Business Advice

Humanity and our environment are going through historically important changes, which we need to navigate more carefully. Technology can leave you vulnerable, but it is not the only challenge we face in business today. I grew up prior to computers and the internet, we had no mobile phones. What we had, was a much simpler version of now. It offered us certain benefits – TRUE, quality leisure time was one of those. We never had to check emails or text messages; things just had to wait for us to get back to work. Today, our leisure time is not comparable to pre internet and mobile phones. Your brain does not get the same opportunity to go into rest mode. Gadgets constantly require our input and attention. Technology has spread itself across our existence like a huge fishing net – and it can be highly irritating. Fake news, cyber crime, hacking, clickbots etc, are all new challenges that business until recent years had never heard about. These new area problems can ruin businesses that have become a target. Anti Virus software will not be a match to the latest hacking tools. There is a need for diversification in the offering of small business, to align with the changes to our lifestyle over the last 10 years. Pioneers and Innovators are needed in small business today, not just in the corporate sector. We have an increasingly unwell society and an increasingly unwell planet. Todays’ children do not get the physical exercise we once did. Yet, physical exercise is mandatory for a healthy brain development. The brain develops with exercise, as exercise stimulates the cerebellum in the brain. A business focusing on the shortcomings we experience today, would make an ideal ethical choice. How will it perform financially? Always run a feasibility study when you put your finances at stake. The quality of our supermarket food products has deteriorated. Preservatives and traces of many poisonous chemicals are found in the majority of what we put into our mouth each and every day. What has all that got to do with your urge to buy a business? Everything! You have to adapt to current needs and market factors. What was an appropriate indicator for a good business 5 years ago, may no longer be of any relevance today. I always remind people of the Kodak collapse. One of the worlds best known brands until the mid to late 1980’s. Yet, new technology wiped it out almost overnight. Looking for a business opportunity, evaluate the lifestyle impact of your decision. Will you have weekends to yourself, or does the business require a weekend roster? How do you feel about the product or service you will be dealing in? Does it meet your ethical standard? What is the industry growth forecast? Can I add services or products to the business to suit my location? Does my purchase contract prevent me from certain add on idea’s? Is the lease secure and fair value? What about the financial investment that you are about to commit? Have you allowed for all costs, including some initial operating cashflow to cover the first six months? Worked out all wages, taxes, utilities and other trade associated costs? The business that you are most likely to succeed in, is the business that you actually have a passion for. It may not be the style of the business, but the opportunity to grow a small business into a bigger business with a new idea. Most business buyers assume they can do things better than the current owners. This often rings true, as the current owners may just have had enough and have shown little love for the business of late. Just don’t jump in blind, the current owners may know something that may impact the business in future. Do your due diligence prior to the purchase and make it all inclusive. Leave no stone unturned. Finding a flaw with a business is not a bad thing. It may be the best buying opportunity. As long as you are confident that you can work around the existing flaw, you may pick up a bargain. In many fields, workplace security has dramatically declined and wage growth has been non existent since 2009. Being successfully self-employed can offer you, more job satisfaction, more job security and leaves you less vulnerable to loss of income. Many small businesses fail in their first year. Should that worry you? NO! This fact simply should alert you to the potential pitfalls and help you avoid mistakes made by some of the failed businesses. Owning a business can bring a certain feeling of freedom with it. It is your chance to find your calling and grow to financial success. It can also be the mistake that took away the family home. Don’t over commit yourself. Don’t be afraid of the new skills you may need to learn, just make sure they are skills that you are not afraid to learn. Create a business buying strategy, similar to planning your life. Don’t treat your business purchase as a separate entity, see if it can enrich your dreams and compliment your life goals. Use the internet to research your potential business purchase. Search the actual business and see if there are “independent” news articles or reviews, these may provide a clearer picture than the one you may be presented with by the seller. Once you found the right business, having done your research, just try and run it the best way anyone could run such a business. Put your shine on it, its not just an income producing vehicle – the business now is simply relying on you. Enjoy the ride and live your dream. Run it like an athlete, always aiming to improve performance. As an Insolvency advisor and business owner, I have seen more cases of business going bad than most people. Good operators and good businesses are not spared from unfortunate circumstances. We can’t fool proof everything, but we certainly can take many measures to reduce risk. The vast majority of insolvency cases are not made up of good operators, but often those who have over committed and perhaps those who have a lack of understanding of  what it takes to run and grow a business. If you need help to purchase or sell a business, feel free to contact me initially via email, outlining your situation. Troy Eichelberger Email [email protected] or visit http://a1debtassistance.com.au

