Many an entrepreneur who announces to the world that they are about to start a new venture are warned about the number of companies that fail in the first year. It is three in five. That’s an incredibly daunting figure, but it’s not altogether surprising.

All small businesses that are just getting off the ground have similar problems, and many are unaware of the importance of getting the basics right.

Not surprising, doing the accounts, recruiting staff, buying insurance and paying the rent sound like small beer compared to the big idea behind the company, but spending time on these can make the difference between success and failure. Planning should always be the first step in developing a business.

One common issue is the problem of time – there’s quite simply not enough of it for sole traders, who put their life, soul, and themselves on the line to do what they do best. They make up three quarters of all Australian small firms.

Mark Smith, who runs his own plumbing business, had problems that were typical of a new business. Initially he didn’t focus on cash flow – which is quite simply the money coming in, and leaving the business, as customers pay him, and he pays for supplies. All small businesses know it is vital to ensure there is a buffer between income and expenditure, in case a customer doesn’t pay on time. This was highlighted as soon as he took advice from a support network.

There are dozens of support groups offering advice who can point small business in the right direction. For many the first stop is the Office of Australian Small Business. It represents small business interests and has templates for everything from cash flow to stock control.

Another source of free advice is Business Enterprise Centres. They provide free or low cost advice and assistance to small businesses throughout Australia.

Often entrepreneurs will open a business because they’ve had experience in that line of work before. For example, you might open a boutique because you’ve worked in one. However, just because you know how to do the day to day tasks on the shop floor doesn’t mean you are well-equipped to run the business. For instance you may know how to cut hair – but planning a marketing budget is another matter.

Your marketing plan should combine your total marketing effort, ensuring you have enough customers, and give you a systematic approach to letting customers know you are there.

Barnett’s Couriers Senior Logistics Manager is Shaun Willis, and the GM is Bob Barnett. After over five decades operating in one of Australia’s most competitive industries Barnett’s Couriers have learned a lot of lessons about how to survive and prosper in the transport sector.

They make the point that a company’s relationship with an insurance broker is crucial, often suggesting things that may not have occurred to those running the firm, proving professional support and ‘top shelf’ advice to help you run a better company, even if that company is only you and another person.

They can also suggest emergency planning. Resilient businesses prepare for possible risks, and take appropriate action. For example if a company van is off the road following an accident, or if there is a fire in the firm’s only office.

Even when you are setting up your company, you should not ignore what may happen when you leave it. A succession plan is designed to help you plan for the day when you move on. Planning for this time can provide a smooth transition and lowers the risk of disruption.

Vincent Piccolo is the GM of The Art of Gelato, a small family owned boutique gelato store. As a second generation business, it is a great example of a company that got it right, with a son who knew what he wanted to do, and a father who wanted someone to succeed him to make the company the success it now is. Vincent however knew he needed to learn more about running a company, and so he studied business at university before taking the reins off his father.

Running a small business can be one of the most stimulating experiences you can have. However, it can also be short lived, unless you ensure you have good financial management, and good planning. Then, when you have a great small company you will have something that is not only a great place to work, it is also a good revenue generator for the country, and something that you will want to hand onto the next generation.

To listen to the Big Fix for Small Business Podcast click here.

*Article written by Julian Lorkin, Financial journalist and host of The Big Fix for Small Business