How To Start a New Business

The First Pitch: My Definitive Guide on How to Start a New Business from Scratch

Every great business, every global brand, every disruptive innovation you’ve ever admired started in the exact same way: as a moment. It’s that flash of an idea in the middle of the night. It’s the nagging frustration with a service that makes you think, with absolute certainty, “I could do this so much better.” It’s the quiet, persistent realisation that you have a unique skill or passion that the world is missing.

It’s an electric feeling, a potent cocktail of pure, unbridled excitement and heart-pounding, stomach-lurching fear.

This is the moment where every single entrepreneur begins. I know it intimately. My journey with RedBalloon didn’t start in a slick CBD boardroom. It started in my home, at my desk, with a $25,000 personal investment—every cent I had—and an unshakeable belief that giving experiences was far more meaningful than giving things. That single, powerful idea grew into an online success story and eventually led to the co-founding of Big Red Group, the largest experience marketplace in our region.

For over a decade on the set of Shark Tank, I saw that same spark in the eyes of hundreds of entrepreneurs who bravely walked through those doors. They had the passion. They had the drive. They had the idea. But as I’ve said time and time again, an idea is just a thought without a plan and flawless execution. The vast chasm between a daydream and a thriving, profitable business is bridged by the deliberate, strategic, and often difficult steps you take next.

So, how do you take that brilliant idea and forge it into a real company? It is without a doubt the most common and most important question I am asked. It’s precisely why I sat down and dedicated a foundational episode of my podcast to creating a clear, actionable roadmap for this exact journey.

[Listen now for a detailed conversation on this foundational topic: How to Start a New Business]

Today, I want to give you my definitive guide. We’re going to cut through the noise, the myths, and the overwhelming jargon. This is my step-by-step framework to take your idea from a fleeting thought into the tangible, thrilling reality of your first sale.

The Foundation - Finding Your Bedrock Before You Spend a Single Dollar

Before you even think about registering a business name, designing a logo, or spending money on a website, you must start here. This foundational stage is the one most aspiring founders impatiently skip in their rush to “get started,” and it is the number one reason the majority of new businesses fail within their first few years.

1. Discover, Define, and Anchor Your "Why"

Starting a business is one of the hardest things you will ever do. There will be 2 a.m. nights staring at the ceiling, wondering if you’ve made a huge mistake. There will be rejections that feel deeply personal. There will be days you want to give up. The only thing that will sustain you through the inevitable, crushing troughs of despair is a "why" that is bigger than the money. As I explored in my book Live What You Love, your business must be fuelled by a deep, unwavering sense of purpose.

Ask yourself these piercingly honest questions, and write down the answers:

• Why this specific business? What is the problem in the world that you are utterly obsessed with solving? What injustice or inefficiency keeps you up at night?
• Why you? What unique experience, skill set, or passion do you bring to this problem that no one else can? What is your personal story that connects you to this mission?
• What is the legacy you want to create? Beyond profit, what impact do you want to have on your customers' lives, your community, or your industry?

Your "why" is your compass. It is your North Star. It will guide every strategic decision, it will inspire your future team, and it will attract a tribe of customers who believe in what you believe. When I started RedBalloon, my "why" was to fundamentally change the nature of gift-giving in Australia from accumulating "stuff" to creating lasting memories through experiences. That mission was infinitely more powerful and motivating than a simple goal of "selling vouchers online."

2. Stop Guessing and Start Validating: The Idea Litmus Test

This is perhaps the most critical lesson I learned from my time in the Shark Tank. An idea, no matter how brilliant you think it is, has zero value until you can prove that someone—other than your supportive friends and family—is willing to open their wallet and pay for it. You must transition from the dangerous internal monologue of "I think people will love this" to the powerful, evidence-based position of "I know people will pay for this." This process is called market validation.

How do you validate your idea before you’ve built anything?

