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Shares Versus Property

 

What is the best investment? Property and shares are the 2 most common ways of building wealth in Australia outside of superannuation.

The topic of whether to invest in property, shares (or both) often leads to heated debate. The 67% of Australians who own the house they live in are usually passionate about they believe is their best investment decision.

Shares and real estate have both generated reliable income and capital returns for Australians over the long-term.

 Source: Corelogic, Housing Market and Economic Update March 2016 

Property and shares are rarely out of the news, with weekly predictions about Australian property bubbles and busts fuelling speculation and creating confusion for the majority of investors. Against this tide of information overload, it is important to remember there are advantages and risks associated with both property and share ownership.

Property ownership

Historically there has been a belief in Australian culture that home ownership leads to an improvement in living standards, representing a symbol of success and security. Therefore people think it is the best investment for the long-term.

Since 1961, home ownership has been relatively stable at around 70%, with a decline in recent years to 67% due to stretched affordability. Home ownership tends to increase with age, alongside general increases in wealth.

However, recent analysis shows a rise in the proportion of renters, as buying a home become less affordable due to rapidly increasing prices.

Both Sydney and Melbourne property prices have enjoyed strong price growth between 2012 and 2016, however despite recent price rises, there are significant risks associated with taking on a large mortgage including interest rate risk and lack of diversification.. 

 

Sources: CoreLogic RPData; RBA

Share ownership

Australia has one of the world's highest share ownership rates, with around 36% of adults owning shares outside of their superannuation.

Owning shares doesn't typically have the same level of personal attachment when compared to property, as the part-ownership of a business is less tangible than a physical house. Notwithstanding, shares have generated reliable income and returns for Australians over the long-run.

Over the 30 years to 2015, Australian shares have generated an average return of 10.8% per year including dividends.

 

 Sources: ASX

 Factors to consider

There are many factors to consider before deciding what is the best investment for you.

  • Your budget for living and investing has limits. Look at what you can afford and test different interest rate scenarios before making a major investment decision.
  • Compare whether you would be better to buy or rent.
  • What is your attitude to share market movements? Would you have the discipline to stay invested even during periods of market volatility?
  • How stable is your income? Would you be able to continue paying a mortgage if something changed to you or your partner's work situation?
  • How much of your decision is impacted by tax? Tax law changes regarding property (negative gearing) and shares (franking credits and capital gains tax) could occur at any point in time.
  • Consider your lifestyle, whether or not you have dependents and the kind of area that would be best to live in. Buying a property in an area with access to desired facilities such as public transport and schools may not always be immediately affordable.
  • Can you commit the required time to maintain a property?
  • Personal values and situations affect your decisions about opportunity costs and risk appetite for investing decisions. Social pressure can push individuals into making choices that are not best suited for them, even though these choices may have worked out well for others.
  • Rather than buying property to live-in, some people buy property as an investment to rent out. This brings another whole other set of potential advantages and disadvantages. Two of the most common are negative gearing and landlord costs.

Property vs shares

Investing in property or shares both have advantages and disadvantages. Below are some factors to consider before making a decision to invest in either.

Consider

Property

Shares

General

Pros:
– Peace of mind and stable place of residence.
– Flexibility to renovate.

Cons:
– Lack of liquidity and unable to quickly change mind after the initial commitment.

Pros:
– Easily bought and sold.
– Regular income from dividends.

Cons:
– Not a physical asset.
– Generally more volatile in the short-term.

Diversification

Pros:
– Lack of correlation with other asset classes and good protection against inflation.

Cons:
– Poor diversification and highly concentrated in a single asset.

Pros:
– Easy to gain exposure to the entire index of thousands of companies to reduce risk.

Cons:
– The entire market can also have periods of weak performance.

Leverage risk

Pros:
– Able to borrow more and leverage returns which can be great during times of low interest rates.

Cons:
– Higher repayments if interest rates rise.
– Leverage magnifies losses so you can lose more than you invested.

Pros:
– No leverage means you can't lose more than you invested.
– Interest rates typically have less impact on share prices.

