"The Santa Clause Effect" Article by Steve Marsten

This is the time of the year we talk about goodwill to all men and we let our budgets head into deficit a little to make sure our children and partners and extended family receive beautiful gifts and we have the roast turkeys, hams and pork all on the one day. So no one is thinking about stock markets, property markets or the economy too much.

The stock market has a history of going up in December.  It’s often referred to as the Santa Claus effect. This year is no different. The market has done quite well during the month going up 5% over the past month.

Most western economies have regular patterns to them and there is a model known as the Economic Clock. The Economic Clock demonstrates that - as an economy moves through its economic cycle, there is a time to buy certain types of investments and a possible time not to buy. It’s not a signal about what to buy to become quickly rich rather it identifies that the return to a specific type of investment. Currently it shows Australia’s economy crawling out from the bottom of the market – a hesitant uneven economy; interest rates falling and property stabilising. It’s just after 6 o’clock – heading towards 7! THIS is the start of the potential bull market.

 Over the past 12 months the US market has performed considerably better then the Australian market. The difference is that the US government is not trying for a surplus. They run the world’s largest deficit and will increase spending in another “quantitative easing” likely in the New Year. This stimulates their economy. Our economy has not had this luxury and hence our market is subdued. Nevertheless, we are building a strong economic footing for the nation. Also for the faint hearted it may take some time before they will jump into market given that, to them, it may be still considered iffy! However the signs are there. That’s not to say the market won’t fluctuate – of course it will, however the trends are looking up.

So eat, drink and be merry this Xmas but save a little something to start the wealth building in the New Year and see your investment advisor as soon as you possibly can in the new year to take advantage of what looks to be a good market year.  From the team at Sothertons – Merry Christmas and Happy New Year!

"Can your business survive the flu?" Article by Tina Zawila

It’s an odd time of the year to come down with “the flu”, but that’s exactly what happened to me last week.  I was fine when I went to work Monday, but by the afternoon, I had taken an early mark and headed home.  I thought I’d be right after a good night’s sleep and be back at work Tuesday morning, but that wasn’t the case.  In fact, I didn’t return to work until Friday, and even then it was only for a few hours.

My business had to operate without me for the better part of a week, without any prior planning and during arguably one of our busiest months of the year.  Fortunately, I have a business partner who was able to pick up the urgent parts of my workload, and a great team that could just “get on with the job”.  But it got me thinking...

What happens to your business, when you are unable to be there?

Some of the leading business and finance writers refer to the concept of businesses that operate without the owner/investor working in the business.  Robert Kiyosaki author of “Rich Dad, Poor Dad” calls it the “automated business”.  Jim Collins in “Good to Great” identifies that great businesses have leaders, not owners who are operators/technicians in their businesses.

So take a moment and think about the unexpected...if you weren’t able to come in tomorrow, what would happen to your business? 

·         Is your team capable of operating the business effectively without you?  

·         Are there systems and processes for the team to follow that are not reliant on your input? 

·         Are there customers/clients that only you can look after, or work that only you can do?

Your answers to these simple questions, should either give you a warm feeling of security, or prompt you to create a project/action list to address these potential weaknesses.

By taking some simple steps you will not only set your business up to run without you while you take that much needed, and well-overdue holiday, but you will also add significant value to your business when it comes time to sell.

Savvy, potential business investors look for opportunities to purchase “automated businesses” – businesses that are not reliant on the current owners.  These are truly “walk in, walk out” operations and generally allow the transition from previous owner to new owner to be as smooth as possible.

So take a moment, as we approach this holiday season, to consider how your business would operate without you, and start your action list to improve any gaps.  If you need advice or support during this process, or assistance with implementing your action plan, call us at Sothertons on 4972 1300.  We are here for you in [Business] + [Life].

"Is Giving Your Gift?" Article by Steve Marsten

Well it’s three weeks until Christmas! Its the time of Rudolph the red-nosed reindeer, holly wreaths, decorated trees with heaps of presents, mistletoe, seasons greetings, seasonal music, cold beer, a dip in the pool with 20 others and Santa Claus are all associated with this holiday. These all bring warm feelings to those who celebrate it. Add to that rich Christmas cake; plum pudding with sixpences, beautiful leg hams, roast turkey, pork, pork crackling and backyard cricket with the extended family – and that’s how I remember Christmas.

It’s also a time to reflect. One thing I have focussed on is taking stock of where we are at - as a family; as a business and as a community. The key point of Christmas I feel – is the giving and the goodwill.

If you have had a good year – stop and think about how you got there. Consider the support of your spouse; your family members; your business partners and your team that you work with. Consider the support you have received from your customers and clients. Consider the support from your “raving fans”. What are you most thankful for?

 

When things go well – what do you give back? We too often forget that even in ”well off communities” – there are those who still do it tough.

