What happens when a business has no business plan?

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A business plan is essential for the success of any business.  An effective business plan gets to the heart and soul of your business, it provides direction, keeps you on track and is a set of guidelines created to reach a specific business goal. Strategies can range from annual budgets to individual marketing strategies for the release of new products. Without a coherent overall strategy, a small business has no road map to follow when pursuing opportunities and running daily operations. The consequences of not having a comprehensive business strategy can be severe.

Lack of Objectives

Without a coherent strategy, your company does not have identifiable business objectives. Your company lacks the focus needed to achieve corporate goals and develop plans that will move the company forward. A lack of objectives means that your company does not have a clear vision for the future. If you don’t know the goals and objectives you’re reaching for, how do you know when you’ve accomplished them? Objectives are used to develop long-term growth and productivity plans that are essential for the sustained success of your organization. 

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Resources not properly allocated

Business plans and strategies are used to allocate corporate resources into projects and operations that need them. When there is a lack of planning, or planning is not coherent, it’s difficult to create budgets for special projects and understand the personnel and funding resources necessary to launch new products and grow the company. Instead, leaders disperse funds “on the fly,” as managers request them, without a budget to compare against. Dispersing funds this way, a company can then find itself short of funds for critical activities such as payroll and paying vendor invoices. The adage, “failing to plan is planning to fail” – often attributed to Ben Franklin – certainly applies here.

Unclear Organisational Structure

Part of business planning is identifying the people in charge. Some businesses prefer having a highly structured hierarchy, while others are more loosely organized. Whichever method you prefer, make it clear to everyone. This establishes responsibility for the success of each department and helps staff know who to report to for clarification of job duties or questions. Without a coherent business strategy, the company structure is not defined and there is no focused effort for employee and corporate development.

 Communication Flow Not Coherent

The efficient processing and distribution of information is essential for the success and growth of your small business. A business strategy establishes lines of communication and allows employees to understand information priority, the flow of information in and out of the company and how information is distributed internally. Without a strategy, there is no formal structure for communication and important information can get lost. Each employee will naturally focus on what he believes is important, which may or may not align with yours.

Take Action: Identify Your Purpose

You know the purpose of your business. It’s the reason you started the company. Don’t assume, however, that employees and even managers know the purpose. Perhaps you think they certainly should know it because you’ve discussed it many times. Still, it needs to be a clearly written explanation so that everyone can understand it. Some companies create their mission statement as their purpose. It’s the company’s reason for existing.

Develop a Fluid Plan

Through strategic planning, you can map out how your company will achieve its mission or purpose. Be wary, however, of going into too much detail in your plan. The business climate is a fluid one, changing due to many factors, including industry advances and the state of the economy. If your strategic plan is too detailed it will be difficult to adjust course even slightly when you need to. Your plan should indicate to everyone the direction the company is headed towards its mission, but be flexible enough to change course as needed.

 

Are you starting this financial year blindfolded_ If you don't have a business plan then that is exactly what you are doing.

Single Touch Payroll for small employers

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If as an employer you are not ready for Single Touch Payroll (STP) don’t panic!   Although 1 July has rolled around, smaller employers (those with less than 19 employees) have three months from this date (until 1 October 2019) to be STP-compliant. Furthermore, no penalties will be imposed during the initial 12 months of STP, therefore there is no need to be worried.

While for many employers, their STP solution will be to adopt STP-compliant software or outsource their payroll to their registered Accountant or Bookkeeper, many very small employers may be eligible for the micro-employer concessions including:

  • Reporting quarterly through their registered accountant or bookkeeper for two-years until 30 June 2021 (instead of reporting each time you pay your employees).
  • Adopting a free or low-cost, simplified STP solution (as opposed to payroll software).

Micro employers are those with less than five employees at the time of application. Virtually all employees are counted (including casuals, those on leave, and employees working overseas), however closely-held payees are excluded – namely, family members of a family business, directors or shareholders of a company, and beneficiaries of a trust.

In the event that a business is currently a micro employer but later no longer qualifies as it puts on extra staff, the ATO adopts a different approach in respect continued eligibility for the above concessions. While eligibility for quarterly reporting will be unaffected by an increase in staff above four, the ATO expects employers to cease using the simplified, low cost STP reporting solutions if they later cease to qualify as a micro employer. This would then generally mean adopting STP-compliant software, or lodging via your registered accountant or bookkeeper.

Single Touch Payroll compliance made simple seminar 

In respect of the low-cost, simplified STP solutions, an updated list of products now available and currently in development is maintained on the ATO website. There are a wide range of products available including free solutions such as apps to install on your phone that allow employers to simply key in employee payroll information (gross amounts per pay, and tax withheld etc.) and send it to the ATO (and thereby maintain your manual payroll systems if you so choose).

Of course, micro employers can opt to disregard these free or low-cost solutions and instead adopt STP-compliant software and, in doing so, enjoy the advantages of computerizing your payroll processes.

