The start of a new financial year is a great time to do some thinking and planning as to what is happening in your business. A good place to start is - What is the purpose of my business?

How much do you want to earn? How many hours are you prepared to work? What is your overall objective? 

It’s always a good idea to start out with the end in mind.

• Are you trying to build up the business to sell it?
• Are you wanting to franchise or open other similar offices/stores in other locations?
• Are you wanting to build a lifestyle whereby you can employ managers to run the business, but you don’t have to be there every day?
• Are you operating a business that you want to operate for the rest of your life… because you absolutely love what you’re doing in your business?

The strategies you develop to operate your business will be determined on which of these questions you’ve answered positively.

We’ll look at each of these in more detail in upcoming posts. Until then, give some thought to the question, “What is the purpose of my business?”

Periodic Financial Accounts – Each month we consider questions related to the preparation of a business plan. This time we’re looking at periodic financial accounts.

• Are periodic financial accounts prepared throughout the year?
• If so, how often?
• Are other periodic accounts prepared on a detailed management basis to assist management to “drill down” into the figures?
• Do you compare your performance for a month (or quarter) against budget expectations?
• Do you compare your emerging financial performance against benchmark organizations?
• Do you prepare Key Performance Indicators on the business’ performance?

There are over 50 questionnaires relating to the preparation of a business plan……… in the next post of this series we will consider Budgets/Cashflow Monitoring.

Business Plans – Some Questions to Consider

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This post is part of the 50-part series “Business Plans – Some Questions to Consider” (yes, there will be 50 of them!).

Be sure to read the other parts of the series to get a full picture. You can follow the series along on the blog or read them first by subscribing to our popular Business Plus+ newsletter.

Taxation - Each month we consider questions related to the preparation of a business plan. This time we’re looking at Taxation.

• Have adequate systems been implemented for recording transactions relative to income tax? 
•  Pay As You Go installments?
•  Pay As You Go withholding amount (withheld from salaries and wages)?
•  Pay As You Go withholding amounts from payments to businesses which have not quoted an ABN?
•  Fringe Benefits Tax?
•  Goods and Services Tax (GST)?
•  Has your system been reviewed to ensure that your organization would be able to satisfy a taxation audit?
•  Is your business conducting a research and development activity? If so, is the business operated as a company?
•  Have adequate systems been implemented for recording transactions relative to income tax?
•  Has the business instigated systems for a proper recording of research and development?
•  Have you had a review undertaken of any trust deed to ensure that the trust deed is up to date and still applicable with current laws and interpretation of the laws?
•  Has a complete review been made of all benefits that the business is paying staff, to ensure that the Fringe Benefits Tax return is being accurately prepared?
•  Are all employee packages properly documented so that you are aware of all fringe benefit requirements?
•  Has staff been made aware of their responsibilities relative to completing their motor vehicle log books, proper recording of expense claims, documentation of travel expenditure, documentation of entertainment expenditure, documentation of overseas travel expenses, recording of annual kilometers on the odometer on the 31 March each year?

 There are over 50 questionnaires relating to the preparation of a business plan……… in the next post of this series we will consider Periodic Financial Accounts.

Business Plans – Some Questions to Consider

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This post is part of the 50-part series “Business Plans – Some Questions to Consider” (yes, there will be 50 of them!).

Be sure to read the other parts of the series to get a full picture. You can follow the series along on the blog or read them first by subscribing to our popular Business Plus+ newsletter.

Budgets and Cashflow Forecasts – Each month we consider questions related to the preparation of a business plan.

Budgets and Cashflow Forecasts seem especially relevant at the moment as more and more banks and requiring this information from small business before considering finance arrangements.

