4 issues for you to consider for your situation
While owning your own business can be a rewarding experience, there’s no doubt that there are risks involved too.
And while the statistics show that start-ups are more likely to fail, existing businesses are definitely not immune.
Yet it’s not all doom and gloom! By planning ahead and considering some key issues, you can manage your risk and give your business and yourself the best chance of success.
Some of the key areas to consider are:
1) Choosing the incorrect business structure
Even though you can change your business’s structure in future, there are costs involved every time you make a change.
That’s why it’s far more cost-efficient to select the business structure that not only suits you now, but is most likely to fit the needs of your growing business into the future.
2) The risk of borrowing to fund your enterprise
Of course, it’s a rare business indeed that doesn’t need to borrow funds to get started – or indeed to keep trading. With borrowing comes debt… and with debt comes risk.
Most of the time, your finance provider will want security over your property in order to lend you the capital you’ll require. Usually that means mortgaging your family home (as it’s usually your most saleable asset).
You can see why it’s important to keep your debt under control and make sure you have a plan to keep your cash flow healthy, so that your business’s debt remains serviceable.
3) The need for timely payment of debts
As a business owner, naturally you will be ultimately responsible for the payment of the debts and liabilities of the business.
For example, this includes paying superannuation for your employees, submitting your BAS correctly and on time, and of course paying your staff’s salaries (including withholding income tax).
Failure to do so on time could lead to major penalties being applied.
4) The risks of being an employer
One of the biggest areas to get your head around are the many and varied issues with employing staff. While they can of course be one of your greatest assets, they’re human – which means you definitely won’t be able to predict all the many scenarios you’ll face!
While of course that shouldn’t stop you from employing people, it’s important to be aware of:
Relying too heavily on critical staff
Having a good team behind you is crucial to your business’s success. Yet it’s true that staff (however good) inevitably won’t be quite as heavily invested in your business as you are.
That’s why there’s always the possibility of good staff resigning to pursue other opportunities. To address this issue, firstly make sure you’re a generous employer and create a great working environment where people will want to stay. Secondly, as far as possible try to have a backup plan for when your high performers hand in that dreaded notice.
Naturally, your staff will be due annual leave, sick leave, personal leave, carer’s leave, and more. This accumulation is considered to be a liability of your business, and proper accounting is important.
Your liability for creating a safe workplace
As a business owner and an employer, it’s your responsibility to ensure your employees can experience a safe workplace.
That means not only ensuring a physically safe space, but also being aware of and managing issues such as sexual harassment, mental health, and the possibility of accidental injury.
Along with the issue above comes the need to ensure your workers’ compensation policies are compliant with legislation. Annual premiums must be paid every year, and proper return-to-work programs put in place for injured or sick staff coming back to the business.
The risk of employee theft
It’s a sad fact that sometimes, businesses experience more loss from their own staff than they do from the general public. For example, it’s estimated that up to 62% of retail thefts are actually carried out by employees!
Not every business will deal in a commodity that can be stolen by trusted employees; but if your business does, it pays to have systems and procedures in place to reduce your risk.
Before you start your business, talk to MDL
Of course, none of these risks are insurmountable – with the help of a good business plan and sound advice from experienced advisers.
That’s why a conversation with McCarthy Durie Lawyers can be so valuable. An experienced Business Lawyer will take the time to understand your situation, and offer you straightforward advice about your options and the best way forward.
Contact us today on 3370 5100 or fill out the contact form here to get in touch.