October Newsletter
Seed Stage
So you’ve got a business idea. You know it’s got potential, and you owe it to yourself to pursue it. But where do you go from here?
This is the seed stage of your new business, and it’s important to get the basics right now so life and compliance are easier down the line. Before you jump in, get as much advice and knowledge as you can to give your new business the best chance of success.
Turning a seed into a viable business
Pick your idea well
It doesn’t matter how great your idea is – unless there is a market need, it won’t work. Do your research, investigate your potential competitors, visualise your ideal customer base. Then, pick the right moment to jump in – timing is everything in business.
Create your business plan
It doesn’t have to be a thesis; you just need to show, on paper, that you’ve thought things through. It should describe the essential components of your company – including management structure, financials and objectives – and provide a clear roadmap to help you stay on track. If you want to go more in-depth, create your marketing strategy and your competitor analysis; think about operating procedures and future workforce needs. And write it all down on paper to make it real.
Sort out your financing
How much funding will you need to generate revenue and reach profitability? You may need to secure financing – from the bank, or from investors. They’ll all ask to see your business plan and roadmap to assess the viability of your business idea.
Take care of the details
Running a company requires more than just an idea to thrive – or even to be compliant with legal regulations. You’ll need business banking and credit accounts, insurance, maybe even staff. You’ll need to be registered correctly for GST, PAYG, and other tax needs. And you’ll need to be legally set-up to be able to trade – this is where your accountant or business advisor becomes the key. Seek professional advice to choose the right legal structure for your business, to file paperwork with Statutory Authorities, and to obtain any other licenses or permits you’ll need to operate.
Beware the challenges in seed stage
Work with a business advice partner who can help you keep focus. Tax Knights can help with both set-up and planning, including:
Legal structure and set-up, including advising on the best business entity type for your operations
Preparing your business plan
Budgets and Cashflow
Tax registration, planning and paperwork
Start-up
Your new business is legally set-up and ready for action. It’s been “born” – now it’s time to get out there and start making that idea a reality. And the reality is the key here because real life will start sinking in fast unless you’re prepared.
The realities of life in a start-up
You’ll burn through cash quicker than you can say “I run my own business”
You don’t birth a business with ready-made customers and cash flow. The challenges here are to manage cash reserves and sales expectations while establishing your customer base and market presence. And while you’re doing all of that, you’re spending money on staff, stock, marketing…
Worries, stress and sleepless nights are the new normal
Your business is totally dependent on you and your abilities, and whether it thrives, survives or dies is on you. There is no off switch.
The work never ends
Start-up life is living in a lean, mean machine. Resources are tight, and time is finite. You’ll find yourself on the shop floor at midnight; answering emails at 3 am; ditching the morning run to attend a networking breakfast. It can be exhilarating – but it can also be exhausting.
But start-up life is exciting, too!
That idea is coming to life
There is something incredibly satisfying about seeing your seed of an idea turn into a thriving, real-life business. Once you invite others into the idea, it grows exponentially. You bounce ideas off each other, you find new ways of doing things, new avenues to go down.
New opportunities are there for the taking
Every day brings a new opportunity – a new customer, a new development, a new potential route to growth. If you’re lucky, you’ll have plenty of opportunities just ready and be waiting for you to pursue them.
Growth can come fast and furious
If you judged the market right, you could grow fast. Look at a company like Snapchat – in 2014 it had an average of 46 million daily active users and closed 2016 with 158 million daily active users, ground-breaking product launches and an imminent IPO. That is a wild ride.
Remember: ignorance is no defence
Your attention will be pulled all over the place, so it’s best to work with a business advice partner who can help you keep focus.
Tax Knights can help your start-up function through:
Bookkeeping and accounting
Cloud Accounting
Payroll and HR services
Risk assessment
Business licenses
CFO services
Business strategy advice
Introducing you to financiers and investors
Investigating any government grants you can utilise
Tax planning and paperwork
Business Strategy
Whether they’re commercial or personal, everyone has priorities and everyone has goals. It’s our job to help you identify those, and make them happen. Here is how we do that:
Strategic planning
We can guide you to develop clear objectives for your business, building on your strengths and overcoming your weaknesses. Through a series of planning sessions, we can:
Identify those areas in your business that are holding you back
Present the options available to you
Plan the best course of action
Our approach follows a well-designed strategic planning programme covering all dimensions: from marketing, operations, human resource management and finance, all aiming to unlock the potential within your business. Our strategic work focuses on detailed and effective action planning, which means you will receive support and guidance to help you realise your aspirations. We can give you:
Greater control over your future
A clearer succession plan
Increased freedom from your business
A higher return on your investment, or increased revenue
Improved team morale and productivity
Profit improvement
You want to maximise the income of your business, while at the same time you’re striving to keep costs under control. Remember: minimising waste and inefficiency can and does have a positive effect on both. The average company could lose an estimated 15-20% of their operating costs through waste and inefficiencies.
We identify where waste and inefficiencies occur in your business
We prioritise the areas to tackle first
We set the actions needed to cut out these wastes and inefficiencies
We help make your business more streamlined.
Value-building and succession planning
A business primed for sale can be worth considerably more than one where the owners have neglected to plan. There are several actions you can take to maximise the value of your business, facilitate a
smooth transaction and ensure its ongoing success – timing really is key to exit planning. Our succession planning strategic partners can help you to:
Achieve clarity of vision for your business
Establish a track record of growth in profitability
Build a management team that can succeed without you
Establish robust systems and procedures built on best practice
Become free from excessive debt
We can help you get a clear idea of where your business needs to be when you exit, where you are currently – and, crucially, what you need to do to bridge that gap.
