Biz Talk: Structuring Your New Business (Part 2)

Part 2: Getting the Structure Right

Second in a four-part series: the legal, financial and operational plumbing.

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Business Name

Register a business name with ASIC directly and avoid the many aggregators who try to clip that ticket. Research a website name and register it with something like GoDaddy. Do a trademark search. The problem with business names is the ‘tort of passing off’, where someone misrepresents their goods, services, or business as connected to another business, and it damages their reputation or trade.

Classic example: a rival slapping a name or get-up on their product that customers mistake for yours.

That’s why there are so many generic made-up names in business, such as ‘Bupa’ or ‘Wiyut’: because the possible combinations of words and letters in a business name, website and/or trade mark can collide with someone, somewhere, once you get traction.

Bank

You need to open a business account, which, from recent experience, will take several days, or never happen if you bumble into the Leichhardt branch of Bendigo Bank, where my most recent company bank account simply did not arrive. Nor did they follow up!

Set every kind of security protocol and arrange a Visa or Mastercard debit card. Register for online banking at the branch so you are sure it all works.

Bookkeeping

The only word in the English language with three sets of double letters in a row! And it is essential that this be set up from day one. Most people use software like MYOB or Xero. I prefer the latter. A default will usually be supplied with generic line items like ‘sales’ to produce an invoice or do a cash sale, and codes for expenses like ‘wages’, ‘fuel’, ‘phones’ and ‘rent’, along with most common line items.

At the very least, you need to be able to generate an invoice or action a sale from day one. You can usually set up an online payment gateway like Stripe so customers can pay using a card. Check the fee cost of the transactions!

You need an Australian Business Number and, if turnover will exceed $70k a year, and I truly hope it does, you also register for Goods and Services Tax (GST). I’d recommend this at any turnover level, since it ‘removes’ GST as a business cost. Whilst you charge it on your price, you also claim back ‘inputs’, or GST that your business has paid.

It isn’t always understood: GST is not a ‘cost burden’ on a business. It is ultimately paid by the end consumer, who could be the concert-ticket-buying punter. The people in the concert chain pass the GST through.

Rules

You need a set of rules, called Terms and Conditions of Trade. Have a look at the bottom of our ENTECH web homepage for Conditions of Attending and Conditions of Exhibiting. Two different sets. These should include payment terms and liability carve-outs, like in our Sydney PA Hire business, where we don’t take responsibility for event cancellation caused by our equipment punking out. Doesn’t mean we don’t care, we just don’t want a lawsuit. I’ve never ‘lost’ a show in my 53 years in the biz, by the way!

You’d spell out who carries what Public Liability Insurance, which, for example, pays out if your truss falls onto a dancefloor and hurts people. You need this too, so put a line item in your budget because every business should have it. If or when you hire a contractor, they in turn must carry their own insurance, so that’s in your T&Cs.

These days you also need a Privacy Statement dealing with how you handle customer data. In our rental business we collect credit card details and identification info – how will you store and protect these?

Are you exhausted yet?

P-P-P-Payroll

Prepare yourself for the horrors of staffing, because as soon as you need hired help you are in a legislated hellhole of workers compensation insurance, Pay As You Go (PAYG) tax and superannuation. Not to mention Fair Work and confusing award rates.

As an example, under the Live Performance Award 2020 (MA000081), theatre techs fall under ‘Production and Support Staff’ with a ‘night work provision’.

Between 11.00 pm and 6.00 am they receive a 52.5% penalty payment instead of overtime, which would be double time. Keeping employees paid within any award is sometimes difficult.

You need an employment contract that lays out the job role and expectations, along with confidentiality, company equipment, things like who pays parking fines, and how or if overtime is paid. These days, restraints known as ‘non-competition periods’, which try to restrict someone from taking a job with your opposition, are harder to enforce.

Forget about the common industry practice of ABN invoicing, where a ‘contractor’ (person) does a gig and emails you their invoice with an Australian Business Number on it. Quite simply, that is now defined as ‘sham contracting’. An invoice from an individual, not a Pty Ltd company, is deemed employment and super is payable. So if you have an invoice from anyone with an ABN, you are required under law to pay 12% super into their fund within seven days. The problem is so acute that many production firms will only accept invoices from Pty Ltd entities.

Marketing

I get asked about this a lot, since I’m regarded as a prolific self-promoter, because I am!

Having a memorable name like Julius made it a good idea to associate my name with all of my businesses. You don’t see too many ‘Smith & Co Audio’ or suchlike, because that would drown in a noisy world. On the other hand, I bought ‘Sydney PA Hire’ last year because what it says on the can, it does!

Many industries spend between 2 and 4% of turnover on marketing, some much more. I rate Blackmagic Design, RØDE, Apple, and Allen & Heath as excellent practitioners. They are all consistent and present, which are core elements. Proper presentation of your facility and product is essential, along with accurate delivery.

Customer service sits under this umbrella. Be very clear and open about whatever levels of support you plan to offer and do offer. Back your product and your reputation.

Wearing my ENTECH hat, I sell a product that has absolute deliverables. We put exhibitors in front of most trade buyers in our core industry. But sometimes, rarely, I hear a reason not to exhibit: “we know everyone already”.

Hilarious, given every time we run ENTECH we discover at least 15% new entrants among the thousands who attend.

Currently, I’m not convinced boosted or promoted posts on social media are cost-effective, but I’m also not as savvy as a lot of younger marketers who’ve grown up in that space.

The one golden rule in marketing: make noise, but make the right noise.

Which goes to ethics. More on this later on.