Archive for 'Business'
A Restructure Only Means A Setback To Your Business, And Not A Closure – Here’s What The Reforms Could Mean For Your Business
With the demanding conditions that have plagued the retail industry over the past twelve months, business owners need to be aware of all the restructuring options available before it is too late.
COVID-19 has unfortunately resulted in reduced foot traffic, store closures, the accumulation of legacy creditors and significant deteriorations in working capital positions.
Even with the support of JobKeeper and other government initiatives buoying business ventures from early 2021 to now, many family and small businesses are sure to continue to struggle.
The Misconceptions Of Formal Restructures
The idea of restructuring your business or reaching out for external help can appear scary and often seen as something to be avoided at all costs. However, business owners are not on their own when dealing with the difficult conditions facing them in their short-term future.
No one wants to see a business fail.
That’s why there are always options available to businesses. However, the longer a company holds off on making a decision, the more the business and its available options will deteriorate.
If companies and businesses can act early enough, their options include informal arrangements and advice, voluntary administration, and new restructuring reforms for small businesses.
With the availability of these options and the right people involved, there is no reason why a financially distressed small business cannot survive the challenging times and thrive in the future. All companies experience some form of distress from time to time and often at no fault of their own. The ones that survive focus on cash, seek appropriate advice from trusted advisors at the right time and act further on it.
How Might A Business Survive Financial Distress
Using the voluntary administration process as a restructuring tool allowed Tuchuzy (a well-known retailer in Bondi) to successfully deal with legacy creditors, refocus on high margin product lines, and ultimately, the company continued to trade profitably.
The key to Tuchuzy’s restructure was a ‘light touch’ administration to minimise costs and disruption to the business and closely working alongside the director to ensure the proposal submitted to her creditors would be acceptable than an immediate winding up scenario (of which it was).
There is a lot of flexibility and breathing space afforded in the voluntary administration process.
The administrator can quickly reset the cost base by exiting unprofitable stores, reducing the workforce, and focusing on only buying and selling favourable margin products.
Even when a liquidation becomes necessary, the process can be reasonably quick, fair and transparent if run properly.
The secret is to overcome the general stigma accompanying restructures and approach restructuring experts early who will ‘unemotionally’ explain each available option and provide an impartial recommendation that aligns best with the individual circumstances.
What Do The New Small Business Restructuring Reforms Mean For You?
For a business with few creditors and a single location, the process of voluntary administration can be expensive and unnecessary.
Indeed, voluntary administration is often not appropriate for many small businesses due to associated financial costs and the hurdle accompanying a director relinquishing control.
The government has responded to this critique and offered an alternative. This alternative comes at a perfect time as directors are, once again, exposed to personal liability for insolvent trading.
The new small business restructuring (SBR) reforms offer a lower cost and far simplified restructure process, critical for small businesses to continue to trade after government assistance such as JobKeeper ceased in March 2021. The reforms add an essential new path that will assist many retailers.
Though there have been only a handful of SBRs to date, and their effectiveness to save businesses is yet to be appropriately evaluated, it is an option to explore in the right circumstances.
Critical Questions Your Business Should Be Asking
The COVID-19 crisis has put a severe strain on many previously successful businesses. Though the government and many advisors are attempting to ensure that they do not collapse, directors and business owners need to be proactive and engage early for them to work.
Often businesses approach liquidators and advisors at the point where their financial problems have become insurmountable, and a liquidation/shutdown is often the only option left. The timing of coming and asking for help can be the difference between a shutdown and the continuation of trading.
With proper preparation and an effective plan that considers all stakeholders, any business should be able to restructure and continue to trade.
If your answer to any of the below questions is yes, you should seek immediate advice from a trusted restructuring advisor.
- Am I currently losing money?
- Am I finding it hard to pay bills on time?
- Have I got old debts that I am finding hard to pay down?
- Do I need some breathing space?
- Do I have my ‘head in the sand’?
Making decisions as the owner of a business can be a world of difficult choices, but none so much as deciding that your business requires a partner. It’s a critical, strategic decision for the business that you won’t want to get wrong.
Approach your search for the right business partner to suit your business as you would a life partner. As a major legal covenant, a partnership is not unlike a marriage of sorts in the business world. It’s also something that you won’t want to rush into. A good partnership requires:
- A shared vision and goal
- Mutual hard work
- Open communication
- Mutual respect
- A balance of power
- Effective conflict resolution
You might already have an idea of what you are looking for when it comes to a business partner, but it’s still important to identify key aspects of what makes a good one.
