30 May 2017

Righting the Sinking Ship

By Steve Marsten

Lately, it seems more than ever before, businesses are reaching out for help. If your business is losing customers or money and you don't know how to plug the hole then its time to talk to your professional.  

Recognising when things start to go south is obviously, very important. It’s not the end of the world though… at least not if you adopt steps to try to “right the ship.”  Three areas we look at to start with are:

1.       Are you losing customers?
If customers are drifting away, it could be a coincidence, or there could be common underlying reasons. The best advice we give is to reach out to each departing customer. Learn why they are leaving you. What is attracting them to your competition? Is there anything you can offer to save the relationship? You may end up retaining a customer and at the very least, you’ll take away valuable information that could keep other clients. This could mean the difference between staying in business or closing your doors for good.
2.       Are you losing too much money?
If cash seems to be the main issue, you need to look hard at your expenditure and outgoing cash flow. Bring in outside help if you’re not as good with finances as you thought. We encourage people to establish simple systems that address these matters on a daily basis with minimum effort. Awareness is the best way to stay in control.
3.       Are you falling behind in skills, technology, or visibility?
It may be time to take a deep look in the mirror. Are you losing your mojo? The initial step of talking to your customers can sometimes highlight this.  But, if not, take a long hard look at each one of these. Are you the dinosaur? Could you be more innovative?
Ask trusted customers about their expectations now and in the next 12 months and take on board their feedback.

If your business is going under, the quicker you act, the better the outcome. Call us at Sothertons on 49721300 for more detailed strategies.

24 May 2017

Growing in a Downturn

By Tina Zawila

There’s no doubt that the economy in Gladstone has changed significantly over the last 12-18 months, with many businesses noticing the decline in demand and revenue.  Many have had to make difficult decisions to scale back operations to meet the market.

However, there are some businesses that are in fact entering and growing in this market.   So what’s their secret?  As with most things in life, it’s usually not just one thing that they are doing differently, but instead a combination of activities and strategies. 

So today let’s talk about selling.  I know most people who love their product or service, don’t like to think of themselves as salesmen (because they believe their product or service sells itself), but in reality we are all in sales.  However what does selling really mean?  I recently heard this definition of sales and it resonated with me:

Selling is all about creating relationships to solve people’s problems and transfer value”.

So let’s break that definition down from the customer’s perspective.
·     
  • Creating relationships. As a customer, we want to feel appreciated, valued, and dare I say, loved. We want to do business with people we like and trust. 
  • Solve our problems. We want our needs and wants met and we want solutions. Sometimes we don’t even know that we have a problem, want or need, until you identify and show it to us. 
  • Transfer Value. We are prepared to pay when the price is equal to, or lower than, our perception of the value we will receive from your product, service or solution.

So if sales are declining, maybe before we blame the downturn in the market, we should look at our own ability to sell our products and services. 

Do our customers feel loved, are we meeting their needs, and are we offering good value?    

If you need help with strategies to improve customer relationships, developing your products and services, and articulating the value you provide, call the professional business advisors at Sothertons Gladstone on 4972 1300.

16 May 2017

Where is the protection for small business?

By Steve Marsten

It’s rare that we comment on Commercial matters however this week I feel the recent actions against some local businesses has caused us to raise the issue to warn others. It makes me wonder - what is the point of the Law?

Last year a local business provided equipment to a major industrial builder who had won a significant local contract. They had worked with the contractor on several occasions over the past 3 years with no hint of trouble.

The contractor went into administration early last year owing the local business less then $4,000. So that’s not such a big deal - we would think. Unfortunately, the administrators have come back and asked for all funds paid over the past 6 months which is well over $120,000. These are funds that have been paid to his employees; his suppliers and maintained his equipment and are no longer has sitting in his bank account.

Naturally, one expects that the law would protect this business. After all - the business owners operated in good faith. When the contractor was slow to pay - he followed up the debt. The follow ups were not excessive. No demands had to be issued. There were no long outstanding debts and a remittance advice was issued with each payment. No cash was received and no payments were dishonored. Everything was carried out in a business like manner. There was nothing to indicate that the contractor was at anytime in trouble. This is known as the Good Faith Defense. One would think the law is on the “law abiding reasonable business operator’s” side. But alas – No! Legal advice indicates one should settle for something much larger than the last payment received from the contractor of around $3,000! By the time you consider the need for a Queens Council; a legal advisor and the cost of court - the estimated costs to defend the “moral actions” of an honest small business is over $110,000.

