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Location:
Northwestern Sydney
Registered:
August 2002
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 Starting your own Company
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Mon, 17 May 2004 02:20
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I'm looking into starting my own company, as part of somthing I've always wanted to do, And getting out of the industry I'm in currently.
Has anyone had experience in starting their own company and what where the problems encountered?
I'm currently Looking at all the Tax, legal and Business loans side of things as well as speaking to people who do the similar work to get their comments/issues on going into that line of work. And comming up with a business plan based on the results of my research.
There appears to be a market Niche that I'm targeting that the bigger contractors don't touch and the smaller contractors try not to do as they are after the bigger contracts. This particular Niche exists in my area (Being New housing).
I'm really after peoples opinions on starting a company and weather it is worth it in the long run.
Cheers
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Location:
Newcastle
Registered:
April 2003
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Re: Starting your own Company
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Wed, 19 May 2004 09:45
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Does it need to be a company to do the work you are going for?
If not the just register a buisness name and operate that way,much cheaper and a lot less paper work in the long run.
Just my two cents.
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Location:
Brisbane
Registered:
February 2003
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Re: Starting your own Company
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Wed, 19 May 2004 12:19
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a limited liability company (e.g. Lambo's Inc.) might help isolate you from a business failure or risk (to a point) - but the costs and requirements of establishing and maintaining a company (legally) are significant and possibly cumbersome (and this is just for a private company - going public adds another whole new world of pain and complexity).
A simple trading name (e.g. Mr Fred Lambolica trading as Lambo's) allows you to get started with things like business name, bank account, GST & ABN numbers, etc... but exposes you to all the risks (e.g. you loose everything if it tanks).
what ever the structure, you're starting from scratch - no credit/trading history, minimal assets, no historical cashflow.
Either way, i'd focus on planning your business ... >50% of new businesses fail in their first year because they didn't plan (you'll hear lots of business advisors say that they 'planned to fail').
Work out your cashflow for the year, look at your longer term (assets, liabilities, net position, tax liability, etc), identify where you want business to be down the track, set the milestones you want to measure success/failure against (e.g. at what point do you close up before being forced to sell the family farm - or sell/attract investors the business to recoup your initial investment)
Work out your communication and marketing plans - and be able to monitor and measure how you're going with them.
Look at your (proposed) business processes and make sure they produce the goods that your business needs (do the things your business needs, do them only and do them well)
and be prepared to review and update your plans if they were off target - but identify where and WHY things didn't go according to plan so you don't repeat the mistake.
Being a small business requries you to be manager, salesperson and worker - and contracting work has significant risks/overheads you might not find elsewhere... long term contracts restrict cash-flow growth; contracts might expose you to liabailities beyond the initial contract; contracts require maintenance and supervision; etc.
talk to a commercial lawyer, accountant, tax advisor, financial planner, banker, etc... get lots of advice and weigh them all up.
Look at other business in or related to yours and identify the characteristics of the successes and failures.
visit the state small business dept's web site and read up... (in Qld its State Development <www.sd.qld.gov.au>)
...and why do i know this stuff? because i used to be (and sometimes still am) in freelance graphic design - but i prefer being paid each week so i work in gov't and supervise/direct minions ... 
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Location:
Northwestern Sydney
Registered:
August 2002
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Re: Starting your own Company
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Thu, 20 May 2004 04:13
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Thanks for the replys gents...
M.J.H. - No I don't need to for the planned work, But in the short term I'm going to be doing 2 jobs to keep cash flow up. and to do that I may need to go from full time in my current job to contract and for that i need minimum an ABN.
Chuckster - Where do I start...
My girlfreind is an CPA accredited Accountant/finacial adviser. So she is looking into the best (least exposure) way to set anything up for my particular situation.
My largest overhead is the initial purchse of equiptment. from there initially there is only repayments (if I don't purchase outright)fueling and matinanance. The company I'll be purchasing through have mobile service and can be out to where I am within 2 hours and if the equiptment can't be repaired in the field they bring a second one and lend it to me till mine is fixed. So from a down time point of view thing will be as efficient as I can possibly think of. in the short term I only need to do 3/4 of a days work to cover over heads for that business (whilst working a full weeks work from home in my current job to cover domestic expenses)As the new work improves the current job will be accordingly reduced.
I currently have a 5 year plan with goals for 1st year, 3rd Year and 5th Year as to where the work is comming from number of long term contracts I can handle and still provide the attention to clients requirements that I want to provide. This includes equiptment upgrades, additional equiptment, possible premises for base of operation. and for 5th year and beyond the possibility of requiring employees.
I've been in contact with people in the industry from different parts of it (potential clients) on specific requirements for each area that I can provide service for, and getting an idea of where my expertice can be used in a fashion that meets the clients requirements (ie faster, cheaper than manual labour) and seeing where this will be the case and targeting those fields first.