Gladstone has done fairly well and I feel we live in a bubble compared to other parts of Australia. We are VERY lucky to be here than in other parts of the country right now.

You don’t need to be rich to give. Often people feel it’s about the dollar. It’s not. Time is actually the most valuable thing we possess or have control over. Whether you donate time or money – giving is beneficial. There is research supporting the old adage that “it’s better to give than to receive”. A Gallup survey on volunteers found that 52% of volunteers do it because they like doing something useful and helping others. Another 38% enjoy it because they “feel good” about themselves and while 2 % of volunteers reported they were in poor health this compared to 34% of non-volunteers.

  

I was reading an article in a health magazine that suggested “giving” as part of your exercise program/regimen.  So besides feeling good about yourself for doing something for others, “giving back” is actually good for your physical health.

In the lead up to Christmas take time to recognise the support of your team; your clients and customers; your business partners and your spouse and family.

"Are you Inviting the Tax Man to your Company Christmas Party?" Article by Tina Zawila

The team at Sothertons had some fun on the weekend and enjoyed our annual Christmas Party.  Every year for as long as I can remember we have had a fancy dress theme and this year it was “Grease” the movie.  Yes, we had Sandy and Danny, Rizzo and Kenickie, Frenchy, the geek Eugene and even Elvis made an appearance!

However, there was one character that we didn’t want at the party ... The Tax Man!

The annual company Christmas Party falls under the definition of Entertainment for taxation purposes...yes, there are income tax implications associated with having a good time, and you can be left with more than a hang over the next day.

Generally, entertainment and recreation expenses are not income tax deductible except in very limited circumstances, no matter who the recipients are and irrespective of whether there is a genuine connection with business activities.

Therefore, the cost to an employer of providing team social functions (including the annual Christmas Party) is a non-deductible entertainment expense.   Similarly, providing Christmas gifts to employees where the gift provides entertainment by way of food drink or recreation (eg a holiday, tickets to sporting events, the theatre or cinema or the cost of a night out at a restaurant) would not be tax deductible.  However, the cost of relatively inexpensive Christmas gifts (such as a bottle of wine/spirits or a food hamper) that will be consumed by an employee at home will not be treated as entertainment. 

But wait there’s more...you may need to consider Fringe Benefits Tax (FBT)...

Where entertainment expenses are incurred in providing a fringe benefit to an employee or associate, the entertainment expense will generally be income tax deductible as an ordinary business expense, but may be subject to fringe benefits tax (FBT).

There is an exemption available within the Fringe Benefits Tax Assessment Act in respect to “Minor Benefits” – these are defined as benefits with a value of less than $300 and are “infrequent and irregular”.  Generally speaking, a gift for an employee upon the birth of a child, or a milestone birthday, with a value of less than $300 would be considered to be a “minor benefit”.

Whilst minor benefits are exempt from Fringe Benefits Tax, they are not tax deductible, and the input tax credit (GST) cannot be claimed.

FBT legislation was introduced in 1986, but still proves to be confusing to many business owners.  If you need assistance, please call us at Sothertons on 4972 1300 and we will help you minimise the “mess” the tax man leaves behind after your Christmas Party!

"Is it time for a Makeover?" Artilce by Steve Marsten

I see people everyday that are operating businesses in Gladstone – some doing extremely well and some not so good. What often confounds business owners is why their efforts aren’t yielding the past good results. Often it’s not the effort that’s the problem – it’s the thinking. People still often believe that yesterday’s strategies will yield tomorrow’s results.

Business’ whose sales are flat lining or tanking need to refresh their tactics otherwise they cannot expect their businesses to grow. Things have changed dramatically and recently I sat down with a long standing Gladstone Business owner and discussed the changes in their business that had kept it going since the mid ‘80’s.

We discussed the fact that selling services today have changed considerably. Once - 85% of his sales came from the yellow pages. This he found had reduced to less the 15% and half of that was “yellow Pages” online. Today customers are buying directly off the website. They are texting his mobile from the website using Smartphone’s; sending emails. He has had to have a constant eye on the emails and be flexible to ring people as soon as possible after they send the email. They request quotes off the internet. The speed of his site is now a priority when updating it. This, from a couple who 12 years ago considered themselves as computer illiterates!

When sales were dropping in the late ‘90’s early 00’s, they started to consider whether they should close their business. They sat down with their advisory team and adopted a completely new bunch of strategies.               

They started to look at each area of their business and determine how they could refresh their services. They even timed how long it took to do things; they monitored and rated their customers’ experience. This assisted in fixing issues promptly and improving customer satisfaction levels.

The other major issue they took on was determining what their culture was. They had a “Team Culture” day which helped establish the business’ culture. What it meant to be an employee; what it meant to be respected and what the business meant to their community. The staff immediately improved their output as they felt the owners were listening to their concerns and acting on them. Mind you some employees resigned as well. This was a good thing – it meant the ones who stayed wanted to work there.

