Restructuring or selling your business? We can help

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Restructuring or selling your business? We can help

This time last year, you might have been pondering Christmas bonuses or booking your summer holiday, but with a completely different business landscape in front of us, your head is no doubt filled with different questions.

 

I've decided to restructure. What's the best way to do this?

 

Restructuring is never easy but if it's necessary to keep your business afloat, there's a process you can follow to keep stress to a minimum.

 

  • Write a proposal outlining why roles need to change for the business to succeed.
  • Email employees to let them know you're proposing a restructure and invite them to a meeting (at least 2-3 days later) to learn more.
  • At the meeting talk through your proposal on how the restructure should be implemented. It's really important for staff to feel part of the process, so invite them to give feedback via email or book to see you after the meeting. Particularly if redundancies are a possibility, it is vital that you show an open mind as to what should be done to promote your business's objectives.
  • Proposed changes to an employee's terms and conditions must be committed to writing and provided to the employee with notification that they are entitled to seek independent advice. They must be given a reasonable opportunity to seek that advice.

 

I want to sell my business. How do I get it ready for sale?

 

Selling your business involves a lot of homework. You need to get it looking as "shiny" as possible before getting it valued by an accountant.

 

Here's how:

 

  • Sell assets you're not using, stop investing in long-term projects and put together a realistic financial forecast.
  • Prepare a business plan that includes how well the business is running and plans for growth.
  • Sort out any legal issues or staffing problems.
  • Bring health and safety, cloud solutions, and bookkeeping software up to date.
  • How are your website and social media looking? Could a buyer hit the ground running with them?
  • Talk to us about ways to boost your sales revenue and pre-sale profit margin. Remember it's the last two or three years' profit, and future maintainable profit, that determine the value.

For a confidential discussion regarding your circumstances please contact our Principal - John Clarke on john.clarke@clarkemcewan.com.au or book a time for either a face to face or zoom meeting here http://www.clarkemcewan.com.au/contact_us/request_an_appointment 

 

Planning for seasonal dips in income

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Planning for seasonal dips in income

Seasonal dips in income can be highly challenging when you're a small business. But there are proactive ways to predict, plan for and overcome these dips in revenue.

The key to dealing with seasonal dips is to know when they're most likely to occur, and to have measures in place to spread your income and revenue pipeline over the course of the year.

Understanding seasonality in your sector

If your business is seasonal such as pool supplies, or a ski gear specialist, you'll be used to the peaks and troughs, but many 'non-seasonal' businesses experience times during the financial year where sales and revenue peak – and, on the flipside, where sales and revenue experience a pronounced dip.

When income is low at certain times of the year, it makes for challenging times.

So, what are the key ways to plan for this kind of seasonality?

  • Forecast your seasonality – it's vital to know WHEN you're most likely to experience any seasonal dips. Looking at benchmarking reports for your industry is one way to predict the seasonality in your niche or sector. But you can also use your own accounting data to great effect. Look back through your profit & loss reports and spot where the peaks and troughs have occurred over preceding years.
  • Charge a premium in peak time – one straightforward approach is to apply premium pricing for your products/services during the busy season. By increasing your pricing, you boost your overall revenue, giving you more working capital to see you through the leaner months when sales and income are at their lowest.
  • Offer additional peak-time services – offering added extras and other additional service lines during peak time is another way to maximise the season. In the months where customers are most engaged, look to upsell these premium services and offer more value. Satisfied clients will be more inclined to pay for added extras, giving you an increased revenue stream from the same number of customers.
  • Target other markets – exploring other related markets is another useful tactic. When you're experiencing downtime, look for other ways to monetise your existing assets, products or services. For example, if you're a hotel where sales peak in summertime, offer discounted conference space in the winter months to boost revenue.
  • Diversify your products/services – if one product/service has a known seasonal dip, look at adding an additional product or service to offset this downtime. For example, a a ski resort could promote bike-riding or hiking breaks during the warmer summer months to keep revenue constant. Likewise a pool maintenance firm could establish an outdoor fireplace business for the colder months.
  • Have a regional e-commerce strategy – If you're dependent on a small local market, broadening your marketing and e-commerce strategies can help to attract a wider customer base – and bolster sales. Paid advertising through Facebook, LinkedIn or Twitter can easily target new geographical markets, bringing in new customers and giving your revenue a much-needed uplift during seasonal troughs.