Starting a business can be a daunting proposition, with the aspiring business owner facing a myriad of tasks, decisions and challenges. Many business functions suddenly become the responsibility of the owner, whether they are skilled in them or not. That’s not to forget the financial risks, which can be life changing in either direction – boom or bust Starting a business can be a daunting proposition, with the aspiring business owner facing a myriad of tasks, decisions and challenges. Many business functions suddenly become the responsibility of the owner, whether they are skilled in them or not. That’s not to forget the financial risks, which can be life changing in either direction – boom or bust. The more risk averse entrepreneurs may see franchises as a great option, with some safety in a known brand, training, systems and processes, infrastructure and support; the best of both worlds (in theory). But, with the horror stories of franchising splashed across the media, it’s natural to question the promise against the reality. Is it better to just start a business on your own, save the extra fees and invest that into your own business? There is no simple answer, as every situation is as different as every new business owner. Let’s look at the pros and cons of each. Buying a franchise There are lots of franchises out there, varying in size from just a few, to national icons with thousands of franchisees. Even though the sector is highly regulated, the way that each business is run varies a lot. In franchises, the franchisee mostly follows the business formula of the company, doing things the standard way that fit in with the company brand. That can be as varied as making muffins,  mowing lawns or running fitness classes. The upside of being part of the franchise is that you get to benefit from the brand identity, the business that comes with that, marketing systems and support. The idea of immediate cash flow is tantalising for a new business and can be quite appealing. The reality of how much support you get, how good the brand is and how much business you actually get varies a lot from franchise to franchise - sometimes good, sometimes not. One crucial factor for being in a franchise is that you can have less control over many aspects of the business. Ideally you should believe in the product and the company, which can be a challenge for some headstrong entrepreneurs. If you like doing things your own way, you may feel constrained by being in a franchise. Another factor is the location and how many other franchisees there are (and will be). Franchisors that want to grow sometimes do so at the expense of the franchisees. In my own experiences, I bought into a network being told there would be 18 in the state, which changed to 30 within 6 months. Some previous franchise clients of ours had their business cannibalised by a neighbouring franchise. Of course you pay the support, brand, marketing and systems, which means fees and charges up front and ongoing. Starting your own business Starting a business on your own is a lot less restricted than a franchise, so everything you will need to do yourself. There’s no built in support, processes and policies to follow, no brand, not traffic already looking for you. Because of that, you have an opportunity to do things completely your own way, to build completely your own empire, your own brand. With less restriction, you can control the set up costs more, but it will be up to you to build up the business. But that has its own risks. As with franchises, there are stories of success and failure. Without doubt, you will totally believe in the company since it’s yours. How to decide For any potential investment, especially a business, due diligence is crucial. Build your team of experts and consider all of the opinions in your decision making. In the most successful franchises that I have worked with, the franchisor has the best interest of the franchisees at heart, and doesn’t kill the relationship through punishing conditions or profit-at-all-costs attitude; they are there to support when times are harder. Know the conditions of your agreement inside out and get great legal advice.  As there are so many franchises out there, do your homework and talk to some existing franchisees. Really ask yourself if you want to do that activity in the company way, every day? For the start-ups, take the time to build a solid business plan with external expertise to know what you are getting into. The ultimate decision rests a lot on the right opportunity but also on who you are as a person. Even though both are forms of business ownership, the experiences can be quite different. Knowing what is important to you as a business owner will act as a framework to make your decision. Take your time and look at lots of options; for the right choice, an exciting and rewarding experience lies ahead. For more information contact Dr. Warren Harmer Chief Business Planner Email [email protected] or visit http://businessplancompany.com.au  

The end of the financial year brings with it the thrills of counting the beans of your business wins, or the condolences of tallying up losses. It is a perfect time to take stock of your current position and how you got here. Revise the goals you have set in your business for improved performance and better results.  Ultimately, your goals will be successful only when their achievement grows your business and establishes freedom. Often measurements are set around lag goals which is not always helpful. Lag goals are usually results oriented, meaning their achievement comes directly from your organisation’s activity. Lag goals are easy to measure but not as easy to improve or influence. These goals target outcomes such as the number of sales made or the amount of revenue produced.   While tracking them has value, they’re not always the most productive areas to set KPIs around, because they are by definition the type of goals that lag behind the activity being done. They can only be attained as a result of your routine business activity.   Lag goals are important to measure because results are important to achieve. But if you want to control the activity leading these results you need to set KPIs around lead goals. Lead goals measure what is actually being done in the here and now. They are easier to influence or improve because they deal with immediate progress and show the likelihood that you will reach your aims.   Lead goals track activities such as the amount of sales calls being made to result in the sales. They count the amount of customer interactions that you’re having which will result in revenue. They tally how many ads being presented on a daily, weekly or monthly basis to achieve the social media reach that you might be looking for.   To put it simply, the difference between lead goals and lag goals is the difference between counting the amount of workouts you do and counting the amount of kilos you lose. The workouts are directly within your control, while the weight loss is something you cross your fingers for in hope.   When you’re setting your business goals this financial year, be clear on the difference between lead goals (which are your daily and weekly routine activities) and lag goals (the results or the output of that activity). For more information about setting productive goals in your business, contact Kerry Anne Nelson at Operation Verve http://www.operationverve.com/   

