Archive for 'business'
With the current economic slowdown, now is the perfect time to review your business strategy and conduct a business “health check” to come out the other side improved and ready to go. Analyse whether or not your business is in the state that you want it to be in and any improvements you can make to prepare for when the economy starts to recover.
Clients and customers
Client and customer loyalty is a trait all businesses should appreciate, but if your clients’ values are misaligned with yours, conflict is inevitable. Hence, now is the time to re-evaluate which clients you want to keep loyal and which ones you can see a cooperative future with. Re-assessing your target audience and deepening your understanding of the wants and needs of your clients would also be beneficial, as you can perfect your marketing strategies now while you have the time. If you have clients who frequently struggle to pay you on time, rude to your service and employees and generally disrespectful to your business, take the time to assess whether your attention is worthwhile and if you would like to continue to work with them when the economic situation improves.
Your employees are another stakeholder to check up on during this downtime opportunity. Your employees will always be your business’ representatives so make sure they are up to standard and help them improve on their skills now when they have the time to. Take the time to teach your employees more about your business goals and strategies and improve the team atmosphere by introducing team recreational activities. Your relationship with your employees now during a global crisis will dictate how they feel about you as a leader and if they can rely on you in the future. Foster respectful, strong and healthy bonds between you and your employees and only good things will be coming your way.
The key question to ask when reviewing your suppliers is whether or not you are getting what you need from them at a reasonable cost. Of course, not all sales deals are made equally and while you may get the bad end of the stick now, that is sometimes for the benefit of the long term. However, if this is not the case and you feel that your suppliers are asking too much from you, letting you down with their product quality or causing other complications, take the time now to look for other options. As most businesses struggle through current economic conditions, more and more suppliers are becoming competitive and hence, there are more options to consider. Do your research and decide on the suppliers you want to work with for the long-term future.
Managing your finances is always a difficult task but it is now more important than ever. Your budget and profit predictions for this year are likely going rogue so reevaluate your finances and research other funding options such as commercial rent, interest rates and banking services. Consider how you can minimise cost while maximising efficiency and productivity, save as much money as you can during these downtimes, and review your investments in detail to determine whether or not they are worthwhile.
Supporting your employees during chaotic times as an empathetic leader will improve your relationships within your business and boost personal confidence. Here are some ways you can support your employees mentally and financially during these uncertain times.
Be open with your employees
As businesses implode due to current economic circumstances, employees want transparency and closure over the state of the business and their employment. Thus, being open about your business’ finances and both your short-term and long-term growth initiatives when communicating with your employees will earn their trust and appreciation.
Being transparent over your employees’ job security is also a good idea, as unemployment is becoming a major concern for all Australians. Reassuring your employees and guaranteeing their safety will also boost productivity levels and business morale as a major source of anxiety is lifted off of their shoulders.
Take mental health seriously
You can support your employees’ mental health by encouraging a healthy work-life balance (especially if they are working from home) as well as offering tutorials, professional mentoring sessions and online webinars on mindfulness and effective stress management strategies. Be more lenient with your employees who are struggling with productivity due to mental fatigue and enforce healthy lifestyle habits.
Another way to protect your staff’s mental health is to give all your employees financial advice and education, even if they are not struggling financially at the moment. Let them know that you care for their livelihood and can support them with constructive guidance.
Take care of your staff’s physical health
Taking care of your employee’s physical health as well as their mental health will also relieve your employees’ stress levels and give them peace of mind when working with you. Allow your employees to work from home whenever possible and provide disinfectants like hand sanitiser and alcoholic wipes in your workspace to reinforce health precautions. Enforce social distancing procedures such as the 1.5m distance rule and strive to eliminate physical health risks related to your employees. It is vital that no employee comes to work if they are feeling sick.
Businesses now working from home can take the opportunity for employers to learn from the experience and consider new work structures coming out of COVID-19. This could mean increased flexibility for employees when it comes to working remotely. Here’s why you should consider flexible work arrangements with your employees.
