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Starting or buying a business necessitates research, risk, passion and planning. To succeed you need to make the right opening moves and over the years we have mentored hundreds of clients through the start up phase of their business. We have earnt a reputation as a business start up specialist and developed a number of practical tools and checklists to help you fast track your business success.
The business landscape in this country has changed courtesy of the GFC, technology and the internet. Websites are the 21st century business card and depending on your target market, social media could be your most important marketing channel. The harsh reality is that enthusiasm, money, hard work, talent or a great idea is not enough to guarantee success in business.
According to 2011Doing Business report by the World Bank, Australia is the second easiest place in the world to start a business with entrepreneurs needing only two days to get a business registered and operational. However, statistics from the Australian Securities and Investments Commission (ASIC) indicate that 9,829 companies entered external administration in the 2011 financial year, an increase of 5.9% from the previous year. Clearly, the old saying, ‘people don’t plan to fail, they just fail to plan’ still applies and and it remains both valuable advice and a warning for people intending to start a business.
If you are starting or buying a business the evaluation and establishment phases can be periods of great anxiety due to a combination of excitement, uncertainty and financial risk. Clearly the risks are real and the Australian Bureau of Statistics suggest that 42% of new businesses won’t be around in 3 years time. If you think buying a franchise reduces the risks consider the results of a franchise study in 2008 that revealed:
While the small business journey can be challenging, it can also be very rewarding. Our role is to support and guide you through the process and it starts with the right opening moves. Unfortunately many people starting or buying a business fail because they don't seek or receive the right professional advice. Having assisted so many clients in your situation you can benefit from our experience. We also believe business owners want a lot more than just basic accounting and tax compliance services from their accountant. Our client brief includes helping you grow your business, your revenue and profits and in time, build your personal wealth.
Michael Gerber pointed out in his best selling book ‘The E Myth’ that, “Most people work IN their business. The secret is NOT to work IN it, it’s to work ON it so that you don’t have to work IN it.” While you’ve probably heard it all before the fact is, most business owners struggle to find the time to work on their business because they’re caught up in the day to day operations. They have simply created a job rather than a business that works independent of them.
Our business coaching services are both broad and deep and if you need a business plan, succession plan or financial blueprint for the future we can help you. We can also assist you with your marketing including your branding, marketing plan, website and corporate brochure. We have the knowledge, tools, resources and experience to turn your ideas into profits. We aim to make your financials more meaningful and when you work with us you have a true business advisor committed to your results.
THE FOUNDATIONS OF A SUCCESSFUL BUSINESS
Accounting software is another brick in the wall of your business foundations. Again, the wrong choice can be catastrophic because poor records are one of the biggest causes of business failure in this country. You need up to date, accurate financial records to make informed business decisions which is why we insist your accounting software matches your business needs with your level of accounting skill. Using a sophisticated double entry accounting program without a reasonable level of accounting skill can create records that resemble a 'computerised shoebox'. This leads to frustration and extra costs which conflicts with our mission of helping you reduce the cost of compliance.
As you know, to build a house you also need the right tools. When 'constructing' your business we use a number of tools including our start-up expense checklist to identify all your potential establishment costs. These figures can then be transferred into a cash flow budget template to produce a projected trading statement for your first year of operations. For many business owners, your car is arguably your most important business tool. You can download our Motor Vehicle Tax Guide from the resources section of our website to learn more about the alternative methods of claiming your vehicle expenses and the distinction between a business and private trip. In addition, through our affiliate partners we can also assist with vehicle finance (chattel mortgage, CHP or lease) and get you fleet pricing on your new car that could save you thousands of dollars. We can also help you put together your business, marketing and financial plans using our in-house templates.
That’s really just the beginning because as accountants we can do some financial modelling and prepare some ‘what if’ scenarios to identify your best and worst case profit scenarios.
MARKETING YOUR BUSINESS
Most business owners rely on their reputation and referrals to grow their business. While these ingredients remain important, in the digital age you also need to focus on your online presence. Increasingly local searches (e.g. ‘Bulder Perth’) are driving traffic to your website and often your website is the first touch point with a potential new client. As you know, you only get one chance to make a good first impression and your website and marketing can be the difference between boom and gloom in the digital age.
One of our biggest points of difference compared to other accounting firms is our marketing expertise and over the past few years we have worked with dozens of clients to help them create affordable, quality lead generation websites. If you need advice and direction with your website content including video production we can help you. Not only that, if your website lacks calls to action or lead magnets we'll help you build them plus we'll introduce you to strategies like re-marketing and search engine optimization to drive more traffic to your website.
We recognise the fact that business owners want more customers and more profit so we also give you access to one of the world’s most successful marketing programs, the ‘Business Growth System’. It contains more than 80 breakthrough marketing strategies supported by videos, templates and checklists. Access to this ‘vault’ of resources would normally cost you $6,000 per annum, however, as a client of the firm you get unlimited FREE access. In addition, you also get unlimitedaccess to the ‘Grow Your Business in 5 Days’ video training course that could have a massive impact on your future business growth.
