Small Business Accountant Perth

Eight characteristics of successful small businesses

When making plans for their business, most people aim to be successful and we have identified eight characteristics important to business success. International researchers who have studied many small businesses have found that these characteristics consistently play a part in the success of small companies.  The eight characteristics are:

• Owners leading by example
• Having a simple business structure
• Information sharing among staff
• Carefully chosen staff
• Staff commitment and loyalty
• Unique products or services
• Specific customer focus
• Prompt follow up

1. Owners leading by example

The owner or manager leads by example.  He or she is usually the first to arrive and the last to leave.  The owner knows everyone by name and their presence is obvious.  They show a strong commitment by setting standards across the board.  This commitment should be easy to understand; after all, if they don’t work hard in their own company, how can they expect any one else to take their business seriously?

2. Simple business structure

They operate a simple and open business structure, encouraging easy access to the owner for every employee. They value the contribution of each employee, many of whom are given the opportunity to influence aspects of the business that would ordinarily be denied them in a large hierarchical company.

3. Information sharing among staff

Staff often receive information as soon as the owner does.  Goals, problems and concerns are discussed openly and feedback on issues is encouraged.  Staff are asked to contribute their own ideas for making improvements and overcoming difficulties.  It is often this aspect of open communication that staff appreciate the most; after all, it is fairly unique to small businesses.

4. Staff are carefully chosen

Staff are recruited very carefully, because the owner(s) recognise they are the lifeblood of any small business. Staff are hired on the basis that their knowledge, skills and abilities will be beneficial to the business rather than because of friendships or family relationships.  Staff are not only carefully chosen, but are nurtured and trained so that both the staff member and the business get the maximum benefit possible out of the relationship.

5. Staff commitment and loyalty

When staff are very committed and loyal, their performance is rewarded with praise, extra responsibilities and money.  Poor performance is not.  Consistently poor workers are removed as they upset the rest of the team.  Businesses whose staff show optimum commitment and loyalty have a source of competitive advantage that is hard to copy or to beat.

6. Unique products or services

Most successful businesses have unique products or services such as their own designs, systems or some other aspect which sets them apart. This uniqueness is an important source of competitive advantage and one which many companies work hard to sustain, adapting and innovating their products or services as their competition catches up with them.

7. Specific customer focus

Successful small businesses have a specific focus on their customers and are geared to supplying them with exactly what they want.  This focus means adopting a market led approach, with the owners and their managers consistently looking for ways to solve their customers’ problems and improve their products to match their customers’ requirements.

8. Prompt follow up

On occasions when an enquiry or complaint is received, successful small businesses actively follow up and solve them as quickly as possible.  The results are promptly reported back to the customer and, in the case of complaints, measures put in place to reduce the likelihood of similar issues reoccurring. Successful small businesses view complaints and problems as opportunities for growth and improvement.

If you want to make a change to embed some of these characteristics into your business, you need to ensure you have a robust plan in place to deliver this change.

If you’ve never written a business plan before, it can be a daunting prospect.  You can download our free eBook – A Foolproof Guide to the Perfect Business Plan.

If you need help to develop a business plan that will drive your business forward, contact us.  Until the end of September 2016 we are giving 25% off the price of a business planning session.  Contact us today for more information.

Business Plan Perth

Set a course for the new financial year!

Last month we focused our blogs on setting goals and targets, however if you want to achieve your goals you will have to plan what activity you are going to do in order to make a change.  After all, if you keep doing what you’ve always done you get what you’ve always got.  So if growth, profit improvement and cost reduction are on your agenda, it’s essential you put in place a robust plan as to what you are going to do and when, to enable you to achieve your goals.

Every business needs a plan. Your business plan will keep you focused, provide direction for employees and can be used to help convince investors to lend you money.

Why do you need a business plan?

You may be wondering why you need a plan in the first place. After all, you have a clear idea in your mind about what you want to achieve. You know the market, you have the necessary skills, so why do you need a plan?

There are many good reasons. Here are just a few of them:

• To clarify your ideas
  Writing something down gives it structure and substance. Your ideas will be clearer on paper than in your head.
• To discover and solve problems
  The business idea you have in mind may have some holes – you might not have covered everything. This will become much more apparent when your words are on the page.
• To get feedback from others
  A properly written business plan can be shared with trusted people to get their advice.
• As a formal document
  Banks, investors, accountants and lawyers will want proof that you’re serious about your business. A written plan will provide that proof.
• To guide you as your business grows
  A good business plan will keep you on track and focused, even as day-to-day work becomes a distraction.

Identify your strategy

Your business plan will also include your business strategy and will outline the steps you plan to follow to achieve the goals and objectives you have identified. This, in turn, will direct the day-to-day operations of your business. Each of your business goals will need a plan of action that needs to be followed to achieve the objective.

As a rule of thumb, your strategy will outline the most practical and cost-effective way to achieve each objective. It will detail any extra equipment or personnel that might be required to achieve this.

