How to startup a startup: A step by step guide
You may have some grand perceptions of startups and startup culture, with ball pit meeting rooms, faux grass floors and the obligatory table tennis or foosball table. However, starting up a startup is much less glamorous and involves a lot of leg work, particularly at the beginning of your startup journey. Get off on the right foot with this step by step guide and you’ll be having your meeting in a Pac-Man themed office in no time – seriously, this is a thing, look it up.
Step 1. Ask yourself some tough questions
So, you have an idea that you’ve been kicking around in your head for a while. You may have even done some research to see whether anyone else has thought of the same thing. Your first step is to determine whether your startup will be a hobby, or a business. As a business, the impetus for your idea must be commercial, i.e. aim to make a profit. Secondly, ask yourself, does your business idea solve a genuine need? Often new startups struggle because they simply fail to solve a genuine need. If you can’t confidently determine these two key launch points, you may need to do some more research.
Step 2. Decide on a business structure
Woohoo! You’ve done some solid research and decided to take the plunge – it’s an exciting time. However, before you can register your business and business name, and get those swanky business cards printed off, you’ll need to decide on the structure of your startup, i.e. will you operate as a sole trader, in a partnership, a company, or a trust? This early decision is a crucial one as it will impact your tax and legal obligations. The Australian Government has created a handy Business Registration Service to help you decide the right type of structure, as well as any other basic business and tax regulations that may apply.
Step 3. Register your business
Now that you have an understanding of the basic structure of your startup, it’s time to register for an Australian Business Number (ABN). An ABN will allow you to:
- Claim any applicable GST credits
- Claim any applicable energy grant credits
- Confirm your business identity
- Avoid PAYG tax on payments you receive
- Obtain an Australian website domain name.
It doesn’t cost anything to register your startup, however, if you want to register your business name, which you can do at the same time as registering for an ABN, a small fee does apply.
Step 4. Choose a location
You might have already mentally decided on an open-plan share-space office, with its own micro-brewery and “thought-lab”, however, think about how you’re going to pay for the office rent. One problem almost all new startups have is cash-flow. And making sure your new startup stays cash-flow positive will be crucial to your survival in the early days. So, if you’re going to be a one-person band at the beginning, you might want to consider operating from your home office. There can be some massive positives in running a startup from home, such as nobody stealing your sandwiches from the work fridge.
Step 5. Arrange small business insurance
Now that you’ve settled on a home for your startup, it’s time to think about one of the less glamorous elements of starting up a startup: small business insurance. Small business insurance can provide cover for unexpected events that impact your business’ contents, stock and other assets. It can also provide legal liability cover in case a third party sues your business and you’re found negligent. Some of the main types of small business insurance are:
- Public Liability Insurance, which can cover the cost of compensation if your startup business is responsible for personal injury to third parties or damage to their property
- Property damage, which can provide cover for physical loss of or damage to your business property from insured events, such as fire or storm damage
- Business interruption insurance, which can provide cover for a reduction in your business revenue arising from interruption of your business by an insured event
- Theft, which can provide cover for the loss of your contents and stock from theft.
These are of course just some of the main steps to consider when starting a business. For a more comprehensive guide to starting a business, the Australian Government has created a ‘Starting your business checklist’, which can help guide you through the process. For more information on the right types of small business insurance for your startup’s needs, we’re here to help. Give us a call on 13 22 44 (8.30am – 6pm AEST/AEDT, Mon-Fri) or get a small business insurance quote online now.
Disclaimer: Insurance issued by AAI Limited ABN 48 005 297 807 trading as AAMI Business Insurance. Consider the Product Disclosure Statement before making a decision about this insurance. This advice has been prepared without taking into account your particular objectives, financial situations or needs, so you should consider whether it is appropriate for you before acting on it.