Steps to Set Up for Success in Business – Step 2
When your business is up and running, it means you have successfully launched your venture, have customers, and are generating revenue. However, the work continues. To protect your investment and set your business up for long-term success, you need to take several strategic steps:
Set Up a Business Bank Account
When starting a business, consider setting up a business bank account to help keep track of your business finances. Find out when you need a business bank account and the benefits of having one.
Understanding your business banking obligations is essential. Different business structures have their own record keeping requirements.
- If you’re operating as a partnership, company or trust, you must have a separate bank account for tax purposes.
- If you’re operating as a sole trader, you do not have to open a separate business bank account, but it’s a great idea to do so and will save you time when working out what transactions are personal and business.
Further information about organising your finances can be found on business.gov.au.
Manage Cash Flow
Ensure you have a solid financial management plan in place. Keep track of your income, expenses, and cash flow. Budget wisely. A suggestion is to set up and maintain a reserve fund for unexpected expenses or lean periods.
Effective cash flow management is crucial for any business’s survival and growth. Consider engaging a bookkeeper to help track and manage your cash flow, ensuring you have enough liquidity to meet your financial obligations.
Managing your business cash flow and knowing how much money goes in and out of your business allows you to make better business decisions. For help with understanding how to manage your business cash flow, look at the resources below:
Develop a Pricing Strategy
Pricing is a crucial element of business. Find out what you need to consider when you price your products and services, including the types of pricing strategies, legislation obligations, what your price should include, and where to conduct research.
Before calculating your price, it’s helpful to calculate how much it costs to produce or deliver your product or service. When coming to a figure, always consider the cost of producing your product or service as well as your overheads. Don’t forget to factor in goods and services tax (GST) and other relevant taxes in your costing.
Pricing is the process you use to set the price of your product or service. Pricing your products and services can take time to determine. If you set your prices too high, your customers may find your products too expensive. However, if you set your prices too low, you will affect your profits. There are a number of pricing strategies you can employ when setting your price, including strategies based on costs, competition, perceived value, and product. Source: Business.gov.au – Develop a pricing strategy
When choosing your pricing strategy, keep your overall marketing strategy in mind to ensure your strategies complement one another. Also, understand that when you price your products or services or even advertise a price, there are regulations with which you must comply. See: ACCC – Setting prices: what’s allowed
Engage a Bookkeeper
All businesses in Australia need some form of bookkeeping to help comply with Australian Taxation Office (ATO) compliance for income tax as well as other financial reporting obligations, such as business activity statements, payroll, payroll tax and superannuation. Some business owners do the bookkeeping themselves; others see the advantages in engaging a professional bookkeeper.
Engaging a bookkeeper will help maintain your financial success and assist with cash flow management, compliance, and risk awareness. By delegating these tasks to a professional, you may reduce your chance of error and free up time for other activities such as operations, sales and marketing.
Engaging a bookkeeper when setting up a business is essential for several reasons:
- Record Keeping and Compliance: As a business, for tax purposes, you must keep detailed records for all transactions related to your tax, GST and superannuation affairs as you start, run, sell, change or close your business. Keeping accurate and complete records for all your business transactions will also help you manage your business and its cash flow.
- Financial Organisation: A bookkeeper will set up and maintain organised financial records, including income, expenses, assets, and liabilities. This organisation is crucial for understanding your business’s financial health and making informed decisions. A bookkeeper can implement internal controls to minimise the risk of errors and detect potential fraud in your financial transactions.
- Time and Resource Management: As a business owner, your time is valuable, and handling financial tasks can be time-consuming. By delegating bookkeeping responsibilities to a professional, you can focus on core business activities, such as marketing, sales, and strategic planning.
- Accurate Financial Reporting: Bookkeepers ensure that your financial reports, such as balance sheets, income statements, and cash flow statements, are accurate and reflective of your business’s performance. These reports are vital for understanding your profitability and financial position.
- Informed Decision Making: With accurate and timely financial information, you can make better-informed decisions about your business’s future. This includes identifying areas of cost savings, investment opportunities, and expansion prospects.
- Professional Expertise: Bookkeepers are trained professionals with knowledge of accounting principles and software. They can handle your financial tasks accurately and efficiently, ensuring everything is in order.
