Key elements to consider if you want to start your own business

Aussies looking to be their own bosses are being warned to avoid these costly mistakes if they want to succeed. See what experts say.

Struggling Aussies are pinning their hopes on starting a business to ward off rising cost-of-living pressures.

Seven in 10 Australians aspire to be their own boss, and earning more money is the top driver to entrepreneurship, research from Shopify reveals.

But experts warn running a business will likely increase financial stress rather than reduce it. They caution that higher earnings are often best achieved by those who remain employed by others, at least over the short term.

“If you’re thinking, ‘I will start a business to avoid the high cost of living’, well that’s just wrong,’’ says Anne Nalder, founder and chief executive officer of the Small Business Association of Australia.

“You will actually get double the whammy.

“Not only will you have your mortgage (payments) and high costs of living, you will have the high costs of business too – (business) insurance has gone up and electricity has gone through the roof.

“If you’re employing people, you’ve also got to worry about having enough money coming in to meet your obligations to staff, which includes (paying) superannuation.

“I would never, ever say don’t start a business … but money shouldn’t be your motivation. If it is, you will fail.’’

Start with a side hustle

While more than a quarter of Aussie business owners go full time into their company from the outset, the vast majority start with a side hustle, the research shows. One-in-five later progress to a full-time venture.

Separate research from design and marketing company VistaPrint shows almost three-in-five Australians have turned their hobby into a business or would consider doing so.

Nalder says a side hustle is one of the best ways to start a business, allowing entrepreneurs to test the waters of their new venture without the huge business compliance costs associated with an all-in approach.

Having other employment during the early stages of a new business also maintains an income stream if the path to success is slow.

“It typically takes around two or three years for a business to make decent returns,’’ Nalder says.

“(By operating as a side hustle), you can still be earning your wage (from your full-time job) and you can try out whatever it is you are going to sell. Then, if it’s not a goer or you don’t feel inclined (to continue on a larger scale), you haven’t lost a lot of money.’’

Kim Tran-Flores runs calligraphy personalisation business Kimlligraphy.

Hobby to hustle

Kim Tran-Flores took “measurable risks’’ when she turned her passion for calligraphy, lettering and engraving into calligraphy personalisation business, Kimlligraphy, in 2017.

The business now employs 30 people across Australia, has seen revenue growth of 160 per cent in the past two years and has allowed Tran-Flores to work with leading brands, such as Tommy Hilfiger, Meta, Tiffany and Co and Rolex.

But success didn’t come overnight, with Tran-Flores depending on additional income streams to make ends meet in the early years.

“In the first five years, Kimlligraphy was more like a paid hobby while I worked in a corporate role,’’ says Tran-Flores, who eventually quit her job in project management to work as a calligraphy artist in a florist studio, before branching out on her own.

“Success isn’t a straight line, it won’t be easy but, if you love what you’re doing, you will be more energised and it will be worth it,’’ she says.

Small Biz Matters founder Alexi Boyd.

Shopify APAC managing director Shaun Broughton.

Tips for success

Would-be business owners should choose their venture according to their interests and skill sets, rather than any perceived ideas of profitability, Nader says.

Notwithstanding this, timing can be everything. And in the current economic climate, Nader warns it’s particularly risky to set up a hospitality business or enterprises that offer non-essential products and services.

Small Biz Matters founder Alexi Boyd, who has partnered with VistaPrint to support those turning their hobbies into a business, says the potential to earn more money as your own boss depends on several factors, including initial outlay and ongoing overhead costs.

“Some people who might go into the consulting space (which has minimal overheads) could immediately earn more than what they were earning previously but, for others … it’s a gradual step just to earn the same amount of money,’’ she says.

She recommends new business owners engage reputable finance and business advisers, including a bookkeeper, as early as possible and connect with professional industry groups to maximise their success.

Shopify APAC managing director Shaun Broughton says online ventures often require few resources and, like side hustles, can be a safer way of testing and refining a business idea without incurring extensive losses.

With three-in-five businesses failing within their first three years, he agrees a strong support network of mentors, advisers and peers is important to avoid the most common pitfalls.

“Failure is something most business owners experience at some point but it certainly doesn’t need to mean the end of their entrepreneur journey,’’ Broughton says.

“If anything, failures can lead to important lessons that pave the way for future success.’’

Top reasons Aussies want to start a business:

-Earn more money

-Be their own boss

-Work flexibility

Source: Shopify

Originally published as Key elements to consider if you want to start your own business