We are both delighted and disheartened to let you know that Liz has decided to retire at the end of the year. Liz joined us in 2005 when we had just moved to 111 Phillip Street and has seen us go through many changes. We wish her all the best as she starts the next chapter of her life. She will be missed.
We have temporarily relocated to Level 7, 111 Phillip Street while the office undertakes a complete refurb. This will be for approximately 8 weeks, seeing us back upstairs early February. We are looking forward to a fresh new office.
Over the holiday period we will be closed from 5pm Tuesday 22 December and will re-open 9am Monday 4 January. We would like to wish you a Merry Christmas and hope that you have a safe holiday season.
2015 - The Year That Was
2015 is nearly over. What were the highlights?
- There was massive growth in property prices, particularly in Sydney.
- There was no Reserve Bank of Australia interest rate rises.
- "Cheap petrol" was available in most parts of Australia.
- It appears that the government had earned more respect, however in the last 2-3 weeks, there have been some significant changes leading to a 13% swing against the government in the North Sydney by-election.
- There are ongoing discussions relative to the GST – the Federal Treasurer and some of the State Premiers are making comments. Will there be changes? Some people believe there will be, yet many others believe that it's just a "talk fest".
- Cashflow management is still an enormous problem for most small businesses. It's interesting to see that two of the major banks are promoting their services to small/medium enterprises and a couple of new banks that have recently emerged are promising to be "small business proactive". This could lead to an interesting situation with financial offers to small businesses, particularly as some of the banks are promoting no-security lending (cashflow lending).
The start of a new calendar year is a great time to review budgets and cashflow forecasts and to take some time out to consider your business' strategies for the next 12-month period. Why not have a planning day to review all of the activities within your business? Many businesses have found that one of the best ways to do this is to engage an independent facilitator to chair this process.
Successful business operators continually review their business operations and, most of them, undertake a detailed review of their businesses, at least, once every three to four years.
One way to have a fresh look at your business is to compare how you're operating with how a start-up company operates.
Successful start-up companies generally challenge pre-conceived ideas as to how businesses should operate. They search for market opportunities which have been overlooked by the established operators. They obviously don't do things the same way that they were done previously. They don't make comments like - "this is how we've always done it around here".
Because they're new to business, they cannot blame competitors, neighbours, the economy, staff or suppliers.
One of the benefits of having a fresh look at your business every three to four years is that it requires you to carefully analyse what has happened in the market place. For example, have you identified the threat that the internet and/or cloud technology might make to your business and have you already taken steps to effectively compete with online selling and the improved services that are available through cloud technology? What other similar problems are emerging because of the significant changes in communication and technology?
In what phase of the business cycle is your business eg:
- rapid growth?
- or is about to enter rapid decline?
Can a rapid decline be overcome by a reinvention of how your business operates? How does your business address the problems to which the market place requires answers?
What does a successful start-up do? (Obviously not all start-ups are successful. We're trying to look at the ones that are successful). They look for opportunities. They analyse the market to see what services are required which are not being supplied by the established operators. This requires an identification of:
- what are the market needs?
- what are the market problems?
- are they being serviced?
They then analyse what they, as a start-up, could do to deliver a great service for which customers will be willing to pay premium rates rather than determining the lowest price the customer would pay. In other words... a successful start-up is closely evaluating the market and identifying market opportunities. Are you doing that regularly in your business?
Successful start-up operators are identifying commercial opportunities, preparing feasibility studies and business plans to enable them to successfully market their product/service or process to meet the market-identified requirements. This requires a fair amount of homework on the market opportunities. This will involve an analysis of competitors to ascertain who is successfully servicing the market and who is not and which areas are being fully serviced. They then focus on the delivery of good service, at high quality, at premium prices in an expectation that profits will follow.
Responsibilities / Liabilities of Directors
Directors have onerous responsibilities, irrespective of the size of the company. The Corporations Code applies to every company, whether it's a large multinational or a small business entity (except for some specific protection that gives relief to small business operators).
Some of the key areas of responsibilities include:
Workplace Health and Safety - Directors have a responsibility to ensure appropriate systems have been implemented, to make the workplace safe and to ensure that the system approved by directors has been implemented by the management.
Cashflow Management - Management of cashflow is a vital concern for directors. This means that directors should be continually aware of the cashflow position and ensure that management has given directors a full and accurate overview of the cashflow position.
Not Trading Whilst Insolvent - This is a very important issue. Directors are responsible for ensuring that the company doesn't continue to trade if it's not meeting its obligations in accordance with the negotiated payment arrangements with lenders and creditors. To fulfil this obligation, directors should ensure that they're continually receiving financial accounts and summaries of the current bank position and cashflow forecast, together with the Creditors' Days Outstanding list, so that they can ensure that there's adequate monitoring of this very important area.
Environmental Issues - 25 years ago, there were virtually no environmental laws but now there are a significant number. Directors need to ensure that either the management team is aware of the environmental issues and continually report to the Board or an external consultant(s) have been appointed to keep the directors abreast of environmental issues that can have an effect on the company's operations.
Stock Control Area - Directors need to be kept informed by management of:
- investment in stock
- details of slow-moving or obsolete stock
- strategies that management proposes to liquidate slow-moving or obsolete stock
- stock turn rates for various categories
- budgeted investment in stock in peak period
Working Capital Control - Working capital is the lifeblood of the business. It primarily relates to investment in debtors, stock, work in progress, less the amount that is owing to creditors and bank overdraft. Directors need to ensure that they're being regularly informed of the situation for debtors. This includes making sure the business' new customer policy is being implemented.
Australian Government Releases The Innovation Statement ?
The Prime Minister, Malcolm Turnbull, has announced the Australian government's Innovation Statement. This begins a major transformation of Australian business, by allowing companies and directors to take "necessary risks to innovate".
The policy embraces the risk of failure, in order to allow innovation to succeed. This means recognising that, in pursuing new ideas and opportunities, unfortunately, some businesses will fail.
The reforms announced by the government will help change the Australian business culture.
The key components of the announcement, as they relate to businesses, include:
- Introducing a "safe harbour" for directors from personal liability for insolvent trading if they appoint a restructuring adviser to develop a turnaround plan for the company.
- Making "ipso facto" clauses, which have the purpose of allowing contracts to be terminated solely due to an insolvency event, unenforceable if a company is undertaking a restructure.
- Reducing the current default bankruptcy period from 3 years to 1 year.
- Tax incentives for "angel" investors providing funding to start-ups.
- Favourable changes to tax treatment for the acquisition of intangible assets such as patents, trademarks and copyrights.
- Changes to disclosure requirements for employee share schemes.
- Additional investment in cyber security through the creation of a Cyber Security Growth Centre.
- New laws that make it easier for companies to access crowd-sourced equity funding.
- Changes to the tax treatment of Early Stage Venture Capital Limited Partnerships (ESVCLPs) to attract more investment into start-ups.