Archive for 'business'

Investigating Your Options For Your Business Before Closing Doors Could Open Different Pathways – Here’s Why A Restructure Should Always Be Considered First

With the demanding conditions that have plagued the retail industry over the past twelve months, business owners need to be aware of all the restructuring options available before it is too late.

COVID-19 has unfortunately resulted in reduced foot traffic, store closures, the accumulation of legacy creditors and significant deteriorations in working capital positions.

Even with the support of JobKeeper and other government initiatives buoying business ventures from early 2021 to now, many family and small businesses are sure to continue to struggle.

The Misconceptions Of Formal Restructures

The idea of restructuring your business or reaching out for external help can appear scary and often seen as something to be avoided at all costs. However, business owners are not on their own when dealing with the difficult conditions facing them in their short-term future.

No one wants to see a business fail.

That’s why there are always options available to businesses. However, the longer a company holds off on making a decision, the more the business and its available options will deteriorate.

If companies and businesses can act early enough, their options include informal arrangements and advice, voluntary administration, and new restructuring reforms for small businesses.

With the availability of these options and the right people involved, there is no reason why a financially distressed small business cannot survive the challenging times and thrive in the future. All companies experience some form of distress from time to time and often at no fault of their own. The ones that survive focus on cash, seek appropriate advice from trusted advisors at the right time and act further on it.

How Might A Business Survive Financial Distress

Using the voluntary administration process as a restructuring tool allowed Tuchuzy (a well-known retailer in Bondi) to successfully deal with legacy creditors, refocus on high margin product lines, and ultimately, the company continued to trade profitably.

The key to Tuchuzy’s restructure was a ‘light touch’ administration to minimise costs and disruption to the business and closely working alongside the director to ensure the proposal submitted to her creditors would be acceptable than an immediate winding up scenario (of which it was).

There is a lot of flexibility and breathing space afforded in the voluntary administration process.

The administrator can quickly reset the cost base by exiting unprofitable stores, reducing the workforce, and focusing on only buying and selling favourable margin products.

Even when a liquidation becomes necessary, the process can be reasonably quick, fair and transparent if run properly.

The secret is to overcome the general stigma accompanying restructures and approach restructuring experts early who will ‘unemotionally’ explain each available option and provide an impartial recommendation that aligns best with the individual circumstances.

What Do The New Small Business Restructuring Reforms Mean For You?

For a business with few creditors and a single location, the process of voluntary administration can be expensive and unnecessary.

Indeed, voluntary administration is often not appropriate for many small businesses due to associated financial costs and the hurdle accompanying a director relinquishing control.

The government has responded to this critique and offered an alternative. This alternative comes at a perfect time as directors are, once again, exposed to personal liability for insolvent trading.

The new small business restructuring (SBR) reforms offer a lower cost and far simplified restructure process, critical for small businesses to continue to trade after government assistance such as JobKeeper ceased in March 2021. The reforms add an essential new path that will assist many retailers.

Though there have been only a handful of SBRs to date, and their effectiveness to save businesses is yet to be appropriately evaluated, it is an option to explore in the right circumstances.

Critical Questions Your Business Should Be Asking

The COVID-19 crisis has put a severe strain on many previously successful businesses. Though the government and many advisors are attempting to ensure that they do not collapse, directors and business owners need to be proactive and engage early for them to work.

Often businesses approach liquidators and advisors at the point where their financial problems have become insurmountable, and a liquidation/shutdown is often the only option left. The timing of coming and asking for help can be the difference between a shutdown and the continuation of trading.

With proper preparation and an effective plan that considers all stakeholders, any business should be able to restructure and continue to trade.

If your answer to any of the below questions is yes, you should seek immediate advice from a trusted restructuring advisor.

  1. Am I currently losing money?
  2. Am I finding it hard to pay bills on time?
  3. Have I got old debts that I am finding hard to pay down?
  4. Do I need some breathing space?
  5. Do I have my ‘head in the sand’?

Posted on 6 September '21 by , under business. No Comments.

Rent Relief Rebate For Commercial Tenants & Landlords

Commercial tenants have been some of the hardest hit during the ongoing COVID-19 situation, with many losing out on revenue while businesses have been forced to close or make alternative arrangements across the state/country.