• Become an Anthropologist: Identify your ideal customer—your "who." Then go and find them. Talk to at least 20 of them. Your goal is not to sell them your idea, but to listen with profound curiosity. Ask open-ended questions about their lives and the problem you believe you can solve. "Tell me about the last time you tried to [do X]." "What was the most frustrating part of that?" "What have you tried to use to solve this before?" "What did you like or dislike about those solutions?" You are mining for pain points and insights.
• The "Smoke Test" - Your Pre-Launch Launch: This is one of the most powerful and cost-effective validation techniques. Create a simple one-page website or a social media landing page that describes your product or service as if it were already fully available. Make it look professional. Write compelling copy that highlights the benefits. Then, include a prominent button that says "Buy Now" or "Sign Up for Early Access." When a potential customer clicks the button, a message appears: "We're not quite ready yet, but we're launching soon! Leave your email to be the first to know and receive a special launch discount." Then, drive a small, targeted amount of traffic to this page (you can use a $100 ad spend on Facebook or Google). The percentage of people who leave their email address is your conversion rate—a direct, quantifiable measure of real-world interest. This validates demand before you’ve invested thousands in product development.

The Blueprint - Charting Your Course for Success

Once you have tangible evidence that a market exists for your idea, it's time to create a plan. Forget the dusty, 100-page business plans of the past that take months to write and are obsolete the moment they’re printed. What you need is a lean, agile, practical blueprint that gives you clarity and direction.

1. The One-Page Strategic Plan

Your initial plan should be simple enough to fit on a single A4 page or a whiteboard. It’s a dynamic, living document, not a stone tablet. It must clearly and concisely answer these fundamental questions:

• The Problem: In one sentence, what specific, painful problem are you solving?
• Your Solution: How does your product or service solve this problem in a unique and compelling way?
• Target Market: Who is your ideal customer? Go beyond demographics. Create a persona. Give them a name. What are their hopes, fears, and motivations? Where do they hang out online and offline? The more specific you are, the easier it will be to find them.
• Your Unfair Advantage: Why will customers choose you over established alternatives? This is your "secret sauce." It could be proprietary technology, an incredible brand story, unparalleled customer service, a unique business model, or deep industry expertise.
• Revenue Streams: How, specifically, will you make money? Is it a one-time product sale, a recurring subscription, a commission-based model, a service fee, or advertising?
• Key Metrics: What are the 2-3 numbers that will tell you if you are winning? It could be new customers per week, website conversion rate, or monthly recurring revenue.

2. Master Your Financial Story

You don’t need to be an accountant, but you absolutely must be fluent in the financial language of your business. This is non-negotiable for any serious founder.

• Calculate Your Startup Costs: Create a detailed spreadsheet and list every single conceivable expense required to get your business to its first day of trading. This includes business registration fees, legal advice, website development, initial inventory, branding, marketing materials, and software subscriptions. Be brutally realistic, then add a 20-30% contingency buffer for the unexpected costs that will arise.
• Develop a Pricing Strategy: Do not just guess a price. Your price communicates your value. You need to triangulate it. First, calculate your Cost of Goods Sold (COGS). Second, research your Competitors' Pricing. Third, and most importantly, estimate the Value you provide to the customer. Your price should sit confidently at the intersection of these three factors.
• Find Your Break-Even Point: This is your first magic number. It is the point at which your total revenue equals your total costs. How many units do you need to sell each month to cover all your fixed (rent, salaries) and variable (materials, shipping) costs? Knowing this number gives you your first, most critical sales target and tells you if your business model is viable.

The Nuts and Bolts - Making It Legal and Fuelling the Engine

This is the part that can feel intimidating and bureaucratic, but getting it right from the start sets you up on a solid foundation and prevents major headaches down the road.

1. Your Legal Structure

In Australia, you'll typically choose between being a Sole Trader, a Partnership, or a Proprietary Limited (Pty Ltd) Company. Each has vastly different implications for your personal liability, the tax you pay, and the administrative costs you'll incur. My strongest piece of advice here is this: do not skimp on professional advice. Spend a few hundred dollars to have a one-hour meeting with a good accountant. This small, upfront investment will be the highest ROI decision you make in your first year. They will help you choose the right structure and register your Australian Business Number (ABN), your Business Name, and get you set up for GST if required.

