How to start a Startup
Many people dream of starting their own business, how do you do it?
In the tech community the hackers' dream is to sell their cool webapp to Google for millions of dollars. This is so rare that is does not occur in statistical terms. Yes, we all know the stories and names Writely, Blogger, YouTube, SketchUp etc but the is reality most do not succeed.
There are a number of distinct phases a startup goes through:
This is where a person is annoyed by the lack of service or solution to a problem they have and think there must be an easier way.
Often it takes a long time before your thoughts are solidified into actions. On many projects may take years for either the market or the technology to catch-up to your insights.
Alternatively, you can overcome the technological barriers on making it.
1. Part-time startup
This is when you have decided to start a project, it is not necessarily business, it could be a new community gardening group or countless other social groups.
There is no / little formal structure. You and possibly several like-minded individuals start doing work without regard to costs. Business planning is non existent, the only question is can I solve my problem.
This is often called "scratching your own itch".
Within a short while, people decide if there is a business to had from the project and start thinking how to generate revenue from the project.
People continue to work their 'real' jobs and often use their employers equipment and stationery as a cheap source of capital.
"As long as you’re willing to invest your moonlight hours to develop your business, continuing to take a salary while launching your startup company is basically like asking your current employer to fund your new startup – without actually asking them."
2. Professional startup (Or why I don't have money any more?)
This is where you 'quit' being an employee to work on your project full-time.
People are wildly optimistic (you have to be as an entrepreneur) in estimating how quickly and cheaply you will succeed.
1. It always takes longer than you planned
2. It always is more expensive
It is a shock when you do not receive a regular wage. If you are doing some consulting / subcontracting work while developing your product or service, clients are often slow to pay.
Often this is the stage where you need access to OPM (Other People's Money). Depending on the amount and type of business you may need either a 'seed investment' (3F money), an angel investor(s) or Venture Capital. If this is the case, you will also need a quality business plan.
SETTING UP A LEGAL BUSINESS ENTITY
1. Business Name
Most start ups start with a name, don't they? So while not strictly about creating a legal entity, the law says if you use start using a business name you need to register it with ASIC (it used to be done by the States & Territories but now ASIC handles it). Or you can use a cool service like Business Name Registration.
2. Legal structure
While it's good to seek advice from a reliable accountant or lawyer with decent start up experience, they can be hard to find sometimes (and when you do, be prepared to pay). Whoever you use, try to secure a fixed-price before engaging, otherwise you may get cost blow-out. If you are a one man (or woman) band and starting off small, you may not want to spend too much money forming a company at start up. In this case, consider setting up as a sole trader first by securing your Australian Business Number (ABN) through the ATO or for less than $200 you can use experts www.businessregistration.com.au who will sort everything out. You can always migrate to a company later.
Some firms from experience of the forum members (Please contribute to this list if you've have good experiences)