In an increasingly globalised and competitive business landscape, launching a start-up strategically is essential to set yourself up for success.
With about 300 million entrepreneurs trying to start around 150 million businesses worldwide each year, the start-up landscape is more competitive than ever.
But a well-thought out start-up strategy can help get you on the road to success, according to Nadia Sabaini, business advisory expert at Bennett and Philips, who says poor planning is the leading cause of start-ups failing.
“Failure to research and plan is one of the biggest causes of business failure, however having experienced advisors on your side in these early stages vastly improves your odds of success,” Ms Sabaini says.
1.Make a business plan
While it may seem obvious, the most fundamental step before launching a start-up is formulating a business plan.
The plan should include the objectives of the start-up, including research on any competition in the sector, projected profit and loss, cash flow analysis and a detailed marketing plan, according to Ms Sabaini.
“You’ll need a detailed business plan to apply for finance or pitch to investors,” she says.
And most business plans are not as detailed as they should be, Ms Sabaini says, so make sure the information in the plan is as thorough as possible.
For those in Queensland, the Business Queensland website has a template business plan and other useful tools, she says.
2.Choose your advisors
Knowing who to consult is also a crucial element of a good start-up, according to Ms Sabaini. This means engaging experienced lawyers and accountants.
Consulting family and friends is a good way to find advisors, but you should never rely solely on this advice, Ms Sabaini says.
“Do your due diligence and choose people that fit your requirements and have the requisite experience in your industry or the field of expertise you require,” she says.
3.Select a business structure
Establishing your business structure is also important, according to Ms Sabaini. This means knowing whether your business will run as a sole trader, partnership, company or trust.
This is one of the earliest and most important decisions to make, she says, because of the different financial implications of business models.
“It’s key because it can have a huge impact on cash flow because of tax and how your business is set up. It’s also important to realise that if you need to change the structure once the business is operating you will be charged transfer duty,” she says.
4. Sign a shareholders’ agreement
This is a crucial step to minimise the risk of disputes, Ms Sabaini says, and even companies with only two shareholders should have one.
“It forces the partners to discuss and agree on how they will address the most likely eventualities that may arise, such as illness or a desire to resign, and provide an agreed process for buy-outs and transition arrangements,” she says.
“It’s very important from a business continuity perspective to have agreement that says what will happen.
5.Register your intellectual property
Ensuring you protect your IP rights is crucial to ensuring that profitable business material isn’t misused.
Protecting assets such as your business name, logo and any novel business idea from misuse by external companies is imperative, Ms Sabaini says.
“This can be done with formal IP registration via trademarks and patents, or in some cases with confidentiality agreements. It goes without saying that you should also check if anyone already owns or is operating under your proposed business name or logo,” she says.
6.Ensure your licences and policies are in place
Obtaining the necessary licences and permits, as well as implementing privacy and workplace health and safety policies, will prevent costly litigation down the line, according to Ms Sabaini.
“This means checking your legal obligations are by seeing your lawyer to put in place the relevant licenses, permits and policies prior to trading,” she says.
7.Choose how to finance your business
Business finance is a heavily regulated industry, and start-ups need to be sure to have a grasp on these regulations prior to launching, according to Ms Sabaini.
“Traditional bank loans, venture capital, outside investments and sales of shares can be confusing without appropriate legal advice,” she says.
“Keep in mind that the sale of shares in companies requires certain procedures to be followed, so be sure to seek legal advice before making offers of shares including to family and friends. If you are considering crowdfunding, note that crowdfunding equity is now regulated, and certain procedures need to be followed.”
8. Sign employee agreements
Even if employees are under a Modern Award, employee agreements must be in place to ensure that both parties are protected and all remaining conditions are covered, including matters of confidentiality and policy, she says.
“Be careful falling into the old trap of engaging an employee as an independent contractor to avoid employee obligations. The law will class an independent contractor as an employee in many circumstances.”
9.Prepare good terms and conditions
Most businesses don’t realise that some of their terms and conditions may, without legal cross-checking, be invalid, according to Ms Sabaini.
This makes legal guidance on terms absolutely essential to safeguard a business, she says.
“Legal drafting ensures terms and conditions which are legally effective. Although it can be expensive, it is one of the greatest investments you can make for your business. Don’t fall into the trap of buying terms and conditions online. They are often designed for other jurisdictions and are unlikely to meet the requirements of your particular business, so they won’t be any help when you need them most,” she says.
10.Take out insurance cover
Finally, taking out insurances will ensure the business is protected against the unexpected, Ms Sabaini says.
“Insurances such as workers compensation insurance, public liability and contents insurance for your premises are vital and often required by law or by your lease, but you should also consider other insurance policies that may be useful to your business, such as cyber insurance for data breaches,” she says.