Why lockdown could be the time to start your small business

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A pandemic might seem like a weird time to start a business, but marketing whizz Emma Reeves, from Excelerate Marketing, believes it was as good a time as any to take the plunge.

In June 2020, Reeves decided to launch her own business and by the end of July she was working with several clients in the professional and financial services field. A year later, the 28-year-old is earning as much as she did as an employee and is paying herself a salary.

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why lockdown could be the time to start your small business

While the commercial world was already obsessed with the benefits of digital marketing such as social media, Reeves identified that pandemic lockdowns would turn the wave of demand into a tsunami. While the millennial marketer saw the immediate opportunity, the desire to start a business predated the coronavirus.

"I would rather make no money and do something I love than work for an employer doing something I'm not passionate about. I had a job, but I felt it was time to follow my passion.

"That said, I had an inkling that with all the changes caused by the pandemic, the whole digital marketing world was evolving, along with the way businesses talk with their customers and how they spend their marketing budgets."

Serial entrepreneur Dean Roller, who launched Hammock Centre, a "dropshipping" business, as a 28-year-old in December 2010, agrees passion is critical to start-up success. "I also love the freedom to run my own show and be creative."

Roller, who has a double degree in mechanical engineering and physics from Sydney University, initially took a job with an advertising agency after graduation because he was interested in learning about the dark art of Google AdWords.

"However, I hated working for someone else, and I settled on working for myself after reading The 4-Hour Work Week by Timothy Ferriss, which alerted me to the idea of dropshipping," says Roller. (In the dropshipping model, a business sends its sales order to a wholesaler, which then ships the goods to the customer.)

Roller has since launched customised bean bag provider Bliss Bean Bags, which took off during Covid lockdowns on the back of demand for chair bean bags for home offices. He is also a co-founder of online dental retailer Mouthwatchers Australia and in April 2018 launched DIY Granny Flat, which helps homeowners add investment value to their properties.

Plan to make a difference

"I'm too busy to plan" is a catchcry across all business sectors. It's easy for owners to ignore planning and focus on activity.

"I didn't do much planning," says Reeves. "It was just a few conversations to check on the concept of the business, scribbling a logo on paper, building a website and evolving the business as I got new clients."

Roller never troubles himself with formal business plans.

"My advice is to do some research. Before Bliss Bean Bags, he road-tested two other businesses - importing blenders from Hong Kong and protectors for the boots of parked cars to guard them against scratches and bingles. He created some simple websites for $100 and for $300 ran some Google AdWords, which he carefully tracked. The research revealed there was little demand for the boot covers or blenders.

"So I scrapped these ideas before shifting to bean bags," he says.

Get the structure right 

If you don't choose a business structure, it's assumed you'll operate as a sole trader.

That said, it's worth considering what operating as a sole trader involves, along with the other structures such as partnerships and companies, by speaking to a lawyer or accountant.

Reeves says that from the outset she determined to operate as a company. Unlike a sole trader or partnership, a company is separate from its owner so you're less exposed to business-related legal or financial issues.

"I preferred the company structure because it delivers security and reputational benefits," she says.

"In terms of security, by operating as a company I keep my personal assets separate from my commercial interests, it gives my clients the peace of mind that they are working with an entity that has structure and will provide ongoing support, and operating as a company sends a signal that I have plans to grow and expand."

Companies also generally pay tax at a lower rate, although they cost more to operate than a sole trader or partnership.

There is also more administrative red tape, which an accountant can handle for a fee.

On the issue of expenses such as accounting fees, Roller says cash flow management is key to start-up success.

"When you start, try and spend as little money as you can because you don't know if it's going to work, and you might need money to try again."

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Anthony O'Brien is a small business and personal finance writer with 20-plus years' experience in the communication industry.