• Do you prepare budgets on a monthly basis to cover the next 12 months?
• If you are in a manufacturing type business, do you prepare production budgets?
• Do you prepare sales budgets?
•  Do you calculate the required investment in stock at the end of each month?
•  Do you prepare a wages budget analysing every aspect of the business including production, sales, distribution, marketing, administration management?
•  Expense budget – has each expense item been examined to determine the likely cost for the next 12 months?
•  Are all of the expenses necessary in the business?
•  Are individual expenses subject to review, quotations etc, in an attempt to reduce the costs of that particular expense item?
•  Have you prepared a debtors’ budget based on the sales forecast?
•  Have you reviewed the projected debtors’ days outstanding to compare to previous debtors’ days outstanding achieved?
•  Have you analysed the projected stockturn to see whether this would be satisfactory?
•  Have you prepared a cashflow forecast which incorporates the items from the various budgets and then incorporates other key information, such as loan payments, lease payments, taxation payments etc.? The cashflow forecast can be significantly affected by changes in debtors’ days outstanding, stockturn rates, creditors’ day outstanding etc.

That should give you some food for thought…

There are over 50 questionnaires relating to the preparation of a business plan……… in the next issue we will consider Taxation.

Business Plans – Some Questions to Consider

FOLLOW THE WHOLE SERIES

This post is part of the 50-part series “Business Plans – Some Questions to Consider” (yes, there will be 50 of them!).

Be sure to read the other parts of the series to get a full picture. You can follow the series along on the blog or read them first by subscribing to our popular Business Plus+ newsletter.

Benchmarking - is very important to enable the small business to compare its business operation with other similar businesses. Does the business have its performance figures compared to other businesses?

Benchmarking comparisons can assist in measuring your business performance in a wide range of key performance indicators including:

•  income per employee;
•  wages cost percentage to turnover;
•  gross profit percentage;
•  net profit percentage;
•  sources of income;
•  key expenses for the business;
•  rent percentage of income;
•  advertising percentage of income;
•  investment in working capital items;
  • debtors;
  • stock;
  • work in progress;
•  key calculations;
  •  debtors’ days outstanding;
  •  stock turn

Running a small/medium enterprise business can be a lonely affair. The effective use of benchmarks can enable a small business operator to have a far better idea of how his/her business is performing as measured against similar operating businesses.

There are over 50 questionnaires relating to the preparation of a business plan……… in the next issue we will consider Budgets & Cashflow Forecasts.

Business Plans – Some Questions to Consider

FOLLOW THE WHOLE SERIES

This post is part of the 50-part series “Business Plans – Some Questions to Consider” (yes, there will be 50 of them!).

Be sure to read the other parts of the series to get a full picture. You can follow the series along on the blog or read them first by subscribing to our popular Business Plus+ newsletter.

It has been a while since we add our series of Business Plan Questions to Consider. Let’s pick it up again with WIP (something us accounting types are obsessed with tracking).

Work in Progress 

If you are operating a Work in Progress system, are all costs adequately recorded:-

•  Labour?
•  Material?
•  Subcontractors?
•  Outlays?
•  Labour On-costs?
•  Does the business raise invoices for progress claims on a regular basis?
•  Is there a comparison between the actual cost compared to the estimated cost for the project?
•  Labour productivity reports prepared weekly/monthly?
•  Is a report prepared on results of “jobs completed during the month” so as to give management a guide as to the actual financial contribution made by individual jobs?

There are over 50 questionnaires relating to the preparation of a business plan……….. in the next issue we will consider Benchmarking. 

Business Plans – Some Questions to Consider

FOLLOW THE WHOLE SERIES

This post is part of the 50-part series “Business Plans – Some Questions to Consider” (yes, there will be 50 of them!).

Be sure to read the other parts of the series to get a full picture. You can follow the series along on the blog or read them first by subscribing to our popular Business Plus+ newsletter.

Stock

We are continuing our series on questions you should consider when preparing (or updating) a business plan. In this post we’re looking at stock. Here’s some food for thought:

•  Do you conduct regular stocktakes?
•  Do you identify slow moving, obsolete or damaged stock?
•  Have you used a stock matrix to identify your stars, problem lines, cash cows & dogs?
•  Does your staff know what your “star” stock items are?
•  Does your stock ordering system enable you to have the “right” amount of stock on hand?  
•  Does someone watch “fashion trends” to make sure you are buying stock that will sell?
•  Do you calculate stock turn reports on individual stock items?