Introduction In the sale or purchase of a business, a very important consideration is whether the buyer should purchase the: shares of the company comprising the business; or assets of the business directly from the company itself. This article is focused on the sale and purchase of a business which is operated by a company. For other business structures such as a sole trader or partnership, the buyer is usually only able to purchase the assets of that business. The difference between an asset sale and a share sale An asset sale involves the purchase of some or all of the assets owned by a company. Examples of common assets which are sold include; plant and equipment, land, buildings, machinery, stock, goodwill, contracts, records and intellectual property (including domain names and trademarks). The transaction is between the company and the buyer of the business assets. The seller retains ownership of the company structure. In a share sale, the buyer purchases shares in the company, rather than just the assets. The buyer purchases the company – a separate legal entity.  Typically, the company continues to retain its assets and liabilities. The transaction is between the company’s shareholders and the buyer of the shares.  All business assets remain with the company.  It is the composition of the ownership of the company that changes. Advantages and disadvantages of an asset sale Seller Advantages Typically, a seller provides fewer warranties and indemnities in an asset sale. The seller can exclude any assets that are not intended to be transferred. Seller Disadvantages Transferring individual contracts and assets from the seller to the buyer may require the consent of third parties and/or additional registration which can be a time consuming and onerous process.  For example, suppliers of the business may have to consent to the buyer taking over supply agreements and the landlord under a lease would have to consent to the lease being assigned to the buyer. The seller must procure releases of any security interests affecting the assets of the business from their financiers prior to the completion date. The liabilities of the business generally remain with the seller. Buyer Advantages Usually, the liabilities remain with the seller company and do not transfer to the buyer. The buyer can ‘cherry pick’ certain assets and leave any unwanted assets with the seller.  The buyer may agree to take on certain liabilities of the business.  For example, if employees are transferred across from the seller company to the buyer’s business as part of the transaction, then a buyer may agree to take on the accrued employee entitlements subject to a reduction in the purchase price for the assets. Subject to certain criteria, the sale may be classified as the sale of a ‘going concern’ which may result in no GST being payable on the transaction. Buyer Disadvantages Stamp duty may be payable on the transfer of land and other real property. Third parties may refuse to consent to assign or novate contracts which the buyer considers to be vital to their decision to purchase the business. The seller will often require the buyer to offer employment contracts to all current employees which are substantially similar to their current terms. Some assets, such as government licences and permits, may not be assignable. Advantages and disadvantages of a share sale Seller Advantages There may be a better overall return for the shareholder in a share sale transaction which includes access to tax concessions. Client, supplier and employment contracts remain within the company. There is less effort and risk associated with ensuring clients, suppliers and employees will stay with the company than in an asset sale. Seller Disadvantages Because the company retains all historical, actual and contingent liabilities of the business, to protect against these liabilities, the seller may be required to provide extensive warranties and indemnities.  These warranties (unless limited) could be required for a significant period of time.  The directors of the selling company may be required to provide personal guarantees which may expose them to unlimited personal liability. Part of the purchase price may need to be held on trust or the seller may need to provide a bank guarantee as security if there is a breach of a warranty. The seller may need to comply with any restrictions on share transfers to third parties, such as pre-emptive rights provisions in the company’s constitution or the Shareholders Agreement. Buyer Advantages Where the company has recognised brand, goodwill and reputation, it may be preferable to buy the business by way of a share sale in order to capitalise on the company’s brand, goodwill and reputation. As contracts, business names, leases and intellectual property are already in the name of the company, there is no need to formally assign contracts and other property and therefore third party consents are not required. Stamp duty is not payable in a share sale (unless the selling company is ‘land rich’). Buyer Disadvantages The buyer becomes the sole shareholder in the company.  The company retains all past, current, future and contingent liabilities of the business on completion (including any tax liabilities of the company). Even if the seller provides an indemnity for the liabilities incurred by the company up until the date of completion, unless an amount representing the value of the indemnities/ warranties is held on trust as security or a bank guarantee is procured, there is the risk that the seller may not have the funds to indemnify the buyer when called upon to do so. To mitigate the additional risks associated with a share purchase the buyer usually must engage in extensive and detailed due diligence to detect liabilities and risks associated with the selling company. Some agreements require third party consent where there is a ‘change in control’ of the company. Deciding how to sell your business Although there are advantages and disadvantages for buyers and sellers associated with a share sale and asset sale transaction, there are ways to mitigate risks that are associated with each type of transaction. It’s important to understand the commercial, taxation and legal risks associated with both types of transactions to select the most suitable type of transaction for the particular sale. If you would like further information please contact Justin Hill on 0418 578 701 or email [email protected] 