Several states have announced rent relief in the form of rebates and legislation to ensure that commercial tenants can viably remain in place during the ongoing situation facing the country.

Victoria

The Victorian government recently announced the finalised new regulations for the rent relief rebate and broadened the eligibility requirements for the Commerical Tenancy Relief Scheme (known also as “the Scheme”).

For Commercial Tenants

These amendments have been brought in to assist small and medium-sized businesses with some welcome rent relief, a major concern for many businesses within hotspot areas who cannot continue operations in the usual manner during the COVID-19 situation.

This rent relief rebate will be in the form of a proportionate reduction in rent, determined by the decrease in turnover/revenue.

Commercial tenants will now be able to choose three consecutive months between 1 April and 30 September to compare to their turnover in the same three months in 2019, to assist in determining the financial relief amount.

The Scheme is hoped to help the small and medium-sized businesses with an annual turnover of less than $50 million who have experienced a decrease of more than 30% during the pandemic of their revenue.

New businesses will also be eligible for assistance under the Scheme if they have been opened since April 2019. Special arrangements will be in place to calculate the turnover impacts for businesses that were not operating in 2019.

For Landlords

Commercial tenants are not the only beneficiaries of the rent relief amendments, however. Landlords who provide their eligible tenants with rent relief will be provided by the Government with tax relief of up to 25 per cent (in addition to any previous relief), with the support worth up to $100 million.  Additionally, any small landlord who can demonstrate acute hardship will be eligible to apply for payments as a part of a $20 million hardship fund.

In accordance with the Scheme, the Victorian Small Business Commission will support tenants and landlords with the provision of information to assist in negotiating a rent relief agreement. They will also provide access to free and impartial mediation if a fair agreement cannot be brokered, and are also offering help with negotiations and mediation in the event that a tenant isn’t eligible.

Landlords and tenants will require a mandatory reassessment point (as per the Scheme’s provisions) during the period of rent relief to check in on one another, and assess whether the circumstances have changed and rent relief should be adjusted accordingly.

The Scheme will apply retrospectively from 28 July 2021 through to 15 January 2022.

In light of the new rental relief amendments to the Scheme, commercial landlords and tenants should enter into a negotiation with regard to their current commercial leases. Seeking additional advice from legal professionals or the VSBC regarding these negotiations is highly encouraged.

New South Wales

In New South Wales, the government reintroduced the National Cabinet’s Mandatory Code of Conduct for Commercial Leasing, which will mandate the rent relief for eligible tenants who have been hit hard by COVID-19 until at least 13 January 2022.

For Landlords

With the extension of the Retail and Other Commercial Leases Regulation (COVID-19) 2021, landlords will be required to renegotiate with their tenants about rent. Previously, this regulation only required the landlords to attempt mediation before evicting or locking out tenants, but landlords will now be required to offer rent relief in proportion with a tenant’s decline in turnover. At least half of this must be offered as a waiver, and rent negotiations must be entered into prior to moving to evict or lock their tenants out.

The mandated relief will also be accompanied by a new $40 million Hardship Fund, which will be offering monthly grants of up to $3,000 for small commercial or retail landlords who have waived rent of the same value and who rely primarily on that rental income from the commercial properties.

Eligible commercial landowners are able to apply for up to 100 per cent of their land tax liability for 2021. To be eligible, the landowner must have reduced rent for the affected tenant by at least the amount being claimed for any period between July 1 and December 31 this year.

For Tenants

The extended regulation of the Retail and Other Commercial Leases Regulation (COVID-19) 2021 is applicable to those commercial and retail tenants with a turnover of up to $50 million who meet eligibility criteria for either the COVID-19 micro-business grant, COVID-19 Business Grant or JobSaver Payment.

In addition, the NSW government has committed $2 million to the Small Business Commission so that it can handle the surging demand for mediation requests from small businesses.

Queensland

Commercial businesses who have been impacted by the effects of COVID-19, which has resulted in a reduction in turnover during the response period or extension period, may be eligible to negotiate rent relief with their landlord under the Retail Shop Leases and Other Commercial Leases (COVID-19 Emergency Response) Regulation 2020 (known also as the Regulation).

The deadline for this was 31 December 2020, but may be subjected to change or amendment depending on the current situation in Queensland (as of August 2021).

