26 September 2017

Persistence and Planning Pays Off

By Tina Zawila

Over the last few months I have had the privilege of working closely with two new entrepreneurs on their new business ventures, watching the idea grow, develop, and come to life, culminating in the doors opening and the first sale being made.  For both entrepreneurs (and for me) it was incredibly exciting to reach the end of one stage of business and to start a new one. 

Having been on the journey from the start, I have watched both entrepreneurs overcome many different obstacles and challenges and spend many, many hours researching, learning, planning and re-working their business model until they were ready to launch. 

For both of them, their start date was pushed back a few times due to the unexpected.  However, coping with those unexpected challenges in the planning stage and overcoming them with persistence and passion will set them up well to cope with the future challenges of being in business.

They have sought and taken professional advice and have done all things possible to successfully launch their business, and now the real fun begins!

As a local community we should admire, support and encourage entrepreneurship.  While Gladstone may have been built on the back of big industry, it is small business that keeps our economy rich and vibrant and provides many locals with employment.  It is often the small business owner that brings something unique, different and personal.

I heard a quote recently in response to a question – What is a city?  Dave Troy said “Some might say a city is a geographical area, a collection of streets and buildings, but I believe a city is the sum of the relationships of the people who live there.” 

So let’s nurture our community by supporting each other, and in particular, our local small business owners who are putting their heart and soul into their business to enrich and sustain our city and our economy. 

If you need support and advice on your business journey, call our professional team at Sothertons Gladstone on 49721300.

19 September 2017

Company Directors need to face up to the ASIC DIN!

By Steve Marsten

Well the Government plans to finally crack down on illegal phoenix companies. The legislation has been passed on Wednesday last week. It includes a surprise move to introduce “director identification numbers”.

Phoenix companies have long been a problem for the economy, and many SMEs have lost out due to the questionable practice of avoiding debts and liabilities by transferring assets to a new company. Government figures put the annual loss at up to $3.2 billion.
Under the newly unveiled plans, all company directors will be issued director identification numbers or DINs. Interestingly, the DIN will interface with other government agencies and databases to allow regulators to map the relationships between individuals and entities and individuals and associated people.
In addition to the new ID numbers, the government is proposing a raft of measures it hopes will reign in the practice and reduce the burden on businesses and employees. These include:
  • Establishing specific phoenixing offences
  • Create a special ‘phoenix hotline’ as a single point of contact for businesses, employees and consumers to report such activity
  • Powers to enable the ATO to recoup tax liabilities by recovering a security deposit
  • Making directors personally liable for GST liabilities
  • Banning related entities of a phoenix operator from appointing liquidators
This is great provided the action to stamp out illegal activity does not inadvertently discourage legitimate entrepreneurship.
You see it happens to be a fact of life that some legitimate businesses fail; people need to be able to pick themselves up and start again. We need our laws to deter illegal behaviour while encouraging healthy risk taking and innovation.
The new laws are welcome however they don’t address a bugbear that we see regularly - unfair preference laws where good businesses that are paid for goods and services are asked for their hard earned money back during liquidation. This issue is still to be addressed.

For more information feel free to ring our team at Sothertons on 4972 1300.

13 September 2017

Profit is Positive, but Cash is King!

By Tina Zawila

I know you have heard us talk about this many times before, but unfortunately, we do come across profitable businesses that are at real risk of going broke.  The good news is that if this risk is identified early enough, the situation can often be addressed and the cash crisis avoided.

There are a number of ways that a profitable business can encounter a cash crunch:

·         Your customers are on account and take longer to pay you, than the time you have to pay your employees or suppliers,
·         The business is highly leveraged and the repayments on the loans take up a large portion of (or are more than) your net profit,
·         Your cash drawings from the business exceed the profits available (because you don’t know how much you are making).

The key risk is that without good financial monitoring and reporting, this could be happening in your business and you may not even be aware of the situation until it is too late! 

Given the software and technology available these days, and the access to professional advice, there really is no excuse for not being on top of your numbers.

One of the most invaluable, but underutilized success tools in business is a Budget.  Preparing a budget that includes a Profit and Loss, Balance Sheet and Cashflow could save your business from a cash catastrophe. 

By taking the time to project ahead and review the expected results in advance, you can take action now to avoid or mitigate a situation that may or will arise in the future.  It simply gives you a powerful advantage - the time to consider your options and act before a crisis occurs.  You can identify ways to increase income, curb spending, or if necessary re-negotiate your borrowings.

Operating your business with out a budget or without regular financial reporting is like driving your car on a dirt road at night without headlights – how can you see where you are going and how can you avoid the potholes or the tree?  Call our professional team at Sothertons on 4972 1300 and let us help you avoid a cash catastrophe.

05 September 2017

Introducing Mr and Mrs Australia

By Steve Marsten

Recently I came across an article about Mr & Mrs Australia. Basically it was saying that Australia remains the lucky country despite us having the second highest housing prices in the world! So much for the great Australian dream!

On average men live until they are 80.4 and women 84.5 years of age.

The statistics though paint an interesting picture of what most of us think average is. Apparently based on the International Monetary Fund data of Australian households, the average Aussie family owns $954,800 worth of assets. These include Houses; car, property and contents. Our total household debt is $245,500 and we save about $100 per week.

The downside is we have on average $4,300 in credit card debt and we earn about $1,500 per week. Also we only work about 32 hours per week on average.

As a Nation, we spend $14.1 billion on alcohol each year; $9.5 billion on gadgets and computers; $8 billion on beauty products and treatments;$20 billion on gambling which by the way the average gambling loss per adult is $1,279 which is the highest in the world!

The average household has about $160,000 in super; while couples aged 55-64 have the most - $488,000 in super. Because of obligatory superannuation, Australians technically become one of the biggest savers in the world and clearly the baby boomers made the most of this when it was introduced by the Keating Labor government and encouraged by the succeeding Howard governments.

In 2015 Australians gave up $229 million dollars to scam artists!

What’s does this all mean? Probably not much other than highlighting where you might stand compared to Mr & Mrs average Australia in statistics. It does highlight that perhaps our debt to assets is not as bad as we may have thought,  however our retail or consumer debt (the credit card) at 2.8 times our weekly take home pay is probably more of a concern. Other key matters might be to make sure you have a plan to atleast cover your retirement for 15-20years on average and to review your personal budgets to determine where you can save while paying down the credit card and reducing the amount you draw on your card while the interest rates remain low.

Call us on 4972 1300 for further information or come and see us.