Did you know that 97% of all businesses here in Australia are small businesses? And did you also know that over 67% of small business owners don’t make it through to survive their first 5 years? Running a business is not for the faint of heart. Entrepreneurship is undeniably risky. While there are a number of small businesses that perform well and are continuously profitable, a larger portion of businesses fail without the proper tools in place to achieve critical business objectives. So many small businesses are on an inevitable path to failure. Here are four reasons why small businesses fail: Not making enough sales A large number of businesses fail because they are over-reliant on a very small number of clients. It takes just one unexpected closure to result in a significant fall to rocky financial. Short-term future earnings can be massively reduced, and invoices for completed work can go unpaid. While maintaining caution about spreading yourself too thin, you should try not to rely on a very small client base. If you deal with a very few clients, or if a small number make up the bulk of your turnover, you should begin scouting for new prospects. 2. Expenses are too high – Just as good cash flow keeps a business afloat, poor cash flow can sink it. If your bills exceed cash on hand, you’ve got a cash flow problem. Cash flow can also shift dramatically depending on the time of year, or even by day of the week. What makes it even more challenging is that cash is most needed when your business is growing. A strict handle on cash flow helps insulate your business during struggles, downturns, or unpredictability, and also allows more flexibility during growth periods. 3. Record keeping  As a small business owner, you understand your business’ processes inside and out. You probably lose sleep at night worrying about your sales. You’re passionate about your business succeeding, and you’ve invested your life’s work into it. But, there are metrics that small business owners often overlook and fail to record and track effectively, which ultimately hinders them from making strategic plans thus preventing them to succeed in their businesses. 4. Strategic management  A 2011-12 report by the Australian Securities and Investments Commission (ASIC) found that 44 percent suffered poor strategic management. This is another common reason why small businesses fail. For a small business to grow and succeed, it needs a good strategy and a plan to support it. As an entrepreneur, don’t make the mistake of excessive idealism concerning your business, don’t be so focused on your vision for the business that you forget or neglect creating a strategic plan that factors in important components of your business and addresses them adequately. Having a clear understanding of exactly what we are dealing with here in our small business journey is half the battle. It is vital that we keep the passion we have for our small business in check with the realities of our very survival. Developing a clear plan to address each of these four areas in our small business is the only way that we will earn our right to be on the positive side of the statistics, growing and expanding beyond our humble beginnings to the larger operation we always imagined.   If this article has struck a chord with you, please reach out to Kerry Anne online. She loves hearing about her readers’ businesses and is passionate about helping them to transform their operations into the Freedom Machine they’ve wanted all along. She is dedicated to establishing proven business systems to create team certainty and sustainable expansion which open pathways to new lifestyle choices. http://www.operationverve.com/   

“The greatest thing in this world is not so much where we stand as in what direction we are moving.” Johann Wolfgang von Goethe It’s hard to keep up appearances in your business when the backend is chaotic and stressful. Successful businesses thrive on the hard work of well-oiled business processes, dedicated employees, excellent communication, continuous innovation and a desire to provide more to customers. All of these depend on how well managed a business is – how effective the management is in steering the business in the right direction. Whether you are the business owner, a customer or a prospective investor, you want to be a part of a business that’s being run smoothly and efficiently. Let’s explore the five groups that can see all the behind the scenes pieces of your business. These are the people who experience the effects of a poorly managed business, which this puts you on the back foot when it comes to driving business growth: STAFF: The first group of people is your staff. What does your business look like from a staff point of view? The more you can get your staff flowing competently and confidently, you will find that they are the very people that will pick up the mission of your business expansion and drive it forward are better than you ever could. Make sure to create a supportive environment where everyone knows what a good job looks like. And when that is done, ensure that work is getting rewarded. CUSTOMERS: The next group of people who are going to see the effects of the backend of your business are your customers. They may not see what's going on in your business filing systems, but they're certainly going to get the effects of how things are run. Make sure your customers experience a consistently positive event when they engage with your business. They should always have the same type of service, receive the same sorts of follow up, and have the same sort of exemplary experience in your business. If they don't, they may not tell you, but they will tell their friends and family or put their reviews online. So make sure that the backend of your business is driving exceptionally positive customer experiences. SERVICE PROVIDERS: The next group of people who are going see the effect of a poorly managed business backend is your service providers. Your suppliers and contracted service providers have the potential to become some of your biggest raving fans and they have the ability to drive your business forward into new growth. If your business doesn't have a good flow when you're dealing with your service providers, that word will spread like wildfire. FAMILY: The fourth group of people to see the effects of the behind the scenes part of your business is your family. If you're going home tired and stressed, worried that you're juggling too many balls in the air because your systems and processes don’t flow, they are going to feel the impact. But conversely, if you are refreshed, and constantly achieving and expanding in a sustainable way, your family will jump on board and celebrate that with you. It's really important to get that behind the scenes aspect of your business set up and running smoothly because you want your family to be advocates for you and your business’s growth. YOU: And finally, the last person is you. You can put on all the smiles in the world when you’re in public, but if your business is a mess behind that veil, deep down you know that things aren't right. It is hugely important that you have a sense of integrity and honour about what’s happening in the engine room of your business. If your business is clean and clear, and it matches the glossy front end of your business, then you know the entire operation is being represented truthfully for everyone to see. If you want to stay ahead of the growth curve in your business, it's really important that the back end of your business matches what's happening in the front. If you want to continue to scale that business through to become something that's bigger than yourself, expanding, multiplying, creating a positive impact in the world, you need to realise that in reality, what’s happening behind the scenes is driving what people see and experience, and not the other way around.   