Human nature can truly be both a wondrous and frustrating creature.

I met an acquaintance of mine recently over lunch and before I could open my mouth to complement her on her choice of venue, she immediately started regaling me (well, battering me really) with details of a new business she had just established.

My friend (let's call her Christabelle - hey, I like the name OK?) had just commenced business at home as a distributor of hair care products and was eager to tell me her business plan for the next year.

Given the numbers she was talking it sounded as if she was going to be the next Loreal.

"Where are you storing all the stuff?” I asked, "Have you rented premises somewhere?”

"No, that's the beauty of it. I'll save money by storing it in my spare bedroom” she replied.

"But what if something goes wrong and it all gets stolen or leaks or used as mouth wash or something?” I countered.

"Well, duhhh! Have you ever heard of home contents insurance?” she responded.

"Sure, but that won't cover you and what about any negligence claims?”

It was at this stage that Christabelle expressed her years of business wisdom with the immortal word, "What?”.

As I explained to her that quite a few home contents insurance policies have exclusions for a business being conducted on the premises and that steps should be taken to protect her if any customer wanted to sue her for negligence if they somehow didn't use the product properly (like eating it or something), I could see her rapidly beginning to deflate.

Not wanting to stifle her entrepreneurial flair, I attempted to rectify the situation with the reassuring words "Well, don't worry. If anything did go wrong your business structure should protect you to some degree.”

"What do you mean business structure?” she replied.

At this stage I felt it prudent to order a bottle Chardonnay to cushion her as I attemp

ted to explain the benefits of setting-up a business in Australia correctly, to take advantage of taxation, protection and other business benefits.

I could see that my words were slowly starting to sink-in but I had a further meeting to attend (and the Chardonnay had run dry) so I told her not to worry and that we would discuss her position the next day.

To cut a long story short, Christabelle was eventually able to sit down with an accountant and insurance broker to look at her business and determine the best way for her to proceed, to allow Christabelle to concentrate on what she does best - selling!!

Is there a moral to this little tale?

Don't skimp the dollars when it comes to advice!! Actions taken to save money in professional fees at the outset usually result in twice as much being paid to rectify the problem down the track.

For example, if you are thinking of selling your business down the track, do you know if your current business structure will allow you to pay NO tax on any gain you make on its eventual sale? You didn't? Naughty-naughty!

Business regulations in Australia ARE complicated - that's why you should discuss them with experts!

Don't let a fantastic business idea get flushed down the s-bend simply because you wanted to save a few dollars. If you set-up business correctly at the beginning, you'll be set-up for life!

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