There are over 50 questionnaires relating to the preparation of a business plan. In the next instalment we will consider Work In Progress.

Business Plans – Some Questions to Consider

FOLLOW THE WHOLE SERIES

This post is part of the 50-part series “Business Plans – Some Questions to Consider” (yes, there will be 50 of them!). Be sure to read the other parts of the series to get a full picture. You can follow the series along on the blog or read them first by subscribing to our popular Business Plus+ newsletter.

Debtors

This post marks the half-way point for our series on questions to consider when it comes to writing your business plan. I keep coming back to cashflow as a critical issue for business and this is especially true if you will be providing goods or services on account. What are some things to consider when it comes to debtors?

 • Is there a system to ensure that debtors’ tax invoices are prepared accurately?

• Are the tax invoices sent to the debtors as soon as possible after the product/service is delivered to the customer?

• Are debtors’ statements prepared promptly at the end of each month?

• Are they immediately sent to the debtor?

• Does the business offer discounts for early payment?    

• Does the business refer problem debtors promptly to a debt collection agency?

• Has your business considered debtors’ financing or factoring to improve cashflow of the business?

• How long after the end of the billing period do you forward your debtors’ statements to customers?

• Have you confirmed in writing your terms of trade with your customers?

There are over 50 questionnaires relating to the preparation of a business plan……….. in the next issue we will consider Stock.

Business Plans – Some Questions to Consider

FOLLOW THE WHOLE SERIES

This post is part of the 50-part series “Business Plans – Some Questions to Consider” (yes, there will be 50 of them!).

Be sure to read the other parts of the series to get a full picture. You can follow the series along on the blog or read them first by subscribing to our popular Business Plus+ newsletter.

Human Resources

We are almost half-way through our series on questions to consider when it comes to your business plan.

Before we jump into questions regarding Human Resources, I’d like to stress something here:  If you are going to employ staff you MUST keep yourself informed about your employees rates and rights. 

Frankly, if it were up to me nobody would be allowed to employ staff unless they had taken some kind of basic workshop on employer obligations. It never ceases to amaze me just how many people go into business, put on staff, half-arse the pays and paperwork with no regard for the employees actual entitlements and expect to get away with it.  This might fly for a short period but you are only setting yourself up for a lot of headaches and financial pain down the track.

That’s the end of my little rant so let’s get on with the questions…

Have you reviewed your systems relative to the Fair Work Act and Modern Awards relating to:-

• 12 months parental leave?

• Cashing out of annual leave?

• Payment on dismissal?

• Redundancy payments?

• Have you implemented a small businesses’ Fair Dismissal Code checklist?

• Have you reviewed all aspects of employment documentation?

• Does your business have an effective staff training program?

• Have you implemented procedures for employing new team members so that they will learn and stay with the business, including:

- Inducting new team members?

-Inviting new team members to participate in discussions in regard to the direction the business is going?

Next time we will take a look at questions regarding Debtors….

Business Plans – Some Questions to Consider

FOLLOW THE WHOLE SERIES

This post is part of the 50-part series “Business Plans – Some Questions to Consider” (yes, there will be 50 of them!).
Be sure to read the other parts of the series to get a full picture. You can follow the series along on the blog or read them first by subscribing to our popular Business Plus+ newsletter.

We haven’t visit the Business Plans series in a while so let’s get back to it with a look at imports.