The Regulation and the COVID-19 Emergency Response Act 2020 (known as the Act) sets out the arrangements in place for Queensland regarding small and medium-sized enterprise commercial leases affected by the COVID-19 emergency.

For Tenants

Under the Regulation, landlords cannot take prescribed actions against a tenant with an affected lease who fails to pay rent or outgoings or is not open for trade during either the response period or the extension period (including the taking of action after either of those periods). However, this does not mean that a tenant does not have to pay anything, or otherwise comply with their lease.

Commercial tenants must have an affected lease to be eligible for rent relief assistance under the Regulation. It must meet all of the eligibility criteria to be eligible:

  • It is a retail shop lease or prescribed lease
  • It was binding on the tenant on 28 May 2020
  • The tenant is a small and medium enterprise that carried on a business (or non-profit activity) in the financial year and had a turnover of less than $50 million for the 2020-21 financial year and/or turnover that was likely to be less than $50 million for the 2020-21 financial year.
  • The tenant under the lease is eligible for but not necessarily enrolled in the JobKeeper Payment Scheme.

Small businesses can also continue to lodge small business tenancy disputes as needed.

For Landlords

Negotiation must be entered into regarding the lease and prompted by either the landlord or the commercial tenant. Any information shared must be true, accurate and correct, and not misleading, while also being sufficient enough to enable all parties to negotiate in a fair and transparent way.

The landlord must make an offer about rent (and other lease conditions) during the response period and/or the extension period to the tenant within 30 days of sufficient information being received.

During the response period, at least 50% of the rent reduction must be waived as a discount, and the remainder of the reduction must be deferred to be repaid by instalments after 30 September 2020.

Posted on 1 September '21 by , under business. No Comments.

Know What You’re Looking For In A Business Partner? Here’s What We Know Works…

Making decisions as the owner of a business can be a world of difficult choices, but none so much as deciding that your business requires a partner. It’s a critical, strategic decision for the business that you won’t want to get wrong.

Approach your search for the right business partner to suit your business as you would a life partner. As a major legal covenant, a partnership is not unlike a marriage of sorts in the business world. It’s also something that you won’t want to rush into. A good partnership requires:

  • A shared vision and goal
  • Mutual hard work
  • Open communication
  • Mutual respect
  • A balance of power
  • Effective conflict resolution

You might already have an idea of what you are looking for when it comes to a business partner, but it’s still important to identify key aspects of what makes a good one.

Critical Skills & Experience 

A candidate for a business partner should possess skills and experience that can be brought to the table which complement that which you already possess. They may possess strengths that you simply do not, which can make it easier to start, plan, grow and run a business.

For example, you may be a customer relations extraordinaire but struggle with the operational aspect of business development. That might be the skillset you look for in a business partner.

If the candidate for a business partner can also provide you with the resources and credibility for your business on top of sharing your vision, this can be a gamechanger. Those resources could include a secure business network, industry connections, client list or specific credentials and expertise that can add value to your business.

Values, Entrepreneurial Spirit & Business Vision

You will need to be able to communicate effectively with your partner to make decisions, set goals and drive the business forwards. Aligning your values and business vision with your partners will help facilitate your business’s development and growth without hindrance.

Minimise The Personal Intruding On The Professional

If your prospective business partner is facing serious challenges in their life, they may translate over to the business. While giving someone a chance to challenge themselves is an honourable act, running a small business takes focus, time and tremendous energy that they may not be able to afford to give.

Personal & Business Ethics

A partnership should be a mutual and trusting relationship. Someone who values honesty and practices good personal and business ethics should be at the top of your list. You don’t want to be involved with someone whose moral code does not align with yours, or who could get you involved in legal matters that may besmirch you and your business’s reputation.

Also, if you cannot respect your partner or they cannot respect you on a professional level, your ability to work as a team will suffer, and your clients will read into that as a lack of professionalism. Never partner with someone that you do not respect, or who does not respect you.

In the event that you choose or have chosen a business partner that is not right for you, make sure that everything agreed upon for the partnership was set out in writing, as breaking the partnership is no easy matter. With a lot of legal ramifications that you may face in dissolving the agreement at play, having evidence and a plan can save you plenty of grief.

For assistance with drawing up partnership agreements, business planning or simple advice on anything brought up here, you can speak with us.

Posted on 16 August '21 by , under business. No Comments.