Flexible work arrangements can increase the productivity of employees by allowing them to work when they feel most motivated. Some people may naturally be more productive at night time and do their work then, which would not be possible with regular office hour restrictions. Remote work also saves time on excessive staff chatter and workplace distractions, such as ringing telephones and colleague drop-ins. Offering flexible work arrangements can show your employees that their lives are valued, which can lead to higher levels of performance and hard work to justify the flexible arrangements.
When employees are working from home more frequently, it means that your office doesn’t have to sustain as many people and you can reduce rent and utility expenses. This doesn’t mean that your employees have to pay too much more; the ATO has introduced an easier way of deducting work from home costs during the COVID-19 period called the ‘shortcut method.’ This allows employees to deduct 80c per hour they work from home to compensate for running expenses.
When your business exclusively depends on employees being physically present, it’s possible that you’re missing out on great workers who live too far or require more flexible arrangements. Modern job seekers are often on the lookout for positions that offer greater flexibility, rather than the regular 9 to 5 in the office. Highlighting workplace flexibility in your job advertisements can attract more prospective talent as physical barriers are eliminated.
Remote work can improve the overall physical and mental wellbeing of your employees. One perk is that they may be able to be better rested and eat a proper breakfast in replacement of the morning commute. Work flexibility will also enable them to work around family commitments, which can boost their quality of life and happiness. This can raise morale and improve their quality of work by reducing the risks of fatigue and burnout.
Workplaces that allow employees to maintain a healthy work-life balance are more likely to retain their employees for long terms. This can benefit businesses by reducing the frequency of hiring and training periods, which can save a lot of money and productivity while continuing to grow corporate knowledge in existing employees.
Contracts, sales or purchases are bound to be cancelled with financial uncertainty plaguing the economy as a result of COVID-19. To help you get through this, the ATO recommends making a goods and services tax (GST) adjustment when cancellations do occur.
In the event of contracts, sales or purchase cancellation, you can make a GST decreasing adjustment. A GST decreasing adjustment refers to when you originally paid for a product or service more than the amount payable after taking in an adjustment event into account. This also means you pay less GST for the reporting period.
For further clarification, the adjustment amount is a decreasing adjustment if you claimed less for the purchase in the earlier tax period than the amount you could have claimed if the adjustment event had been taken into account.
According to the ATO, GST adjustments can be made when:
- The price of a taxable sale or purchase changes;
- Taxable sales or a purchase you’re entitled to a GST credit for is cancelled;
- You write off or recover a previously written-off bad debt, or
- The actual usage purpose of a sales or purchase differs from your personal intended usage.
To make a GST adjustment, first look over your previous BAS and paid invoices and check if you paid GST, how much you paid in GST and when you paid. After that, you can make your adjustments for the amount paid in each previously lodged activity statement, provided that you are accounting for GST on a cash basis. In the case that you account for your GST on an accruals basis, make your adjustment during the activity statement period when you become aware of it.
When you become aware of a GST adjustment opportunity, you should report it in your activity statement for your current reporting period. The ATO provides you with adjustment reporting assistance in the form of worksheets designed for purchase recording purposes (for sales, purchases, bad debts and creditable purpose) and also brief guides on their website.
Keep in mind that you only need to adjust GST if the contract, sale or purchase was reported in a previous business activity statement. There’s no need to report an adjustment if your contract, sale or purchase occurred within your current business reporting period.
Despite unprecedented circumstances, employers still need to consider the requirements of dismissal under the Fair Work Act when ending employment to avoid legal action against them.
When dismissing or standing down employees due to COVID-19 limitations, employers must continue to comply with the applicable award, enterprise agreement, workplace policy or employment contract, as well as providing employees with their legal entitlements, such as notice, accrued leave and redundancy payments.
The Fair Work Act prohibits employers from dismissing employees due to illness or injury, meaning that if they have contracted COVID-19, or have symptoms that prevent them coming into work, they cannot be dismissed.
Employers who are affected by COVID-19, such as those who are facing business slow down or are shutting down may dismiss employees under redundancy. Employees may be entitled to redundancy pay if their continuous service to the employer is less than 12 months. Regular redundancy eligibility requirements still apply and not all employees will be eligible, such as casual workers, apprentices and trainees.