This is something that is simply not right and unacceptable to small business. It’s immoral. We at Sothertons would love to see serious changes to our commercial laws that strengthen the Good Faith Defense so that it has teeth to protect the Small Businesses operator who do the right thing. Call us on 49721300 for more information.

09 May 2017

It's Tax Time Now!

By Tina Zawila

When you read the title of this article, you may have thought, “it’s only May!”, however, this is not a typo. It really is time to talk tax NOW, in May.

You save tax, or maximize your refund NOW, by the actions you take before 30 June, not when you see your accountant after the financial year is over.

This is the time of the year to assess where you are to date and what actions you can do to improve your position. If you are in business there are tax saving strategies that s are simple and somewhat obvious – such as deferring income and bringing forward expenses, however, every year there are also some specific strategies and windows of opportunity.

This year, there are two legislative changes which take effect from 1 July 2017, which means that you must act before 30 June 2017 to access the tax advantages that these two changes will remove.

  1. If you are aged under 50 you can currently contribute up to $30,000 to superannuation and claim a tax deduction for the contributions, if you are over 50 that amount increases to $35,000. However, from 1 July 2017 this concessional contribution cap falls to $25,000 for everyone. Therefore, the 2016/17 year is the last year where you can contribute an ‘extra’ $5,000-$10,000 into super and claim a tax deduction. 
  2. If you are a small business owner you may be aware that you can currently claim an immediate tax deduction for assets costing less than $20,000. This accelerated deduction is not available post 1 July 2017, therefore, this year is your last chance to claim an immediate deduction for assets (costing less than $20,000). After 1 July 2017 you will only be able to claim the cost of the asset over several years (depreciation). 

Of course, this is general advice only and you should seek specific advice tailored to your own circumstances before taking any action. DIY Tax Planning can be worse that no Tax Planning at all. Call Sothertons Gladstone on 4972 1300.

03 May 2017

Observe the warning lights before you hit the rocks!

By Steve Marsten

It’s disappointing to hear about more local businesses closing down and staff being retrenched. Business owners, together with their staff, go through an extremely stressful period when this happens. I often ask why was it left to go on for so long? Business termination or closure is an economic decision that should be made by business owners who have the fortitude and clarity of looking ahead. Often the final decision is made in desperation and frequently without any consideration of where to turn to.

We have seen many businesses heading towards the rocks however, those who can see the warnings signs; those who can see the turbulence ahead; those who understand what a contracting economy will do to their business - simply make quality decisions earlier.

Over the past 18 months I have lost count of the businesses who we have sat down to discuss cashflow and cost issues. All who have acted based on the actions from those meetings remain solvent today and it’s something that we are proud of. Now that’s not to say some business still won’t go broke. Some business owners make the decision to consult with an advisor far too late and hence the decisions that have to be made are extremely difficult and tough. Often those business owners may not be prepared to make such wholesale changes and inevitably crash the business on the rocks.

Now no one has a silver bullet fix however, being able to identify the tell-tale signs can assist with knowing when the business is heading towards the turbulence of insolvency. We always check the following points:
  1. Does the business have a budget to monitor its financial operation?
  2. Is there a tax debt building? Often this is GST, super or PAYG Withholding unpaid and is a major indicator.
  3. Are there ongoing monthly Trade Losses? If so, seek advice after no more than 4 months.
  4. Do you have an online accounting system that allows you to confirm figures monthly and soon after month end?
  5. Can you print off a cashflow report for the month and Year to Date? Is your overdraft expanding?
  6. Is there a difficulty selling stock or collecting cash from customers? Often changes in the way cash is collected needs to be rectified quickly and stock decisions need to be made as early as possible.
These are just some of a significant list that we address to assist business owners first identify the problem and go through a process of rectification and turnaround. We have yet to have a client indicate that such a meeting is not valuable to their business.

To learn more about keeping your business afloat, ring our team at Sothertons to discuss your turnaround strategies on 4972 1300.