Ready To Take Your Business Overseas? Here’s What You Need To Know About Exporting

Looking to expand your business into the overseas market, or thinking about ways to increase your revenue? Exporting a good or service to customers or businesses outside of your home country can open your business to new markets, which creates sales potential and increases your business’s competitiveness.

Australian businesses export a variety of products and services from industries across multiple sectors. The benefits of exporting for your business could include:

  • Learning new and innovative ideas and practices to make your business more competitive
  • Diversifying and spreading your risk across multiple markets, rather than in just the one
  • Increasing sales to grow the business steadily and sustainably
  • Gaining new customers and clients for your business’s products and services
  • Potentially better growth and expansion prospects for your business.
  • Taking advantage of opposite seasons to promote goods in other markets during opportune times

If you are looking to pursue exporting, you may want to consider whether the benefits of it outweigh the risks. Those risks could include:

  • Getting paperwork and compliance obligations wrong (including export documentation, meeting importing regulations
  • Forgetting to protect your intellectual property
  • Unscrupulous or unsuitable new business partners
  • Lack of understanding when it comes to the local culture which may impact on your brand reputation
  • Awareness of the hidden costs that may occur when entering a new market
  • Long and complex payment terms
  • Not receiving payment
  • Political and global risks, such as politics and events,  which may affect your business when exporting.

As long as you are abiding by your local, national and international legislation, you can start exporting today if you so choose to do so.

Exporting as a  business will require you to understand and comply with the current rules and regulations that govern both your country and the countries to which you are exporting. This may include additional reporting obligations by which your business may already currently be abiding.

If you’re looking into this avenue, we highly encourage you to speak with us, so that we can advise you on planning out your business’s path and future.

Posted on 10 August '21 by , under business. No Comments.

The Pros & Cons Of A Partnership As A Business Structure

If you’re looking to go into business with someone, the chances are that you might be looking at using a business structure known as a partnership. A partnership is a type of business structure that is made up of two or more people who distribute income or losses between themselves and is a fairly popular form of structure amongst those looking to develop a business.

It offers ease and flexibility to run your business as individuals, eliminates the need to create a company structure and avoid reporting obligations. You’re also not going into creating a business by yourself, which can be an added bonus for some and reduces some of the initial financial burden and uncertainty of the setup.

Just as there are advantages to choosing to set up a partnership, one must also examine the disadvantages.

A partnership generally exists between two or more parties, so disagreements in management may occur, and decision-making may never be truly equal. It can be difficult to add or remove partners into and out of the partnership, and adding more partners can make the partnership more complex to manage.

Partnerships also generally do not receive access to many government grants (barring special exemptions).

A partnership business structure may be the structure for you to employ as they possess the following key elements:

  • Partnerships are relatively easy and inexpensive to set up
  • Have minimal reporting requirements
  • Require separate tax file numbers
  • Must apply for an ABN and use it for all business dealings
  • Share control and management of the business
  • Don’t pay tax on the income earned, as each partner pays tax on the share of the net partnership income that each receives
  • Do require a partnership tax return to be lodged with the Australian Taxation Office (ATO) each year
  • Require each partner to be responsible for their own superannuation arrangements.

There are three main types of partnerships that you may have come across in your own research. Each one has advantages and disadvantages that you may want to take into account when considering what would be the best suited to your situation.

A general partnership is where all partners are equally responsible for the management of the business. For any debts and obligations that may be incurred by the business, each partner has unlimited liability for them.

A limited partnership is made up of general partners whose liability is limited to the amount of money that they have contributed to the partnership. Those involved in this style of partnership are known as limited partners who are usually passive investors without a role to play in the day-to-day management and running of the business.

An incorporated limited partnership is where the partners involved in this type of partnership can have limited liability, but at least one general partner must have unlimited liability. If the business cannot meet its obligations, that general partner (or partners) become personally liable for the shortfall and debts.

Each state and territory has different legislation and regulations that must be abided by when setting up a partnership. Learn what is legally required from you prior to setting up your partnership, or discuss with us what you may be obligated to do.

Posted on 26 July '21 by , under business. No Comments.

Negotiators Are The Key To Success For A Business – Here’s How To Be A Good One

Businesses use negotiation in a number of different ways. You can negotiate in business for both informal day-to-day interactions and formal transactions. These could include negotiating for things such as negotiating conditions of sale, lease, service delivery, and other legal contracts.