Single Touch Payroll compliance made easy

Tax time: Are you in the ATO’s sights?

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A consistent theme this tax time is overclaiming and under reporting. With the Australian Taxation Office (ATO) getting more and more sophisticated in its data matching approaches, taxpayers can expect greater scrutiny where their claims are more than what is expected.

Here is a checklist of the key issues.

What’s new

For you

Your Superannuation

Your business

Your Trust

 

If you are concerned about any of the issues raised, please call us – we would be more than happy to help you.

the health of your wealth in 2019 and beyond

20 everyday tips to save you money in 2019

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A recent Australian Securities and Investment Commission (ASIC) report, found that 1 in 6 Aussies are struggling under a mountain of credit card debt, with outstanding balances now totalling $45 million.

With the start of the new financial year, now could be a good time to get started on clearing your debt.  Help keep yourself on track with these 20 everyday possible ways to save.

  1. Get your partner on board – If you have a partner then making sure that you’re both communicating and agreeing about your financial priorities is important.
  2. Reduce your vices – Do you smoke, Drink?  Have an addiction to coffee?  Whatever your vice, make a conscious effort to cut back.  Healthy and wealthy – a double benefit.
  3. Learn how to cope with stress without spending – Buying things can be an easy way to relieve stress, but it’s not always good for your wallet or your mental state. Find a healthy and sustainable way to relieve stress and both your mind and your wallet will thank you.
  4. Stick to one shop per week – Doing one large shop rather than several small ones cuts down on impulse buys, takeaway and wastage. Plan ahead and write a weekly meal menu so you can get all ingredients you need at once.
  5. Use your own coffee machine – According to a businesses.com.au article, the cost per cup from an office coffee machine lies between $0.40 and $0.60. If you compare this to the average price of a cup of café brewed coffee in Australia, which is currently between $5-6 per cup, there are definitely savings to be had by brewing coffee at home.
  6. Taking a cut lunch to work – Packing your own lunch or snacks a few times a week could save you a whole lot of cash. You will also be more inclined to make healthier choices when you prepare your own lunch and could cut back on your calorie intake.
  7. Make school lunches at home – If you have children, making school lunches at home rather than using the tuckshop could save hundreds of dollars and give you more control over what your child is eating.
  8. Pay your bills on time – avoid late fees and grab a discount – Paying your bills on time is a great way to keep your credit record clean. If you struggle with your bills, consider setting up a regular repayment amount to even out the cashflow. Some energy providers will also offer a discount to customers who pay on time.
  9. Check how much interest you are paying on your credit card – If you owe money on your credit card, check what interest rate you are paying. Credit card interest rates can vary from less than 10% to more than 22%.
  10. Phone your bank – Even a small discount could save thousands over the life of your loan.
  11. Shop around for your car insurance – The cost of a comprehensive insurance policy can vary by over one thousand dollars per annum.
  12. Review your health insurance – Health insurance can be another great place to make savings.
  13. Review your personal insurance – including your life, total and permanent disability, trauma and income protection insurance.  Some of them can be paid via your superannuation fund.
  14.  Update your telecommunications contracts – There are hundreds of different phone plans.  Review yours periodically to ensure that it’s cost effective.
  15. Review your electricity and gas options – Being on the wrong plan could be costing you. Also, consider making small changes such as washing your laundry in cold water.
  16. Car pool when you can – If you are going to the same destination, get your friends or family together and car pool.
  17. Track down your lost super – One in three working Australians have lost track of some of their superannuation, to the tune of around $18 billion. Track down your lost super to potentially increase your retirement nest egg by thousands of dollars.
  18. Cancel memberships you don’t use – If you’ve got a gym membership, sports club membership, or something similar that you’re paying for but not using, look into cancelling it ASAP. You could be throwing money away.
  19. Check your family is registered for the Medicare Safety Net – If eligible, ensure that you and your partner are registered as a family for the Medicare safety net, rather than as two individuals. This will lower your Medicare safety net threshold.
  20. Salary sacrificing – In some work places you can salary sacrifice goods and services.

If you are struggling to make ends meet talk to our professional team today on (03) 9744 7144 about how we can help you with your financial situation.


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End of year tax planning opportunities

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As we approach the end of another financial year we wanted to share with you some end of year tax opportunities, which could assist you in minimising your tax liability.

We have highlighted some areas to focus on however we encourage you to schedule a meeting as soon as possible to assess your options and the steps you need to take well before the 30th June, 2019.

You can read more about these opportunities by clicking on the link below;

Tax Planning Guide 2019

To assist you we have put together a list of strategies to consider and note:

  • To maximise benefits for the 2018-2019 year, we suggest that you prepare a preliminary estimate of your taxable income for the year ending June 30, 2019 to determine if you have a tax ‘problem’.