GROWING SCALING UP
Scaling up
You have customers and market demand, and you have excitement – but then you remember that 90% of start-ups fail. How do you ensure your business scales to become a thriving one with a long-term future? In the world of business, the rate of growth differs wildly, and one size does not fit all. That’s why expert advice is so essential.
Growing pains for growing businesses
Make sure you’re ready to scale up
The Startup Genome Project found that 70% of start-ups fail because of premature scaling, so don’t spend money on things like sales and marketing until you have nailed the product/market fit.
Process cannot be a dirty word
In those exciting days of youth and scrappiness, you can forgo things like “the way we do things”. Now, though, you need to get your financial house in order. Sort out your systems and your ways of working. Professionalise your accounting and cash flow.
Consider the capital question
To truly grow and scale to the next stage, you’re likely going to need an injection of capital. Where is the best place for this to come? Expert business advice at this stage can help you to make the growth move seamlessly, safely and with eyes wide open.
Keep your focus and scale your business
Take another look at the business plan
You need to become operationally and financially efficient. Examine your team, your operations, your sales volume. You may want to revise the company’s business plan now to reflect how far you’ve come, and what the next stage will mean for you.
Surround yourself with smart talent
The smart way to focus is to hire people with complementary skillsets; these are the people with which you can innovate and expand. And you’ll need it because at this stage the competition is starting to notice you. Make sure you’re attracting top talent with a strong benefits package, or competition will steal the talent, too.
But really, is it the right time to scale?
Growth and expansion into new territories are risky, and it may pay to spend a few more years stabilising before pushing forward. Working with an expert partner can help you to mitigate the risk.
Tax Knights can help growing businesses through:
Updating and streamlining your business plan
Tax registration, planning and paperwork
Expansion into new markets
Business restructuring
HR and payroll
Cloud accounting
Employee benefits packages
Established
Established business
Congratulations! You’re one of the 10% who survive start-up life, and who scale up with intelligence and promise. There are still headaches to take care of, though.
Mature businesses must play a game of patience
Don’t rest on your laurels
Your business has reached a level of market knowledge – perhaps even dominance – and is a stable presence in the industry. This is both a blessing and a curse. If you don’t continue to push forward and innovate, you’ll grow stagnant and lose share. But push too hard, and you’ll flounder.
So, keep your focus
Focus on improvement and productivity, better business practices, automation, outsourcing. You may even consider bringing in external consultants and business advisors to help you work out what’s next.
Consider your own position
Many businesses change leadership at this stage; they bring in an experienced CEO to help with further expansion, or they exit the business. The question is not just one for business growth, it’s about your own personal growth and ambitions, too.
Is the business ready for more?
Even with strong and stable profits year-on-year, make sure there is enough opportunity in new markets and, most importantly, that your business is financially stable enough to recover from an unsuccessful attempt at expansion – because that happens more regularly than you think.
Compliance is key, even for mature business.
Consider outsourcing support
While you’re working on your new business model, the wheels need to keep turning. You have the staff to pay, tax returns to file, transactions to monitor. It could be that outsourcing your back-office functions – things like accounting, regulatory compliance, payroll – will bring you the efficiencies you need to focus leadership attention on expansion. Outsourcing essential business functions can also aid growth by helping you to land and expand quicker, more easily and more effectively than setting up an entirely new team.
Do your due diligence
Keep an eye on compliance. One foot wrong with regulation, and you could face large fines and threats to your business. Keep up-to-date with regulatory changes, and have someone you trust doing the checks and balances.
New horizons are calling you
It’s in these expansion phases that business advisors become key.
Tax Knights can help you with the next step in your business, including:
Outsourcing support for HR, payroll, accounting, tax and compliance
Updating your business plan
Company secretarial services
Tax registration, planning and paperwork
International trade and employment licenses
Cyber risk analysis
Exit planning
Exit
Seek business exit strategy advice
Are you ready?
Selling your business can be an emotionally-charged decision. Step away from your feelings to make sure you are personally ready for an exit, and then bring in some business exit advisors to assess the company’s operational readiness.
What’s it worth?
The business may have been built on your blood, sweat and tears, but your idea of fair value may not reflect the market’s idea. You should consider not just the number on the board, but also what you’ll get to keep after taxes, professional fees and other organisational costs of exit. It might not actually be worth selling – or it may fuel your next adventure.
Establish your transition plan
Look at your business operations, management and competitive barriers. Assess your processes, ownership structure, legal requirements. If you’re selling, you should work with the buyer to ensure a smooth transition to the new operation. If you’re winding down, there are other factors to consider – what happens to your staff, your infrastructure, and your records?
Keep your eye on the ball
If the business starts to flounder before the deal is sealed, it could affect the price. Make sure the potential purchaser knows this is a growing venture as it will help your negotiating position.
Business exits aren’t just for the successful
Cut your losses and run
It’s a tough decision to make, but put aside your emotion for long enough to take an honest look at the state of your business. Trying to save a failing business can literally cost more than it’s worth.
External pressures force your hand
Health, family or partner problems can force an exit. Takeover bids or a mutiny in the ranks can be assaults on your leadership. It’s important to have an exit strategy in mind, even if it’s not fully-formed because you never know what’s around the corner.
Exit right
From that germ of an idea, to a fast-paced start-up, to a growing and then matured business, and finally to a global outfit or from an idea that sadly failed. If it’s time for something new, then it’s also time for an exit – and Tax Knights can help with:
Exit planning
Handover strategy
Tax consolidation
Debts and liabilities
Cash flow review
Company secretarial services
CFO services
Disclaimer
The information presented here is general in nature; we have made various assumptions which might not reflect your particular circumstances. You should always seek personal advice disclosing individual
circumstances to be sure that the information is right for you.