If this article has struck a chord with you, please reach out to Kerry Anne online. She loves hearing about her readers’ businesses and is passionate about helping them to transform their operations into the Freedom Machine they’ve wanted all along. She is dedicated to establishing proven business systems to create team certainty and sustainable expansion which open pathways to new lifestyle choices. http://www.operationverve.com/   

Today one of our major national newspapers is carrying a front-page story about the ongoing energy crisis and the potential economic risks that flow from political plans based around ideology not reality.   Peter Strong, CEO of Council of Small Business Organisations Australia (COSBOA], responded saying; “Business knows that if you have a problem then you must address it with a plan that identifies and manages change and the risks - practically and comprehensively – you can’t stand still. It is time for our political parties to stop pandering to the extreme left and extreme right voices in their ranks – they must let the ‘sensible centre’ majority to be heard.”   “Small business is frustrated and angry – we continue to feel the pain from ever increasing energy prices while farmers and businesses in regional communities face devastating losses from bushfire and floods of increasing severity.”   COSBOA knows that small business people, like all Australians, want an energy system that provides reliable and affordable electricity while reducing GHG emissions. This can be done without destroying jobs and wrecking the Australian economy in the process.   COSBOA will be holding an invite-only Small Business Energy Summit in Melbourne on 20 March to confront this issue head-on. This summit will focus on all challenges and develop a roadmap that is about change management and risk management. The Energy Summit will be working out ways small businesses can take control of their electricity usage and costs, in a way that is both affordable and environmentally responsible.   Mr Strong added, “Many households have voted with their feet by installing rooftop solar panels. Doing this in a small business, operating in a building or shop they don’t necessarily own is harder, but not impossible.”   “And it is not just about coal and renewables. There are major opportunities for Australia to better harness its vast reserves of natural gas to power Australia’s economy with lower carbon emissions, alongside coal and renewables. Yet many State/Territory governments appear to be asleep at the wheel in respect of these opportunities”.   “We are going to assemble a team of partners (political leaders, business leaders – big, medium and small) to develop a practical plan that will work for Australian Businesses.”   “We are delighted that Minister Taylor has agreed to open the forum and we will be inviting the other political leaders in this space to tell us how they could help Australian businesses (of all sizes) take control of their energy costs and responsibly reduce their GHG emissions”.   Mr Strong finally added; “It is past time for action. The time for talk ended years ago.” ____________________________________________________________________ For more information on COSBOA visit cosboa.org.auInterviews with Peter Strong, CEO of COSBOA are available upon request.

If you could sit down with some of the most successful people in business and learn all the lessons of success that they had taken a lifetime to gather. Do you think that would help you to be more successful   What if you could sit down with one hundred of the most successful people who ever lived and learnt their rules, their lessons and their secrets of success? Would that help you be more successful in your life? What if you could sit down over time with more than a thousand highly successful men and women? How about two or three thousand?   Action is Everything   You probably answered spending time with these extremely successful people and learning what they learned to achieve their goals would be a great help to you. The truth is, all this advice and input would do you no good at all unless you took some specific action on what you’ve learned.   If learning about success was all it took to do great things with your life, then your success would be guaranteed. The book stores are full of self-help books, each one loaded with ideas to make you more successful. The fact is however, that all the best advice in the world will only help you if you motivate yourself to take persistent and continuous action in the direction of your goals until you succeed.   The probable result of reading this article has been that you have made some specific decisions about what you’re going to do more of and what you’re going to do less of.    You have set certain goals for yourself in different areas of your life, and you’ve made resolutions that you’re determined to follow through on. The most important question for you now is simply. Will you do what you have resolved to do?   Self-discipline is the Core Quality   The single most important quality for success is self-discipline. Self-discipline means you have the ability within yourself, based on your strength of character and willpower, to do what you should do, when you should do it, whether you feel like it or not.   Character is the ability to follow through after the enthusiasm with which the resolution was made has passed. It’s not what you learn that’s decisive for your future. It’s whether you can apply discipline to yourself to pay the price over and over again until you finally get a result.   You need self-discipline to set your goals and make plans for their accomplishment. You need self-discipline to continually revise and up-grade your plans with new information. You need self-discipline to use your time well and to always concentrate on the one most important task you need to do at this moment.    You need self-discipline to invest in yourself every day, to build yourself up personally and professionally, to learn what you need to learn so as to enjoy the success of which you’re capable.   