Talk to us about planning for seasonality

If your business is struggling with seasonal dips, and the resulting impact on cashflow, come and talk to us. We'll help you identify the timing of your seasonal downtime, and come up with a clear strategy for stabilising your income across the year.

Get in touch to start beating those seasonal dips.

Your monthly activity statement (BAS) is due on the 21st

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Your monthly activity statement (BAS) is due on the 21st

Use the following checklist to make sure you are ready for lodgement day:

  • Have you allocated all bank transactions to the correct accounts?
  • Have you verified that the bank balance listed in your accounting software matches the balance in your bank account?
  • Do you have tax invoices and receipts for all business-related transactions?
  • Have you checked the GST tax codes for all transactions?
  • Have you checked tricky transactions like agency arrangements, insurance or overseas purchases for GST tax code accuracy?
  • Have you got paperwork for asset purchases or new finance arrangements?
  • If you have to report PAYG withholding for employees, you also need to check that your payroll categories and tax calculations are correct for the quarter, (or last month for employers who lodge a monthly IAS).

Checking the figures at each of the BAS reporting labels means your statements are more likely to be accurate and less likely to need GST adjustments at the end of the financial year. This results in you having a more accurate picture of your liabilities throughout the year and being able to plan accordingly.

Any questions? Talk to us. We can help you set up the processes to make this area of your business easy - and you can focus on your business.

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Your December quarter superannuation guarantee contribution is due soon

Prepare now for your quarterly superannuation guarantee (SG) contribution lodgement and payment.

 

Things to review before finalising the quarterly superannuation lodgement:

 

  • Have you allocated all payroll related bank transactions to the correct accounts?
  • Have you checked for errors such as duplicate pay runs?
  • Have you checked that all payroll categories used this quarter have had super correctly applied or excluded?
  • Have you checked superannuation accrual reports for accuracy?
  • Do you have any salary sacrifice amounts to include?
  • Have you had to make any termination payments this quarter? If so, check which payroll categories have super calculated or exempted.
  • Do you have complete and up-to-date contact details and a super choice form for all employees?

 

Most superannuation clearing houses (including SuperStream compliant software companies) require payment by the 14th of the month in order to distribute the funds to the relevant super funds for each employee.

 

If you use the ATO Small business Clearing House (SBSCH) you have until the 28th to lodge and pay.

 

Checking the figures thoroughly each quarter ensures that you report and pay accurate amounts for each employee. You will also have a more accurate picture of your superannuation liability and be able to plan accordingly.

 

Penalties for late super can be severe. Superannuation calculations can be difficult if your payroll software is not set-up for correct accruals of superannuation guarantee.

 

We can help you review of your super set-up and the SG accounts used in your accounting software.

 

Succession Planning for Small Businesses

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Succession planning for small businesses

It takes guts to start a business. It also takes a strategic mindset to succeed.

Business owners are no strangers to weighing risk and navigating uncertainty, but the current climate has dialled everything up. Many business owners face the uncomfortable position of having to remap carefully thought-out succession plans and exit strategies and to consider selling their business before they're ready and, possibly, for less than it's worth.

Transition may be a better option

Rob Young, Managing Director of Platform 1, works with business owners on ensuring they get the best possible return when selling their business. Rob's advice is to start by thinking about what options you have first.

There are five different ways to sell:

  1. Close the business down and sell the assets
  2. Sell to a family member
  3. Sell to an employee
  4. Just a straight sale to an outside party
  5. Gradual buy-out - The Platform 1 model.

The Platform 1 model is a gradual buy-out program. It involves finding a manager to take the reins early on. Gradual buy-out a process that involves:

  • figuring out what kind of individual would be right to run the business; finding that person, and developing them.
  • Creating a plan where the new manager buys in gradually over 3 to 6 years. The objective is to get the owner out of the business physically as quickly as possible by transferring relationships and processes to the incoming person, so the owner becomes more of an investor rather than a manager.

Preparing for sale - what's important

  • Get your house in order - Ensure you have systems and processes in place so the business isn't reliant on you, but can run as a standalone entity.
  • Maximise your profit - Make sure that you are not taking decisions to minimise your tax liability – because what you're trying to do is create a profitable business.

Don't put off your succession plan - even if you are not ready to sell

It's a good idea to think about this long before you need to sell so that you maximise the value of the business and achieve a better outcome. It's also worth remembering that retirement doesn't need to be doing nothing. If your business can run as an asset without your involvement, you don't have to sell it completely, so not selling down 100% of the business is a viable option.

