Home' Border Enterprise : Summer-Autumn 2011-2012 Contents enterprise
Vol 5. Summer/Autumn
IF YOU thought starting a business means
tonnes of crushingly tedious admin, think
again. In Australia - the world's second
fastest country for starting up after New
Zealand -- the process takes two days,
according to the World Bank and the International
The question is how, after your snappy start,
you adapt to running your business with no
salary. How, unless you have a rich spouse,
do you avoid going broke amid "financial
"Firstly, cash flow is extremely important,"
says Kris Bondin, managing director of financial
advice service Bills to Pay. Bondin says most
start-ups will not earn a wage "for at least 12
So, before quitting your day job, Bondin says,
if you lack cash, ensure that you can "redraw"
on any home loan you have. Most home loans
offer a redraw feature that lets you make extra
repayments and withdraw them at will. Bondin
suggests checking fees and the maximum
amount you can extract.
Business coach Lisa Murray knows all about
maximising your cash during the cold-sweat
pre-profit start-up stage.
Murray left her old biomedicine management
job early, four years ago, spurred by "extreme
burnout". She then languished in bed, lacking
But set on being her own boss, she had
saved "every cent I could" for six months. To
swell her finances, she took out a line of credit
on her home, borrowing against the equity, and
arranged an increase on her credit card limit.
She was bootstrapping, which she defines as
"finding money from anywhere and juggling".
"In hindsight, I would have done it slightly
differently," she says.
She recommends that would-be
entrepreneurs who hold steady jobs seek out
clients before taking the plunge.
Another simple sensible tactic is to launch on
a shoestring. If you cut to the chase and find the
right low-cost service providers, you can launch
with less than $1000, Murray says. "Often you
can start small and build, once the initial cash
flow shows up," she adds.
Jewellery stand vendor Alecia Braven, 35, was
lucky. She had more cash to play with than the
average budding start-up director. Until January
this year, Braven worked as a corporate lawyer
and investment banker.
Still, cutting the tie and investing $100,000
in savings to cover niche manufacturing costs
tested her commitment.
"I was hesitant to leave a sizeable secure
salary to go out on my own," she says. Starting
up takes "strict determination and careful
planning", she adds.
Braven says she has never looked back, and
expects to make a profit in her second year,
which she will plough back into the business.
Here are some of her top tips on scrimping
before and after making that ambitious solo leap
in the dark.
Seven secrets of staying solvent
1. Save well in advance of leaving your current
job -- draw up a budget and gauge exactly
what you will need to spend on the business
and your personal life.
2. While you are earning an income, also prepay
expenses such as electricity, so that when
your income fizzles you can forget about
3. Negotiate a discount on your rent for paying,
say, six months ahead.
4. Do part-time work which is flexible enough to
let you keep focusing on your business.
5. Hunt around and haggle every business
expense - you can save you up to 50 per cent
on most expenses, including printing costs
and web hosting expenses.
6. File your GST returns on time because, early
on, you will likely have more expenses than
income and so will be due for a refund.
7. Get payment in advance of shipping goods.
If you tell your clients that you are a small
business without resources to process
debtors, they may be happy to pay upfront.
"Perhaps offer a lower minimum order
quantity to sweeten the deal," Braven says.
- David Wilson
Many start-ups will not
earn a wage for at least
the first year.
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