You need self-discipline to delay gratification, to save your money and organise your finances so you can achieve financial independence during your working lifetime. You need self-discipline to keep your thoughts on your goals and dreams and keep them off your doubts and fears.    You need self-discipline to respond positively and constructively in the face of difficulty.   Persistence Is Self-Discipline in Action   Perhaps the most important demonstration of self-discipline is your level of persistence when the going gets tough. Persistence is self-disciple in action. Persistence is the true measure of individual human character. You persistence is the real measure of your belief in yourself and your ability to succeed.   Each time you persist in the face of adversity and disappointment, you build the habit of persistence. You build pride, power and self-esteem into your character and personality. You become stronger and more resolute. You deepen your levels of self-discipline and personal strength. You develop in yourself the quality of success, the one quality that will carry you forward and over any obstacle.   The Two Essential Qualities   Orison Swett Marden says in his book that “there are two essential requirements for success.    “The first is to get to it, and the second is to stick at it.”   Confucius said, more than four thousand years ago, “Our greatest glory is not in never falling, but rising every time we fall.”   James J. Corbett, one of the first heavyweight boxing champions said “You become a champion by fighting one more round. When things get tough, you fight one more round.”    Yogi Berri the great American baseballer said “It ain`t over till it’s over.” And that it’s never over as long as you continue to persist.   Elbert Hubbard wrote, “There is no failure except in no longer trying. There is no defeat except from within, no really insurmountable barrier save our own inherent weakness of purpose.”   Vince Lombardi said, “It’s not whether you get knocked down. It’s whether you get up again.”   All these successful people have learned how critical the quality of persistence is in achieving greater goals and objectives. Successful men and women are hallmarked by their incredible persistence, their refusal to quit, no matter the circumstances.   The one quality that absolutely guarantees success in business and finance is this indomitable will power and the willingness to stick with it when everything in you wants to stop and rest, or go back and do something else.   Perhaps your greatest asset is simply your ability to keep at it longer than anyone else.   For further info call Bob Lyon on 043 883 0937.

Business plans are not a new concept, most of us have seen them and have a fair (if theoretical) idea of their value. Despite a lot of interest from business owners who seem enthusiastic, what I have seen over the last 15 years is a long way from that enthusiasm. My estimate is that less than five percent ever had a business plan. Gurus and experts love to spruik all sorts of doomsday outcomes from not having a business plan, but business plan / business failure are not the only two, mutually exclusive outcomes. This ridiculous line actually undermines the value of business planning as those who would benefit simply tune out, as they don’t think they’re about to fail. In reality, there is a continuum of outcomes for businesses with and without plans; most small businesses don’t do any kind of planning and haven’t failed. If avoiding failure is not the pinnacle of business planning, what is the point? To me the whole point is about improving the outcome from what would otherwise be done without any kind of planning. Sometimes that means saving the business from oblivion, but not often. Usually, it means making more money, a clearer direction, better engagement, and doing less dumb things. Businesses are very high risk, yet “seeing what happens” is the most common approach. Getting out of operational mode for a short time to decide where you want your business to go gives clarity and certainty for the whole team when they are in-the-trenches every day. Analysing the business also uncovers a lot of problems that business owners may or may not know about: low margins, poor marketing, failing strategy. It’s like looking in the mirror that forces the owner to address reality. A common misconception about business plans is that it’s all about the business plan and the total focus is on creating a polished document. But the real value of a business plan is the process that goes into creating it – the document creates a record of the analysis and the decisions made. We spend 2 to 4 weeks analysing the business, researching the market, creating projections and targets, reviewing the strategy, understanding pricing and margins, understanding the business owner, marketing and human resources. We take the business apart and put it back together again. Outcomes we have seen at The Business Plan Company include a plumbing company that cut out half of their non-profitable business, a pest company that learnt to deal with seasonality, a kitchen company that stopped wasting many thousands on advertising and a consulting company that eliminated bad debts. Even for business owners who have been in business a long time, we challenge the way they think about their business. Most small businesses don’t do business planning; it’s not useful, it’s too hard, too expensive, they don’t need it or even don’t understand it. From what we have seen, a short, sharp, action-oriented business plan can unleash enormous value in a business. If an effective business plan generates more than $2,000 extra profit than not having a plan, why wouldn't you invest that to get the professional help to create one? From the businesses that we have worked with, they generate that value with their eyes closed. For More Information: Warren HarmerEmail: [email protected]: 1300 171 534Website: www.businessplancompany.com.au

