Business question... I'm thinking of leaving my employment and becoming a contractor. I think I have a handle on the things I need to be considering but would like to get some advice from people running their own business on how they found it starting out, what they didn’t expect and what they found work for them? Thank you
Tony, Good afternoon. What a great question and you are very wise in seeking some input prior to leaving your PAYG employment. I could give you a little information in terms of both advice and experience. From the 'Advice' side. the most critical thing to keep in mind is that should you need to borrow money (home loan etc), that Lenders can be very tough on self employed applicants. For example, most Lenders will want to see the business being in existence for a minimum of two years. In terms of assessing your income this can often be an average over the last two years, although there are some Lenders that will look at just one years taxation returns. Please also keep in mind that any lending assessment is based on your Net (taxable) income, and not gross business turnover, unless you are prepared to consider higher rate low documentation loan options. So, advice number one, If you do need to borrow some funds, then do this prior to leaving the PAYG job.
The next piece of advice (from the experience point) does flow on from above. That is you need to be able to fund your living needs during the start up period of the business. Most new business ventures take time to generate solid income and you will need a nest egg to get you through any start up period.
The third piece of advice that I might throw in is to be very comfortable about what you are offering on a personal basis, ie what will differentiate your business from the pack. I find that there are two key angles, one is the 'sales' angle and two, the knowledge / skills angle. You have not mentioned the type of business you are considering, but it is very important to make a self assessment as to which of these two angles you are best at and how you close any gaps you feel may exist. Of course a combination of both, will lead to more success.
Hope this advice helps and all the best with your new venture.
Customers First Mortgages & Insurance
1300 ASK KEN
Congratulations on thinking to start on your own.
Starting out is always exciting but can be very stressful and unrewarding at the beginning but it's always good to look at the 6 months from the start or 1 year from the start goals and work towards that day by day.
Some traps to avoid:
1. Giving out low prices to get new business
2. Not planning for tax and "spending" all money you receive. Unlike being employed where you get after tax income, when self employed you get the full lot and have to plan set aside money for tax
3. Over planning
4. Thinking that all will go to plan
1. Being genuine - don't over promise just to get new business
2. Giving yourself a break and not working yourself to the ground
3. Using the technology to your advantage
Hope this helps.