For example, you might need an extra staff member and an additional computer to increase output by 10% within the next six months, or you might consider enrolling your sales staff in a course to achieve the objective of increasing sales to existing customers next year.

Forecast the financial implications

The financial implications of your goals and strategies will be reflected in the financial forecasts in your business plan. Your goals will identify the areas of improvement, like an increase in sales or a reduction in costs, and your strategy will identify any additional expenditure needed to achieve these goals.

Most business plans will include a 12 month cash flow forecast, a profit and loss forecast, and a two or three year projection.

Your cash flow forecasts will identify whether you have sufficient financial resources to implement your plans immediately, or whether you will need to explore other financing options. Monitoring your actual spend against your projections is a way to ensure that new project costs do not escalate much beyond planned expenditure.

Review your business plan

Your business plan is a living document that grows and changes over the lifespan of your business. Its objective is to identify your key goals and how to achieve them, while taking market and technological trends into account.

The effectiveness of your business plan as a management tool depends on you referring back to it as a reminder of your plans and objectives, and updating your plans to keep them relevant.

Reviewing your progress against your business plan, on an annual basis, is a good way to measure actual performance, and will form the basis for revising and updating your plans.

Because the nature of your business and the market you operate in will change over time, it is a good idea to review and update your business plan once a year. The most efficient way to achieve this is to set aside a few days at the same time every year.

If you’ve never written a business plan before, it can be a daunting prospect.  You can download our free eBook – foolproof guide to the perfect business plan.

Is a self-managed super fund right for me?

Many people have heard the term self-managed super fund (SMSF), but very few really understand what it is and whether it’s a reasonable option for them.  So we have shed some light on this for you to help answer the question.

Why do people choose a SMSF?

A SMSF will give you more control over your super and retirement planning, but it’s important to understand the responsibilities that come with being a trustee of a fund.

Do you have enough super?

You generally need a reasonable amount of super – or be looking to build up your super quite quickly – to justify the costs of having a SMSF.

Everyone has a different view of how much is enough to start a fund.  The ATO has indicated that to have a viable fund, you may need a minimum of $200,000.  An accountant or a financial advisor can help you work out if you have enough.

Do you have enough time?

There are many tasks involved in managing a SMSF, so it helps to be prepared for the time commitment.  As a trustee you’ll need to:

• monitor your investment strategy
• stay on top of your reporting obligations and make sure you meet relevant deadlines
• keep up to date with changes to superannuation laws that could affect your responsibilities as a trustee
• keep abreast of investment opportunities and performance and adjust your investment strategy accordingly.

You generally need someone to help you set up your SMSF.  An accountant, a financial advisor or SMSF solutions manager can help you work out if a SMSF is right for you.

How much will a SMSF cost you?

The cost will depend on your circumstances, super balance, investment strategy and how you choose to manage your fund.  The more complex you make it, the more it’s likely to cost.  Plus, SMSFs are required to be audited every year, which incurs a fee, so it’s important to seek good advice to assist you in setting up a SMSF.

What is the sole purpose test?

This is the central requirement for any super fund as set out in Australia’s superannuation laws.

In general terms, it requires that your super fund and its assets are used solely to provide benefits to you and other members during retirement, or to dependants should you pass away or become permanently disabled.

Who is eligible to become a trustee?

Individuals may not be eligible to be a trustee if they are:

• classified as an undischarged bankrupt
• mentally incapacitated
• have certain criminal convictions

Age restrictions

An individual under the age of 18 can be a member of a SMSF, but not a trustee.

SMSFs are not suitable for everyone.  Their suitability depends on several factors, so before making a decision speak to an accountant or financial advisor.  Here are some advantages and disadvantages of having a SMSF.

Advantages

1. Control – You have complete control over how your funds are invested, however you must develop and maintain an appropriate investment strategy.
2. Flexibility – this level of control allows you to invest in a wide range of assets from bank funds, property and managed funds.  Plus, you can switch and modify your investments to suit your needs and requirements.
3. The benefits go on after your death – the fund can provide benefits to you, your spouse and even your children.  This means that the fund continues after your death which can allow for estate planning benefits and a better use of your benefits.
4. Cost savings – generally the cost of managing and maintaining your fund does not increase as your investment grows.  So the greater the balance, the more cost effective the fund is.
5. Tax concessions – the fund provides tax concessions such as the deferral of lump sum tax in the pension phase.
6. Advantages to small businesses – many small business owners are able to utilise super rules which permit SMSFs to invest in business property and then rent it back.

Disadvantages

1. Responsibility – all decision making regarding fund management rests with you.  Plus, you have to comply with certain rules and deadlines.  As a trustee you are responsible for ensuring the fund meets all legislative requirements on time, so you need to keep up to date.
2. Limited ability to diversify investments – although you are able to invest in a wider range of assets, you may not have the money to invest in them all.
3. It can be expensive – depending on the types of investments you choose or the advice you receive, administration of the fund can be expensive.
4. No access to the superannuation complaints tribunal – as a member of a SMSF you are not able to bring complaints to the superannuation complaints tribunal.  Instead, you must have matters heard by the courts which can become expensive.