A review of your latest financials (if current figures are not available, then last year’s figures will suffice) to determine the need for tax planning tactics such as pre-paying some expenses before June 30 for deferring some revenue until after 1st July.Key Dates edm

 

*Trustee Resolutions (Where Applicable)
Trustees of Discretionary Trusts must resolve to distribute the current year’s Income via a signed Trustee Resolution. If no resolution is in place to determine who is to be assessed on the trust income, then the trustee will be assessed at the highest marginal rate of 47%. Distributions will need to be determined based on an assessment of expected final income of the trust and its beneficiaries.

Where a trust is making a distribution to a new beneficiary, we will need to lodge a ‘Tax File Number Information Form’ with the ATO before 28 July.  If you elect to prepare the Trust Resolution yourself, please provide us with a copy of the Resolution by 30th June otherwise the Trust may be taxed at 47%.

We urge you to contact us to discuss any strategy you are planning to implement before June 30, 2019.

Smart strategies to control your cashflow when times are tough

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Sadly, even profitable businesses can go broke if they do not effectively manage their cashflow during tough times – and it’s affecting many small businesses right now.

Not surprisingly then, cashflow is one of the biggest challenges currently facing business owners, with some 92% reporting that they frequently experience stress due to cashflow concerns.  If you’re like many of the business owners we’ve talked to recently, you may have had to reduce the scope of your operations, source additional funding, take a pay cut, or even make long-standing staff redundant.

However, it’s not all doom and gloom.  The good news is that while cashflow may be the first to take a hit when times are tough, the actual key to surviving is to implement strategic cashflow management policies and systems;

Here’s our top 12 strategies for you to consider;

  1. Set goal-oriented budgets and proactively manage them.  Profit and loss budgets are still very important but right now your focus should be on developing your cashflow budget, which will allow you to plan for your cash requirements and shortfalls in advance.
  2. Focus on increasing sales and income – a feat that, even during tough times, is possible.  Be proactive, provide real value to your customers and identify creative ways to increase your retention rate, generate leads, and increase conversion.
  3. Avoid easy tactics like discounting, which can be dangerous to business profitability – even a 10% discount can result in your business having to increase sales by 100% to achieve the same gross profit pre-discount.
  4. Set your terms of trade at the outset, terms should include when you expect to be paid and your ability to add interest.
  5. Stick to your payment terms.  Don’t let your customers pay you late.
  6. Use a contracted debt collector on slow payers.
  7. Set aside a percentage of all cash you receive into a separate bank account to cover your tax payments.
  8. Manage your work in progress by billing regularly, reducing the number of jobs you have on at one time.
  9. Only hold enough stock to cover the time it takes between the sale of an item and when you get delivery of the same item.
  10. Measure how long in days on average it is taking to sell each stock item and reduce obsolete stock.  You’re better off to convert that slow moving or obsolete stock back into cash.
  11. Finance the cost of fixed asset purchases using over terms similar to how long the asset will last before it needs replacing.
  12. Set a budget for income and expenses and stick to it.  If a new cost is not in your budget then find a saving somewhere else.

 

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Managing poor performance

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It’s a firm belief that when anyone starts a new role they come to work with the intention of doing a great job.  They’re keen to make an impression, to make a difference, and to enjoy themselves.  After all life is too short, right?  If the average person spends 40,000 hours of their life working, they’d better do something they like.

Nobody likes to fire someone but, more importantly, nobody likes to be fired.  

So, why do many business owners loathe the fact that they have to ‘manage performance’ or ‘open the door of opportunities’ or ‘free up the careers’ of some team members?

It’s quite simple; somewhere between induction and the time when performance starts to slip, the enthusiasm to put in a great day’s work is gone.  The fire in the belly goes out.  If we can discover why this happened and prevent it from happening again, then we’ll spend much less time managing poor performance.

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As a leader, we must be committed to acting above the line (by taking ownership, accountability and responsibility for the poor performance).

Now, answer these questions in relation to your interactions with this poor performer:

  1. Do you demonstrate above the line behaviour and a positive, can-do attitude 100% of the time?
  2. Does your business have a concise Core Purpose statement (why your business exists for your clients) that your team member believes in and can see how they are contributing to?
  3. Have you clearly articulated your vision and goals for the business?
  4. Have you given the team member regular opportunities to align their personal and career goals with your business goals?  We must ensure their personal purpose in life aligns with your business’s purpose.
  5. Have you set clear expectations as to the five most important KPI’s or targets that the team member needs to achieve?  It is important to define a great day’s work for them.
  6. Does the team member understand and agree with these targets you’ve set for them?
  7. Have you created a process to ensure that the team member can see how they’re tracking to reach these targets?
  8. Most importantly, when the performance is lacking do you talk about it with the team member? Or, do you whinge behind their back to everyone else and generally live in denial (below the line)?

Of course there will be times when external influences affect performance – this is when people need your support.  Or, perhaps you made a poor recruitment decision – if you follow the 8 steps you will come to the right answer together with the team member.

Remember – a poor leader can take a great team and destroy it, causing the best team members to leave and the remainder to become disengaged or, worse, toxic.

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