Paul's Insights: Over 200,000 Australians launch new business during pandemic
Plenty of Australians have seen their working week - and income - cut short as a result of the Coronavirus pandemic. But in true Aussie have-a-go style, around 200,000 of these people have turned the situation around, using it as an opportunity to start their own business.
Figures from the Australian Securities and Investments Commission (ASIC) show that new business registrations jumped 10% in the first six months of 2020 compared to 2019. The real action started in May, when businesses registrations rose 22%, followed by a 43% increase in June. In total, over 200,000 new businesses have set up shop so far this year.
A pandemic may not seem like the ideal time to launch a new business. Realistically though, it’s a risky step at any stage. It can also be an outstanding investment – if the business goes well, the rewards are high.
Running your own show sounds good, and assuming it works, it is. However, as I found, starting a business from scratch means you’ll probably end up working a lot harder for a lot longer than you would in a paid role – especially in the early years. You also need to carefully manage cashflow, bearing in mind that money needs to be set aside for tax.
That said, if you’re prepared to work hard, making the leap into self-employment can be life-changing. But making a success of a new business rarely happens by chance, and it’s important to draw up a business plan. A great sounding business idea doesn’t always translate into a viable business, and a well-researched plan can show if your proposed venture is likely to work.
It also pays to tap into every bit of support. Fortunately, there is plenty of that available right now.
The 2020/21 Federal Budget expanded the New Enterprise Incentive Scheme (NIES), which delivers mentoring and financial support if you’re starting a new business. From 15 October 2020, budding entrepreneurs can access NEIS if they are working 25 hours a week or less. This makes it easier to get a business up and running even if you’re studying or caring for kids.
There is also a variety of grants available to new businesses. These are worth looking into, and a good starting point is the business.gov.au portal, though other grants are listed on the websites of state/territory governments.
Support is also available through the private sector. Mastercard has just announced its ‘Getting Back to Small Business’ package, offering local small businesses access to around $5,000 worth of tools and services, plus educational resources to help the business make the most of the digital economy. Head to the Mastercard website for more details.
Paul Clitheroe is Chairman of InvestSMART, Chair of the Ecstra Foundation and chief commentator for Money Magazine.