Imports

• Do you import products or services from overseas?
• Have you visited suppliers overseas?
• In what currency do you purchase imports?
• Do you take forward exchange cover to cushion the effect of currency movement?
• Are you registered under the deferred GST scheme?
• Have you enquired about any tariffs that might be charged on the imported products?  
• Have you enquired from Industry Capability Network whether there are equivalent products manufactured in Australia?
• Are you importing items that you then include in another product that you are manufacturing and exporting within 12 months?
• If so, have you registered for the Tradex Scheme? (The Tradex scheme allows importers of products, to be exported within 12 months, to avoid paying import duties and GST on the imported product)

There are over 50 questionnaires relating to the preparation of a business plan….. in the next instalment we will consider Human Resources.

Business Plans – Some Questions to Consider

FOLLOW THE WHOLE SERIES

This post is part of the 50-part series “Business Plans – Some Questions to Consider” (yes, there will be 50 of them!). Be sure to read the other parts of the series to get a full picture. You can follow the series along on the blog or read them first by subscribing to our popular Business Plus+ newsletter.

Staff Development

Some of the questions that should be considered in reviewing staff development as part of the preparation of a business plan:

• Do you have a staff development plan?
• Do you encourage your staff to develop their own skills?
• What additional skills would you like your staff to develop?
  • Time management?
  • Selling?
  • Marketing?
  • Motivational and attitude training?
  • Leadership?
  • Computer software usage?     
• Do you think you delegate properly?
• Have you developed a staff training manual?
• Do you involve your staff in developing your business’ Business Plan?

We are sharing a sample of questions from over 50 questionnaires relating to the preparation of a Business Plan…in the next post of this series we will consider staff training.

Business Plans – Some Questions to Consider

FOLLOW THE WHOLE SERIES

This post is part of the 50-part series “Business Plans – Some Questions to Consider” (yes, there will be 50 of them!). Be sure to read the other parts of the series to get a full picture. You can follow the series along on the blog or read them first by subscribing to our popular Business Plus+ newsletter.

We’re up to number 21 in our series of posts on questions to consider when preparing a business plan. You can access previous entries from the sidebar on your right or via the Series Page.

Exports

Some more food for thought… questions that should be considered in reviewing Exports as part of the preparation of a business plan include:

•  Do you sell any products or services overseas? If yes, to which countries?
•  Are you planning to export goods or services?
•  Have you visited the overseas markets?
•  Have you developed an export plan for each market?
•  Have you had discussions with officers of Austrade?
•  What currencies do you normally sell in when conducting exporting activities?
•  Do you take forward exchange contract cover?
•  What due diligence have you undertaken in relation to the appointment of proposed overseas representative?  
•  Have you reviewed tariffs and import regulations that apply in the country to which you are proposing to export?
•  Have you consulted your bank?
•  Do you spend more than $10,000 on export market activities per annum including:
  •  Overseas representation?
  •  Marketing consultants?
  •  Visits to overseas markets?
  •  Communication costs?
  •  Free product sample ?
  •  Trade Fairs?
  •  Promotional material?
  •  Bringing overseas buyers to Australia?
•  If so, do you lodge an “Export Market Development Grant” application prior to the 30 November each year?

In the next instalment we will consider Staff Development.

Business Plans – Some Questions to Consider

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This post is part of the 50-part series “Business Plans – Some Questions to Consider” (yes, there will be 50 of them!). Be sure to read the other parts of the series to get a full picture. You can follow the series along on the blog or read them first by subscribing to our popular Business Plus+ newsletter.

June is a great time to take time out and think about the challenges you may face in an economy that is presenting many challenges for a large number of small businesses. Some of the challenges include:-

Business Goals – The debate on the Resource Super Profits Tax has highlighted not only the projected difficulties for many major resources companies, but also a large number of SMEs who supply products and services to the resources industry. If you are likely to be effected by the cutback in supplier services to resource companies, what changes can you make to your business goals?

Getting Paid – If you are giving credit to customers, you need to develop a policy on chasing late payers and contacting them immediately the outstanding debt exceeds your business’ payment terms.

Profitability Analysis – Have you analysed the profitability being achieved from various products and individual customers?  

Customers – Have you sought your customers’ input on business improvements?