Critical Skills & Experience
A candidate for a business partner should possess skills and experience that can be brought to the table which complement that which you already possess. They may possess strengths that you simply do not, which can make it easier to start, plan, grow and run a business.
For example, you may be a customer relations extraordinaire but struggle with the operational aspect of business development. That might be the skillset you look for in a business partner.
If the candidate for a business partner can also provide you with the resources and credibility for your business on top of sharing your vision, this can be a gamechanger. Those resources could include a secure business network, industry connections, client list or specific credentials and expertise that can add value to your business.
Values, Entrepreneurial Spirit & Business Vision
You will need to be able to communicate effectively with your partner to make decisions, set goals and drive the business forwards. Aligning your values and business vision with your partners will help facilitate your business’s development and growth without hindrance.
Minimise The Personal Intruding On The Professional
If your prospective business partner is facing serious challenges in their life, they may translate over to the business. While giving someone a chance to challenge themselves is an honourable act, running a small business takes focus, time and tremendous energy that they may not be able to afford to give.
Personal & Business Ethics
A partnership should be a mutual and trusting relationship. Someone who values honesty and practices good personal and business ethics should be at the top of your list. You don’t want to be involved with someone whose moral code does not align with yours, or who could get you involved in legal matters that may besmirch you and your business’s reputation.
Also, if you cannot respect your partner or they cannot respect you on a professional level, your ability to work as a team will suffer, and your clients will read into that as a lack of professionalism. Never partner with someone that you do not respect, or who does not respect you.
In the event that you choose or have chosen a business partner that is not right for you, make sure that everything agreed upon for the partnership was set out in writing, as breaking the partnership is no easy matter. With a lot of legal ramifications that you may face in dissolving the agreement at play, having evidence and a plan can save you plenty of grief.
For assistance with drawing up partnership agreements, business planning or simple advice on anything brought up here, you can speak with us.
If you’re looking to go into business with someone, the chances are that you might be looking at using a business structure known as a partnership. A partnership is a type of business structure that is made up of two or more people who distribute income or losses between themselves and is a fairly popular form of structure amongst those looking to develop a business.
It offers ease and flexibility to run your business as individuals, eliminates the need to create a company structure and avoid reporting obligations. You’re also not going into creating a business by yourself, which can be an added bonus for some and reduces some of the initial financial burden and uncertainty of the setup.
Just as there are advantages to choosing to set up a partnership, one must also examine the disadvantages.
A partnership generally exists between two or more parties, so disagreements in management may occur, and decision-making may never be truly equal. It can be difficult to add or remove partners into and out of the partnership, and adding more partners can make the partnership more complex to manage.
Partnerships also generally do not receive access to many government grants (barring special exemptions).
A partnership business structure may be the structure for you to employ as they possess the following key elements:
- Partnerships are relatively easy and inexpensive to set up
- Have minimal reporting requirements
- Require separate tax file numbers
- Must apply for an ABN and use it for all business dealings
- Share control and management of the business
- Don’t pay tax on the income earned, as each partner pays tax on the share of the net partnership income that each receives
- Do require a partnership tax return to be lodged with the Australian Taxation Office (ATO) each year
- Require each partner to be responsible for their own superannuation arrangements.
There are three main types of partnerships that you may have come across in your own research. Each one has advantages and disadvantages that you may want to take into account when considering what would be the best suited to your situation.
A general partnership is where all partners are equally responsible for the management of the business. For any debts and obligations that may be incurred by the business, each partner has unlimited liability for them.
A limited partnership is made up of general partners whose liability is limited to the amount of money that they have contributed to the partnership. Those involved in this style of partnership are known as limited partners who are usually passive investors without a role to play in the day-to-day management and running of the business.
An incorporated limited partnership is where the partners involved in this type of partnership can have limited liability, but at least one general partner must have unlimited liability. If the business cannot meet its obligations, that general partner (or partners) become personally liable for the shortfall and debts.
Each state and territory has different legislation and regulations that must be abided by when setting up a partnership. Learn what is legally required from you prior to setting up your partnership, or discuss with us what you may be obligated to do.