Cons:
– No benefits of higher leverage during periods of high growth.

Taxes and transaction costs

Pros:
– Potential for negative gearing benefits.

Cons:
– Relatively high transaction costs associated with buying, selling and property maintenance.

Pros:
– Potential for franked dividend benefits.
– Transaction costs and fees can be low.
– Involves very little ongoing effort after an initial investment.

Cons:
– Capital gains tax when shares are sold.

 

 

Inheritance Centrelink and Wills

 

By the pure nature of it, receiving an inheritance tends to come at a time when we are grieving, and at this distressing time, we need to understand whether the inheritance itself impacts a Centrelink aged pension benefit.

 

The key to this is the size of the inheritance, and is dependent on one's existing wealth and how this wealth is structured.

 

The Age Pension payment will stay the same if you are under the assets test and receive a small inheritance.

 

It could reduce the Age Pension, or in the worst case, cancel the Age Pension if you are over these limits.

 

The pension will be cancelled if total assets exceed the upper threshold limit of  $556,500 for a single homeowner or $837,000 for a couple homeowner.

 

There are a number of strategies that can be applied in planning for a Centrelink entitlement  reduction  as a result of an inheritance receipt, the main two most people have used in the past are:

1.       Gifting or transferring their entitlement to another person

2.       Retaining money in the deceased estate for a prolonged period.

 

The above strategies generally have limited impact and have limited  benefit as Centrelink  has  rules  on  the  amount you can gift.  Amounts gifted  above  $10,000 per   financial year  and $30,000 over  5 financial  years  are  considered as an  asset and deemed to earn income for the next 5 years. Transferring your entitlement  to another person is also considered a gift in the eyes of Centrelink.

 

Once the estate proceeds are able to be paid, Centrelink will look to assess your entitlement as an asset. Most people are not aware Centrelink can assess funds held in an estate and as such keeping funds in the estate for a prolonged  period may not be a viable option.

 

One  strategy that  is effective is to spend on the  things  a lack of capital  has  previously  made difficult. We often  see  clients complete renovations on their house, take their dream holiday or invest in assets that are either exempt or have limited Centrelink penalty.

 

The advice of a financial planner can help minimise the chances of Centrelink issuing the dreaded request for repayment of overpaid entitlements.  Contact us for an appointment if you have concerns.

 

A well documented business plan can be an effective management tool if it is designed to suit the structure and needs of your business.  Putting one together need not be as complicated as it sounds.  There is no set formula that you have to follow and each business will have different points to address and elaborate on.

To design your own business plan you first need to  identify the reasons why you need planning.  Sometimes a concept that starts as a rough idea needs to be fleshed out and certain criteria to be identified before it can move forward.   The most effective approach could be to set business goals and objectives, establish performance benchmarks, and communication to people inside or outside the business.

Sample Business Plan Structures

A business plan usually serves a number of purposes. It is a good idea to identify the purposes you'd like your business plan to achieve because this could affect how you choose to structure and write your plan. For example, you're likely to focus on different information depending on whether your plan is intended as in internal document for management to refer to, or for raising finances from an external source.

Use the three business plan structures in the table below to find the best structure for your business. Because there is no set way to structure a business plan, the format is one of personal preference. You might find one outline is more suited to your business than another.

 

Structure 1

Structure 2

Structure 3

Cover page

Cover page

Cover page

Table of contents

Executive summary

Brief statement

Executive summary

Table of contents

The market

The Business

Business overview

Personnel skills and resources

Marketing

Market overview

The benefits of your product

Staffing

Business goals/objectives

Business goals/objectives

Purchasing

Requirements overview

Long-term plans and needs

Production

Operations overview

Financial targets

Finances

Sales and marketing overview

Business history

Supporting documents

Financial overview

Supporting documents

 

If you're writing your business plan as part of the process of applying for a loan, it is a good idea to include a one-page cover letter. The cover letter should include the following.

  • The type of loan you are looking for
  • The amount of the loan and period you wish to borrow the money
  • What you need the money for
  • A reference to the business plan attached

If you are applying for a loan, you will probably also need to include more detailed personal information, including your tax returns, bank account statements, assets, liabilities and other business interests.