Overall business has grown at an average rate of 8% since 1986. Overall they believe that business owners need to consider whether a few small tweaks are required to tune up your business or is it time for a complete makeover?

"WITY - What's Important To You?" Article by Tina Zawila

Another acronym! We seem to love these here in Gladstone. This one was a new one for me.

I picked it up at the PrimeGlobal Oceania Conference in Sydney last week. PrimeGlobal is an international association of independent accounting firms. Firms across Australia, New Zealand (and even guests from Canada and the USA) converged on Sydney to listen to thought provoking speakers covering a range of topics including economics, taxation, accounting, audit and most importantly, how we can add value to our clients.

This simple, yet powerful acronym made me think - isn't that what relationships are all about? Knowing what is important to the other person?

Whether it is business or personal - asking this simple question will certainly enhance the relationship. It shows that you are genuinely interested, and based on this knowledge; you can offer your support, knowledge, experience, guidance or simply a listening ear to help them preserve, pursue or protect what's important to them.

For me, this question could prove to be quite enlightening if asked of my teenage daughters - what's important to them right now is, more than likely, very different to what's important to me. Knowing what's important to them helps me understand their decisions and actions and allows me to support, guide and protect them.

When asked of my clients, their responses provide me with invaluable information (beyond the usual financial data) and empowers me to assist them in developing strategies and actions to achieve their goals and protect what is important to them right now. It also enables us as a firm develop and provide our clients with products and services that are useful, relevant and valuable to them.

So when was the last time you asked someone "What's Important To You?”

I encourage you to ask this question of your customers/clients - their answers could make all the difference to your business relationship and help you to support and serve them. After all they are the life blood of your business. It is as simple as remembering WITY.

Start your new business engines - Article by Steve Marsten

With everything happening in Gladstone over the past 18 months, there has been an increase in the number of enquiries buying or starting a business. Major projects that boost the local economy encourage confidence in people to follow their dreams and actually act on them.

As everyone knows there are scary statistics about new starts and their failures however and the big problem is that most people under capitalise their business and forget why they started in the first place. The first thing they cut back on is the marketing. I have heard people say – “we’re just going to have a quiet opening and let word of mouth work its magic”. This is what is known as “Hope Marketing”. Soon they have a quiet closing because people didn't know they existed! 

Plan the opening – it’s important. In towns the size of Gladstone – people talk. They use social media. The word will get out quickly IF you have a well planned opening event. Consider who should be there. Who should “open your business”?

Consider some pre-launch sequences to build anticipation. There should be at least 3 spread over a period of no more the 6 weeks and no less then 3 weeks. It may be a flyer; a video ad on YouTube or something physical that you give away in the main street.  The aim is to focus on the “opportunity or experience you are offering. How will your custom be “different” after the experience or the opportunity? How will they have transformed? Keep giving people value. (You can never give too much!) What will the “ownership experience” of owning your product be? Or perhaps the tasting experience? Always note that there is a special offering coming to them.

Engage people in conversation. They will engage others hence social media can be useful for this as well as your blog perhaps. Use Partners to turbo charge your marketing. Speak to your suppliers. Utilise their lists or clientèle or if you are starting Yoga Classes maybe you target someone in the Massage industry?

Planning the Launch – you need to target two sets of people - those who are your potential clients and customers and those who love to talk about new things in town. Don’t forget to invite the town dignitaries as well as the local paper. All of these will talk about your business over the next week. When you have your speech keep it relatively short and focus on WHY you are doing what you are doing then delivered to the highest standard possible. At Sothertons we work with business owners who are focussed on success.

Countdown to Christmas - Article by Tina Zawila

I don't want to alarm you...but its 9 weeks to Christmas!  Surely you have noticed the Christmas items sneaking into the shops, there to tempt you to get organised and get in early! 

Whilst Christmas is usually a special time of the year with friends and family, the lead up to this event can also be a stressful time for some of us trying to find the "right" gift at a price that we can afford.  This often leads us to making rash decisions and making impulse purchases, usually on our credit card.

So let's talk credit (and dare I say it ... budgeting!).  

• Review your current financial position.  Do you have an amount each week in your budget that you can "allocate" to Christmas gifts/celebrations?  
• Who would you like to buy gifts for, and at what value?  
• How much would you like to have to spend on Christmas celebrations - food, drink, parties?

So, now to the crunch - will your savings between now and Christmas be sufficient to cover gifts and celebrations?  If not, you have two choices - cut back on gifts and celebrations to come within you budget, or consider using credit.  Obviously the first choice is the wise financial decision; however, most of us will choose the latter.

