Becoming Your Own Boss for the New Financial Year?

15 February 2012

Becoming Your Own Boss for the New Financial Year?

With on average more than 6000 new companies established in New Zealand during January and February each year, for many aspiring Kiwi entrepreneurs the thought of another year in their job is all the motivation they need to become their own boss.

But while starting a business in even the most positive economic environment can be challenging, with current growth conditions sluggish and local businesses buffeted by international pressures, the 2012 financial year promises to test even the most dynamic start-ups.

According to MYOB general manager Julian Smith, along with harnessing the inspiration to establish their own business in the first place, there are a number of things new business owners can do to ensure they go from start up to success in any economy.

“I don’t believe we recognise and celebrate enough in New Zealand the courage and determination it takes to start your own business,” says Julian Smith.

“The small business sector is incredibly important for our economy, with almost half our economic output created by SMEs. These Kiwi businesses really are the engine room of the economy, and yet so much focus is placed on organisations at the big end of town.”

MYOB believes more could be done to make life easier for local start-ups, including a focus by Government on simplifying the tax system, making R&D funding more accessible, establishing buy Kiwi-made programmes for government agencies and focusing KiwiSaver funds on local investment.

“Most potential start-ups expect they’ll have to do a lot on their own, so those who pursue their dream usually have an independent spirit that sets them off,” says Mr Smith.

“That doesn’t have to be the case, and your new business will be better off if you start by getting some help. Before renting your premises, sign writing the van or ordering product, start with some really good advice. There’s plenty available for business start-ups, the key is to know where to look.

“An accountant would be a strong first port of call, not just because they can help you navigate the many regulations you need to be aware of as a new business owner, but also because they can provide you with benchmarks for other businesses like yours – what they’ve experienced, how they are set up, and the kinds of challenges they face.”

“Business mentors are also a great source of advice, which around a fifth of Kiwi business owners access, according to our MYOB Business Monitor research. Banks too are a popular starting point – especially as many banks now provide specialist business advisors.”

One of the first things any advisor will encourage a potential business owner to do is some planning.

“Having a passion for what you are doing is very important,” says Mr Smith. “That will carry you through the late nights and the long weekends, but it’s not a substitute for a solid plan.”

“You have to go into a new venture with your eyes open. You need to prepare an honest assessment of what you want to achieve in business and how you are going to get there – including, most importantly, how to fund it along the way.

Having a way to measure that progress is also vitally important for any business, not to mention the Inland Revenue.

“The days of running a business on pen and paper, with a shoebox or dashboard full of receipts, are long gone. There are so many inexpensive options for business management software today both online and for the desktop that there really is no reason to start a business without a system in place.”

Testing the water is also a good option, particularly for first time business owners.

“Rather than handing in your notice as soon as you can, spend time with the business development process. Research the area you are considering, the terms you can get for things like leases and equipment, the size and potential of the market and, of course, the competition,” says Mr Smith.

“This used to be a fairly challenging process, but the internet can provide many answers you are looking for these days – from competitors’ price and stock lists, to a detailed business map of your area.”

But, Mr Smith says, if he could give one key piece of advice to the business class of 2012, it would be this: “Start a website! According to MYOB Business Monitor research, businesses with a website are proven to do better – on average earning over 5% more revenue than their competitors – and are more resilient.”

“At the moment in New Zealand, having a website will give you a real competitive advantage because while around two-thirds of the population search online first for a product or service, only one third of businesses are online. Being found online first can make a real difference to your business success.”

According to the MYOB Business Monitor, only 19% of startup businesses reported revenue increases in 2011, while 28% reported losses. However, 50% of start-up business owners expect to see an improvement in their revenue next year.

“Kiwi businesses are a resilient lot, and they tend to be resolutely positive about their own fortunes, even if they are less than confident about the future of the economy,” says Julian Smith.

“For this reason, around 50,000 per year start their own business. That’s something to be celebrated, because without the courage and dedication of people determined to pursue that dream, we’d be a lot poorer as country – not just in terms of economic growth, but in innovation, opportunities and diversity.”

“We need to do all we can to celebrate and encourage 2012’s start ups, who with a bit of help, some good planning, and smart technology, could be the world-beaters of the next decade.”

Top five things to do before starting your new business:
1. Start with some advice – get help from an accountant, business advisor and/or bank manager.
2. Write a plan – make a thorough and honest assessment of what you want to do and how you are going to achieve it.
3. Do your research – check out the market, the costs and the competition.
4. Set up a system – because you will not be starting your business to do the books, set yourself up so they will not be a worry, with a good software system.
5. Get online – get a website and tell the world where you are; it will improve your business by 5% and put you ahead of two thirds of the competition.

About MYOB
MYOB is a leading provider of business management solutions that have helped more than a million businesses in Australia and New Zealand. MYOB serves businesses of all kinds and sizes, delivering software and services that simplify accounting, payroll, client management, websites, and much more. With a network of more than 20,000 accountants and other professional partners, MYOB provides the tools and support that help make business life easier. For more information visit the MYOB website at www.myob.co.nz

ENDS

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