Afraid to make the leap and fly solo with your own business? There’s more help out there than you may think!
Funding appears to be the major concern amongst those afraid to take the first step. 60% of the nine million Aussies that are afraid to fly solo claim they don’t make the move because of lack of funding. The reality is, it is easier than ever to secure the funding necessary to get started…just make sure to educate yourself and follow some sound financial principles.
Fear holds back many from trying to make a go of it on their own. They may have ideas, even a detailed plan in mind, but are held back by the fear of failure. Many don’t understand, or are afraid of, venturing out into the business world without a regular pay cheque, working from home, or launching a business with no guarantee of success.
Nine million Australians have the desire to fly solo, according to a report by the Australian Banking Association. The main reason they don’t take the first step to starting their own business is the belief that they don’t have “access to money” – in fact, 60% believe they don’t have access to the funding they need. 5.4 million people responded this way!
Demographically, 65% of women and 55% of men hold this belief. The majority of those holding themselves back from flying solo are between the ages of 18-34. This age range is actually the prime time in someone’s life to get started.
There’s far more support out there than most people think. In fact, business loan approvals average around 94%. So why aren’t they taking the leap? What is holding people back?
Soloists Businesses in Australia
Soloists in Australia comprise 62% of all businesses. According to the data, 98% of Australian businesses have less than 20 people employed within their company.
The current lending rules favour small business. Shouldn’t banks and lenders be yelling this from the rooftops? Perhaps it is because their reputation was tarnished during the Royal Commission. The new Banking Code of Practice now makes it easier for small businesses to obtain funding.
The New Banking Code
As of July 2019, the new Banking Code of Practice, outlined by the Australian Banking Association, makes it easier for small companies to secure the funding they need.
The loan contracts and the process has changed. The contracts are now simplified, making it easier and faster to apply for the loans. Banks and lenders are now required to provide longer notice period for any changes regarding loan conditions. They must also improve their communication and transparency when they are using insolvency practitioners and valuers.
Lenders tend to see start-up companies in a favourable light when they have been in business for at least 6 months, according to business lending expert Bill Tsouvalas, CEO and Savvy Founder.
By spending time reading and understanding the fundamentals of financial statements and the process of financing a business, potential Soloists would feel more comfortable starting their business. Chinmay Ananda, founder of the Finance Academy, speaker, consultant, and author of The FUNdamentals of Financial Statements has personally worked with hundreds of potential Soloists. He has guided them through the understanding of finance and financial statements.
Potential Soloists are not very confident their ideas will work out. Chinmay says they often focus on the worse possible outcome instead of focusing on the potential success of their ideal business.
Cash Flow Issues
One of the biggest reasons businesses fail is due to inadequate cash flow. In fact, according to ASIC, 47% of businesses fall into this trap.
Most often the cash flow issues occur when long term loans are spent on short term assets and vice versa. An example would be purchasing expensive office equipment on a credit card.
Unfortunately the lack of financial education is partly to blame. Money issues and education are not openly discussed, nor is it a focus during our years in school. By taking the time to understand the cash flow and financial fundamentals, we are in a stronger position to manage our business cash flow and build security for our business.
Another important aspect of your business will be ensuring you have the most suitable insurance coverage. It’s important to protect the company you are building, as well as limiting your risks and liability.
Public liability insurance is a critical component in your overall insurance plan. This type of policy protects your business if a customer, supplier, or member of the public is injured or sustains property damage as a result of negligent business activities.
Comprehensive business insurance should be maintained in order to protect your overall business and give you peace of mind so you can concentrate on making your company successful.
So, if you’re ready to take that first step in becoming a Soloist, take the time to understand the resources available to you, put together a business plan and go for it! The rules are in place to turn your unique idea into a successful reality!
Quotes for insurance can be obtained from a range of sources. You can contact the insurance companies directly however, this generally involves a lot of running around if you want to compare quotes from a variety of insurers. A better option for many business owners is to use an insurance broker or adviser who can obtain quotes on your behalf from a wide range of companies offering insurance.
BizCover has access to a network of insurance companies and can quickly provide you many policy options to choose from to secure the most suitable insurance to your business. For additional information regarding the importance of insuring your start-up business, please see https://www.bizcover.co.nz/business-insurance/.