I've also contacted people doing the same work as I and basically telling them I'm looking at doing the same thing, and getting a history of where they came from, there goals and how they achieved them and getting a very good feel for the market areas that they cover. These guys have been most helpful in their advice and didn't really hide anything.
Marketing, I've looked a taking ques from the others doing what they have done and get a high rate of return. Plus a few other marketing Ideas that target that Niche that exists.
I also realise that that maket Niche will only exist for probably the next 3-4 years before that area moves on. and I've catered for that in my goals.
Because of the low on going overheads monitering performance of the the "company" will be straight forward, and If in the event that I do have to pull the plug the most I can lose is 20% of the initial outlay to get started, in this case a few thousand, and i have my current job to fall back on. and If that failure happens after 8 months of trading (even 1 day per week) I've broken even and walk away the same as I walked in.
My main concern is really getting burned by clients not being truthful of site conditions and me giving a quote based on inaccurate information, then spend twice as long to get the job done. but that is the experience I need to learn in the short term and is the intial part of the first year plan.
After that it is commitment to regular clients and sourcing more work to my limit of capacity. holding that position until I'm ready to start the next phase of growth.
I'm managing an office at the moment and spend most of my day on the phone doing everyone elses work for them. and Now I want to do it for myself and hopefully reap the rewards of being successful.
Thank for the words of advice..
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Location:
Newcastle
Registered:
April 2003
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Re: Starting your own Company
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Thu, 20 May 2004 10:59
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Sounds to me like a business setup would be the best for your current situation.
Alot easier and cheaper than setting up a company from scratch in my opinion but the final decision is yours to make.
Finally,good luck with it all and i hope it goes well for you.
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Location:
Brisbane
Registered:
February 2003
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Re: Starting your own Company
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Thu, 20 May 2004 15:11
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sounds like you've done your homework already!
is good that you've thought about a few exit strategies - all too often, small businesses become so personalised and emotive that any kind of exit is seen as a personal failure or shortcoming (to be avoided at all costs).
anyway ... if your g/f's a CPA, then why worry ... ... tho for the sake of good probity, an independant auditor might be worthwhile at tax time
i notice your worried about performace of clients under contract? have you had your agreements looked at by legal advisor so you cover these kinds of issues? even building contracts have provisions for variations and interpretation of information.
it might be worth revisiting that part of your plan (e.g. part 45.3 'suitable contract documentation and enforcement practices') and adding details for contingency planning and enforcement of contract provision? so you've got a method of dealing with these, rather than having to shift into ad-hoc damage-control to the detriment of other work.
but enuf of bad news ... good luck your business - i hope you and your clients profit from the exercise.
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Location:
Northwestern Sydney
Registered:
August 2002
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Re: Starting your own Company
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Thu, 20 May 2004 23:49
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Chuck , My problems with client contract are purely from a customer satisfaction point of view. The contract (would) state that the quotes given are subject to the prevaling conditions on site, as a quote is based on a 1/2 hour look at the site (neibouring properties, etc) and no "test pits" or the like will be dug unless I deem required for contract purposes. But by the same token I cannot see what lies 4 inches under the soil.
The whole basis of starting the company would be based around saving time, labour, costs. any job I quote on has to meet those 3 critera and a site issue may very well blow out the time or the cost (or both) and that isn't good for me or the client.
and for each job and indeed the company to suceed I need to meet those 3 criteria as often as possible to even have a chance at return business (1st year plan basis) from there I should retain some base contracts for the second year and concentrate on satisfying those till the 3rd year where (if costs planning is accurate) I'll own the equiptment out right and I can Judge at that point the equiptment that needs Upgrading/replacing or new items that become available to move into some of the other areas.
At this point the old equiptment may be retired and new machinery purchase the older equiptment will be my backup gear and will be available for hire to contractors and I'll be running the new equipt.
The first thing I did was work out cash flow and my exit strategies, I'll have no overheads (except equipt. which is quite liquid) for the first 3 years, and by then I'll own the original equiptment. and I'll be ahead.the critical area is the first 6 months if I can survive through that the losses are significantly less as time moves on.
This is all part of my plan to go into the line of work that I want to do and in 10 years (or there abouts) the whole company aim will shift but by then I'll have done enough work to gain the relevent experience and I'll have my little landscape architecture firm I've dreamed of with 3 supporting jobs to fall back on and the knowledge to run every aspect and manage with confidence.
M.J.H - that is the most appealing direction at the moment based on the currnet situation.
Thanks guys it's good to get input from people in a general sort of way to reinforce my ideas.