Talk to us today about your succession plan

If you don't already have a succession plan in place, we can help so that you have options when you need them.

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Have you got a strategy for a financially stress-free holiday period? 

Christmas holiday breaks are a chance to recharge for the year ahead especially after the year we have had. We look forward to warmer weather and finally setting up an out-of-office email for the break. However, for business owners, this time is a stressful without careful cash-flow planning.Even if you do continue to operate through the holiday shutdown season, your customers' financial behaviour may not remain the same.

The strategies and tips shared below are generalised, however, we are here if you need to budget and prepare a cash-flow forecast. We can also help if you need assistance in applying for short term finance to get you through the break.

Why is cash-flow planning particularly important at this time of year?

Staff leave needs to be covered in addition to your normal fixed overheads like rent, creditors and tax compliance. The budget and forecasting process ensures you know your numbers and are prepared. If you are shutting down, you won't be driving revenue during this period and sales may take time to get started again in the new year.

Here are some simple strategies that can help

Decide your Christmas and holiday break dates – confirm these with staff, customers and suppliers.

Budget and plan for annual leave – remember the pay rates may be higher than standard hourly rates, also factor in statutory public holidays.

Decide if you are going to pay out leave in full at the beginning of the Christmas break or continue to pay as usual throughout the break.

Review your work in progress (WIP) - plan to complete jobs or services that can be invoiced and paid before Christmas (remember if you don't invoice and get paid before Christmas, you may not see the money until mid to late January).

Capacity planning - There is often a rush to get everything done before Christmas, whether it's the kitchen benchtop installed or the beauty treatment before the break, so make sure you have the capacity to maximise on this.

Stock-take - Do you need to order in goods now to be able to complete work in progress? Check that there is stock on hand available.

Making an arrangement with the Tax Office - if you find you can not make payments, it is possible to apply for an instalment arrangement. There are costs associated with this, however it may provide a solution that gets you through the holiday period. Talk to us, we can help.

Need financial support?

If you can't make ends meet, now is the time to organise short term financial relief. Please let us know if you need any help with cash-flow forecasting, budgeting or finance applications.

Happy Christmas

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Happy Christmas

Happy Christmas!

We wish you health, happiness, and a little more certainty in the year ahead!

After a very challenging and difficult year we hope you will have time at Christmas to take time-out.

May you have the time to connect with family and freinds, even if not in-person, to recharge and relax 
before the new (and hopefully brighter) year begins.

We are grateful for the opportunity to work with you and be a part of your continued prosperity.

Our office will be closing from 5pm on 23 December 2020 and reopening at 8.30am on 4 January 2021.

 

Adopting an Atomic Habits mindset

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Adopting an Atomic Habits mindset

We all have habits; some good and some not. Habits are those almost unconscious behaviour patterns we have... so, how do we build better habits?

In his book, Atomic Habits, James Clear identifies two types of habits; outcome-based and identity-based. Understanding the difference and reframing your mindset will help you adopt an atomic habits mindset and ensure your desired habits stick.

Outcome-based habits

These are the habits that have a specific end point we'll reach; where our focus is on the outcome. Outcome-based habits generally only last for the short-term; as soon as we've achieved that outcome, we're likely to revert to our old ways. If we're too focused on the outcome, we may give up when don't see fast progress.

So, how do we ensure that our habits stick? We form identity-based habits..

Identity-based habits

These are the habits that become part of our identity. We determine which habits we want to adopt, then we change our identity to reflect those behaviours. In other words, what type of person do you need to become to make those habits part of your everyday life?

For example, if reading more is the outcome, you might have a goal to read 12 books during a 12 month period. This would be forming an outcome-based habit and when you're done you're likely to stop reading.

Instead, become the type of person who reads very regularly. Set a nightly phone reminder to read before bed and start small, 10 minutes even, and gradually increase. You'll soon get through those 12 books and continue reading each night. Stacking the new habit to an existing one (i.e. going to bed) is a great way to build momentum.

James Clear defines the recipe for sustained success as a simple 2 step process:

1. Decide the type of person you want to be
2. Prove it to yourself with small wins.

"The goal is not to achieve results at first, the goal is to become the type of person who can achieve those things."
 - James Clear

You can find more information about Atomic Habits at jamesclear.com 

Reach out if you need help adopting an atomic habits mindset!

