#business advice#money matters#finance management

Hurdles to overcome opening a business in Australia

|Sep 13|magazine9 min read

Starting a new businesses is a challenging and resource-intensive undertaking, and there's no doubt that start-ups in Australia have their fair share of stresses.

So what are some of the key challenges facing entrepreneurs who are wanting to open their own business in Australia?

Cash Flow

The top concern for new business owners in Australia is certainly cash flow.

There are a lot of sayings bandied about - you have to speculate to accumulate, new businesses never make money in the first year, and all kinds of other wise old wives' tales. But the long and short of it is, new businesses need a decent injection of cash, and that can be hard to come by.

With more money being tied up in superannuation accounts and the cost to banks for deposits on the rise, the banking industry in Australia is feeling the squeeze.

This means the cost of lending is greater, which can hit start-ups hard. Finding the initial cash needed can be a challenge, making good resource management a key skill for success.

The ATO

The Australian Taxation Office can seem like something of a nemesis to small businesses.

The taxation regulations are complex, peppered with confusing acronyms (do you know your FBT from your GST from your PAYG?), and strictly enforced, with many small businesses feeling hunted. 

Dealing in any industry known for its cash transactions, discrepancies that result from honest mistakes, and failure to comply with the many tax regulations can all lead to small businesses falling foul of the ATO.

Under current Fringe Benefits Tax laws, a company can find the ATO looking at it disapprovingly if it spends too much on an employee social gathering, while different types of tax have different tax years, leading to a mountain of paperwork and confusion.

For those wanting to open a business, sorting through the tax regulations and keeping up with them can seem like a mountain to climb.

Thorough and meticulous bookkeeping and some time spent reading and grasping the nuances are necessary to navigate the taxation maze.

Carbon Tax

Going green and looking after the environment are important issues for any world government in these days of environmental awareness.

However, Australia's carbon tax is serious business for small businesses, with 63% telling the MYOB Business Monitor that scrapping the tax is a priority for them. Under the scheme, companies considered as top polluters must pay a fee per tonne of carbon released into the atmosphere.

For start-ups who plan to go into production, the pitfalls of this scheme are obvious. However, it also affects small businesses in terms of the rising cost of the supplies they need.

As production costs more, so the price of goods rises, which in turn pushes up the day to day costs of running many small businesses. The good news is that the carbon tax will be scrapped eventually. But, it will be replaced by an emissions trading scheme; new start-ups will need to keep an eye on that, and allow for its effects upon their running costs.

While there are certainly some challenges facing start-ups, these can be overcome with a good dose of enthusiasm and common sense.

A start-up owner is far more likely to be concerned with getting out there and drumming up business than worrying about the ins and outs of the ATO.

So long as they can retain that enthusiasm while staying on top of their legal requirements and paperwork, start-ups can still set the world on fire (so long as they pay their carbon bill).

 

About the Author

Tristan Anwyn is an author who writes on subjects as diverse as health, marketing, jobs requiring a bachelor degree, and SEO.