Creating a new business or purchasing an existing one? Exciting and daunting, common feelings when embarking on a business ownership journey. Whether it be starting from scratch or purchasing an established business, early decisions and great planning can shape long-term success. Here are a few key considerations to help you get started.
Early on, surround yourself with trusted professionals who can support you along the journey: an accountant, a lawyer, a banker, and a business mentor or advisor. No business owner succeeds alone; these relationships can save you time, money, and potential costly mistakes.
If beginning your business from the ground up, start the process by validating your business idea – understand your target market, the financial viability, and your point of difference from similar existing businesses. Develop a solid business plan to assist with direction and decision-making.
If purchasing an existing business, do your due diligence. Consider the reasons for the sale, the financial health and history of the business, and its current reputation.
So, you’ve now decided to do this thing! What’s next? With the help and guidance of your trusted professionals, start ticking off some important tasks:
- Choose a business structure (Sole Trader, Partnership, Company, Trust). Your accountant can help to assess which structure aligns best with your goals and risk appetite.
- Understand the legal obligations of being in business (contracts, leases, sale & purchase agreements, employment, and so on).
- Upskill; ensure you have the necessary permits, licenses, training or qualifications to successfully operate your business.
- Work out how the new business will be funded, and what’s needed in the bank account to get going and keep going in the start-up phase. Cash, debt and working capital are key considerations here.
- Set up financial systems, including dedicated business bank accounts, accounting software and cash handling processes.
- Understand your accounting and tax obligations – know the when, what and how of different taxes.
- If applicable, employ the right people to support your operations.
A few last tips:
- Make smart financial decisions. Every decision – from pricing to hiring – has financial implications. Create a realistic budget and forecast your cash flow. Your accountant can help with modelling scenarios to make informed choices, plan for tax, manage cash flow, and meet Inland Revenue (and other statutory) deadlines.
- Undertake regular reviews. Businesses evolve and change over time and pivoting within that first year or so is normal. Take time to regularly review performance, update your strategy, and ensure compliance. Staying proactive helps you adapt and grow sustainably.
One of the most common pitfalls for new business owners is forgetting that your trusted professionals are here to work with you to achieve the best outcomes. Starting a business in New Zealand is a rewarding challenge. With careful planning and the right support, you can build a meaningful and successful business.
As one of those trusted professionals, MCI are here to help you navigate the numbers and make confident decisions from day one. Contact us for more insight and support.