Help Support St. Gabriel's School & The Royal Institute for Deaf & Blind Children
Signum Business Advisers have entered the Coleman Greig Challenge to raise money for St. Gabriel's School and the Royal Institute for Deaf and Blind Children to support children with special needs. On Friday 23 October our team of 14 will cycle, run or walk for this great cause. We ask that you take the time to visit our team page on the Coleman Greig Challenge website and donate to support our team and these great organisations for kids. Help us raise $100,000 today!
What Business Issues Are Worrying You?
As part of our ongoing commitment to improving our services to our clients, we're interested to know what business issues are worrying you. Your worries might include:
This is a huge problem in Australia. In fact, the ATO has recently indicated that 60% of the recoverable debt owing to the ATO ($20.3B) is from small/medium enterprises. This is an increase of 9.7% from the previous year.
According to Dun & Bradstreet, the average debtors' days outstanding is 51.6 days. This is considerably longer than the traditional 30-day payment terms.
If your turnover is $2M per annum and your debtors' days outstanding is 52 days, this would mean that your business had $284,931 in debtors. For every one day that debtors' days outstanding can be reduced, this would generate $5,479 to your business.
There are procedures and processes that can be implemented to improve a business' debtors' management.
Succession planning is important for businesses for all of the key personnel within the business. Who is trained to take someone's place in case of resignation, sickness or death?
It's very important to have succession planning strategies implemented for senior management, the owners and also for the other positions in a business. This highlights the need for ongoing training.
Business plans are like "maps for tourists". If you don't know where you're going, how are you going to know when you get there?
However, business plans shouldn't be prepared and then left in the bottom drawer. They need to be utilised as a "living document", so that actual performance and actual achievements can be compared to what was stated in the business plan at set periods during the year (eg at least 3 monthly), to measure your business' performance against the targets that were set in the business plan.
The ATO has now introduced the type of benchmarking they're utilising as a form of verification for about 100 different types of businesses.
There are commercial benchmarking organisations available who have assembled actual data on over 120 different types of businesses, which enables an individual business to compare itself against others operating in the same business category.
A wide range of data can be compared, including:
· Sales per Employee
· Gross Profit Percentage
· Productivity Percentages
· Sales per Square Metre of Premises
Personal Property Securities Act
The Personal Property Securities Act (PPSA) was introduced in 2012, along with the Personal Property Securities Register (PPSR).
This legislation has caused a lot of problems within many businesses, both small and large, primarily because owners were not adequately trained as to how non-registration on the PPSR could have a significant financial effect on the business.
The government recently reduced the fee for a registration on the PPSR. However, there has been no major education program offered by the government.
The problem with this legislation is that you can lose an asset for which you've paid or on which you owe money, through no fault of your own, other than not registering on the PPSR.
Building Business Partnership
Many small/medium enterprises aspire to develop business relationships through "business partnerships" with larger organisations.
The first thing to do is to look for businesses that are complimentary to yours. You will then need to develop some clear objectives as to what you wish to obtain from a business partnership. This can be a great way to build your brand and add-value to your current business. However, it takes confidence and enthusiasm to develop business partnerships with larger organisations. Smaller businesses need to get the larger businesses engaged with the enthusiasm for the overall concept.
You need to be mindful of what your vision is and the vision of the larger business. You need to be keen, energetic, enthusiastic and follow some golden rules to achieve a great business relationship with a business partner.
These rules include:
· Having a "win-win" intention – there's got to be something in it for both parties.
· The target markets need to align – there needs to be a valuable alignment.
Both parties need to believe that there's a sense of trust, one to the other, that you both understand the critical success factor for each partner.
In the first instance, you need to have clarity as to your objectives. Be very clear on what you want to achieve from a business partnership. Also, be aware of your potential partner's objectives.
What assets do you have in your business, both fixed assets and intellectual property assets, that you will be able to leverage to achieve success from a business partnership?
· Small/medium enterprises need to clearly identify the type of business they're seeking as a potential partner.
· How do you obtain referrals to talk to larger businesses? What's your approach?
· What type of offering is suitable to secure appropriate meetings with a potential business partner? Perhaps you can arrange for a third party to introduce you to them and then have a meeting with them, to give an overview of your product, process or service.
· It's very important to appropriately seal the deal. Enter into a written agreement only after all the issues have been discussed, probably over more than a cup of coffee or a drink.
· You then need to continue to manage and leverage the business partnership on an ongoing basis. It's very important that you don't set it up and leave it to the team to operate, without any ongoing involvement from senior management. It takes a long time to establish an appropriate business partnership. It can easily fall apart through senior management's neglect.
Don't assume that you will achieve the results to which you aspire, unless you're prepared to contribute management expertise to achieving the shared vision.
Using Benchmarks To Add Value
Benchmarking is a comparison of a business operation's Key Performance Indicators (KPIs) and financial ratios with best practice and average performance data relating to similar businesses.
As you know, it's very difficult for a small business operator to find authentic data against which to compare their performance to that of their peers, as this information is generally not known or released. It makes it very difficult for small/medium enterprise operators to know where they stand relative to:
· revenue generated per employee
· gross profit percentage per department
· labour to turnover percentage for each department
· net profit percentage to turnover for each department
· other performance data as compared to the overall industry performance figures
Benchmarking is important. Some people do it without realising that the task is called "benchmarking". Many businesses look, compare and then change the way they do things. Other people do it also. For example, sportspeople do it. Our cricketers are a great example. They use baseball players to teach cricketers how to throw and how to speed up their ground fielding.
Other sportspeople set and monitor their actual performance against "personal best" or national or world records and change part of their technique. They understand the importance of diet. They use the most efficient equipment possible. They visualise future performances. They then measure progress towards their targets, as these steps involve improving one aspect of their performance or technique, in an effort to improve overall performance.
Benchmarking can achieve the same results for your business. If you would like to have a discussion relative to a benchmarking analysis on your business, please don't hesitate to contact the accountant with whom you normally have dealings.
Have a listen to a scam telephone call purporting to be from the ATO – Reminder to alert clients
It's not every day you actually get to listen to a scam telephone call purporting to be from the ATO. This report from Jessica Brown in The Newcastle Herald (15 August 2015) includes a YouTube clip of a recorded scam message.
There are indications that these scam calls appear to have reached epidemic proportions this year, and we are unaware of any successful arrests (the technology being used appears to be too sophisticated for enforcement agencies). If you receive a call from the please refer them to call our office.