Here are some of the things you should be taking into account:
Where you will work
Will you work at home or rent some office space? Or are you able to work anywhere with just a phone and a laptop? Consider the impacts your place of work will have on you, your family and your business. For example working from home can make it hard to separate your job from your life – thus interfering with your work-life balance and family obligations. Also, does your council approve of you setting up a practice or office on your street? Is your place of work convenient for your business/client needs? Choose wisely. There are also tax implications with working from home so discuss this with your accountant.
Impacts on family and friends
Consider the needs of the people around you that matter. Talk to them about your self-employment plans and ask for their thoughts. They may not feel as positive about it as you, so take their feelings into account when you?re making the decision. Also ask yourself, will the business be able to support the family? Will you still have enough time to catch up with friends? You don?t want your work destroying your personal life.
Think carefully about how being self-employed will affect how you live out each day. Will it restrict you from taking long holidays? You may feel like your business needs constant nurturing and that not tending to it for just a week will result in its failure. Also, if you?re becoming a sole trader, will you feel lonely not having a team around you?
Your business idea
Is your idea a money-maker? Research the market you?re entering. Is there enough demand for your products/services? How will your idea separate your business from your competitors? Also consider future developments (e.g. new laws, changing markets) and whether technological change can result in something being invented that will render your idea redundant. Refrain from copying someone else?s business idea or you could be facing a lawsuit. Check out the Commonwealth Bank Daily IQ app for some great insights.
Things can happen beyond your control – health problems/injuries can prevent you from working and natural disasters can strike. Also, sometimes businesses just fail despite your best efforts. You need to protect yourself financially from these risks. Having a backup plan and considering insurance are some ways to protect you from financial ruin.
Plans and goals
Do you have a long-term business plan and goal? It?s good to have something to strive for to keep you motivated and passionate about your business. Also, ask what you intend on doing with the business when you retire. Will you sell it? Pass it on to a family member? Or does it just end there? You might feel sad seeing your life?s efforts finish up just like that, so have an endgame in mind. There are some great business planning resources available here.
Choosing a name for your business requires deep thinking. What does it say about you? Does it create the right impression? Is it marketable and easy to remember? Make sure it is original and trademark it before you launch your business.
How will people find out about you/your business?
Marketing is an essential component of any business. People need to know about you and what you do before they can pay for your products/services. Study your target market and how you can be visible to them. Will you pay for advertising? Set up a website? Or will your services be so good that you can simply rely on word-of-mouth.
Tax is something you?ll have to deal with every day as a business-owner, so don?t forget to factor the cost of it in. Be aware of all the types of business taxes you have to register for to ensure you are fully compliant. Aim to be tax efficient (not paying more tax than you need to) and keep on top of all of the things that are tax deductable.
Be aware of the laws that apply to your business
Your business might seem innocent enough, but it may be breaking the law without you knowing it! You should consult a legal professional to help you understand the all of the laws, licenses, permits and registrations relevant to the business. You don?t want to be at risk of closure for non-compliance with the law. You can use an online search tool such as ABLIS to help you find the relevant licenses and permits required to run your business.
Although you?re not required to, it is important that you pay yourself superannuation for your retirement. You may not be able to continue running your business in old age, and selling the business may be more difficult than you think. If you do manage to sell it, the business might not even be worth as much as you estimate, so you could be left without enough money to live out your retirement on. That?s why it?s important to set aside money for your own retirement.
Are you fully aware of how much it will cost to run your business? Even the cost of things such as printing and lunches with clients can add up. Crunch the numbers down to the smallest details and include everything in your budget estimates.
Does the business require funding?
Do you have enough of your own capital to start up the business? Perhaps you?ll need to apply for a business loan. Consider the implications of that and whether you?ll be able to manage a business debt along with a personal debt. Other ways you could fund your start-up could be through seeking venture capital (fancy appearing on Channel TEN?s Shark Tank?) or having a crowd funding campaign.
Under taxation laws a certain standard of bookkeeping is required. But having a good bookkeeping system can also be helpful for tracking your business?s performance. Have you factored in the time and cost of doing your bookkeeping? Consider whether you are skilled enough to do it yourself or if you should pay an accountant to do it.
Don?t get lost in all the paperwork! Consider how you will store all of your important documents (legal papers and contracts) and receipts in a way that will make them easy to find. It may also be hard for you to remember many different pin numbers, logins and passwords, so perhaps you should have these safely stored somewhere.
Would it be more efficient for your business if you hired someone? Can you afford it? You might not have ever had people work for you before, so you?ll have to learn how to manage staff and their needs to create a good environment. Bad working environments can destroy businesses so make your staff?s well-being a priority. Be aware of the laws surrounding employing people too. Also consider how you could find someone suited to your business and its goals.
And finally…will you enjoy your work?
Will you feel fulfilled by what you do for a living? Will it satisfy your life goals and fill you with a sense of purpose? Will you be proud of what you do? Just because something can earn you good money doesn?t mean it will bring you happiness. Only run a business you are passionate about.