  Many small and medium sized businesses experience regular cashflow problems. It is more common than you may think and it becomes a balancing act, or a poorly choreographed juggling attempt. A clear head is the number one ingredient, not yours, your thinking is hampered by stress. You need someone that offers substantial business experience and sound advice. Don’t look at the usual suspects for support. No job can match the business experience you gain in the insolvency sector. Financial Crisis is what we deal with and learn from with every new case. As an insolvency consultant, I see first-hand what can go wrong. I also often get to learn what would have made a difference, but by now it is too late. This is frustrating, knowing so much of financial pain could be eased or avoided altogether. Not all insolvency consultants focus on helping clients avoid insolvency. A1 Debt Assistance does, as I lost my chain of retail stores during the Keating recession. I now help others avoid my mistakes. You need to expand your horizons.  There are a multitude of reasons for your business to experience challenges. Often these are not obvious until the business undergoes a due diligence process. Don’t have your first due diligence as part of the sale of your business. This is likely to turn into the purchaser being able to walk away from the deal. Run your own check, or get help. Address the issues and establish which ones you can fix and which ones you can’t fix. How would this situation look under a new ownership? Can we turn weakness into strength? Is it your personal debt that is dragging down the business? There are solutions and under some circumstances you may be able to go bankrupt and still operate your business. Freeing up cashflow. Be honest when you sell After losing my small chain of 5 retail stores, I ended up in Commercial Real Estate – selling businesses. I was shocked when going through the listings. Many business listings, with substantial asking prices had no more than junk value. The prices reflect the owners financial needs to get out, not the value of the business. Don’t let your business become such a listing. I started to help struggling business owners who had nothing to sell, to turn things around and stay in business or finally be able to sell. Buyers need to know if it’s a basket case and the asking price needs to reflect this. This does not stop you from selling, it stops you from cheating. Don’t ruin someone else in the process. The No-Go zone. Basket Case and over-priced.  The figures must stack up so the buyer can borrow against the business.  A cash buyer is rare. Whenever it seems’ a buyer is ready, the accountant or the bank manager will pull the plug. Due diligence is there for a reason. I never understood why agents would even run with shonky listings. Fix them first and you actually have something to sell. What are your options?  At A1 Debt Assistance we receive calls from business owners ready to enter into some form of insolvency. Often, we help them avoid this. We approach it similar to a due diligence process. Our motivation is to detect the main culprit causing your business problems and develop remedies. A purchaser does not have the same overheads than the current seller. This relates to existing car loans, business loans, over drafts etc – all such figures are called add backs. Running through this process will tell you if you have a business that could be viable to a particular purchaser. It also will determine your asking price. For tax reasons we are encouraged to make business purchases on finance and use the finance costs as write downs. Unfortunately, when the turn over drops, your repayments remain. The tax saving is now killing your business. There are insolvency options that may actually help you, whilst still being able to keep your business. How does this help you to sell your business? People generalise things and overlook the detail. To establish your best sales options for a difficult business, get someone that has the skill to look at the detail. Numbers tell a story, they don’t just add up. Get professional help to decipher the story for your business. Different buyers have different reasons to purchase a business.  Your business may have major flaws, but someone does put value to certain parts. This could be your data base, or a contract that is not viable under your structure. It could well be managed effectively by a larger player. Your store could be in an ideal location, just not for your type of business. Sell the lease to the right business or chain. Once you understand the true selling points, you get a better understanding of who the likely buyer is. Don’t let them know they are your last hope! Now you can create your hit list of targeted buyers. You have approached a competitor and they are interested. Trust me, they will find out how tough it is for you. Their approach will likely be the waiting game. They are not paying, they just wait for you to close the doors and they are on the phone to the landlord – taking over your goodwill for nothing. Why advertising the sale of your business is so important? To avoid the above scenario. Your buyer should fear they could miss out. You could be dealing with multiple buyers. This will give you a much greater chance to sell your business and get the best possible price under the circumstances. Create the balance of supply and demand.   If you need help with your business – feel free to contact me via email [email protected] or visit my website www.a1debtassistance.com.au.

Although bank interest rates are at record lows in Australia, many potential franchisees still can’t raise the finance to acquire a franchise and are increasingly turning to non-bank lenders, particularly their parents and family members. The Franchise Advisory Centre estimates around 10% of new franchisees are now funded or underwritten by family finance, which it terms the Bank of Mum and Dad (BOMAD). BOMAD financing is very different from traditional bank lending. Banks will methodically and unemotionally evaluate a loan application, and will ultimately price their risk based on the security offered by the borrower, and their capacity to service the loan. The security requirement will normally boil down to bricks-and-mortar real estate (usually the borrower’s home], and the servicing requirement will be assessed on the business’ capacity to generate enough cash to repay the loan and meet all its other obligations (as well as pay a reasonable rate of return to the operator). BOMAD financing on the other hand, is often based on emotional, rather than purely financial considerations. If the Bank of Mum and Dad underwrites a loan provided by a bank by giving personal guarantees, or putting their house up for security, they bear secondary risk if the franchise goes bad and the loan is not repaid. However, if the Bank of Mum and Dad is the loan provider themselves, they bear the primary risk if the loan goes bad, which can have a flow-on effect to the relationship between the family members involved. There are a number of advantages and disadvantages of BOMAD financing for franchisors and franchisees. Here are a few: Advantages for franchisors: Access to younger, potentially more talented candidates With Baby Boomers approaching retirement age, more and more franchisees are coming from the ranks of Generation X and Generation Y. Generation X are often mortgaged to the hilt due to the rising property market, so have some real estate equity for security, but often not enough to buy a business. On the other hand, Generation Y can’t afford to enter the property market, so rarely have any real estate equity to