Thinking about starting your own business or going freelance? Deciding to go your own way is an exciting prospect, and many graduates will go on to have successful and highly rewarding futures in self-employment.
Self-employment enables you to have more control over your working life and to build lifelong skills and experience in your area of interest. You can prepare for the journey ahead by educating yourself and understanding the risks and challenges you might face. This is the best way to position yourself for future success.
Many people are drawn to the freedom and autonomy that self-employment offers but you must also be aware of the challenges involved, such as finding clients, maintaining professional relationships and promoting your services. For this reason, self-employment requires a great deal of ongoing initiative, networking and people skills to ensure that you are able to maintain enough business to sustain yourself.
You will need to be outgoing, have a strong work ethic and excellent communication skills. As self-employment does not offer the financial predictability of a employee salary, you also require a carefully planned approach to budgeting and financial forecasting. You will need to have strong finance skills and a good understanding of budgets, tax, accounting and the law, or consider engaging professional assistance in these areas.
If you are considering any of the following options, we recommend seeking further professional advice. The Victorian Government initiative 'Youth Central' also offers excellent guidance on starting your own business.
Become a sole trader
A sole trader is the most basic business structure and in most cases it is inexpensive and easy to set up (this will vary depending on your country). If you are looking to start a business on your own, becoming a sole trader is often a good place to start. Keep in mind that you are entirely responsible for all aspects of a sole trader business, personally liable for anything that happens and you are required to understand and comply with your legal responsibilities as a business owner. This structure is appropriate for freelancers, online businesses, startups, consultancies, wholesale businesses and shopfronts.
Important skills for sole traders include strong communication, initiative, multi-tasking, the ability to work autonomously, a strong sense of responsibility and accountability, and a good understanding of your financial and legal requirements.
Set up a partnership
If you intend to go into business with an associate, friend or family member, you may decide to set up a partnership, which is a jointly run business. A partnership under Australian law can involve two to 20 partners, but this may differ in other countries. A partnership is an excellent structure for a group of people with complementary or similar skills and a shared vision who wish to enhance the success of their business by combining their skills and experience.
Benefits of a partnership include:
- shared legal responsibility and task-sharing
- a wider range of skills and strengths across multiple partners
- the opportunity to specialise in different aspects of the business (as opposed to a sole trader, who is responsible for all aspects).
Challenges can include shared decision-making (you may not always agree on everything), the potential for personality clashes and ensuring transparency of information across all partners. Make sure that you think carefully about who your partners will be, and try to ensure that you have complementary personalities, mutual trust and a shared vision from the start (business plans and mission statements will help with this). A partnership might include an online business, freelancing, startup, consultancy, wholesale business or a service or retail premises.
Important skills for those entering a partnership (in addition to your specialised business skills) include cooperation and people skills, strong communication, initiative and a solid understanding of financial and legal requirements.
Start a company
Setting up a company is a different way to set up your business. Instead of being an owner or partner with direct personal liability, you instead become a member or shareholder of a company and appoint company directors (if you are setting up a ‘one person company’ you become the sole director and member). An advantage of a company is limited personal liability compared with a sole trader or partnership structure, where you have full personal accountability.
A company is more expensive and complex to set up, so it’s not necessarily advised as an initial structure unless your business is particularly high-risk and you wish to have some protection between your business and your personal finances. You are not completely without liability within a company structure, and you need to be thorough in your research and planning in order to ensure that a company is the best structure for your purposes.
Self-employment can take you in new directions and you may be surprised by the range of opportunities you’re presented with if your venture is successful. While there are many reasons to consider self-employment, there are also potential risks that require careful planning, research and strategy.
Risk management relates to understanding potential threats to the viability of your business and how you will cope if you are faced with a situation that creates difficulties or requires a change in strategy. This can include changes to people, operations, clients, premises or environmental factors that you can’t control (such as an economic downturn or supply shortage). A risk management plan will help you to identify and assess the risks associated with your business or venture and to work out how much risk you are prepared to accept.
If you are considering self-employment in Australia, you can learn more about risk management via business.gov.au or Business Victoria, or by searching for related information in the country where you intend to work.
Tools and resources
The following tools and resources offer small business advice and support from both international and Australian organisations. In addition to this there are plenty of other resources to search for and we encourage you to do your own research.
- Australia Business Register: apply for an ABN and find information on tax and your legal obligations.
- Australia Government New Enterprise Incentive Scheme (NEIS): program delivered by a network of 21 providers who provide individual help for job seekers to become self-employed business owners, including training, income support and personal mentoring.
- Australian Government Small Business: offering government information about growing, running and managing a small business.
- Australian Securities & Investments Commission (ASIC): government department supporting business owners in Australia. Register your business name, renew your business, make changes and access the small business hub.
- Business.gov.au: Australian government site offering information and support for those starting a business.
- Business Victoria: Victorian government site supporting small business owners in the state of Victoria.
- Council for Small Business Australia (COSBOA): Australia’s peak body exclusively representing the interests of small businesses.
- Freelance Australia: Australia's largest independent community of freelancers, offering advice, support and resources.
- Freelancer: Sign-up service and search engine for freelancers and clients to promote their services and connect with each other.
- International Council for Small Business: dedicated to the advancement of entrepreneurs and business owners through education, research and support.
- International Small Business Journal: leading peer-reviewed journal that publishes the highest quality original research papers on small business and entrepreneurship.
- Small Business Association of Australia: specialises in supporting and advocating for the SME (small and medium enterprises) sector.
- Startup Australia (for IT graduates): resource for IT graduates interested in startups and small business.
- Startup Melbourne: Melbourne-specific events and resources for startup businesses.
- Startup Victoria: a resource for startup related information and support.
- Youth Central: Victorian government site offering comprehensive guidance for starting your own business.
Need some more help?
Attend a seminar or workshop on skills development. Check Stop 1 for scheduled sessions.