Setting up a SMSF should not be a decision you take lightly or without professional advice.  BSN & Co are SMSF experts, so arrange a FREE no obligation meeting and we can review your personal situation and advise whether a SMSF is right for you.  We can then help you establish and manage the fund.

Call us today or complete the “Contact us” form (it only takes a minute) and book a FREE no obligation review.

5 ways to improve personal finances in the new financial year

The start of the new financial year is the perfect time to take stock of where you are financially to improve personal finances and take action to ensure that your personal finances are looking better by the end of the next financial year.

Check out our 5 top tips to improve personal finances

1. Review your mortgage

With ever declining interest rates there are some exceptional mortgage offers available, some as low as 3.75%.  As a rule of thumb, if you are paying over 4% or have not reviewed your mortgage for the last 2 years, there is a real opportunity to quickly and easily improve your financial situation.  Speak to a mortgage broker to identify some of the best deals out there.  If you can save $300 per month, that’s $3,600 over the year!

2. Start investing

If you are not already doing so, invest your money instead of just letting it sit in a savings account where it earns very minimal interest.

When it comes to investing, there are so many options to choose from that there is bound to be something that suits you.  So speak to a financial advisor today to discuss your options.

3. Pay off debt

Although interest rates are low now they will go up, so paying off debt is an important part of improving your overall financial situation.  Start by paying off debt with the highest interest rate (usually your credit card), then continue from there.  Doing this will improve your personal finances in the long run.

4. Ensure you really understand your financial situation

Take the time to review your finances thoroughly.  Look at how much money comes in every month and how much of that is spent on essential costs like your mortgage, bills, car, food etc.  Then set some aside every month for savings.  What’s left is your disposable income – what do you normally spend this on?  Monitor this for a couple of months so you really understand your spending.  This will help you make informed decisions about how you can improve your financial situation and how much you can really afford to invest.

5. Set goals and have a plan

The start of the financial year is a great time to set goals for what you want to achieve in this year.  Your goals need to be realistic and you need to break this down into monthly actions – i.e. if you have a $12,000 debt, consider whether you can afford to pay $1,000 per month along with all your other essential expenses.

Also, by keeping up to date with your tax return lodgements, you’ll know exactly where you stand financially.  Plus, we are offering some great deals and early bird specials which run from July to September CLICK HERE to find out more.  So get in early to beat the rush.  We can also make some recommendations as to how you could reduce your personal tax and improve personal finances.

Call us today or complete the Contact form (it only takes a minute) and book a FREE no obligation review.

Setting business targets to achieve better business success

Key performance indicators (KPIs) are targets you set for your business to help you track and monitor the performance of key functions that will help lead to the achievement of your business goals.  It is essential that you select your KPIs carefully to ensure you are targeting the best aspects of your business, the ones that are critical if you are to achieve your business goals.  Below are some possible KPIs that will help you achieve business success this financial year.

What are KPIs? 

They are the tools businesses use to define their goals, and establish quantitative measurements designed to determine whether any progress is being made towards those goals.  They provide data that can be used to spotlight performance characteristics across a variety of matrixes such as financial performance, customer relations, marketing efforts and even employee productivity.

Financial Performance

At the end of the day, understanding how well your financials are doing is like knowing what is going on under the bonnet of your car.

For instance, if you are losing sleep at night over whether or not your latest marketing plan was worth the investment, you will want to explore your Return-on-Investments (ROI) with a detailed ROI KPI.  Conversely, a KPI can highlight underperforming net profit margins, or lacklustre revenue growth rates, and the information obtained can present valuable information to ensure the company’s original financial goals are met.

Customer Relations

A profitable bottom line is the ultimate goal of most businesses, and customers are the key to this.  As such, understanding what motivates your customers provides inestimable advantages to the business owner who knows what they are looking for.  Utilizing customer relations-focused KPIs, business owners can track levels of customer engagement and subsequent retention rates.  If customer satisfaction scores are sagging or turnover rates are high, the worried business owner can target their reports to help develop meaningful responses to address these lapses.

Marketing Efforts

Without a viable marketing plan, few businesses can expect to prosper.  With KPIs designed to highlight marketing performance, you can break down your cost per lead, brand equity positions, conversion rates, social networking footprint, and more.  Get the most of every marketing dollar by discovering what is working and what is not moving you towards your sales goals.

Employee Productivity

While your marketing functions are designed to capture the customers that you are hoping will add to your bottom line, your employees are typically tasked with closing the deal.  Indeed, when you are tallying up your operating expenses, many of which will relate to hiring and training employees, using KPIs to measure their performance just makes sense.

By setting and regularly monitoring your business KPIs you will be able to track your business progress throughout the year.  If you would like help with this speak to the experienced team at BSN & Co.  We are business specialists who have helped lots of businesses just like yours to save time, money and generally improve their performance.

Call us today or complete the Contact Us form (it only takes a minute) and book a FREE no obligation business review.