The Australian Government has enabled employers to make temporary and partial stand downs during COVID-19. Stand downs can be enforced without pay if the business has been closed due to enforceable government direction (non-essential services), if a significant portion of employees are under self-quarantine, or if work is forced to stop due to lack of supply.
The Federal Government introduced a third COVID-19 support package of $130 billion on 30 March 2020. The package includes additional support for businesses, including a new JobKeeper payment to help businesses retain employees.
Businesses who have been affected by COVID-19 may be able to receive a Government subsidy to help them continue to pay their employees. To be eligible, employers must:
- Have more than a 30% reduction in their turnover for at least a month compared to last year if the business has an overall turnover of less than $1 billion.
- Have more than a 50% reduction in their turnover for at least a month compared to last year if the business has an overall turnover of $1 billion or higher.
- Not be subject to the Major Bank Levy.
- Have been in an employment relationship with eligible employees as at 1 March 2020.
JobKeeper payments must only be made to eligible employees, which are employees who:
- Are under current employment with the employer.
- Were already employed by the employer on 1 March 2020.
- Are employed on a full-time or part-time basis, or are a long-term casual who has been employed on a regular basis for over 12 months as at 1 March 2020.
- Are at least 16 years old.
- Have an Australian citizenship or are an eligible visa holder.
- Are not also receiving a JobKeeper payment from another employer.
To receive the JobKeeper payment, employers need to:
- Go onto the ATO website and register an intention to apply with an assessment stating they have or will experience the 30% turnover reduction.
- Provide the ATO with eligible employee information, including how many employees had been engaged as at 1 March 2020. This can be done using Single Touch Payroll data.
- Confirm that eligible employees each receive at least $1,500 per fortnight before tax.
- Notify eligible employees about receiving the Jobkeeper payment.
The Australian Government has increased support for businesses to manage cash flow challenges under the ongoing COVID-19 circumstances.
The Boosting Cash Flow for Employers measure announced on 12 March 2020 will be increased to provide up to $100,000 for eligible small and medium-sized businesses. To be eligible employers must have been established prior to 12 March 2020 and have an aggregated annual turnover of less than $50 million and employ workers.
The measure will provide employers with a payment equal to 100% of the tax withheld from wages and salaries. This is a rise from the original 50%, with maximum payments being increased from $25,000 to $50,000 and minimum payments being increased from $2,000 to $10,000.
Employers will receive payments from 28 April 2020 from the ATO as automatic credit in the activity statement system upon lodging eligible upcoming activity statements.
Eligible businesses will be provided with an additional payment during July – October 2020. The payment will be equal to the total amount received under the Boosting Cash Flow for Businesses scheme. For monthly and quarterly activity statement lodgers, these payments will be provided as automatic credit in the activity statement system for each lodgement up until October 2020.
The Government has also introduced the Coronavirus SME Guarantee Scheme to support the flow of credit for small and medium enterprises (SME) by providing a guarantee of 50% to participating SME lenders for new unsecured loans that will be used for working capital. To be eligible, SMEs will have a turnover of up to $50 million and the loans must comply with the following terms:
- The loan is a maximum of $250,000 per borrower.
- The loans will be up to three years, with an initial six month repayment holiday.
- The loans will be in the form of unsecured finance.
The SME Guarantee Scheme will still require businesses to repay these loans and approval is subject to regular lending requirements. The Scheme will commence by early April 2020 and be available until 30 September 2020.
Business loans and business credit cards are the most popular financing options, but there are key differences between the two that you should consider to help you make the right choice for your business.
A business loan is a lump sum of money that you borrow. They can be a good option for your business if you require funding for a larger one-off purchase, such as buying new equipment or machinery, real estate, business acquisition, capital investment or refinancing existing debts.
Business loans typically range from $5,000 to $50,000 and can be paid as a lump sum or through multiple set payments. Depending on your bank, you can generally make repayments in monthly or quarterly instalments that are tailored to you and your cash flow.
