Business Tips – Year Planner 2016 – Simple Steps to have a better year!

Year Planner 2016 – Simple Steps to have a better year!

With so much going on it’s easy to focus on surviving rather than on thriving, so make some effort to be better prepared by creating a Year Planner 2016 – simple steps to have a better year.

With 80 per cent of consumers researching online prior to making a purchase, it’s no wonder research shows SMEs with a website and a social media site are almost two and a half times as likely to expect an annual revenue rise.

1. Review the last 12 months’ wins & losses – Products, Services Financial Goals
Take time away from business – favourite beach or mountain – to reflect upon what worked, what didn’t and what can be improved. Write down a SWOT – the Strengths, Weaknesses, Opportunities and Threats to your business.

2. Plan a new customer retention plan 
Studies show it costs 5-7 times more to acquire a new customer (advertising, time cost etc) than to retain an existing one, so it pays to identify your most profitable customers. Don’t have a customer retention strategy? Make time to build one. It’s a great way to develop and maintain productive relationships and encourage growth of referral sales. It also enables you to explore ways to grow revenue and recurring sales, and add stability to your business. If you have key clients make time to call them and see what they are up to and what challenges they face. While the intent would be to say thanks for their patronage, the outcome may well be locking in orders for this year. It’s easy to keep customer and sales records current by using up to date accounting software. Ask us for FREE advice 0407 361 596.

3. Devise a new customer acquisition strategy
WE always lose some customers – they move, find a better deal etc – so you want to attract new customers to your business but are you unsure how or where to find them? A customer acquisition strategy should be planned – to start, determine who your existing customers are, and this tells you who your target customers are. Looking at existing clients can help you understand the customers you want to attract and retain, what they want, how much they’re willing to pay, the products or services they’ve tried, plus their expectations about your brand, product or service.

4. Review your product and/or service offering – and marketing funnel 
If it’s been a while since you took a close look at your products and/or services, there’s no time like the present to reassess your mix. How well is your market-offering helping you reach your business goals? Are some product/service more profitable than others? What changes can you make? Are there new opportunities to add to the mix? A great idea is to write what you think are the answers to these questions and then do the work to find the real answers – call existing/past customers/clients. Any gaps can highlight a blind spot in your strategy. Be bold and send out a survey – or prepare one that you ask when you call – and write the answers down.

5. Review your pricing
Knowing what to charge for your products and/or services can help you build a sustainable, profitable business. If you’re unsure, then ask your tax or business advisor, or ourselves, to help – basically – what are your costs to be open per day per hour, then the cost of goods (if you sell product) and what you want to be paid – that is your hourly charge rate – compare to competitors to see if you are in the right ball-park.

6. Perform a cash flow forecast
Cash flow ranks as one of the top pressure points for SMEs – the 3^rd highest in the 2015 MYOB Business Monitor report news. Cash flow forecasting can make business life easier in many ways, enabling you to track your performance against predictions.

7. Accounting in order
If your receipts, payments and credit card paperwork are in disarray, it’s time to embrace online accounting solutions. By using up to date software …(including online versions) you can get a better snapshot of your finances at your fingertips, 24/7, minimise stress and maximise peace of mind!

Arrange a ‘health check’ of your business with a trusted advisor, such as your accountant, bookkeeper or other business advisor or ourselves, to start your new year’s success story.

Get a FREE 30 min answer to your query, and FREE ongoing email or phone support – No-one offers as much! Call and you also get FREE “Avoid these GST mistakes” – There’s 18 that the Tax Office see regularly – Get them right!

Email info@accountkeepingplus.com.au or call 0407 361 596 Australia

Business Tax Tips – Review your business structure and the way profits are handled each tax year

Review your business structure and the way profits are handled each tax year

A regular review of your business structure and the way profits are handled each tax year is what your tax agent can help you with. If you are starting a new business the question becomes whether using a company to operate your business is best. Having a company has some tax and commercial benefits eg many other businesses prefer dealing with companies rather than individuals or trusts, but for a small business it could be cheaper to operate as an individual.

The 30% individual marginal tax rate (32.5% including Medicare) now applies to income up from $37,001 to $80,000 and the top marginal tax rate of 46.5% applies above $180,000. This means the company tax rate of 30% seems slightly better with taxable income up to $80,000 – (that is, sales/revenue less expenses) – BUT it applies to ALL the $80,000.