Cashflow Management – is still one of the major problems for many SMEs. If you are utilising bank, or other lender facilities, you may need to budget for increased interest rates later this year and into 2011.

Government Grants and Assistance – The Australian Government and most of the State Governments have a wide range of programs to assist small/medium enterprises.

Human Resources Review – Some transitional arrangements in Fair Work Australia “modern awards” come into force on 1st July 2010. These relate to rates of pay and some other conditions. If you need additional information, please contact us or Workforce Guardian at www.workforceguardian.com.au.

There is also an expectation that there will be increased competition for outstanding employees because of the expected improvement in some segments of the economy. As part of your planning for 2010/11, consideration should be given to reviewing employment packages and training.

The Australian Taxation Office has started to wind back the leniency policy for late payments that it implemented last year. Insolvency experts are warning that the wind back of the leniency policy will affect many SMEs during 2010/11. If you are having difficulties in paying taxation debts, don’t ignore the problem.  Contact your accountant and get some advice.

Have you given thought to developing plans and strategies for 2010/11? Now’s the time!

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Well-managed businesses plan and budget for sales, expenses, cashflow and growth. At the same time they should also plan for and anticipate the various changes that occur to a family business which are caused through death, disability or retirement of a key person or any other event that may cause problems within the business.

It is estimated that the vast majority of family owned businesses do not have a formal succession plan in place. Ignoring considerations as to the financial arrangements and rearrangements that will be necessary in a family or business in the event of the death, disablement or retirement of family members, can dramatically affect the value of a business. The worse case scenario – the business itself could collapse and the family would be left with immense problems.

Unfortunately, just as night follows day, retirement and then death will occur to all business operators. After all the sweat and toil that has gone in to establishing a business, some consideration should be given to what will happen to that business when the current principal or key persons are no longer available. The best time to start succession planning is at the very beginning of the life of the business.

What would happen if …………?. Is a good question with which to start.

I had an interesting meeting with a start-up the other day. The client had a terrific, highly-marketable product they had conceptualised and produced themselves… with no prior business experience or outside advice, they had managed to secure legal protection for the item and taken a simple idea to an impressive physical product.

When speaking with the client at first, it seemed like they were on the right track. First of all, they had attempted an actual PLAN and commit it to paper. You’d think that was obvious, but most of the DIY business plans I usually see rarely amount to more than “my plan is to sell lots and make heaps of money”. We discussed this along with a marketing strategy (both of which were realistic given the financial commitment and time the client was able to invest).

The plan was lacking in financial information, however this aspiring entrepreneur already had clearly defined prices for the trade and the public in mind. In fact, they had already secured several wholesale orders at these prices. So, naturally, I asked the most fundamental of questions: “what does it cost you to manufacture?”. To my shock and horror…. THEY HAD NO IDEA!!!

You MUST know and UNDERSTAND your costs!

In fact, while plenty of thought had been given to potential sales, no thought whatsoever had gone into what really matters – PROFIT!

Any business that sells products needs to know its product costs. At the very least, you should know the direct manufacturing costs (maybe your accountant will need to help with applying indirect costs). The total cost of goods or products sold is the first and usually largest expense deducted from sales revenue in measuring profit.

As it turned out, after we were able to determine the actual cost to produce each unit, the client discovered they had already commit themselves to supply orders below their cost. Thankfully, they sought assistance before the damage was too great or it would have been a very short-lived business venture.

We’re up to number 19 in our series of posts on questions to consider when preparing a business plan. You can access previous entries from the sidebar on your right or via the Series Page.

Business Operations

Some more food for thought… questions that need to be answered relative to business operations include:

• Activity Review
• Resources
• Quotes
• Order Handling
• Production
• Quality Control
• Costings
• Sales
• Wastage
• Staff Skills
• Scheduling of Work
• Crisis Management

What operational areas require improvement? What additional resources do you need?