Our mission is to fast track your business start up and give you a serious competitive edge in your industry. In fact, if you aren’t using some of these marketing techniques your business probably won't reach its full profit potential. The marketing process often begins with your branding and we have worked through the process with dozens of clients over the years and using some online resources we can help you build a modern brand that resonates with your target market.
We are not your average firm of accountants who just keep the score. We view the tax return as the start of the client process, not the end and we are business start up specialists who are passionate about your business success. To help our clients we have published a comprehensive guide titled 'Starting or Buying a Small Business'. This 45 page booklet provides valuable information on a number of key issues that confront clients starting or buying a business in Australia including:
We are passionate about your business success and to help our clients we have published a comprehensive guide titled 'Starting or Buying a Business'.
This 45 page booklet provides valuable information on a number of key issues that confront business start-ups including:
Excerpts of the booklet are below and full copies of the booklet are available from our offices.
Statistics suggest the average business owner spends 109 hours a year on their tax obligations so your choice of accounting software is critical. One of the biggest mistakes small business owners make is that they purchase accounting software beyond their business needs and level of accounting skill. This can lead to considerable frustration and business records that amount to nothing more than a computerised shoebox.
The wrong software can also add to your accounting and bookkeeping costs while our mission is to help you reduce the cost of compliance. With so many accounting software programs available it's easy to become confused because they range in functionality and sophistication with a price tag to match. To assist you we provide the following basic software guidelines:
If you don’t understand double entry accounting (i.e. debits, credits and journal entries) then avoid sophisticated accounting software programs. If you need to use these types of programs because your business needs functions like stock control, point of sale or a full blown general ledger then consider undergoing a training course at a local TAFE.
Don’t buy software beyond your business needs. If you don’t need inventory or a fully integrated general ledger system don’t use a sledgehammer to crack a nut. Your software should be compatible with our general ledger system to allow easy transfer of electronic data. This can save time, money and assist with meeting the various taxation lodgement deadlines including your tax return and BAS's.
Programs like MYOB and QuickBooks are very popular in Australia but they don't suit a lot of business owners who lack formal accounting training. While we certainly support those programs (plus others) we find many people need to engage an external bookkeeper because they don't know how to use these programs. This involves unnecessary costs and experience tells us that most business owners simply need a bookkeeping program to track receipts, payments and GST. You might also require an invoicing and payroll module in your business. Subject to your business needs and level of accounting skill we strongly recommend Cashflow Manager because of its relative simplicity. It looks and operates like a manual cashbook complete with a spreadsheet or column layout and it requires no understanding of accounting principles including debits, credits or the distinction between assets, liabilities or equity.
The program provides business templates that automatically establish columns for certain business types and it represents excellent value for money. More importantly, it could slash your compliance costs. Reconciling your data to your bank account is also very simple and if you use internet banking you can download your bank statements and import the data into Cashflow Manager to save even more time. You can have multiple bank accounts in a single business file and the comprehensive reports explain your business results and make preparation of your BAS very easy. The program includes the debtors function so you can generate tax invoices, track your debtors and produce regular customer statements. If you have staff you can add ‘Wages Manager’ to process pays, print payslips, Annual PAYG Payment Summaries and track staff entitlements.
There is no need to undergo lengthy or expensive software training courses and our staff can teach you the basics is less than 30 minutes.
While the main reason most people prepare a business plan is to raise finance, your business plan should also prove the viability of your business venture. Included in the business plan is a cash flow budget and a positive cash flow is an absolute necessity if your business is to succeed. Positive cash flow just doesn’t happen, it needs to be planned. That’s why we strongly recommend the preparation of a 12 month cash flow budget before you start the business. In fact, any business that fails to accurately forecast its cash flow in the first 12 months is on a collision course because without realistic cash flow projections, management is unable to identify future cash shortages.
The cash flow budget is based on a number of assumptions regarding the expected future performance of the business. The assumptions must be realistic and supported by research, available data plus known facts such as rentals or forward contracts. The information in your cash flow budget is designed to:
Of course, positive cash flow alone is not enough. The business must be returning a profit and the long term trend for both must be positive.
Under common law principles, You and your employees have certain obligations to each other. You also have obligations under Federal and State Territory laws, industrial awards and agreements, tribunal decisions and employment contracts.
If you have employees you must register for PAYG Withholding and withhold amounts including:
· Income Tax for employees (including working Directors of a Company)
· Withhold 46.5% from payments to suppliers who cannot quote an ABN
Before you withhold any payments, you need to register for PAYG Withholding. This can be completed at the same time as your your GST registration and means that you will have either quarterly or monthly reporting requirements. If you operate as a sole trader or partnership, the Tax Office do not regard you as your own employee and you ‘draw’ funds from the business to live on but this is not technically seen as ‘salary and wages’. As such, there is no need to register for PAYG Withholding and withhold amounts from your drawings unless the above examples apply.
The Superannuation Guarantee Scheme, administered by the Taxation Office, requires all employers to provide a prescribed minimum level of superannuation support for each employee (and some contractors), subject to limited exemptions including :
Employers must make the superannuation contributions on at least a quarterly basis. Payments must be made within 28 days of the end of each quarter.