2. The Money Question: Fuelling Your Launch

Very few businesses can be started with zero capital. How will you pay for your startup costs?

• Bootstrapping: This means funding the business entirely from your own savings. This is the path I took with RedBalloon. It is without a doubt the hardest path, but it offers the greatest rewards: you retain 100% control and ownership of your company. It forces a powerful discipline of frugality and an intense focus on generating cash flow from day one.
• Friends & Family: Taking money from your loved ones can be a wonderful source of early support, but it is fraught with emotional risk if not handled with extreme professionalism. You must treat it as a formal business transaction. Have a lawyer draft a proper loan agreement or shareholder agreement. Be crystal clear about the risks involved, the terms of the investment, and the potential outcomes (including the possibility of losing all the money). Never, ever risk a cherished relationship for the sake of your business.
• Investors (The World of Shark Tank): This involves raising capital from Angel Investors (wealthy individuals) or Venture Capital (VC) firms in exchange for equity—a percentage of ownership in your company. This path is glamorous but is only suitable for a very specific type of business: one with the potential for massive, rapid scale and a clear path to delivering a 10x or even 100x return to investors. If you go this route, you must have a polished pitch, a bulletproof plan, and a clear understanding that you are no longer just the boss; you have brought on partners to whom you are accountable.

The Launchpad - Gaining Momentum and Delighting Customers

You've validated, planned, and funded. The moment of truth has arrived. It's time to launch and make your first sale—the most thrilling and validating moment of all.

1. Embrace the Minimum Viable Product (MVP)

The single biggest mistake I see perfectionist founders make is waiting months, or even years, to launch because they want their product or service to be "perfect." Perfection is the enemy of progress. What you need to launch with is a Minimum Viable Product—the simplest, most stripped-back version of your product that effectively solves the core problem for your ideal customer.

For RedBalloon, our MVP was a very basic website with just a handful of experiences. It wasn't beautiful. It didn't have all the features I dreamed of. But it worked. It allowed us to get into the market, get real feedback from paying customers, and learn what was truly important. Your goal at launch is not perfection; it is learning. Ship it, learn, and iterate.

2. Obsess Over Your First 10 Customers

Forget about mass marketing. In the beginning, focus all your passion and energy on manually finding and utterly delighting your first 10 paying customers.

• Find them by hand: Go to the online forums, LinkedIn groups, or local meetups where they hang out. Reach out personally.
• Give them an unforgettable experience: Go wildly above and beyond on customer service. Write them a personal, handwritten thank-you note. After they receive the product, call them to ask for their honest feedback.
• Turn them into evangelists: A delighted first customer is more powerful than any marketing campaign. They will become your most authentic and passionate advocates. They will tell their friends. They will give you the testimonials and social proof you need to attract the next 100 customers.

Ready for the Real Conversation?

We've covered the strategic framework here, but starting a business is also a deep, emotional, personal journey. On my podcast, my Big Red Group co-founder David Anderson and I have a candid, no-nonsense conversation about this entire process. We share personal stories from our own start-up days, discuss the emotional rollercoaster you can expect, and get into the nitty-gritty of how to pitch your idea effectively from day one. It’s the perfect audio companion to this written guide.

Listen to the full episode here: How to Start a New Business

You Are Now a Founder

The moment you decide to actively pursue your idea—by talking to that first potential customer or sketching out your one-page plan—you cross a threshold. You become an entrepreneur. The journey you are embarking on will be one of the most challenging, exhilarating, and educational experiences of your entire life. It will test your resilience in ways you cannot yet imagine and teach you more than a decade of working for someone else ever could.

Remember the steps: Start with your deep, personal Why. Validate your idea with real people before you build. Create a lean, practical Blueprint. Understand your Numbers intimately. Get your legal Structure right from day one. Launch with a lean MVP. And Obsess over those first crucial customers.

You do not need to have all the answers right now. You just need to have the courage to start. Take that first small, tangible step today. Then the next one tomorrow. You are ready to soar.

Now, I would love to hear from you. What is the business you are dreaming of starting?