There are three ways to go about setting up a business:
- start a new business
- buy an existing business
- buy a franchise.
Starting a new business
Here are some things you’ll need to do or think about before you start a new business.
1. Register a name for your business
To find out more about different kinds of business structures, such as a company, sole trader or partnership, visit our How to develop a business idea page <LINK How to develop a business idea>.
2. Apply for an Australian Business Number
Many types of business in Australia need an Australian Business Number, or ABN. An ABN is a unique number for your business. It is used by the Australian Taxation Office to process your tax.
3. Find out if you need to register for GST
The Goods and Services Tax (GST) is a tax that businesses add to the sale of most types of goods and services in Australia. If you’re registered to collect GST, you must charge your customers the GST, and then pay this amount to the government.
You’re also able to claim the GST you pay on goods and services for your business as a credit against the GST you owe the government, which can save you money.
Only businesses above a certain income threshold need to register for GST. Find out if you'll need to register for GST and how to do it if you do.
3. Apply for licences or permits
You may need licences and permits to set up a business. For example, if you plan to open a cafe, you’ll need to:
- register your business as a food premises
- apply for a liquor licence if you want to sell alcohol
- apply for a permit if you want to serve food on the footpath
- apply for a permit to play background music.
There may be other kinds of licences or permits you need depending on how you want to run your business.
The Australian Business Licence and Information Service (ABLIS) website can tell you more about licences and permits. It takes you through a series of questions to help you find out what licences and permits you need for your business.
4. Apply for a trademark
A trademark protects your business name and logo from being used by someone else. You can also trademark any unique products or services you offer.
You may need to get help from a lawyer who specialises in this area. These lawyers are called trademark attorneys or intellectual property lawyers.
You don’t have to trademark your business name or logo, but it does give you some legal protection. For example, if someone else starts using your business name, you can apply to a court to have them stop using it.
5. Apply for a patent or design rights
You can apply for a patent to protect any new and inventive device, substance, process or method. If you’ve invented a new type of hairdryer, for example, a patent prevents someone else from manufacturing your invention without your permission.
You can also register the design rights for a product. Design is anything that makes the product look the way it does, including its shape, configuration, pattern and ornamentation.
You may need to get help from a lawyer who specialises in this area. These lawyers are called patent attorneys or intellectual property lawyers.
6. Other things to consider before you set up a new business
Other things to consider include:
- writing a business plan
- your budget
- whether you need a business loan or to find investors. Investors are people who are willing to provide their own money to invest in your business in return for a portion of any profits
- any staffing needs
- the location of your business
- whether you will rent a place where you’ll run your business
- hours of operation
- how much you'll charge for goods and services
- what kind of insurance you need – including WorkCover insurance
- how and where you will market your services and/or products
- how you’ll keep track of your finances.
Buying an existing business
Purchasing an existing business has advantages and disadvantages.
The advantages are that there may be less risk involved in buying an existing business. This is because you can see if the business is viable before you buy it. You’ll also get an immediate cashflow from an existing business.
On the other hand, the business might need new equipment or improvements to the building. The previous owner may have damaged relationships with staff or suppliers.
Get professional advice from an accountant when you are considering buying a business. An accountant can help you go over the business’s accounts. They can tell you if there are any problems with the accounts. They can also answer any questions you have about how the business is set up.
Make sure you know all about the business, and find out exactly what you're buying. For example:
- What are the outgoings, such as rent, utilities and labour costs?
- If the premises are rented, how much time is left on the lease?
- Are the stock and fixtures (for example, furniture, desks, shelves and lights) included?
- Will existing staff stay when you take over?
- What's the reputation of the business?
- How much profit does the business normally make each year?
- Can you expect an immediate income?
- Do any business improvements need to be made? For example, do you need to buy any new equipment, or renovate the building and fittings?
Business Victoria provides more information about buying an established business.
Buying a franchise
A franchise is a business that is part of a larger organisation. Fast food restaurants, supermarkets and hardware stores are all examples of franchise businesses.
There are lots of the same 'big name' stores all over the place, but each store is owned and managed by an individual businessperson.
The advantage of buying a franchise is that you'll run your own business, but you'll have the security and support of a larger organisation.
The disadvantage of buying a franchise is that you’ll need to sign a franchise agreement with the franchisor. This will tell you what you can and can’t do with the business. There are usually restrictions about where you can operate, the products you can sell, and the suppliers you use.
Business Victoria provides information and advice about buying a franchise.
Managing money while you get started
You should think about how you're going to pay for everyday living expenses while you’re getting established. It can take some time for a new business to build a customer base and generate cashflow, let alone become profitable. Being profitable means there’s money left over after you’ve paid all your costs and bills.
Before you’re profitable, you may have to follow a tight budget for a period of time. You may not be able to pay yourself a wage from the business for a number of months.
Consider the following suggestions:
- If you're currently in full-time work, stay there either until you can afford to reduce your hours (if your boss will let you) or until your business is doing well enough to enable you to resign.
- Work part-time or casually in an area that's related to your business so you can gain further experience and get some new contacts.
- Get some financial assistance or apply for a grant offered by the Victorian Government.
The Australian Government's New Enterprise Initiative Scheme (NEIS) is a program that helps you to start a business. It provides training and ongoing financial help. If you're 18 years or older, receiving payments from Centrelink and have a viable business idea, you may be eligible for NEIS
The following organisations and websites can provide a range of support services for people who want to set up their own business.
Lots of information about starting a new business, buying an existing business or a franchise, and how to run a business.
Provides practical assistance to small business in Australia, including help with tax, hiring staff and contractors, paying wages and superannuation.
Network of business centres providing a range of small business services in Melbourne and regional locations throughout Victoria.