Writing your business plan

Keep your business plan as short and simple as possible. Use simple language and short sentences so that it is easy to understand, and edit your draft to remove unnecessary words. Use bullet points or tables if this makes ideas easier to read or understand.

Present your facts and information so that they flow logically rather than jump around, and make sure that the information presented in different sections supports each other. You don't want to present information that does not add up or raises questions about the accuracy of your plan.

Do not give in to the temptation to overstate the truth, and bear in mind that the figures you present will need to back up the words in your business plan.

Start by jotting down points and ideas under each of the headings you plan to include in your business plan. Then sort these ideas so that there is a logical flow. At the same time, look out for any gaps or weaknesses and fill them in with the necessary research.

Start writing your business plan as soon as possible and keep refining and editing your work to keep it as short, simple and easy to understand as possible.

Writing your executive summary

Your executive summary is a very important part of your business plan. It is the first section people will read, and provides a brief but complete overview of your entire business plan. Because it contains reference to the entire business plan, the executive summary is usually written towards the end of the business plan writing process.

Your executive summary should be less than three pages, simply written and to the point, with an emphasis on the key issues of your business plan and a focus on the areas that will make your business successful in a competitive market.

Use your plan's table of contents to map out your summary, and elaborate on the areas that are important. It is a good idea to end your executive summary with a short statement of why your business is poised to be a success.

The table of contents

The table of contents will appear before or after the executive summary. It is a list of headings with page number references that help your reader locate specific information in your plan. The numbering of the headings in your table of contents is one of the last things you will do when finalizing your business plan.

The presentation of your business plan

The presentation of your business plan could be one of the first impressions someone gets of your business. It is a good idea to include a cover page and to bind your business plan with a cardboard or plastic front and back cover so that it is professionally presented.

It is also important that the layout is neat and professional looking and that the pages are numbered. Spend a little extra time on the presentation of your business plan to ensure it presents your business in the best possible light.

Does my business plan need an external review?

Your business plan does not need to be approved or verified by anyone, but it is a good idea to let a few people read your draft business plan before you finish it and print it out.

Paying to have your business plan professionally proof read will ensure that it is free of embarrassing spelling and grammatical errors. Asking your accountant and a few business acquaintances or mentors to read through your plan will also help to identify any inconsistencies or gaps in the information.

***

 

How does the ATO treat Uber, Airbnb style services? What you need to know

 

Uber is calling for drivers, Airbnb is seeking more hosts but what are the implications of becoming part of the sharing economy? 

With the ATO increasingly relying on data matching and other online resources to target untaxed income and the cash economy, it is important to understand the tax implications of your arrangement.

 

The basics of tax apply regardless of how you earn money. That is, even though you may be earning income from different sources or using different platforms to generate income, the fundamental tax issues remain the same. You don't have to be carrying on a business to pay tax on income you earn.

 

And, given that so many of these services are through sharing platforms, the Australian Tax Office (ATO) has the capacity to data match money flowing through to financial institutions specifically from these platforms.

 

'Sharing' a room or an entire house

Sharing a room or your house through services such as Airbnb can be a great way to earn income from an existing asset. The tax treatment of what you earn from these services is the same as any other residential rental property arrangement. This means you must include the rental income in your income tax return. For example, if a husband and wife jointly own a property that they rent out through a sharing service, whatever they earn needs to be declared on their income tax returns in the same proportion as the ownership of the house in the year they earned the income.

Hosts can also claim tax deductions for expenses associated to the rental, such as the interest on your home loan, professional cleaning, fees charged by the facilitator, council rates, insurance, etc. But, these deductions need to be in proportion to how much and how long you rent your home out. For example, if you rent your home for two months of the financial year, then you can only claim up to 1/6th of expenses such as interest on your home loan as a deduction. This would need to be further reduced if you only rented out a specific portion of the home.   GST does not generally apply to residential rental income.