Cheers
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Location:
Sydney
Registered:
April 2004
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Re: Starting your own Company
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Sat, 26 June 2004 16:40
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all of the above...
looks like you have things covered,
only tips i would give are dont involve friends
test the market thoroughly before hand and try to prepare for every worst case scenario possible...
best of luck!!
oh one last thing, get a lavender oil burner,do meditation and regular exercise to help relieve the stress and stop insomnia..if all else fails drop me a pm and ill hook you up with some NLP (neuro linguistic programming) techniques that help you maintain focus and sleep like a baby...sorry for the spin off but insomnia nearly killed my business...
all the best!
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Location:
Adelaide
Registered:
August 2003
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Re: Starting your own Company
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Sat, 26 June 2004 21:32
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i always keep in mind that business was made to fail and it is the owner/manager that will have to keep it surviving or growing...
i also remembered an author that said try to start anything on your own provided you can afford, and if you fail, its the entreprenuership skills that will stay within you.
about business plan, i did it for one of my subjects in uni...you can have a well prepared business plan but some people really do not bother reading their business plan after they were made. But chances of failing is higher if you do not have a formal or business plan.
scenario planning is essential i would say, take a time go to a quite place and try to think as much future events might happen (ie: political change,tax,economic downturn,interest,terr0rist atk,fuel raise,etc etc) and map a plan according to those situations. I was told by my lecturer that those oil companies hire a few brilliant/smart people, put them together and they get paid good $$ to think of all the future possible event...
whatever you do, best of luck !
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Location:
Adelaide
Registered:
May 2003
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Re: Starting your own Company
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Sun, 27 June 2004 08:30
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i started my own company, i did it all through my accountant he got me my abn number and business name regd, etc, all is good, im 18 and did it, i assume u r older than me so u should have no trouble! u just need a lot of $$ to start!
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Location:
Adelaide
Registered:
August 2003
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Re: Starting your own Company
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Mon, 28 June 2004 01:47
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i'm sure everyone can start a business (just register a company name which cost u a couple of hundreds-cheap and etc)...
the difference with successful business and non successful business is the PROFIT  
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Location:
Northwestern Sydney
Registered:
August 2002
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Re: Starting your own Company
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Mon, 28 June 2004 04:25
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I'm still looking into the varying possibilities and have a business plan for each area. (keeping in mind that I have several different areas of the industry I can branch into immediatly or in the future) It would be stupid of me to try and cover all 4 possible areas that I'm looking at as I would be speading myself thin on the ground to do it but starting in a general sort of way and seeing which path the company gets pulled down if I reach the goals I've set I'll look at branching out at a later stage.
I'm currently looking at the numbers a little closer and keeping in mind growing costs in fuel and servicing to work out the minimum amout of work that has to be done just to cover overheads in the short term. The real problem area at the moment is the first 12 months (in terms of business survival) and within that the fist 4-8 months in terms of financial survival. If the company is viable (ie profitable) in this period and it fails shortly thereafter the losses financially will be minimal and rather pain less. and in reality all told the worst I can lose out is to the tune ot about 10-15k at worst as the equipment is a rather liquid asset if resonably new. and for the opportunity to own a business I can accept that.
The problem that faces me at the moment is the logistics side of things which the deeper I look the more problems jump up in a worst case senario situation.
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Location:
Northwestern Sydney
Registered:
August 2002
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Re: Starting your own Company
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Mon, 28 June 2004 04:26
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Oh... and I'm already a stressed insomniac, this is why I'm looking to get out of the industry (or job) I'm in. 
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Location:
Adelaide
Registered:
August 2003
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Re: Starting your own Company
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Mon, 28 June 2004 09:28
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try writing a good business plan and sell it? 
or could get someone to sponsor you financially with that good business plan?
if u can..keep your current job until you can support yourself financially for 12 months without expecting a penny frm your own business...
gluck mate....try checking out the statistic from ABS website if i am not mistaken...check out the lowest net profit from your type of business and work out your sales forecast.. that might help alil..
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Location:
mona vale,northern beache...
Registered:
April 2003
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Re: Starting your own Company
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Wed, 30 June 2004 11:11
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better to try and fail than to succeed at nothing...
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Location:
Melbourne
Registered:
November 2003
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Re: Starting your own Company
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Wed, 30 June 2004 19:57
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Perhaps I should write a buisness plan... would be good considering I have been running my own buisness (kinda) for the past few years. Lack of buisness plan may be why I'm not doing so well.
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Location:
Adelaide
Registered:
August 2003
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Re: Starting your own Company
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Thu, 01 July 2004 03:18
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| Shraka wrote on Thu, 01 July 2004 05:27 |
Perhaps I should write a buisness plan... would be good considering I have been running my own buisness (kinda) for the past few years. Lack of buisness plan may be why I'm not doing so well.
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possibly.. lack of knowing where your business stand in the eyes of consumers and your competitors might be the problem too... good luck guys
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