offer. However both of these generations bring youth and vigour to franchising and are desirable candidates for franchisors. BOMAD financing may be the only way they can afford to get into business for themselves. Disadvantages for franchisors: The loan is not treated as seriously as bank finance A franchisee risks all manner of adverse consequences if they miss repayments or default on a bank loan. These consequences are often absent for a BOMAD loan, which may not even be documented with a loan agreement between the parties. Therefore if the cost of failure to a franchisee is low, their drive to succeed may also be low. This is not a strong recipe for success and if the franchisee loses money, they may simply treat it as an advance on their inheritance, which might upset the family dynamics for a bit, but is often nowhere near as severe as what will happen if a bank doesn’t get repaid. Mum and Dad might end up running the business If the business underperforms badly, the franchisee’s parents may become so concerned about their investment that they step in to influence the operation of the business, or are forced to take control altogether. This form of reverse inheritance (ie. the kids passing something to their parents) is a nightmare for franchisors, and even though it might be a breach of the franchise agreement, may be tolerated in preference to shutting down the outlet altogether. The parents who end up running the business might never have attended franchise training, or fully understand the operations and culture of the business. Often for the franchisor, this makes a bad situation worse. Advantages for franchisees: Potentially easier access to finance on more favourable terms Borrowing from the Bank of Mum and Dad may not require any securitisation, and may involve other more favourable terms (such as a lower rate of interest) compared to a bank loan. This can make life a lot easier for the franchisee, so long as they treat the loan seriously, which means at the very least they should still prepare a business plan and agree to minimum repayments over a set timeframe just the same as they would need to for a bank. Plus, Mum and Dad as proud (and invested parents) will always be more supportive and interested in the franchisee’s success than a bank. Disadvantages for franchisees: Interfering parents Just as Mum and Dad are proud of their child’s achievements in business (with their money], so too will they offer unsolicited advice, guidance and other assistance that may be counter to the franchisee’s training or intuition, and be far less helpful than intended. Often this unsolicited support will be an unhelpful distraction to the smooth operation of the business, and at other times, it will be extremely useful. The key for the franchisee is to take the rough with the smooth, filter appropriately, and understand that all help offered by parents is generally made with the best of intentions. Lack of proper documentation BOMAD loans are often undocumented, meaning they are not written down but are loosely based on a handshake or mutual understanding. If they are written down anywhere, they are rarely anywhere near the standard required for a bank loan. To eliminate the opportunity for future family arguments over money, BOMAD loans need to be documented via a formal loan agreement between the borrower and lender, indicating the principal to be lent, the term of the loan, the rate of interest to apply, and the consequences of default. Additionally, the parents should amend their wills to acknowledge the loan as an asset of their estate, and outline whether the loan should be offset against any other inheritance due to the child in the event of their passing.  This helps reduce the potential for ugly disputes between siblings when dealing with their parents’ estate, or the risk of an executor calling-in the loan to settle the affairs of the estate. A franchisor would be wise to ensure that any BOMAD-financed franchisee has a proper loan agreement. It may even make it a condition of granting the franchise that it be provided with a copy of the loan agreement to ensure that the franchisee is committed to repaying the loan and that the conditions of the loan are consistent with those of the franchise. The bottom line This is not an exhaustive list of the pros and cons of BOMAD financing, however it does highlight some key considerations for both franchisees and franchisors. BOMAD financing is expected to grow in future and those franchisors who learn how to embrace it whilst managing its associated risks wiill potentially accelerate their growth compared to those who don’t. Jason Gehrke is the director of the Franchise Advisory Centre and has been involved in franchising for more than 25 years at franchisee, franchisor and advisor level.

With time becoming an increasingly scarce commodity, employees are now placing greater value on their own personal time. For businesses to prosper, employers need to pay great attention to employee conditions and remuneration. Flexible working arrangements allow a greater choice of ways for employees to access the necessary time to complete their tasks. This shows that the employer is respecting the value and importance of the employees’ time and life away from work. The most common arrangements to improve work flexibility are job sharing, working some days at home, rostered days off, and making up any time off on other days. The key part of the arrangement is that it must be conditional upon the employee reaching agreed Key Performance Indicators (KPIs) and other performance targets. That way, everyone is better off. Flexible working arrangements are a low-cost exercise that produces a small but long-term return for the employer. Training to improve an employees’ physical and emotional wellbeing increases the employees’ capacity to perform and adapt. Here are some tips for employers to improve employees’ work life balance: Ask your employees what support they would like from you to help their work life balance. Adopt  healthy  eating  and  drinking practices during working hours and business lunches. Be honest, caring, knowledgeable and inspirational. These leadership traits reduce employee work stress and reduce sick leave. Provide ongoing learning and safety sessions that cover a wide variety of topics including work-life balance. Provide  your  employees with opportunities  to participate in physical activity. Walk your talk. Be the example of good health and a healthy life balance. Creating more flexible working conditions gives your employees greater choice on how to use their time by improving their capacity to do more with their working time, enhancing productivity benefits and leading to a healthier balance sheet for the firm. For further information contact Paul St. Clair on 02 9221 4088.