 



Strategic alliance: the benefits of working together

Your business may compete head-to-head with a number of other companies, but this doesn't mean you have to treat ALL other businesses as if they are the competition. In fact, there are real benefits in creating strategic alliances with other like-minded organisations.

When you look at the wider marketplace, you'll see that there are businesses out there that may well compliment your offering. And by working together (rather than against each other) it's possible to become valued strategic partners, collaborating to serve your joint customers, improve brand awareness and, ultimately, expand your target market.

If this sounds like a positive strategy, now's the time to do your homework and start hunting down the best strategic partners for your business.

Working to serve a shared customer base

Strategic alliances are all about finding the common ground between you and your intended partner – and this means finding the best ways to combine your efforts. If you can share the same customer audience, and create a complementary way of meeting their needs, that creates a broader, more connected way of growing both companies.

Finding a company that's interested in forming a strategic alliance

  1. Find partners in complementary sectors – if you're an accounting firm, like us, it makes sense to partner with solicitors, lawyers and other professional services providers who can help your clients. If you're a maker of shoes it makes sense to partner with a clothing manufacturer that shares your same sense of style and purpose. The key here is to find a shared audience or customer need, and to create some real synergy between your two businesses.
  2. Take part in business networking and events – to get a wider understanding of your local, or industry specific, business network, it's worth taking part in plenty of online and offline business events. You'll meet new people, hear about new brands and will find it easier to find your ideal strategic partner. The wider your business network, the more choices you have for an alliance.
  3. Look at crossover between your target audiences – once you've found a potential strategic partner, it's important to take a detailed look at the crossover between your partner's audience and your audience. Do they shop through the same channels? Do they fit a certain age group or social demographic? Are these customers local, or are they part of a national or global online customer base? How large is their database?
  4. Cross-reference your customer databases – by sharing and comparing your client relationship management (CRM) data, you can cross-reference both sets of customer data and see where there's overlap, or where you may already share some of the same customers. The better you understand each other's customers, the more likely it is that you'll find some common ground for shared marketing and promotion.
  5. Run joint events and promotions – presenting joint webinars with your strategic partner, or running joint promotions. By finding a common theme, you bring both audiences together and reinforce the alliance between your two brands. You also reduce the expenditure by sharing the costs and reach a wider audience.
  6. Combine your R&D efforts – to move your alliance forward, you can also try combining your research and development (R&D) activity, to find new products, new services and new ways of keeping your joint customers happy. By sharing the time, costs and effort of developing new offerings, both companies will benefit – and you keep your businesses at the cutting edge of their respective sectors or specialisms.

Christmas Parties and Presents - and Tax!

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Christmas Parties and Presents - and Tax!

Christmas is a great time to acknowledge and reward your employees and other associates by celebrating and giving gifts. But don't get caught out by entertainment rules! Claiming entertainment and gifts as business expenses is not always straight-forward, as there are implications for GST, income tax and fringe benefits tax (FBT).

Is it Entertainment?

Entertainment is generally not a deductible business expense. Entertainment rules can be tricky, but in general, the more lavish the meal or event, the more costly, the later in the day and if alcohol is involved then it will generally be called entertainment.

Fringe benefits tax may apply to entertainment benefits provided to employees, and if an event or gift is considered to be entertainment then you cannot claim a business deduction or GST.

A Christmas party for employees, spouses, suppliers and customers may or may not be classed as entertainment. Check with us to see if any of the party costs can be claimed.

Keep it Free From FBT

  • If you give gifts to your employees keep them under $300 each. Benefits provided which have a value of less than $300 are exempt from FBT.
  • Give gifts to employees that they otherwise would have claimed as a tax deduction. For example, you could pay for a professional development course or give new tools.
  • Give gift cards or vouchers up to the value of $300. (Vouchers are not considered to be entertainment).
  • Avoid giving 'entertainment' gifts over $300, such as membership to clubs, tickets to events or travel.
  • Pay a Christmas bonus. Process through payroll like any other wage payment and withhold tax. Remember that superannuation applies to bonus wages.

Enjoy the Party

Talk to us when planning your Christmas gifts and events to check how much may be claimed as business expenses. Once you know the costs of throwing a party and giving gifts and bonuses, you can put your feet up and enjoy your own party!