Dreaming the dream
Many of us dream of having our own business and being self-employed. But what does it really take to realise that dream and how do we get started?
In New Zealand, small to medium enterprises (SMEs) make up 97 percent of Kiwi businesses and employ almost a third of all Kiwi workers. That’s around 530,000 small businesses throughout the country that employ 20 people or less.
When it comes to starting up and operating a business, though, it’s not as easy as it might sound. Here are some key things you need to know up front.
Whether you’re starting up a new business or buying an existing one, talk to a lawyer first. Your lawyer can help you by offering pragmatic advice. S/he can offer practical solutions and highlight things you may not have considered, act as a sounding board, brainstorm with you, and provide strategic direction.
If you are buying a business, you should always get a lawyer to help you draft the sale and purchase agreement to make sure you are protected and can get out of the agreement if you find out something about the business after signing and want to withdraw your offer.
Understand the business
It’s important to understand the business you’re getting into. You don’t have to understand every detail of the management and operation of it, but you do need to understand the primary principles of the business itself. Take some time to research the target business market, suppliers and competitor landscape.
Setting up your business structure
The risk is not so much in the structure you choose but in meeting the obligations that come with it. Will you own the business in partnership, a limited liability company, be a sole trader or a trading trust? Your business structure will influence your day-to-day operations, from taxes to how much of your personal assets are at risk. Consider what this means for you and get advice from your lawyer and accountant.
Test your business model
Test your business model to see how your business plan will meet your objectives and desired outcomes. Is it likely to provide the income you need?
Flexibility
Have you included enough flexibility for future partnerships, investors and plans for growth?
Funding
How will your business be funded? Have you explored the different options and is it sound financially?
Managing your risk
Different types of businesses will carry different types of risk. As a business owner you must abide by New Zealand’s constantly changing regulatory environment and protect both yourself and your business.
That also means getting insurance to cover you for loss and liability. Some of the things to consider are Directors and Officers Liability, General Liability, Cyber Liability, Business Continuity Insurance and Business Assets Insurance.
The new Health & Safety at Work Act is just one of many Acts that will have implications for your business. Since it came into effect, it has placed more obligations on business owners and the penalties and fines have increased considerably. As a business owner you must know what your obligations are and meet them.
Getting the right support
Who is on your team to help make it all happen? Gather a team of advisers around you. Having the right support is critical.
As the infamous Walt Disney once said, “If you can dream it, you can do it.”
In the next edition of 'Dreaming the dream', we’ll talk about turning the dream into a possibility so stay tuned.