How to start a business

Jessica Satherley
How to start a business
Has starting a business been on your checklist for a while?

Lots of people want to start a business but how do you actually do this? Here's our potted guide that will cover:  

  1. Business ideas 
  2. Innovation vs Adaptation 
  3. Writing a business plan 
  4. Registration 
  5. Regulations 
  6. Financial advice and business bank accounts 
  7. Risk Mitigation 
  8. Franchises 
  9. Working on the side 
  10. Is your business a success? 
  11. Personality type best-suited to owning a business 
  12. Advice from a business success story 


Photo of Toss Grumley

Toss Grumley says you must ask yourself if this business idea can make money

What you need to know about your business idea 

Have you ever had a business idea, but aren’t sure if it’s a good one?  

If so, you’re not alone because even the experts say it’s hard to know what a good business idea is. 

Business Advisor Toss Grumley, from Wolf and Fox Growth Business Advisors says, “a great idea to someone is a terrible idea to someone else”. 

“What you must focus on here are two key things – does the business model work, and can this business actually make money? 

“So many people start businesses that have a broken financial model and have no chance of ever getting them to their goals.  

“The second issue is, who is the target market? You can create a business with a target market of one and not see any success.   

“How many people would actually buy this product or service?” Grumley says. 


Is it better to innovate or adapt an existing business model?

You might be wondering if it’s better to create an entirely new product or service or simply improve upon the competition already on the market. 

Grumley says the risk of doing something completely new or different drastically outweighs doing something that is already out there. 

“This all depends on your ambitions and skillset though.  Most people will see better results from doing something that’s already out there but doing it better. 

“But without innovation things would never move forward, so someone has to be willing to take the big risks,” he says. 

Once you do have a winning idea, New Zealand is the easiest country in the world to start a business in, according to the 2016 World Bank Doing Business survey

The ease of starting and doing business in New Zealand comes down to the fact that we have “few restrictions on establishing, owning and operating business here”, the New Zealand Immigration website states. 


The first step to starting a business plan - how to write a business plan

So, where do you start?  Grumley recommends starting with a business plan. 

“Always start with a plan that covers all aspects of the business.  You need to think carefully here about your target customer and what they will require from the business. 

“Then you need to do financial forecasts, run a few versions of these forecasts.  At the levels of the less ambitious ones, ask yourself if you’re still happy to go ahead,” he says.

Photo of a business plan

The first step to starting a business is to make sure you write a business plan


They say the devil is in the details and Grumley says he prefers a well-detailed plan. 

“However, you need to take key tasks from this and create a one-page document or a shorter plan too.   

“Don’t make a large plan and then never action any of it,” he said. 

“A plan should include growth measures, expected return on investment, and sales targets along with other consideration specific for your business,” KPMG’s Head of Private Enterprise Paul McPadden told REDnews in a previous article

“It’s really important that you sit down at least once a quarter and look at the goals and measures and objectives, and track how you’re going,” McPadden said.  


Register your business name 

You will also need to decide on a business name and check both the Companies Office and the Intellectual Property Office to make sure it hasn’t already been used by somebody else. 

The New Zealand Intellectual Property Office handles trademarks, copyrights, trade secrets, company name registrations, domain name registrations, as well as patents and other types of IP rights. 

Photo of woman brainstorming business ideas

When starting a business, make notes of the regulations you need to research

“The costs to register a company in New Zealand are minimal, the real costs come later if you haven’t planned it out correctly,” Grumley says. 

Once the business name is registered, either an individual or company tax number will need to be set up through Inland Revenue.   

You will also need to register for a New Zealand Business Number (NZBN). 


Check your business's regulations

If your aspiring business includes food, beverages or health products you will need to look into specific regulations around the product. 

To find out if your business has regulation guidelines you can check on the Government business website under Compliance Matters

The location of your business may also need to be OK’d with your local council.   

Some business activity isn’t allowed in residential areas, such as auto repair shops.  


Setting up your business bank account 

The requirements to open a business bank account are similar to a personal bank account in terms of needing a valid photo ID and address verification, however you need to be at least 16 years old. 

Although, in some cases for a business account you may need to prove a source of wealth and a business plan, including projections and a financial forecast. 

“There is no minimum financial requirement to deposit in the business bank account when opening it, but we need the necessary information to comply with legislation,” Westpac’s Area Commercial Manager of Manukau, Simon Lowe, says. 

Photo of meeting with a banker

Meet with your banker to find out business bank account options

“We would sit down with you and see if you have a borrowing requirement and ask how you would service and secure the loan. 

“If you’re looking to borrow money, we have expert lenders that can structure the deal appropriately to meet your cash flow cycle and capital expense needs. 

“We can identify what your business goals are and make recommendations for your needs, such as merchant facilities. 

“We also advise on ways to manage your money and provide risk mitigation,” Lowe said. 

In terms of how much money you will need, “this depends on the type of business,” Grumley says.  

“Service-based businesses can be started for little to no money.  If you want to launch a product-style business this could be much more costly.   

“My tip here is if you have limited capital, start small and work your way up, it’s how most of us did it,” he says. 