Protect Your Business
Protecting your business is essential to ensure its long-term success and sustainability. Here are some key strategies to protect your business once you have set it up:
Obtain appropriate business insurance coverage to protect your assets, employees, and liabilities. Common types of business insurance include general liability insurance, property insurance, professional liability insurance, and workers’ compensation insurance.
Having the right insurance can help protect your business, customers and income. Understand the different types of insurance and which ones you need for your business.
Get Advice on Types of Insurance
Look at each type of insurance and consider if your business needs it. Talk to a licenced insurance broker, business advisor or insurer for advice. You can check an insurance broker’s license on the Australian Securities & Investments Commission’s professional register.
Ask insurers if they offer insurance packages tailored for business types. These can be cheaper than taking out separate insurance policies.
Source: Business.gov.au – Business Insurance
Work Health and Safety
As a business owner, you are responsible for managing health and safety for you and your employees in the workplace. Work health and safety (WHS) involves managing risks to the health and safety of everyone in your workplace, including your workers, customers, visitors and suppliers.
It is sometimes known as occupational health and safety (OH&S).
Managing WHS may initially cost money and time to implement safe practices and install safety equipment. However, not taking action can result in prosecution, fines and loss of your skilled staff.
Workers’ compensation laws also require you to have a workers’ compensation insurance policy for your employees.
Workers Compensation is a form of insurance payment to employees if they are injured at work or become sick due to their work. Workers Compensation includes payments to employees and subcontractors deemed to be employees to cover their wages while they are not fit for work, their medical expenses and rehabilitation.
Workers Compensation Insurance (also called WorkCover) is an insurance paid by employers. Workers Compensation Insurance is required for all businesses with employees, including directors (some states are optional for directors). An employer or PCBU (Person Conducting a Business Undertaking) has detailed obligations to their workers – this information is available from the state or territory website and goes beyond the realm of the bookkeeper’s responsibility. This document is concerned with the areas of Workers Compensation that a bookkeeper is most likely to be involved with.
Workers Compensation is governed by each state and territory, who have their own regulators that administer and give advice on Workers Compensation.
Preparing Your Business for an Emergency
Prepare and plan for business continuity so that when disaster strikes, a business can easily access all the financial and business records, pay bills, invoice customers, and have sufficient resources and cash flow to continue operating.
Prepare and plan for business continuity by identifying potential risks and vulnerabilities and establishing a comprehensive continuity plan. This plan should include clear protocols for emergencies, data backups, remote work arrangements, and crisis communication. Regularly review and update the plan, conduct drills to test its effectiveness, and ensure all employees are familiar with their roles during disruptions.
By proactively addressing potential challenges and having a well-organised strategy in place, businesses can mitigate the impact of disruptions and maintain essential operations to ensure continued success.
Natural disasters and emergencies can strike without warning. It’s important to be ready for all sorts of emergencies, whether:
- Natural – such as floods, drought, fire, landslides and storms.
- Human-caused – such as crime, terrorism or riots.
- Technological – such as explosions, building or bridge collapse.
During an emergency, the main aim is to ensure your business continues operating. By carefully researching and planning before an emergency, you can help ensure your business is ready.
An emergency management plan will help guide your business before, during and after an emergency. It should document some of the following steps. This page covers how to put these into practice and prepare your workplace and staff for an emergency.
Develop an emergency management plan with the template available to download from Business.gov.au
Intellectual property (IP) is the property of your mind or exclusive knowledge. If you develop a new product, service, process or idea, it belongs to you and is considered your IP.
It’s important to understand how to protect your IP. Some forms of IP rights, such as a trade mark, design, patent, or plant breeder’s rights, are registered rights and need formal application and examination before you can claim a right to ownership. Other forms of IP protection, such as copyright, do not need to be registered.
Source: Business.gov.au – Intellectual property
Protect Your Business from Cyber Threats
Taking your business online can have benefits but can also increase the risk of scams and security threats. Learn how to identify how cyber secure your business is and how to strengthen your business against cyber threats.
Protecting your business from cyber threats is essential in the digital age. Implement robust cybersecurity measures, including firewalls, antivirus software, and regular software updates.
Train employees on cybersecurity best practices to recognise phishing attempts and potential threats. Limit access to sensitive data and enforce multi-factor authentication. Regularly back up critical data and store backups securely. Develop an incident response plan to handle cyber incidents effectively.
By prioritising cybersecurity, your company can lower the risk of cyberattacks, safeguard confidential data, and preserve customer confidence.