Negotiation should not be your enemy. In business, negotiation can be the difference between a deal that creates the best outcome, and a deal that leaves both sides exhausted, resentful and dissatisfied with the outcome.

Good negotiations contribute significantly to business success, as they:

  • help you build better relationships
  • deliver lasting, quality solutions — rather than poor short-term solutions that do not satisfy the needs of either party
  • help you avoid future problems and conflicts.

To be a good negotiator, you will need to be flexible, creative, a good planner, honest, win-win oriented and a good communicator.

It’s important to ensure that your negotiation skills are up to par. You will want to be certain that you are using them most effectively. The key here is to focus on three critical areas:

  • People –  Listen actively, and speak to be understood when negotiating. You need to both understand the other’s perception of what is involved, and keep a rational, cool head.
  • Opinion – Work with the other party to brainstorm a variety of options that could work towards an agreement. Look for ways to dovetail differing interests by exploring options that are of low cost to you and high benefit to the other party and vice versa.
  • Interest – Behind each negotiation position lies a compatible as well as a conflicting interest, so make sure you understand why the other person has taken their position.

Posted on 20 July '21 by , under business. No Comments.

Choosing A Structure For Your Business: The Co-Operative Explained.

Sometimes you might want to set up a structure where you will share in the spoils with everyone that deals with that structure.  There is a specific type of structure for this and it is known as a Co-Operative

A co-operative business structure (or co-op) is a legally incorporated business entity that is designed to serve the interests of its members. Co-operatives may be profit-sharing enterprises or not-for-profit organisations.

A cooperative business serves members by providing goods and services that may be unavailable or too costly to access as individuals. There are two types of cooperatives that businesses can be set up as.

Distributing cooperatives are able to distribute any annual profits to members of the cooperative. They are required to share the capital that they make, and members of this type of cooperative must own the minimum number of shares specified in the co-op’s rules.

Non-distributing cooperatives cannot share their profits with members of the cooperative. All profits must further the cooperative’s purpose, and the cooperative may or may not issue shares to the members. Members may be charged a subscription fee if there is no share capital

Some popular cooperatives business structures include:

  • Consumer co-operatives, which buy and sell goods to members at competitive prices in a variety of sectors.
  • Producer co-operatives, which may process, brand, market and distribute members’ goods and services, or supply goods and services needed by their members, or operate businesses that provide employment to members.
  • Service co-operatives, which provide a variety of essential services to their members and communities.
  • Financial co-operatives, including co-operative banks, credit unions, building societies and friendly societies, which then provide investment, loan and insurance services to their members.

Posted on 5 July '21 by , under business. No Comments.

Planning Out Succession For Your Family-Run Business

Family-run businesses form an essential part of the economy. Tradition, success and history along with their unique dynamic can create a thriving business that many may wish to see continue.

However, as with any business, the conversation about succession and how to continue the business into the future needs to be had.

With only 1 in 4 family-operated businesses considering their approach to succession formally, succession in a family business is one of the greatest viability risks to the actual business and needs to be addressed accordingly.

Every family and family-run business is unique, and every transfer or succession of a family business will also be executed differently. If you are thinking about what your family business’s plan is for succession, you may want to consider keeping these critical factors in mind:

  • Where is your business going? What do you want for your family and business? What are your goals and your time frames for achieving those goals?
  • Is the vision you have for your business shared by your family? It is important to consider this for the succession of your business, as a mutually shared vision will ensure that the business continues on the projected path even after the business has been passed onto the next generation.
  • What obstacles and challenges will your family business face? You need to be able to understand the different perspectives and motivations of each individual that the succession impacts. Ongoing communication is vital to gaining this understanding, but an advisor can be employed to unbiasedly look at the situation independently and take the emotion out of a conversation.
  • Create a plan to plot out the path of the business’s future, and the challenges that the business may face along the way as well as what it is currently facing.
  • It’s important to remember that a family business does not have to be succeeded by a family (though it’s an outcome you may want). Always consider what the members of your family wish to do, and consider alternatives if none wish to take over the business.

A succession plan for a family business needs to be created to move forward and should detail all of the actions you intend to take (including the steps involved with both management and ownership succession).