Sometimes you might want to set up a structure where you will share in the spoils with everyone that deals with that structure. There is a specific type of structure for this and it is known as a Co-Operative.
A co-operative business structure (or co-op) is a legally incorporated business entity that is designed to serve the interests of its members. Co-operatives may be profit-sharing enterprises or not-for-profit organisations.
A cooperative business serves members by providing goods and services that may be unavailable or too costly to access as individuals. There are two types of cooperatives that businesses can be set up as.
Distributing cooperatives are able to distribute any annual profits to members of the cooperative. They are required to share the capital that they make, and members of this type of cooperative must own the minimum number of shares specified in the co-op’s rules.
Non-distributing cooperatives cannot share their profits with members of the cooperative. All profits must further the cooperative’s purpose, and the cooperative may or may not issue shares to the members. Members may be charged a subscription fee if there is no share capital
Some popular cooperatives business structures include:
- Consumer co-operatives, which buy and sell goods to members at competitive prices in a variety of sectors.
- Producer co-operatives, which may process, brand, market and distribute members’ goods and services, or supply goods and services needed by their members, or operate businesses that provide employment to members.
- Service co-operatives, which provide a variety of essential services to their members and communities.
- Financial co-operatives, including co-operative banks, credit unions, building societies and friendly societies, which then provide investment, loan and insurance services to their members.
Family-run businesses form an essential part of the economy. Tradition, success and history along with their unique dynamic can create a thriving business that many may wish to see continue.
However, as with any business, the conversation about succession and how to continue the business into the future needs to be had.
With only 1 in 4 family-operated businesses considering their approach to succession formally, succession in a family business is one of the greatest viability risks to the actual business and needs to be addressed accordingly.
Every family and family-run business is unique, and every transfer or succession of a family business will also be executed differently. If you are thinking about what your family business’s plan is for succession, you may want to consider keeping these critical factors in mind:
- Where is your business going? What do you want for your family and business? What are your goals and your time frames for achieving those goals?
- Is the vision you have for your business shared by your family? It is important to consider this for the succession of your business, as a mutually shared vision will ensure that the business continues on the projected path even after the business has been passed onto the next generation.
- What obstacles and challenges will your family business face? You need to be able to understand the different perspectives and motivations of each individual that the succession impacts. Ongoing communication is vital to gaining this understanding, but an advisor can be employed to unbiasedly look at the situation independently and take the emotion out of a conversation.
- Create a plan to plot out the path of the business’s future, and the challenges that the business may face along the way as well as what it is currently facing.
- It’s important to remember that a family business does not have to be succeeded by a family (though it’s an outcome you may want). Always consider what the members of your family wish to do, and consider alternatives if none wish to take over the business.
A succession plan for a family business needs to be created to move forward and should detail all of the actions you intend to take (including the steps involved with both management and ownership succession).
It needs to be flexible, adaptable and ready to evolve, as businesses (as well as families), change over time. Your succession planning process should be transparent and understand and align with the goals you have set out for the business’s further development across the generations.
The most effective succession plans:
- Preserve and generate family wealth
- Minimise disharmony and disruption
- Minimise the impact of tax
- Encourage personal growth of family members
- Fund the retirement and family lifestyle
- Bring clarity to where the business and the family are heading.
More and more Australians bought local products during the past year and rallied behind smaller businesses, which buoyed many shops that may have otherwise struggled to stay afloat.
To create this kind of loyalty and support it’s crucial to develop and maintain a strong connection with your customers.
If you are a small business, this is a vital aspect of business management that you will want to have occurred to strengthen customer relationships.
Make The Customer Feel Special
Customers want to feel special – you can achieve this by approaching each customer as an individual rather than as a customer per se. Making the user interactions tailored to suit each customer’s specific needs/usage of your products will enhance the relevance and improve the authenticity of the interaction. Your customers will feel heard by your business and seen.
Let Your Customer Feel Heard
Always ensure that the customer feels heard – if the customer has a complaint, treat it the same way that you treat a good review, and respond accordingly. This builds trust with the customer and future customers that you will hear them out, and act the best you can to assist.
Reward Customer Loyalty & Strengthen Connections
Go above and beyond for your customers – if you’re a small business, you can use the closer connection you may have with your customers to your advantage and offer additional loyalty discounts, recommendations, and phenomenal customer support.