On $50,000, the individual pays $8,797 (tax plus Medicare)

On $50,000, company profit, the 30% tax is $15,000 – nearly double!

So a couple with a family business can have an annual net income of up to $160,000 before their salaries will be worse off due to more tax if they retain profits in the company and pay tax there.

As always, seek a tax professional to see what is best for your situation – and review profits in late April May to decide if Director Bonuses may be better than leaving tax in the company, up to $80,000 where the tax for every dollar over that is 37%

It’s a juggling act sometimes!

Get a FREE 30 min answer to your query, and FREE ongoing email or phone support – No-one offers as much! Call and you also get FREE “Avoid these GST mistakes” – There’s 18 that the Tax Office see regularly – Get them right!

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Business Finance 101 – Profit and Loss Statement – What it tells us

One of the main business reports we use, and what it tells us is how the business is going – it is the Profit & Loss Statement or. The statement shows all the sales for a period less cost of goods (if you sell product) leaving gross profit, then from that all the expenses (operating or overheads like rent, wages etc) leaves  the operating profit (not always reported), then from that less any non-regular income and expenses, gives us the final net profit.

In summary, there are three main levels of profit or profit margins –

Gross profit (after cost of sales deducted from sales/revenue),

Operating profit (sometimes given = after expenses deducted) also known as Pre-tax profit (before tax and other non-regular items) and

Net profit (Final, after tax and other non-regular expenses and income).

Note that “profit”, “earnings” and even “income” are all used interchangeably, and mean the same thing.

When the term “margin” is stated, it can apply to the absolute dollar number for a given profit level and/or the number as a percentage of sales/revenues.

The absolute amount, the dollar amount, is on the Profit & Loss Statement. The net profit margin commonly uses the percentage calculation to provide a measure of a company’s profitability on a historical basis (3-5 years) and in comparison to peer companies and industry benchmarks. The margin is the amount of profit (at the gross, operating, pre-tax or net level) as a percent of the sales generated.

Need help? Not sure? Call for FREE 30min advice / strategy session today! 0407 361 596 Aust

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You also get FREE 30 min to assist in setting up your company in the software, and FREE ongoing email or phone support – No-one offers as much! Call and you also get FREE “Avoid these GST mistakes” – There’s 18 that the Tax Office see regularly – Get them right!

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Cashflow Tips – When growth can be a disaster for a business if not handled well

Cashflow Tips – When growth can be a disaster for a business if not handled well

The main result business owners desire is that growth will solve most business problems. But growth can also be a disaster for a business if not handled well – and here are some common miss-beliefs.

1.     Build it and it will sell itself – Many new ideas come to entrepreneurs all the time – but not everything succeeds for outside and internal reasons – no real demand, lack or poorly-prepared marketing plan (often a weak spot for small business owners), lack of financial budget plan

2.     I can/will do it all – Common to fall into the “if it’s to be done no-one does as well as I do it” trap. Yes in the early days you have to do most yourself – but document the method that you find works best, then teach someone else to do it so you can move on to other things. A good explanation is found in “The E Myth” by Michael Gerber. Paint a clear picture of what the future business will look like/become, write out the Organisation chart of the key roles of the organisation and job descriptions, find/create the systems required to make the business efficient, and get employment/HR help a sit is a whole new mine-field of managing people and financial responsibility!

3.     Bigger is better – When owners work on business growth, they often focus on sales, but a look at industry benchmarks often reveals that businesses in higher sales brackets aren’t always the most profitable.  Often, businesses with modest turnover can achieve better profits, where-as too often, as a business grows, overheads can get out of hand and the extra sales get eaten up and profit falls.  So sales and marketing plans are very important – and testing and measuring as you go is paramount – set budgets and create reports at least monthly to track how you are going.

4.     Growth solves Cashflow problems – Nothing just happens without careful measuring and managing carefully!!! Ensure the budget is created as already mentioned, know your margins (Gross Profit, Net Profit as minimum). See if there are supplier discounts with larger purchasing volumes, and importantly, if you sell on account instead of retail, keep monitoring debtor days and don’t get slack on customers taking their time to pay!

Need help? Not sure? Call for FREE 30min advice / strategy session today!

Call and you also get FREE “Avoid these GST mistakes” – There’s 18 that the Tax Office see regularly – Get them right!

Email info@accountkeepingplus.com.au or call 0407 361 596 Australia