Be aware that renting out your home may have a direct impact on your tax-free main residence exemption for capital gains tax (CGT) purposes. In general, your home is exempt from CGT when you sell it. However, if you use your home to earn assessable income, then you might only qualify for a partial exemption on the sale unless special concessions apply. If you are renting out part of your home while still living in the property, then it is unlikely that any gain you make on your home will be fully CGT-free. You might also need to obtain a valuation of your home at the time it was first used to generate rental income.

 

Hosting for investors

A number of investors are generating income from renting residential investment properties exclusively on sharing services rather than traditional longer-term rental arrangements – rental income can be higher for short-term accommodation and the host has the capacity to increase prices easily for peak periods. Just a quick look at properties available around the world on sharing sites shows how quickly this style of arrangement has attracted investors, particularly where the property is located in high demand tourist areas.

But what are the tax implications if you own one or multiple investment properties and rent them on a sharing service? Firstly, it's important to get good advice as this can be a complex area and being on the wrong side of the tax law can have significant implications. For example, if the ATO deems you to be providing commercial residential accommodation, they will treat your activities in the same way as hotels and motels meaning that the rent could trigger a GST liability for you (although you might be able to claim back some GST credits on expenses you pay). Broadly, accommodation falling into this category would have multiple occupancies such as a block of apartments, central management of the properties, and provide services to the guests beyond the accommodation such as breakfast or room servicing.

Finally, check if there are council restrictions, and ensure that you have the right insurance in place and if in doubt be sure to Contact us  before you start hosting or driving.  

Will your business be audited?

How the ATO identifies audit targets

The ATO is very upfront when it comes to their compliance activity. Every year they publish small business benchmarks that outline what a typical business 'looks like' in different industries. If your business falls outside of those benchmarks, the ATO is likely to take a closer look at why that is.

 

Falling outside of the benchmarks might not indicate a tax related problem. It might mean that your business has a different business model to the norm or is performing poorly relative to others in the industry. If your business does fall outside of the benchmark however, it is important to ensure that the reasons why can be clearly articulated (preferably documented) and the reason for those differences is not tax evasion. If there is no proof as to why the business is outside of the benchmarks, the ATO is likely to simply apply the benchmark ratio and issue a revised tax assessment.

 

The ATO look at:

·         cost of sales to turnover (excluding labour)

·         total expenses to turnover

·         rent to turnover

·         labour to turnover

·         motor vehicle expenses to turnover

·         non-capital purchases to total sales, and

·         GST-free sales to total sales.

 

For example, for a veterinary practice with a turnover between $300,001 and $800,00, the cost of sales to turnover ratio is expected to be between 25% and 29% (averaging at 27%), and average total expenses are 78%. The cost of labour to turnover ratio is between 21% and 29% and rent is between 5% and 8%.

 

The benchmarks are also a useful tool for anyone wanting to understand what is typical in their industry and how they perform against the average. It might also indicate opportunities for improvement and where the business is falling behind its competitors.

 

If you have any concerns about your record keeping, please contact us for advice or consult our website under the Client Resources section and Compliance.

 

Why you shouldn't feel bad about renting

The property market is rarely out of the news in Australia, with regular predictions of house prices collapsing being followed by weekends of record auctions and prices.

Property has certainly had a good run.  Over the past 10 years property prices in some of Australian major cities have skyrocketed and as property has become less affordable, more people are looking at a popular alternative which is to rent and invest their savings in a portfolio of shares instead.

Despite similar long-term returns, property and shares are always at different points in their own market cycles. When looking to invest for the next 5 years, it's worth thinking about where each is positioned in their own cycle and what that could mean about the future. Since the financial crisis in 2008-2009, property has been in the recovery and then boom stages, helped by low interest rates and supply shortages.

 

But which is better today, shares or property?

History has shown that investments are often most popular near the top of their cycle. This is when the market is hot and there is high confidence that prices will keep on rising. Silly stuff happens at the top of the cycle like was seen in the US property market in 2006-2008.

Today property investing is 3 times as popular as buying Australian shares. This shows how confident people are about real estate investment right now. High confidence around an investment often comes before periods of flat or falling prices as reality catches up to everyone's excitement. For example, US shares were at their most popular ever in 1999 – just before the infamous tech crash.