It needs to be flexible, adaptable and ready to evolve, as businesses (as well as families), change over time. Your succession planning process should be transparent and understand and align with the goals you have set out for the business’s further development across the generations.

The most effective succession plans:

  • Preserve and generate family wealth
  • Minimise disharmony and disruption
  • Minimise the impact of tax
  • Encourage personal growth of family members
  • Fund the retirement and family lifestyle
  • Bring clarity to where the business and the family are heading.

Posted on 1 July '21 by , under business. No Comments.

Boosting The Business With A Free Resource: Your Customers

More and more Australians bought local products during the past year and rallied behind smaller businesses, which buoyed many shops that may have otherwise struggled to stay afloat. 

To create this kind of loyalty and support it’s crucial to develop and maintain a strong connection with your customers. 

If you are a small business, this is a vital aspect of business management that you will want to have occurred to strengthen customer relationships. 

Make The Customer Feel Special

Customers want to feel special – you can achieve this by approaching each customer as an individual rather than as a customer per se. Making the user interactions tailored to suit each customer’s specific needs/usage of your products will enhance the relevance and improve the authenticity of the interaction. Your customers will feel heard by your business and seen.

Let Your Customer Feel Heard

Always ensure that the customer feels heard – if the customer has a complaint, treat it the same way that you treat a good review, and respond accordingly. This builds trust with the customer and future customers that you will hear them out, and act the best you can to assist. 

Reward Customer Loyalty & Strengthen Connections

Go above and beyond for your customers – if you’re a small business, you can use the closer connection you may have with your customers to your advantage and offer additional loyalty discounts, recommendations, and phenomenal customer support. 

Follow Up With Your Customers

Follow up with customers (new and current) to ascertain reception of products and services, spearhead a proactive approach to appraisals and determine if a poor customer experience has been had. Following up allows customers to feel acknowledged while also granting you access to potential data that you may not have received otherwise. 

Connect Via Social Media 

Ensuring that you remain actively involved on your social media for your business with your customers should increase interaction. With many looking to online platforms to browse products, leave reviews and share favourite products via social media, it makes sense to turn your social media platform into a way to make your brand shine. Actively engaging with customers, responding to comments and questions, and directing your brand’s narrative are great ways to use social media to strengthen your connection.

Your Existing Customers Should Come First

Prioritise the customers you already have over the accrual of potential customers. If you’ve already got an established customer base, one of the best ways to maintain it is to keep them happy. You don’t want to risk losing them during the growth of your business due to less attention and more subpar customer service. The best way to maintain customer loyalty is to ensure that you can meet their needs, follow up with their requests (to the best of your ability) and satisfy their customer service needs. 

Posted on 23 June '21 by , under business. No Comments.

What Can Engaging A Business Adviser Do For You?

Feel like your business is stuck in a rut? Unable to solve a problem that you know is going to cost you in the long run?  It might not be financially tanking, and it’s highly likely that your revenue stream isn’t down, but if you’re not sure what direction to take, it could also mean that you need a fresh pair of eyes to take a look at particular issues that your business is facing to deal with them.

Business advisers can be engaged across many fields with specially focused advice or strategies to a specific area (such as accountants, business bankers or commercial lawyers) or be a business adviser who is dedicated to considering the overall goals and long-term ramifications of your business’s strategies.

A business adviser can be hired on either a one-time basis (to deal with one-off problems your business is set to face) or on an ongoing basis to provide continued support.

Suppose you’re only looking for a particular solution to a problem. In that case, one-time advice from a business adviser can be an easy and cost-effective solution to solve that particular problem. However, suppose you’re looking for long-term ongoing support that’s backed by years of experience and a perspective that’s looking to preempt these issues. In that case, ongoing advice may be more appropriate for your needs.

Engaging a business adviser can provide your business with fresh ideas based on an objective analysis of your business’s current performance and situation.

As an example, contracting an accountant in a business adviser role means that you are looking for strategic and financial advice like profitability improvement, tax planning and advice regarding business performance.

An adviser who can offer timely and relevant advice to your financial situation can make a huge difference to your business in the long run.

If you’re looking for assistance in plotting out the financial future of your business, you can come and speak with us. We’re well-equipped to assist you in mapping out your business’s plan for the future, so start a conversation with us today to see how we can help.

Posted on 14 June '21 by , under business. No Comments.