If you fail to pay the minimum level of support (9.25% for the year ended 30th June 2014) by the prescribed deadline you are liable for the Superannuation Guarantee Charge which is equivalent to the amount of the shortfall plus an interest component and an administrative charge.
Insuring your business premises and your assets is a critical part of establishing a business. For new business owners insurance can seem like a costly addition to an already long list of expenses, however, if your business is uninsured you may never financially recover from a natural disaster, burglary, act of vandalism, fire or storm.
Asset protection includes addressing your specific business insurance needs and making sure you are covered for the unexpected. The size and nature of your business will generally determine the type of insurance coverage you need and it is important not to let your coverage fall behind as your business grows or diversifies. A periodic review of your insurance policies is recommended for this purpose and some or all of these additional insurances could be required depending on your circumstances:
Employees may be entitled to a limited amount of sick pay from their employer but worker’s compensation only covers you for work related injuries, a small percentage of the causes of disability. On the other hand, an income protection policy will pay you up to 75% of your income (salary plus super and any other benefits) allowing you to maintain your lifestyle and keep paying your mortgage and other debts.
There are a number of key areas where a solicitor can assist you such as contracts and agreements, negotiating your commercial or retail lease, insurance claims and representing your interests in dispute resolutions with authorities or other businesses. If you require a solicitor please contact our office for a referral.
A contract is a binding legal agreement, which is created when there has been an offer, an acceptance of the offer, consideration (usually the price of goods or services supplied) and an intention by the parties to enter into a legal relationship. There are many types of contracts that will affect your business. Not only will you contract with your customers but you will potentially also enter into agreements concerning contracts:
With customers, it is important to establish a system that records your terms of trade so that you avoid disputes later on. It can help with the collection of bad debts and the system could be as simple as providing a quote that the customer accepts by signing. Commonly the terms of agreement are often specified on the back of quotations. Remember, if a contract has not been signed it does not necessarily mean that there is not a legal contract. A binding legal agreement may have been established by other means, such as the conduct of the parties and what was said between them.
A lease is a special type of contract between the lessor (the owner) and the lessee to use the property. A lease can relate to land and buildings or to personal property such as motor vehicles, photocopiers and telephone systems. Where the lease relates to land and buildings the owner is called the ‘landlord’ and the lessee is called the ‘tenant’.
The terms of the lease are generally negotiated between the landlord and the lessee and the main issues that need to be addressed in the lease include the term of the lease, the amount and frequency of the rent, details of the tenant's responsibility for the property outgoings, permitted uses of the property, the option if applicable and the bond or bank guarantee if applicable. It is advisable to consult with a solicitor to assist you in negotiating the terms of your lease.
Most leases hold the lessee responsible for keeping the premises, fixtures and fittings in good repair. Many leases provide for payment of all or a portion of the rates, insurance, maintenance and so on. Make sure these are clearly stated as they are additional to your base rent. If you vacate the premises before the lease expires you may still be liable for payment of rent and ongoing costs if a new tenant cannot be found. Before signing the lease the lessor must provide the lessee with a signed copy of the lease. If the lease is for a retail shop, the lessor is also required to provide a Disclosure Statement to the lessee at least seven days before the lease is entered into. Both parties should make sure that they speak to their solicitor, accountant, the local council (to be sure there is approval for the use) before they sign the lease.
Making a Will is something we all know we should do, but like exercising daily and eating a balanced diet, it’s something many of us never get around to until it’s too late. It is one of the most important documents you will ever sign because you are ‘giving away’ almost everything you own. It is therefore important to ensure it reflects your current wishes and distributes your estate in the most beneficial and tax effective way. You must be 18 years of age and be of sound mind, memory and understanding to make a Will.
A Will is the foundation of good estate planning. It’s critical to obtain competent legal help in drafting your Will because a poorly drafted Will can be the cause of endless trouble for your surviving family and beneficiaries. Dying without a Will can be costly and creates added stress for your family at a time that is already difficult. In addition, you risk your estate being distributed according to strict Government requirements rather than your wishes. This makes your estate difficult to administer and it will take longer to be finalised, resulting in increased costs. You may also lose the choice of who benefits from your estate.
What do you need to consider?
We recommend you review your Will every couple of years, or whenever your circumstances change such as starting a business. Call our office if you would like to discuss any aspect of your Will or require a referral to a Solicitor to draft or review your Will.
Over the years we have mentored many clients through the start up phase of their business lives. Experience tells us that successful businesses have clear objectives, produce quality products or services, understand their market, manage their money properly and are good employers. They also keep quality records and have a close relationship with their accountant. When establishing your business it’s vital that you seek professional advice from qualified accounting and legal sources.
If you're a committed and ambitious business owner looking to accelerate your business success we invite you to book a FREE, half hour introductory consultation to discuss your business or farm needs. You'll get practical business, tax, marketing and financial advice designed to help you build your business and grow your wealth. To book a time, call us today on (03) 5941 4868 or complete your details in the box at the top of this page.