That said, confidence levels can remain elevated for a long time and it's always hard to pick the peak. Stock analysts were calling the top of the US tech boom years before it actually ended, just as many commentators have been predicting Australian house prices to fall for a decade now.

In any boom you can be sure that many people will try to pick the top but few will succeed with their timing without the benefit of hindsight!

Then there are shares, which have become less popular in recent years with only 7.8% of people surveyed thinking shares are the best place to invest, which is half the long term average.

 

Based on excitement levels, those who are renting and investing in shares currently have the upper hand since they're likely to be investing at a better point in the cycle. Australian shares are still below the levels they reached 10 years ago in 2007 so they are still in the recovery stage.

People who are renting and investing their extra savings in shares are able to quietly squirrel away savings and pay low rents while everyone else is jumping over each other to buy a house. But patience is a virtue for those renting since the strongest temptation to get involved in an investment usually comes around the top when everyone else is most excited. That's when FOMO (fear of missing out) is at its hardest to resist.

All markets move in cycles. It's tempting to get involved when confidence and excitement are high, but doing what's less popular can be the safer and smarter bet in anticipation of when returns inevitably go back to normal.

For more points to ponder on renting vs. buying... visit the article Shares Vs Property further down this page where we discuss the returns of shares vs. property. 

What Makes a Good Investment Strategy?

If you have a self-managed super fund (SMSF), then you should be aware one of the obligations that is placed on you as a trustee is that you must have an investment strategy for the fund that is reviewed regularly. But what makes a good investment strategy? How long does it need to be? How detailed?  

These are all great questions, but unfortunately there is no single right answer. However, here are 5 considerations that can help you along the way.  

1. Diversification  Super law does require that when formulating an investment strategy, trustees must have regard to diversification. Diversification relates to a consideration about the spread of different investments you might have – or thinking about ensuring you don't end up with all your eggs in one basket. However, there isn't a requirement that an SMSF's investments must be diversified, and there are some SMSFs that have large investments in a single asset (or asset class). Most commonly this occurs where the SMSF has a direct property investment, with a comparatively smaller investment in cash in order to make any relevant payments as necessary.    The big risk being so concentrated with your investments into one asset or one segment of the market is what if something went wrong? What if a property bubble bursts?  

2. Risk and return The risk involved with, and the likely return from, the investments are also important considerations, and really ties back into the issue of diversification of investment.  What can sound like an exciting possible return on any particular investment, should always be balanced against a consideration of any risks involved with that investment. The difficulty is that both risk and return are assessments of what may happen in the future. It's important to remember that any historical performance data availability is purely that – it's history! It can provide some guidance as to how well a portfolio manager has looked after the monies under their control, thereby providing some insight into their level of governance, but you should always be cautious when it comes to relying on performance history.  You shouldn't look at any investment in isolation, and always compare their performance against peers and over multiple periods of time. For example, whilst a share fund that provided an 8% return in the last 12 months might sound relatively good, it's not if all other comparable share funds were returning in excess of 10%. In addition to pure investment risk, you need to consider how much risk the members of the SMSF are willing to take on. The answer may be different for each member of the fund, so you also need to think about whether each member has their own investment portfolio in the fund, or whether everything is pooled together.  

3. Liquidity    As a trustee, you need to ensure that your SMSF is able to pay its liabilities as and when they fall due. Doing this for the ongoing running costs of your fund, sounds relatively easy. But you can't forget about the additional liquidity required as members of the fund approach retirement and start to draw on a pension from the fund.   

4. Insurance  Trustees are also required to consider the insurance needs of members. This doesn't mean that the fund has to hold insurance for the members, but this is actually an important consideration. Given that the trustees of an SMSF are also the members, this is about considering whether you have enough insurance of your own, and if not, should you acquire more coverage through your super.  But don't constrain yourself to personal insurance considerations, even though that's all that's technically required.  Depending on the type of investments in your SMSF, you should also consider if you need the fund to take out other types of insurance. This could be a vitally important consideration if you hold property.  