Follow Up With Your Customers
Follow up with customers (new and current) to ascertain reception of products and services, spearhead a proactive approach to appraisals and determine if a poor customer experience has been had. Following up allows customers to feel acknowledged while also granting you access to potential data that you may not have received otherwise.
Connect Via Social Media
Ensuring that you remain actively involved on your social media for your business with your customers should increase interaction. With many looking to online platforms to browse products, leave reviews and share favourite products via social media, it makes sense to turn your social media platform into a way to make your brand shine. Actively engaging with customers, responding to comments and questions, and directing your brand’s narrative are great ways to use social media to strengthen your connection.
Your Existing Customers Should Come First
Prioritise the customers you already have over the accrual of potential customers. If you’ve already got an established customer base, one of the best ways to maintain it is to keep them happy. You don’t want to risk losing them during the growth of your business due to less attention and more subpar customer service. The best way to maintain customer loyalty is to ensure that you can meet their needs, follow up with their requests (to the best of your ability) and satisfy their customer service needs.
Feel like your business is stuck in a rut? Unable to solve a problem that you know is going to cost you in the long run? It might not be financially tanking, and it’s highly likely that your revenue stream isn’t down, but if you’re not sure what direction to take, it could also mean that you need a fresh pair of eyes to take a look at particular issues that your business is facing to deal with them.
Business advisers can be engaged across many fields with specially focused advice or strategies to a specific area (such as accountants, business bankers or commercial lawyers) or be a business adviser who is dedicated to considering the overall goals and long-term ramifications of your business’s strategies.
A business adviser can be hired on either a one-time basis (to deal with one-off problems your business is set to face) or on an ongoing basis to provide continued support.
Suppose you’re only looking for a particular solution to a problem. In that case, one-time advice from a business adviser can be an easy and cost-effective solution to solve that particular problem. However, suppose you’re looking for long-term ongoing support that’s backed by years of experience and a perspective that’s looking to preempt these issues. In that case, ongoing advice may be more appropriate for your needs.
Engaging a business adviser can provide your business with fresh ideas based on an objective analysis of your business’s current performance and situation.
As an example, contracting an accountant in a business adviser role means that you are looking for strategic and financial advice like profitability improvement, tax planning and advice regarding business performance.
An adviser who can offer timely and relevant advice to your financial situation can make a huge difference to your business in the long run.
If you’re looking for assistance in plotting out the financial future of your business, you can come and speak with us. We’re well-equipped to assist you in mapping out your business’s plan for the future, so start a conversation with us today to see how we can help.
With the end of the 2020 financial year rapidly approaching this month, many businesses will be reflecting on how they managed to navigate and meet the challenges of a turbulent time (namely, the COVID-19 pandemic).
By taking what they have learned, what worked and what failed, businesses should be able to plan for their future for the next financial year and understand how to take their learnings from the previous year forward with them to create preventative strategies and coping measures.
A good business plan recognises these periods of change as opportunities to innovate, challenge the business and engineer a plan that allows them to take chances but remain safe at the same time.
Planning For Your Business’s Financial Future This Financial Year
- Ensure that you are legally compliant with your approach to your employees by conducting an audit of all employment contracts.
- Plan out and undertake a risk-management plan to identify vulnerable areas and what strategies you can employ to mitigate their effect. Include potential exit strategies for the business and a succession plan for worst-case scenarios.
- If there were any excellent habits or innovations developed throughout the pandemic, retaining them should be a priority
- Manage financial obligations, such as commitments to leases, staff, debt etc., and see how those can be managed in the event of volatility or turbulence. Revisit grants and support packages and see if these are still available/useful to you
- Plot out guaranteed, likely and potential projects or income and your expenses, taxes, overheads, wages and subsidies that should be accounted for ahead of time.
- Surplus cash generated can be used to pay down debt or take advantage of opportunities through reinvestment in areas such as hiring new staff or purchasing equipment (especially with the instant asset write off scheme being extended for another year)
- Consider implementing reliable financial software (such as e-invoicing) to ensure everything from expenses and invoices to taxes and analytics are meticulously organised.
We are here to help you plan out your business’s future for the next financial year, including how to prepare financially for any eventualities, what might be the best path forward to deal with potential or existing debts, and what schemes or grants your business could be helpful to your business. Contact us for an appointment today.
