It’s important to know if your idea is a hobby or a business for tax, insurance and legal purposes.
Key questions to consider:
- Is the activity for commercial reasons?
- Is your main intention, purpose or prospect to make a profit?
- Do you regularly and repeatedly undertake your activity?
- Is your activity planned, organised and carried out in a businesslike manner?
If you answered yes to most of these questions, you're likely to be running a business. However it depends on your individual circumstances. The ATO website provides further information and examples to help you understand the differences between a hobby and a business.
The Small Business Development Corporation is one of the best places to find information on starting your business. They have developed the 8 steps to starting your business which will help you determine if you are ready and how to go about bringing your ideas to fruition. The City highly recommends you read the below to educate yourself on all that is needed when starting a business. If you need to speak to a business advisor on any of these steps contact SBDC.
1. Determine if you are ready
Going into business for the first time will change your lifestyle, professionally and personally, and can involve a significant financial commitment.
Whether your business succeeds or fails depends on your abilities, initiative and capacity to work, as well as the economic and business environment.
2. Assess your business idea
The only way you can know if your business idea is going to work is by undertaking market research. This could involve researching information on the industry, undertaking competitor analysis and surveying potential customers. Determine the strengths, weaknesses, opportunities and threats (SWOT analysis) of your business idea.
Analyse your market research with an open and unbiased mind. If your research shows that a proposed business venture has a high probability of failure it would be unwise for you to proceed.
Read the SBDC’s webpage on the feasibility of your business idea for more information on market and commercial feasibility.
IBISWorld industry reports are a great resource for assessing your business idea. These reports cover growth, revenue, employment, imports and exports of more than 500 industries. Visit SBDC's information centre to view these reports. You can also request industry benchmarks by contacting one of SBDC’s business advisers.
3. Build your business plan
Although initially it may seem like a lot of work, a well prepared business plan can save time and money in the long run and help you secure funding and major contracts.
4. Choose your business structure
Once you have established the viability of your business idea, you will need to decide on the structure that best suits your business and its particular circumstances.
Learn more about business structures and their tax implications.
5. Check your legal obligations
There are legal obligations associated with starting a business including licences, registrations, taxation and insurance.
Before your start trading make sure that you understand your legal obligations in order to avoid any fines or penalties.
6. Build your support team
It is advisable to surround yourself with trusted and reliable advisers who can help you with start-up issues and then assist you as your business develops.
Your support team may include an accountant, lawyer or industry association. SBDC’s building your support team guides have more information to help you get started.
7. Figure out your finances
An important part of running a small business is understanding how to set up and manage your finances. You will need to work out whether you can afford to start the business and how much money you will need. It’s not just your start-up costs, you will also need to assess how you will access the money to fund your future plans.
If you are considering obtaining finance you will need to complete some financial forecasts beforehand to provide to your financial institution or investors.
8. Market your business
Many small businesses come up with a great business idea and then fail to market it successfully. You need to get out and spread the word about your product or service to the right people to generate business. Advertising and selling are part of the process but there is much more involved.
SBDC’s marketing section has some useful resources and information to assist you.