Business Plans – Some Questions to Consider

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This post is part of the 50-part series “Business Plans – Some Questions to Consider” (yes, there will be 50 of them!). Be sure to read the other parts of the series to get a full picture. You can follow the series along on the blog or read them first by subscribing to our popular Business Plus+ newsletter.

Traditionally at this time of year we begin interim work with our clients and review tax planning strategies.

Ideally, tax planning is not a one-off event. Today, more than ever, taxation is not just a statutory duty… it is a critical part of any wealth strategy. If you are in business,  taxation should never simply be about what you have done in the past twelve months…  consideration needs to be given to what you aiming to achieve in the future.

• Have you reviewed proposed superannuation contributions taking into account the government’s 2009/10 superannuation contribution rules?  For persons under 50 maximum contribution of $25,000 per annum from employer contributions and salary sacrifice.  Over 50 years of age, $50,000 per annum contribution.  A penalty tax rate of 46.5% will be applied to any excess superannuation contributions.
• Have you reviewed research and development activities to maximise the company’s (claimant must be a company) claim for accelerated income tax deductions for research and development including the preparation of individual research and development plans? 
• Have systems been implemented for scrapping obsolete stock and old unused plant and equipment? 

Now is the time, prior to 30 June, to implement effective tax planning strategies for your business. Don’t wait until it’s tax-return time to meet with your accountant.

The last few days we have been asking questions to encourage you – the small business operator – to analyse how your business is going and identify areas that may need change. So far we have considered Market Conditions, Industrial Relations and Business Performance. Finally, we are up to the numbers…

Financial Reports

Has your business prepared departmentalised financial accounts? 

Are financial accounts distributed to team leaders and other members of the team? 

Could your business’ profit and loss accounts be sectionalised into departments or teams so as to make financial accounts more relative to individual sections or teams? 

Have key performance indicators been prepared for all sections or teams? 

How did the KPIs compare to budget expectations? 

Have you reviewed the balance sheet, especially supplementary information such as debtors’ days outstanding, stock turn achieved, investment in stock, bank exposure (overdraft loans and other financial commitments, leases and hire purchase agreements etc.) as compared to budget expectations?

Perhaps an even better question is do you know what all these terms mean and understand why they are important? If you’re not clear on any of the “accountant-speak” in this post, please post a comment to let me know and I will expand on definitions.

So far we have asked review questions concerning market conditions and industrial relations. Today we’ll discuss your business performance.

Again, don’t just skim the questions and leave it there. Take a moment to put your responses to paper.

Review of Performance

Have you sat back and reviewed the performance for the January-March quarter? 

Are you happy with your business’ overall performance? 

Have you celebrated successes? 

What changes need to be made to your business operations? 

Have you systemised (developed systems for) what worked well so that you do not have to “reinvent the wheel” next time?  

How Did Your Business Perform?

Did you achieve the targets that you set? 

What were the results of marketing/advertising campaigns? 

How did staff productivity compare to expectations? 

What lessons were learnt from the last 3 months’ activities?

If you would like to have a discussion with us regarding your business’ performance to 31 March 2010, please don’t hesitate to get in touch on 1300 35 22 35. Tomorrow, we’ll move onto one of my favourites (but not most peoples): the financial reports.

Yes, it is business review time again. Incase you missed it, yesterday we took a look at the impact of Market Conditions on your business.

As you’ll know, there have been some significant industraial relations changes over the past year.  Today, we’ll take a moment to review where you are in dealing with that.

Industrial Relations Rules

Have you reviewed the new industrial relations rules that are now in operation? 

Have you conducted an audit on the implementation of the procedures in your business that comply with the new industrial relations’ rules? 

Have you incorporated the implications of modern awards and national employment standards (NES) into your industrial relations’ system?  

Have you implemented a Fair Dismissal Code within your business?

A great place for quick access to information regarding the new legislation is the Fair Work Autsralia website at www.fwa.gov.au.   (If you would like a copy of a Fair Dismissal Code Checklist, please contact me). Tommorow we’ll consider your business performance…