FORM OF OVERDRAFTS COMMERCIAL BILLS OF EXCHANGE LEASING
#HECKPOINT
&
FINANCE HIRE PURCHASE FINANCE AND ASSET PURCHASE FINANCE -EDIUM TERM FINANCE CAN TAKE THE FORM
,IST THE LIKELY FIXED CAPITAL ITEMS FOR YOUR BUSINESS
OF TERM LOANS AND PERSONAL INSTALMENT LOANS WHILE MORTGAGE LOANS ARE USED TO FINANCE LONG TERM ASSETS
,IST THE WORKING CAPITAL ITEMS FOR YOUR BUSINESS
.EW BUSINESSES ARE OFTEN SHORT OF CAPITAL 4HE NEED FOR FIXED CAPITAL CAN BE REDUCED BY RENTING PREMISES HIRING PLANT AND EQUIPMENT AND SUB CONTRACTING CERTAIN TYPES OF WORK 7ORKING CAPITAL REQUIREMENTS CAN BE KEPT TO A MINIMUM BY ELIMINATING WASTE BUYING MATERIALS COMPETITIVELY CONTROLLING THE LEVEL OF STOCKS AND WORK IN PROGRESS AND FOLLOWING UP DEBTORS PROMPTLY $EBT VERSUS EQUITY -OST SMALL BUSINESS OWNERS DO NOT HAVE SUFFICIENT FUNDS FROM THEIR OWN RESOURCES TO SATISFY CAPITAL NEEDS 4HEY THEREFORE NEED TO BORROW TO START UP AND OPERATE THEIR BUSINESSES &OR THOSE THAT ARE STARTING FROM SCRATCH LENDERS USUALLY REQUIRE PER CENT TO PER CENT PROPRIETOR S EQUITY IN THE VENTURE AND WOULD EXPECT THE BALANCE OF FUNDS TO BE FULLY SECURED SAY BY A HOME MORTGAGE )T IS IMPORTANT TO REMEMBER THAT YOU WILL ENCOURAGE SUPPORT FROM EXTERNAL FINANCIERS IF YOU SHOW THAT YOU ARE MAKING AN ADEQUATE FINANCIAL CONTRIBUTION YOURSELF 4HAT REPRESENTS COMMITMENT TO A POTENTIAL FINANCIAL BACKER
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4O MARKET TO MARKET 7HAT IS MARKETING
3TEP 2EVIEW YOUR STRENGTHS AND WEAKNESSES AND ASSESS OPPORTUNITIES AND THREATS IN
-ARKETING A PRODUCT OR SERVICE MEANS FAR MORE THAN
THE MARKETPLACE
SIMPLY MAKING A SALE -ARKETING IS THE PROCESS OF PROVIDING GOODS AND SERVICES TO SATISFY CUSTOMERS
,IST EVERY STRENGTH WEAKNESS OPPORTUNITY AND THREAT
REQUIREMENTS AT A PROFIT
AS A MEANS OF HIGHLIGHTING POTENTIAL PROBLEMS AND IDENTIFYING FUTURE MARKETING STRATEGIES
(OW DO ) APPLY MARKETING TO MY BUSINESS 3TEP -AKE SURE YOUR BUSINESS HAS SOMETHING 3TEP $ECIDE WHETHER THERE IS A MARKET
SPECIAL TO OFFER
WORTH PURSUING 'IVEN THAT YOU ARE IN BUSINESS FOR THE LONG HAUL
9ES .O
)S THE MARKET MATURE
YOU MUST DEVELOP SPECIAL ADVANTAGES OVER THE COMPETITION 3ELECT KEY STRENGTHS AS YOUR COMPETITIVE ADVANTAGE AND BUILD YOUR BUSINESS AROUND THESE
)S IT LOW GROWTH
3TEP 4AKE TIME TO UNDERSTAND YOUR MARKET
)S THERE STRONG COMPETITION )F YOUR BUSINESS IS SERIOUS ABOUT WINNING AND KEEPING
)S IT HIGHLY SEASONAL
ITS CUSTOMERS IT MUST HAVE A GOOD UNDERSTANDING OF THE MARKETPLACE AND THE INDIVIDUAL CUSTOMERS IT AIMS
)S IT EASY TO ENTER
TO TARGET
)F YOU ANSWERED @YES TO THE MAJORITY OF THESE QUESTIONS
!SK YOURSELF QUESTIONS LIKE THESE
YOU ARE FACING A DIFFICULT MARKET UNLESS YOU POSSESS A SPECIAL ADVANTAGE OVER YOUR COMPETITORS
7HO ARE MY CUSTOMERS