5. Documenting it all    Ensure you document your plans. The actual investment strategy document can be long or short, but you need to show you have considered the above elements.     Most good investment strategies will have two key positions them.       The first is an overall goal that the investments of the fund are trying to deliver.  For example, the fund could be targeting an overall return 2% above the Consumer Price Index on 5 year rolling basis.      The second, it sets out acceptable investment parameters. For example, it may say the fund is happy to hold between 30% and 60% of its investments in Australian shares, but is targeting a holding of 45%. These elements taken together give the trustees something to measure performance against. If the SMSF isn't meeting these objectives, or its investments fall outside of the expressed permitted range, then the trustees  need to be doing something to bring it back in line.   The good news is that as a trustee of a SMSF, you don't have to do it all yourself.  Professional support can help you understand how your fund has performed in the past and is currently performing, and also help you to identify the requirements of members and select investment to give them a chance of future success.                        

Paying for your children's education

Education costs can account for a huge slice of the family budget. The costs of school fees, uniforms, books, excursions and extra-curricular activities can really add up.    

Education costs are usually a long-term goal that can take more than 5 years to achieve, so it's never too early to start planning.

 

HOW MUCH WILL THEY NEED?

How much money they will need will depend on whether you want your children to attend public or private schools, and whether they plan to take up a post-secondary education after that?

For example, if you send two children to a private high school which costs an average of $20,000 a year for each child, by the time they both graduate you will have spent $240,000 on school fees. And that's not counting extras such as school uniforms, trips and sporting clinics.

Public schools are much cheaper but there are still extra tuition fees, textbooks, uniforms and school camps to pay for so a bit of planning and an early savings plan reaps benefits for them later.  The earlier you start saving for your children's education, the better.   Education costs are usually a long-term goal that can take more than 5 years to achieve.

SAVINGS OPTIONS   SHARES?   TERM  DEPOSITS?   EDUCATION FUNDS?

Once you have clarified the financial goal you are working toward, you should consider your other financial obligations. For instance, you might be better paying off your mortgage where you have access to a redraw facility or paying off some other short-term debts first before you start saving. After all, there is no point in leaving yourself short every week and dipping back into those savings.

To help you reach your goal, you could put your savings into a number of different savings structures like: shares, managed funds, term deposits, savings accounts, investment bonds, or education funds.  We advise parents to use help their savings grow by using a structure that pays compounding interest. 

Education Funds are special funds to help save for children's education. If you are considering an Education Fund you should check the following to make sure these funds fit your long term financial plan. Here are some questions to ask before you invest in an education fund. 

·         Fees - What fees will you be charged?

·         Contributions - How much do you need to invest and how often do you need to contribute? Can other people, such as grandparents, also contribute?

·         Investment options - What investment options are available, and do the suggested timeframes for these options meet the timing of your children's education needs?

·         Fund purchases - What can you use the savings for, for example can you use them for primary, high school or tertiary studies? Do they cover expenses such as clothing, laptops and excursions?

·         Access to funds - What criteria need to be met before you can access your funds? What happens if your circumstances change, or if you can no longer contribute to the fund? Do you lose all that you have invested? How difficult will it be to withdraw your money if your children's priorities change? For example, what happens if your children decide they don't want to do tertiary studies?

You should compare the features of an education fund with other investments such as term deposits and managed funds. In particular, you need to consider the Product fees, features and benefits and how the fund is taxed compared to how other investments are taxed.  A tax agent can assist in unrevealing the complexities of these types of investments. If ever in doubt, contact us for an appraisal of the Fund.

AND, WHEN OUTSIDE ASSISTANCE IS NEEDED

Financial Advisors If you need help with a financial plan to save for your children's education, or if you need more information about education funds, consider getting financial advice from a qualified financial adviser.

There are quite a few assistance programs to help parents cope with the extra costs of school. 

