- Start or buy?
- The value of goodwill
- Business structure
- Australian Business Number (ABN) and general tax requirements
- Your business name
- Licences and permits
- Trademarks, brand names and labels
- Independent accreditation
You have gone through the process of deciding you are the right kind of person to own a small business and that there is potentially a business opportunity in your idea. It is time to turn your dream into a reality.
- What is your main business/product?
- Who are your main consumers?
- What is your main capability?
- How healthy is your current financial situation?
- Have you done a business plan?
- Have you spoken to your accountant/financial advisor?
An existing business may already have the appropriate infrastructure and market presence to allow you to ‘hit the ground running’ from day one. If you have a new product to develop, the existing business will give you the all important cash flow to run the business whilst developing and getting the new product out to the market. However, you will have first have to find that business, and then ensure it will provide what you need and, finally, you will have to have sufficient funds available to purchase it and finance your own plans as well.
You will need to consider:
- Existing sales
- Existing costs
- Assets and liabilities
- The seller and you – what is your relationship?
- Staff – are there staff and will you keep them?
- The availability of trustworthy financial records
- The purchase agreement
It is important at this stage to appoint an accountant and legal representative and run all the above information past them for their advice. An accountant will help you put a value on the business, based on the assets you are acquiring and the income generated by the business.
If you are buying an existing business, the seller will include a value for ‘goodwill’. Goodwill doesn’t appear on the balance sheet as a tangible physical asset but it is a very important business asset just the same. It effectively represents the value of the brand name and reputation, encompassing positive customer and staff relations and may also include patents, proprietary technology or recipes. Goodwill is hard to put a dollar value on, so get expert advice before and during negotiations and ensure the seller can show evidence of this value. If you want to purchase and continue to successfully operate this business, you will need to have all the existing resources to continue business as usual so it is important to ensure any proprietary processes and recipes are also included in the sale.
Who can help?
For more information about starting from scratch and working from home, you will find advice and guidance at Small Business Home.
Business.gov.au has a range of resources for getting started in business, including:
There are a number of options for structuring a business, the most common being:
- sole trader
While a sole trader is the lowest cost option at start up, a company structure may be more suitable for liability limitation, legal status and taxation purposes. Discuss with your accountant which structure is most suitable for you.
An Australian Business Number (ABN) is essential for your business. The Australian Taxation Office issues these and also provides general taxation information. Applying for an ABN is simple and the form can be completed online. It is not essential to have a Tax File Number to have an ABN but the Australian Tax Office recommends you also provide this information to assist with administration.
Unless you are running the business under your own name (without any additions), once you have an ABN you are also required to officially register your business name. Registering your business name identifies your business and puts on public record the fact that you are the owner of the business. Once you have registered a business name it is unique to you and no other business may copy or use it. You must register a business name before you begin trading under it and you can register a name up to two months ahead of beginning to trade.
Business names are now maintained in a single national register, managed by the Australian Securities and Investment Commission (ATSIC). Registering a business name can be completed online via this site and you can also search to see if a name is already in use or identify any very similar names that might be confused with yours, especially if they are in the same line of business.
If you are starting from scratch and inventing a name for your company, you need to consider that you will have to live with this name for a long time. It will become your identity and it will represent you. Visit Naming and branding for more on selecting a name for a new business.
This is also a good time to consider selecting and registering a domain name for your website .
If you plan to operate a business, you will be required by law to notify various authorities at local, state and federal level. This begins with the local council in whose area you plan to operate. For food businesses, this applies to both commercial premises and working from home. Visit your Council website for specific information on Council regulations and permits.
A food business, including mobile food operations, must comply with the provisions of the:
- Food Act 2001
- Food Regulations 2002
- Australian New Zealand Food Standards Code (FSANZ) (including the Food Safety Standards).
Visit Food Safety for more.
Registration of a business name does not guarantee protection of a label, trademark or brand. To protect your rights to exclusive national use of any name or label you should contact IP Australia, which will provide information about applying for Australia-wide protection under the Trade Marks Act 1955. As part of the application process you will need to check your chosen name or names with IP Australia to ensure you do not infringe the rights of others. For more information on brand names, visit Branding . For more information on labelling, visit Packaging and Labelling.
A number of independent codes of practice programs operate in Australia. Some of these are specific to the food sector, others are for business management. Achieving accreditation under these programs can be an advantage to your business because it confirms your commitment to quality. Some customers may also require proof of accreditation under programs such as HACCP (Hazards and Critical Control Points) which ensure safe handling of food to ensure high quality. For more on this, visit Food Safety.
Some markets also require proof of industry-recognised formal accreditation for practices and processes. This is particularly applicable to export. For more on this, visit Markets.
Who can help?
Details of licences and permits can be obtained from your local representatives of Regional Development Australia, your nearest Business Enterprise Centre, or the Business License Information Service.
Licensing of agriculture and food
Since all businesses operate within a legal and regulatory framework, you need to be aware of laws that could impact upon your business operations.
Food Business Information Kit
This kit has been developed by Health SA to assist food businesses to implement the requirements of South Australian food law.
- Australian Tax Office business help
- Business Licence Information (BLIS)
- IP Australia
- Food business notification
- Office of Consumer and Business Services
- Start up hints
- Starting a business checklist
- Start your own business
- Starting a food business
- Thinking of starting a business
Food SA has a number of service provider members who can assist you:
- Hayes Knight