)T S A GOOD IDEA TO TALK TO PEOPLE SUCH AS POTENTIAL
(OW MANY ARE THERE
7HERE ARE THEY LOCATED
7HAT ARE THEIR BUYING HABITS
7HAT IS THEIR SPENDING POWER
7HAT FEATURES AND BENEFITS DO THEY EXPECT FROM A
PRODUCT SERVICE
(OW DO COMPETITORS MARKET TO THEM
7HAT APPEAR TO BE THE MAIN SUCCESS FACTORS
7HAT @GAPS APPEAR TO BE POORLY SERVICED
CUSTOMERS COMPETITORS SUPPLIERS BANKERS AND BUSINESS CONSULTANTS WHO HAVE DIRECT EXPERTISE IN THE PARTICULAR MARKET THAT YOU WISH TO ENTER /THER INFORMATION ON MARKETS CAN BE SOURCED FROM THE INTERNET !USTRALIAN "UREAU OF 3TATISTICS LIBRARIES INDUSTRY ASSOCIATIONS AND SPECIALIST JOURNALS
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4AXATION -AINTAINING FINANCIAL RECORDS
4AX DEDUCTIONS
)F YOU WERE EMPLOYED BEFORE YOU STARTED YOUR OWN
7HILE YOU PAY TAX ON YOUR INCOME YOU CAN CLAIM
BUSINESS YOU WILL FIND THAT YOUR TAX AFFAIRS NOW
LEGITIMATE BUSINESS EXPENSES 4HESE ARE COSTS
BECOME A LOT MORE COMPLICATED
NECESSARILY INCURRED IN RUNNING YOUR BUSINESS AND INCLUDE SUCH ITEMS AS ADVERTISING BANK CHARGES
)T IS IMPORTANT THAT YOU ESTABLISH A TIMELY AND COST
COMPUTER SUPPLIES INSURANCE PREMIUMS POSTAGE
EFFECTIVE ACCOUNTING SYSTEM THAT IS APPROPRIATE FOR THE PRINTING AND STATIONERY STAFF TRAINING EXPENSES NATURE AND SCALE OF YOUR BUSINESS )T S A GOOD IDEA
SUB CONTRACTING COSTS TECHNICAL JOURNALS TELEPHONE
TO SEEK PROFESSIONAL ADVICE FROM THE OUTSET ON WHAT
AND OTHER COMMUNICATION COSTS AND TRAVEL
ARRANGEMENT IS BEST IN YOUR CIRCUMSTANCES !S WELL AS DEDUCTING THESE BUSINESS EXPENSES YOU CAN CLAIM DEDUCTIONS FOR CERTAIN ONE OFF COSTS AND FOR
7HAT TAXES WILL AFFECT YOU
CAPITAL EXPENDITURES WHICH YOU DEPRECIATE OVER TIME ! RANGE OF TAXES MAY WELL HAVE APPLICATION TO YOUR
$EPRECIATION CAN BE CLAIMED FOR ASSETS LIKE MOTOR
BUSINESS #HECK WITH YOUR ACCOUNTANT OR TAX ADVISER
VEHICLES AND PLANT AND EQUIPMENT OVER THEIR
TO DETERMINE WHICH ONES WILL AFFECT YOU
ESTIMATED USEFUL LIFE
#APITAL GAINS TAX
9ES .O
'OODS AND SERVICES TAX '34 9OUR BUSINESS MUST CHARGE '34 ON THE GOODS AND SERVICES IT SELLS ! '34 CREDIT CAN BE CLAIMED ON
$EBITS TAX
GOODS AND SERVICES ACQUIRED
&INANCIAL INSTITUTIONS DUTY &)$
2EGISTRATION FOR '34 IS COMPULSORY IF YOUR BUSINESS HAS AN ANNUAL OR PROJECTED TURNOVER OF
&RINGE BENEFITS TAX &"4
'OODS AND SERVICES TAX '34
OR MORE
9OU CAN ACCOUNT FOR '34 ON EITHER A CASH WHEN PAYMENT IS RECEIVED FROM CUSTOMERS OR AN ACCRUALS
)NCOME TAX
BASIS WHEN CUSTOMERS ARE INVOICED 9OU ARE REQUIRED TO ACCOUNT FOR '34 COLLECTIONS BY COMPLETING AND
,AND TAX
LODGING A "USINESS !CTIVITY 3TATEMENT "!3 TO THE !USTRALIAN 4AXATION /FFICE FOR EACH TAX PERIOD
0AY AS YOU GO 0!9' TAX
0AYROLL TAX
3TAMP DUTY
3UPERANNUATION GUARANTEE LEVY
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