Saver plus matched savings Saver Plus is a program to help families on low incomes develop savings habits, and could help save up for larger school costs like fees and excursions. It helps you reach a saving goal and then matches it dollar for dollar, up to $500. Find out more about Saver Plus

Government assistance some financial assistance is available to families on a low income. Some are means tested or require parents to hold a concession card.   In Queensland you may check out:  Textbook and resource allowance 

From a young age we are encouraged to think about plotting a pathway in life that gets us from Point A to Point B in an efficient and expedient manner. If only!

The truth is for most of us, the pathway to where we want to get to is an elaborate and sometimes absurd game of snakes and ladders. Even more so when you throw your hat into the ring as an entrepreneur.

However, once you embrace this idea, you can start to shed your unrealistic and limiting expectations and go with what really works for you. It may not be the path you originally thought you'd take, but it could be the one that takes you to greatness, just as it did for these successful female entrepreneurs.

Sara Blakely

These are some of the things Sara Blakely tried but failed at before becoming the founder of a billion-dollar company: lawyer, stand-up comedian, and Goofy at Disney World. She did, however, sell fax machines for seven years with some success. "It was great life training," Blakely previously told Business Insider.

Blakely's story is the classic case of the accidental entrepreneur. She invented a fashion product but was not a fashion designer and had never been involved in the clothing trade in any way at all. Instead, she applied the old rule of necessity being the mother of invention when she experimented with cutting the foot section off her pantyhose in order to get the benefit of wearing pantyhose without what she saw as the unsightly bit that spoiled wearing open toe shoes.

It was a mundane and almost comical start to what would eventually become Spanx, which is now a women's hosiery and activewear company worth more than $US1 billion. When she shopped her invention around to hosiery mills in the beginning she was roundly shown the door. But her persistence and hustle meant she finally found a partnering manufacturer and distribution through Neiman Marcus.

Today, Blakely is personally worth $US1.1 billion and has business interests in a range of companies.

Sophia Amoruso

By her own admission, Sophia Amoruso was a little lost for direction at one stage in her life. A dumpster diving punk with zero in the way of conventional career ambitions, Amoruso recounts her strange journey from high school dropout to fashion mogul in her book #Girlboss: "Anyone looking for a sure bet, in business or in life, would never have put their money on me. But that didn't dissuade me from betting on myself. In the end I beat the odds".

Starting out as a strictly eBay venture, Amoruso built up Nasty Gal from a scungy lounge room operation into an e-commerce company valued at $300 million at its height. She did this all in the space of about seven frantic years, riding on the thrift store coat-tails of the e-commerce revolution and the retro tastes of her mainly Millennial customers.

More recently, Nasty Gal has hit rockier times, as Amoruso stepped down as chief executive in 2015 and the company filed for bankruptcy late last year. But having defied the odds once already, it would be a brave person who would bet against Amoruso flying high yet again.

Karlie Kloss

Being a supermodel comes with a certain set of expectations and becoming an advocate for coding is probably not one of them. However, a successful and lucrative modelling career has not stopped Karlie Kloss from pursuing her interest in software and web development, and passing on that passion to young women.

Kloss started modelling at the age of 14 and has modelled for some of the biggest names in the fashion game, including her time as a Victoria's Secret Angel from 2011 to 2014. But in recent years it has been her somewhat left-field turn into the world of computer education that has garnered her applause from more than just the fashion crowd.

Kloss says she was always interested in maths and science as a kid, but her modelling career took over and she was unable to really pursue those interest, until 2014 when she enrolled herself in a Ruby on Rails programming course.

Inspired by her first foray into the world of programming, she teamed up with computer education provider Flatiron School to develop her Kode with Klossy program and scholarship. The non-profit now runs coding summer camps, awards career scholarships to young women developers and helps to foster the role of girls and women in tech.

The 3 big challenges facing Australian small to medium businesses

In today's climate, small and medium business owners face a volley of challenges. In this video, Peter Switzer of Switzer TV speaks with Damien Bueno, Vice President of SAP about what they can do to overcome these challenges.

"Smaller business is able to be responsive and agile... and we increasingly see that the younger people, smart millennials are far more attracted to those nimble and agile smaller businesses." Damien Bueno

                                 Click here to access video

 


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