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What to consider before opening another business location

Expanding your business to open in multiple locations can offer more opportunities and profitability. However, managing one location can be challenging enough, so it is crucial to examine and prepare for the implications of opening up a second store. Here are some considerations that business owners need to keep in mind before deciding to open up a new branch.

How successful is your current business?

Your current business should be stable and successful before you open up multiple stores. If your business is struggling in key areas such as cash flow, sales, employee skill sets, and customer retention, then it’s a good idea to address these needs first, otherwise, your new locations are likely to face the same issues. Assess your current store’s shortcomings and consider whether they will also put your new locations at risk.

What are the characteristics of the new locations?

Choosing the right business location plays a key role in the success of your business. Before branching out, research potential locations and consider how areas could affect your business due to factors such as popularity, business competition, demographics, transport accessibility, rent prices, and attractiveness to employees. Assess whether the differences between your current and potential new locations will require you to make any changes to your business – perhaps you will have to adjust your marketing strategy, prices, or products/services depending on your new demographic.

Do you have the resources to expand?

Expanding your business will require extra financial commitments for rent, utility bills, more inventory and equipment, employees, insurance, and extra advertising. While your income may increase with your new location, remember that it may take months to make the returns required for expansion. It is therefore important that you are already financially secure before opening up a new store to avoid overextending your funds and putting your business at risk. If you don’t have the assets required, a business loan is an option provided that you can prove your financial ability to repay the loan.

Opening up a new location also means that you will have to manage your time between the two branches. This may require delegating business responsibilities, hiring managers, or promoting current employees to management positions. To keep your new business on track and identify early risks, you may also have to initially spend more time at your new location.

How your business can benefit from flexible workplace arrangements

Businesses working from home due to social distancing restrictions can take the opportunity 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 and adaptable hours. Here’s why flexible work arrangements with your employees may be beneficial for your business in the long term.

Increased productivity
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.

Reduced expenses
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.

Attract talent
Businesses that exclusively depend on employees being physically present may be missing out on ideal 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.

Improved wellbeing
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.

Employee retention
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.

Options to consider before declaring bankruptcy

Businesses struggling with debt may feel like declaring bankruptcy is their only option. Premature bankruptcy is an unfortunately common scenario but there are ways businesses can deal with unmanageable debt before declaring bankruptcy.

Temporary Debt Protection (TDP)

Businesses with debt they can’t pay or are being taken action against by unsecured creditors can apply for TDP. TDP provides a six-month protection period where unsecured creditors can’t take enforcement action to recover the money businesses owe them. Businesses are encouraged to use this time to seek advice from the Government’s free financial counsellors, negotiate payment plans with creditors and consider other formal insolvency options which may work better for them.

Declaration of intention (DOI)

A DOI is a short-term option similar to TDP and protects businesses for 21 days from unsecured creditors. During this time, creditors can’t take further action to recover their debts.

Debt agreement

A debt agreement details how businesses will settle their debt and is a flexible way to help businesses come into an arrangement without becoming bankrupt. A debt agreement means either paying a lump sum that may be less than the original amount owed, or repaying debt in instalments. Businesses can apply for a debt agreement if they:

• Are unable to pay debts when they are due.
• Have not been bankrupt, had a debt agreement or personal insolvency agreement in the last 10 years.
• Have unsecured debts and assets less than the set amount.
• Estimate their after-tax income for the next 12 months to be less than the set amount.

Debt agreements can go for up to three years.

Personal insolvency agreement (PIA)

A PIA lets businesses pay off their debt in a way that suits their financial situation. It is similar to a debt agreement but a business’ debt, income and assets do not have to be under a certain limit.

Keep in mind that while these methods are effective in helping businesses avoid bankruptcy, there are still consequences. While usually producing positive results, be sure to weigh up these options and consider whether the long-term effects of implementing them are worth avoiding bankruptcy.

How to improve your hiring process as a small business

Small businesses coming out of COVID-19 may be looking to expand and grow as quickly as possible to prepare for a changing economy. One of the ways you can effectively grow your business is by improving your hiring strategy and making sure it is efficient.

Analyse and catalogue your needs
To make sure your hiring process is fit for your business, spend some time analysing your needs. For example, consider how quickly you are looking to expand, how many employees you are looking to and capable of hiring, the space you have available for additional employees, and other similar conditions. By being specific with your requirements, you are making this easier for yourself in the long run and trimming away unnecessary expenses before you even know it.

Consider hiring part-timers and contractors
Expanding your conditions for potential employees will widen the pool of talent available to you. Instead of being set on particular working conditions such as full-time working hours or in-office working, consider being more flexible with your working arrangements. Hiring part-timers and contractors will be more advantageous to businesses looking to grow quickly and substantially, as part-timers and contractors come with lower costs and you do not have to worry about employee retention for the long-term.

Invest in training your new recruits
Make sure to spend time training your new hires by providing them with the education and resources they need to be successful in your business. While it may not seem worthwhile to invest in part-timers and contractors, building a training procedure will be beneficial in the long run for future employees as you will establish a strong workplace culture while also developing a process that is most suited to your preferences.

Focus on hiring one at a time
It is understandable for you to have many positions open at one time, but to make sure you make accurate judgements on the best potential employees, try to focus on one position at a time. This way, you will avoid being overwhelmed with business decisions involving both ordinary business proceedings and new recruits. Use the same approach when you are hiring a team for a particular project or a new location as well.

Conducting your business’ health-check

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.

Employees

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.

Suppliers

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.

Financing

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.

How to support your employees through COVID-19

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.

Increasing workplace flexibility

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.

Increase productivity

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.

Reduced expenses

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.

Attract talent

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.

Improved wellbeing

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.

Employee retention

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.

What should you do when contracts, sales or purchases are cancelled?

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.

What to consider when dismissing employees due to COVID-19

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.

New JobKeeper payments for employers

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.