To gain a foothold in the online community, it is becoming more and more important that small businesses take advantage of and develop a web presence that they can use to engage and communicate with their customers.
Blogs are among the primary three forms of media used in most content strategies today. By consistently using blogging as a tool for building your business’s online brand and raising awareness, you’re using a cost-effective method of content creation and directing more traffic towards your website. Doing so also enables you to provide your target audience with relevant content that they might find helpful and establish yourself in a niche as an authority.
Reportedly, 89% of content marketers used blog posts in their content creation strategy in 2020. It’s a marketing strategy that over 86% of companies are employing as their primary form of online marketing distribution.
Here are some reasons why you should consider employing blogging as your next marketing move.
Search Engine Optimisation Boost
Blogging allows you to provide search engines with fresh, relevant content straightforwardly and cost-effectively. When you create content through a blog post for your business, you’re providing major search engines with new content to refer back to in search results. You can also insert keywords that pertain to your business into your content that you know your customers use to search for what you’re offering them, and which will then flag your blog in their search results.
Strengthen Relationships With Customer Base (Old And New)
Engaging with your customers is an element of online marketing that you do not want to neglect, as they have the power to make or break your business. Blogging allows you to engage and connect with your customer base informally and builds up trust between you and them as a reliable source of high-quality and particularly relevant information.
Make Your Business The Industry Leader In Information
By providing your customer base with trusted, high-quality information that you know they’ll find relevant, you can establish credibility for your business and yourself as a “knowledge expert” in the field or niche you’ve carved out for yourself. Writing regularly about helpful and informative topics will make you the point of call within the industry, leading to more inquiries and higher conversion rates (clickthroughs, purchases, etc.).
Connect People To Your Brand
Blog posting allows you a more informal, conversational platform to create a dialogue with your customers and show them a more personal side to your business. You can establish a brand message and voice, engage existing and prospective customers, and show them a sense of your business’s corporate standard, character, vision, and personality.
Create Opportunities For Sharing
Sharing the link to your blog is something that your customers who engage with your content can do, which creates the potential for viral traffic and exponential growth in the market. It’s free and as easy as a simple click.
Blogging is essentially a must for any small business looking to increase its outreach into the digital landscape. Suppose you don’t have the time, resources or necessary expertise to write blog content. In that case, you can outsource the posts to a digital marketing agency and have them begin your company’s blogging journey.
The performance review process is an integral part of a business that ensures that all staff (old and new) know their roles and responsibilities and perform them satisfactorily. It allows employers to directly give feedback to their employees in a formal setting that employees can then direct back into and shape how they perform their role.
Performance reviews may include praise about performance, suggestions for improvement or raise professional concerns, or assist in their career development and growth by planning for a future with clear strategic goals.
To be sure that the performance reviews conducted benefit you and your employees, It is essential to make sure that you are fully prepared and able to articulate your feedback. It’s important to have a plan, and a well-organised agenda of how you want the meeting to go can be a valuable tool to employ.
Make a note of any critical issues or points that you wish to discuss with your employee, as having the physical prompt should assist you in keeping the meeting on track and examine all of the relevant points that you want to pursue with the employee.
Essentially, you should cover in the performance review:
- Each employee’s goals or KPIs, and how well those goals are being met/achieved
- Areas where they have excelled
- Places where they may need more improvement
You can also ask your employees to assess their performance and see what they may identify differently from what you have highlighted. You can do this by simply having them conduct a self-analysis on how their performance has been in reaching (or not reaching) their goals
If you are after a more formal approach to a self-analysis, you can ask employees to complete a more formal SWOT analysis, which identifies their strengths and weaknesses, opportunities they’ve taken advantage of to enhance their performance and any threats that may have impacted or may impact their performance.
Performance reviews can also identify and highlight areas for improvement in the business that may have otherwise gone unnoticed.
Typical Things To Address In A Performance Review
- The employee’s quality of work and ability to meet particular metrics
- Dependability and punctuality
- Leadership, communication and team skills
- Progress made towards personal career goals
- Innovation and problem-solving skills
Performance reviews should be conducted periodically and methodically to ensure that you get the most benefit from them. It will also keep you informed about progress and issues within the business. It is recommended that you conduct performance reviews every three or four months, but half-yearly reviews are also perfectly suitable.