Mitigating the risks of your entrepreneurship

“The main risks are around losing time and money on the endeavour,” Grumley says.   

“I think these risks can be reduced by analysing the business deeply from the beginning and making sure that you have covered all your bases in the planning stages,” he said. 

The number of Kiwi businesses in the market increased more than 12% from 2013 to 2018, with the construction industry having the largest growth, according to Stats NZ

But only 16.7% of New Zealand’s workforce is self-employed, according to Infometrics New Zealand as of March 2019. 

Photo of office workers

Mitigate the risks of starting a business by analysing your financial forecasts

Grumley says he’d love to see more Kiwis starting businesses but warns, “I do think people need to plan better as the statistics around failure are extremely high.” 

“I’ve seen businesses go under because of inadequate due diligence being undertaken at the outset,” Westpac’s Simon Lowe, who is also a judge for Westpac’s Business Excellence Awards, says. 

“It’s important to ensure you understand not only your market and customer value proposition (CVP), but have an eye on things like competitor, technology and supplier developments and changes as seemingly little events can have a big impact on your cash flow and profitability. 

“For these reasons it’s always important to have adequate capital to meet unexpected as well as expected expenses. 

“We can also help you stress test your financial forecasts so you can see the impact of what would happen if a product was slow to sell or your wage bill goes up. 

“There is also a lot of legislation and HR requirements in relation to having employees, so once you have staff there is another layer of complexity,” Lowe says. 

For these reasons, Lowe recommends working with a trusted business banker, an accountant and lawyer to help identify and mitigate risks. 


Is buying a franchise less of a risk than starting a new business? 

“Franchises are less risky than starting a new business, but they come with risks of their own,” Grumley says. 

“Many franchise owners end up disappointed, feeling more as if they’ve purchased a job rather than a business after running them for a while. 

“You must be careful when deciding which one to get into and do your research on the business and industry,” he said. 

However, there are advantages to franchises, such as you would have the support of the overall brand and a bank can help manage certain aspects of the business. 

Westpac was the first bank to offer specialised franchise banking in New Zealand and offers franchise commercial managers in all the major centers.   

The bank offers specialist advice regarding franchise funding, it sponsors the Westpac Franchise Awards and supports various franchisee education and training initiatives. 

“The systems of a franchise business, such as supplier agreements and marketing, are already in place, which has its advantages,” Simon Lowe says. 


Photo of a cafe worker

Keeping a paid job on the side could pay off while you start your business

Should you keep a salary job on the side while you start your business? 

To minimise the risk of putting all your time and energy into starting a business that might not make any money in the long or short term, you could keep a salary job while working on your startup.  

“This is how I and a lot of my clients got started,” Grumley says. 

“It’s a lot safer but can also be more of a slow burn.  Again, this might depend on your level of confidence around the business. 

“If you are an expert in what you do and clients will flock to you, why wait?” he said. 

In terms of paying yourself out of your new business, you can take drawings out of the business bank account but remember that has tax implications. 

“Ideally there are profits so you could pay yourself from the profits, but speak to your accountant, it’s always important to retain profits within the business to enable growth,” Lowe says. 


How long does it take to know if your business will be a success? 

“Most people I know who make good money from business have been at it at least three years, those doing incredibly well are usually five to 10 years in,” Grumley says. 

Photo of a successful man

It might take years before you realise the business is a success

“It’s not a quick thing, however, you can start to see the signs quite soon if it has the makings of a successful business. 

“Great businesses are made from the gradual improvement of all aspects over time,” he says. 


What personality type is best suited to owning a business and entrepreneurship? 

Starting a business and being an entrepreneur doesn’t suit everybody and there is much less risk involved in taking an employee contract. 

“Anyone who is willing to take risks and put things on the line will be far more likely to start a business,” Grumley says. 

“It doesn’t necessarily mean they will be more successful in business, but it gets them over the initial barrier of starting,” he said. 


Advice from a business success story 

Photo of Brianne West

Brianne West started her cosmetics company Ethique in 2012

Kiwi biologist and entrepreneur Brianne West created her Christchurch-based cosmetics company Ethique in 2012. 

She recently won a Supreme Award at Westpac Champion Awards and spoke to REDnews about her company - which has so far saved 4.4 million plastic bottles from being dumped because of her compostable packaging. 

West’s advice to other entrepreneurs who want to start a business is, “Surround yourself with excellent people (or even just one), who believe in you and your idea. 

“Even if they’re not an expert in your industry, being able to bounce ideas off someone else is very useful and adds an outside perspective. 

In terms other advice on starting a company, she says, “Don’t wait till it’s perfect and don’t over-plan. 

“If you wait till your product is perfect, you’ve waited too long to launch. 

“As the saying goings, if you’re not embarrassed by your first product, you waited too long. 

“Also, whilst planning is important, writing a 30-page business plan before you even start selling has always struck me as a little ridiculous. 

“Put a plan on a page (what you are going to do, how and when) and then get started. But don’t ignore the financial side of things, even if you don’t like it, it’s critical,” she said. 

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