To get your business loan approved, there is usually a strict approval process you must pass, which can include details such as your business’s financial position and a financial spending plan.
In terms of extra costs, a business loan generally comes with signup fees and late repayment fees. The interest rate for a loan is often lower than a credit card and can be a monthly or annual rate, which typically ranges between 3-10% p.a for secured loans.
Business credit card:
A business credit card is a suitable option if you want funds for short-term needs. Business credit cards are also generally more flexible than a business loan. They usually allow for a limit of up to $50,000 and are often used for working capital, emergency money and smaller ongoing expenses.
In terms of fees, business credit cards typically have a higher interest rate than personal credit cards, however, you only need to pay interest on each month’s expenses. The interest rates are higher than a business loan and can vary between 10-20% p.a. Fees such as annual fees and late repayment fees will apply to business credit cards.
A business credit card also comes with bonus features, such as bonus points for spending, free deliveries, frequent flyer points, complimentary insurance and a reputable company credit score with good use.
Business credit cards can be beneficial in the sense that it offers flexible funding and continuously available money, however business owners should be confident that they will be able to manage the minimum monthly repayments to avoid overdue fees.
A career mentorship program involves partnerships between employees to develop professional skills and gain industry knowledge. Due to their requirement for a collaborative effort, career mentoring programs are often seen as powerful development tools for cultivating both leaders and employees within a business.
Whether you are a small business owner or a multinational corporate leader, the implementation of a mentorship program will always be profitable for businesses as not only does it create a harmonious workplace culture, it also helps to attract and retain employees.
As straight-forward as career mentoring sounds, there are a few key tips to keep in mind when building a mentorship program for your business:
Make sure your mentoring program is clearly defined:
To create a successful mentoring program, both mentors and mentees should have a concise understanding of their roles and what they would like to gain from the mentorship. By succinctly outlining the purpose of the mentoring program, mentors and mentees are more likely to keep organised and communicate respectfully with the guarantee of mutual rewards.
There should also be short-term and long-term goals established for all parties involved, including the business. These goals could be the narrowing of particular skill gaps or creating a more open workplace culture. By having these goals set in stone, both mentors and mentees and have a clear direction to work towards.
Personalise the match-making process:
Often times, businesses will match a mentor and mentee together depending on their skill-set and position within the company. While on paper, this may appear to be an efficient process, but the lack of chemistry between a mentor and mentee may prove to be devastating for the workplace environment.
As a result, be sure to involve both mentors and mentees in the match-making process and take into account personality traits. You could do this by asking employees to take a personality test to ensure compatibility in career goals, personal interests and preferred communication methods.
Be involved as a third-party:
Lastly, it is the responsibility of the business to check-in on the progress of mentorship programs in order to understand how mentors and mentees can grow together and what improvements can be made to the program. Remember to always refer back to the long-term goals established and consider the feedback provided by mentors and mentees from the program.
If you are a small business employer wishing to dismiss employees, you must do so according to the Small Businesses Fair Dismissal Code, as a breach of the code could result in legal action taken against you. If your business has less than 15 employees, it counts as a small business.
Employees can apply for unfair dismissal if they believe they have been unreasonably dismissed from their job. These cases could include when:
- The dismissal was harsh, unjust or unreasonable
- The dismissal was not a case of genuine redundancy
- The dismissal was not consistent with the Small Business Fair Trading Code.
Employees working for small businesses can only apply for unfair dismissal when they have been employed for at least 12 months. If the business had a change of ownership during their employment, then their time with the first employer may still count as service with the second employer when calculating the minimum employment period.
When dismissing an employee, there are three main valid dismissal reasons:
- Capacity (poor performance)
- Genuine redundancy.
Employers must also adhere to employee entitlements upon dismissal, meaning they must pay:
- Accrued leave and annual leave loading
- Accrued or pro-rata long service leave
- Redundancy pay if applicable
- Outstanding wages.
An employer can make objections to the unfair dismissal claim by submitting an Employer response to unfair dismissal application, or an Objection to application for unfair dismissal remedy.