Three tips to save your startup from crashing

SO you've got a great idea and want to be the next Sergey Brin – but what’s involved and where the hell do you start? Here are the essential tips to save your start-up from crashing.    

Sergey Brin, co-founder of Google, introduces the Google Glass Explorer edition. Along with Larry Page, he started Google in a garage.

SO you've got an idea and the burning desire to be your own boss – but what’s involved in opening your own business, and where the hell do you start?

reWell, in the words of The Sound of Music’s own Fraulein Maria, you start at the very beginning.

Once you have your concept, the integral first step is to plan. Know your market, understand your competitors, set out your business plan and get ready for some hard work.

Ready, set - startup

Managing director of Vertical Financial Solutions, Danny Moss, says while the first step may be the idea, articulating your ambition in a formal business plan is essential to startup success.

"Start documenting and building the process, write a formal business plan and garner a solid understanding of the market," he says.

"Understand your strengths and weaknesses and have an extremely strong understanding of what your unique selling points are, and focus on them – do not try to be all things to all people."

So you take the time to plan your entry into entrepreneurship – but how do you know it will work?

"You don’t," Moss says. "But try to stack the odds in your favour and play to your strengths."

Finance fundamentals

Moss says a good level of debt to have depends dramatically on the kind of industry you are in, but if possible to avoid debt within the first 12 months of business.

"And you should absolutely be paying yourself - however, in a new venture be prepared not to pay yourself much in the early days," Moss says. "When things grow, increase your pay – but not at the expense of the business."

"Re-investing in the business will pay dividends in the future, and contributing to super is important.

"To be successful you have to be prepared, know your strengths, understand your market and have sufficient funding."

Look for small business teams within financial institutions and research competitive loans, deposits, merchant facilities and credit cards – as well as making sure they have a 24-hour business call centre and business relationship managers.

Cross your Ts

To add to your ‘to do’ list, you also have to register your business name, apply for an ABN, investigate the best structure to suit your needs and talk to an accountant about tax implications and benefits. Think about what you will need – a website, marketing and PR to attract and maintain a strong customer base, and engage experts where needed.

Justine Davies, Canstar’s finance editor, says setting up a business is an exciting and challenging decision and while there is no way to guarantee whether it will work, the more planning and analysis you do beforehand, the better your chances of running a successful enterprise.

"Bringing a great idea to life is only a tiny part of running a business," she says. "Sure it’s the fun part, but realistically it will only be about 10 per cent of your job."

"You need to be able to successfully navigate through the other 90 per cent of issues!

"The government has some great information on their website business.gov.au in terms of setting up a business plan, grants that might be available, all the accounting and administrative issues you need to think about and financial issues."

Founder and CEO of Australia Business Coaching, Fabrice Beillard, says it is also important to start with an end in mind.

"We assist clients to run their business as if it were going for sale tomorrow, even if they never will as this is best business practice - and even if they don't at least their options are open," he says.