How to startup a startup

There are many great reasons for starting a business. You might want to be your own boss, turn your side hustle into a career, or make a difference in the community. But how do you get things off the ground? 

Step 1. Ask yourself, is this a good idea?

A successful business, regardless of scale, must always cater to demand. Your business idea might be great, but does it address a need? Once you identify this need, see how you can successfully cater to meeting this need long-term.

Then, check whether there are competitors and determine what sets you apart. For example, if you want to open a café, check whether there are other cafés in the area. If so, how is yours going to be different? Maybe you offer meat-free food or culturally specific dishes?

Finally, ask yourself, “Is this something I’m truly passionate about?” Running a business will have challenges – you’ll need that passion to overcome them.

Step 2. Figure out your business structure

Once you’ve determined what you’ll do or offer, decide how you’ll operate. Will it be one of the following?

Sole proprietorship

A business owned and operated by one individual.

A bonus tip for sole traders

When you're the boss of a startup, a lot of responsibility can rest on your shoulders, particularly at the beginning. On one day, you may be the accountant, marketing manager and head of business development. While we can’t help you craft a marketing plan or nail a pitch to a new client, we may be able to assist you with your startup's insurance needs.

Explore AAMI Business Insurance

Partnership

A business structure in which two or more individuals manage and operate a business in accordance with the terms and objectives set out in a Partnership Deed.

Company

A legally separate entity owned by shareholders, managed by directors, and providing limited liability to its owners.

Trust

A legal arrangement in which a trustee holds assets on behalf of one or more beneficiaries. The trustee manages the assets according to the terms specified in the trust deed.

Why is it important to define your business structure?

This decision is crucial as it will impact your tax and legal obligations. The Australian Government has created a handy Business Registration Service. This may help you decide the right way to go about operating.

Step 3. Register your business

It helps to find out if you need to register for an Australian Business Number (ABN). The Australian Tax Office (ATO) website has plenty of information on ABN requirements.

With an ABN, you can:

• confirm your business identity
• claim any applicable GST credits and energy grants
• avoid pay as you go (PAYG) tax on payments you get, and
• get an Australian domain name.

Before you register for an ABN, make sure you have all the information needed for an application. This information includes, but is not limited to:

• a tax file number (TFN) and TFNs of any associates – eg, partners, directors and trustees
• your entity’s legal name
• the business’ contact details, and
• what the business will do – that is, its main source of income.

The Australian Business Register has a comprehensive list of necessary application information on its website. Registering your startup for an ABN doesn’t cost anything. However, registering your business name requires a small fee.

Step 4. Choose a location

Many startups begin operations in an affordable environment to help ease the cash outflow. This can include setting up from home or renting a hot desk in a coworking space. Your dreams of a sparkling, vast office space with luxurious amenities may have to go on hold for a while, but that’s not to say they won’t come true.

Step 5. Prepare yourself for what lies ahead

This adventure won’t be simple. But as the adage goes – a ship in the harbour is safe, but that’s not what ships are for. Before heading out into the challenging waters of business, take a look at the Australian Government’s "Starting a business checklist", which may help guide you through the process.

Read more:

• What insurance should I get for my small business?
• What insurance do you need when you sell products?
• How much does public liability insurance cost?

Insurance is issued by AAI Limited ABN 48 005 297 807 trading as AAMI Business Insurance. Any advice has been prepared without taking into account your particular objectives, financial situation or needs, so you should consider whether it is appropriate for you before acting on it. Please read the relevant Product Disclosure Statement before considering this insurance. The Target Market Determination is also available.