                     

If you are thinking of taking the credit option - do your homework!  If possible limit the amount of credit used to the amount you can repay within the interest free period (usually 44 or 55 days on most cards).  So ask yourself "how much will I have available to pay off the credit card by the end of January 2013?"  Then limit your additional Christmas budget to this amount.  

If you are concerned that you may not be able to pay the balance in full within the interest free period, and then look for a low interest rate credit card, and make sure you know exactly what the repayments will be and how long it will take for you to pay it off.  Remember, the interest charges have just increased the amount you have spent on Christmas gifts and celebrations -so those "bargains" at the shops, may not be a great buy after all!

Let's make sure Christmas 2012 is memorable for all the right reasons, not because we are still carrying debt into mid-2013.  If you need help with budgeting, or comparing credit cards or finance facilities, please contact the finance professionals at Sothertons Gladstone on 49721300.

                          

My website is up and running...what next? Article by Steve Marsten

Many businesses spend many dollars to get their websites up and running and like their Budget that’s in their bottom draw, they forget about it! In a recent report in the US by Vertexera, 85% of consumers prefer to use a search engine when looking for a product or service than anything else. I guess the iPhone and the iPad mean that we no longer have to get off the lounge to look for the Yellow Pages guide anymore thanks to Mr Jobs. Interestingly, Australia ranks ahead of the US in terms of internet penetration. So to me this indicates that if you want to be found in today’s internet connected world - you absolutely, definitely and unquestionably MUST have an internet presence.

What I see are business owners who have rushed to get the website up and running then forget about it! Also many people don’t bother to regularly check the functionality of their website. They fail to put themselves in the position of their customer. They don’t ask the questions that go through the customers mind when they are on your site. Remember we want customers and potential customers using our site. 

So here are a few questions I think are imperative to consider once your website is finalised and the every couple of months.

1.   Does the site seem to take forever to load?

2.   Has your IT supplier spoken to you about caching the browser to speed things up?

3.   Does your website connect to posts, pages, categories and tags on your blog?

4.   When you carry out a search on your search engine for your service, product or business – does it appear on the first page? How far down the page? Do you need to improve your optimisation?

5.    Do you use a good statistics tool? What do you do to manage the traffic on your website? Do you know who and how many people land on your website? How many drill past the first page? How many new customers or existing customers contact you as a result of your webpage? What you don’t record, you don’t manage!

6.    Do you have an events calendar?

7.    Is your site easy to navigate? Some sites have so much information on them it’s sometimes difficult to work out where things are. Consider having someone, maybe a family member or friend or your accountant who is going to give honest feedback - “test” your site.

8.    Build connectors with your customers. Have them “Join your membership”. Formalise a Login to your site. Receive a newsletter or updates on your business events etc.

9.    Ask your customers for ideas or test your customers with surveys – most of all get them involved with you and your business products and services.

Finally, have an IT internet professional who has experience in your industry, to carry out an audit on your site and to give feedback to improve the site every year, otherwise you may not be getting the return on your investment. 

To obtain more information on this topic you can contact Steve Marsten of Sothertons Chartered Accountants on 4972 1300.

Technology: Allowing Small Business to act like Big Business

Recently, Steve Marsten and I spent two days in Sydney attending the annual ATSA (Accountants Technology Showcase Australia) conference, immersing ourselves in technology.

To say that technology is moving quickly is an understatement.  However, with all of the advances in technology, are we working smarter and more efficiently, or are we only using a small part of the capabilities and capacity of our IT systems and software?  A comment was made at the conference "work is something I do, not somewhere I go".  It's true, armed with a mobile device and a good internet connection, it is possible to work or do business anywhere!

Enter the era of the "cloud"... This was certainly the most talked about topic at the conference...what is it?...where is it?...how does it work?  The cloud is not so much new technology; it is just that it is becoming more widely available to businesses of all sizes and to the general public.  For the first time since the dawn of computers, input is exceeding output. We are "uploading" data - information, photos, ideas etc at a staggering rate.

                                                     


Businesses are using the cloud to store and share data, to record financial information via online accounting systems and to market the business worldwide.  However, before you sign up for cloud-based technology for your business, there are some key questions you should ask:

Does the software meet your needs and requirements - will it grow with your business?

What is the cost?

What do you know about the cloud provider - how long have they been in business, how financially stable are they, do they have references?

Where is your data actually stored?  Storage sites vary widely in terms of security, replication and back up policies etc.

Who owns your data?

What happens if you want to leave the provider?

How reliable and strong is your internet connection?

What support is offered and what are their response times?

The marketplace is being flooded with software and IT providers entering this space - they see the opportunity!  So buyer-beware...do your research, talk to others, particularly your accountant/business advisor.  At Sothertons, we are committed to staying in touch with the latest technology and are happy to assist you with any questions you may have.  Call us on 07 4972 1300.