How One Client Found Profit & Cashflow Improvement in the Current Economy

There is no question clients are finding business increasingly tough in the current economy at present and for very good reason – It Is!

The good news is it doesn’t have to be a constant struggle.  Let me explain.

Many businesses are very good at what they do, but are not so good at understanding their business fundamentals.  Whilst they understand the technical side of their business, they don’t understand the management side and this often leads to disaster when the business environment is as tough as it currently is.

As an example, we saw a client recently who had a very good business and was desperately out successfully chasing more sales to assist in growing his bottom line.  The trouble was, his Working Capital % was higher than his Gross Profit Margin %.  This meant that for every new dollar of business he obtained, he required more working capital to fund it than margin he was making on it, and he couldn’t understand why he wasn’t seeing results.

By proactively working on his pricing and volume strategies we were able turn this equation around so that more profitable sales where achieved, so it became a question of what he was selling and at what price, not what quantity.  This improved his cash flow tremendously.

It’s not enough in this environment for clients to be going to their accountant once a year to have a tax return or BAS done – they need strong financial advice and guidance.

When things are going well in business anyone can open a business and make money.  However its times like these when the economic tide runs out on the beach that you can see who’s been swimming with no swimmers.

Skinner Hamilton works extensively with our valued clients to ensure that they fully understand their business fundamentals and are kept accountable to achieve, no matter what the economy.

If you would like the gift of success and being different from the others, please feel free to contact me directly to arrange an obligation-free consultation.

Jason Skinner
Director/CEO

Phone 07 5594 3434
http://www.skinnerhamilton.com.au/

How am I treated for tax purposes as a VMO at a public hospital?

Visiting Medical Officers (VMO) are not employees of the public health system, however are classified as independent contractors for taxation purposes.

As an independent contractor you must have an Australian Business Number (ABN) in your own name and if your business turnover is over $75,000 a year, also be registered for the GST.

Most VMO’s already have their own specialty practice set up and trade as sole traders for taxation purposes. The ABN and GST registration set up for these practices may then also be used for this purpose. The VMO payments are then included in the Business Activity Statement with other business income.

Most of the State health authorities have a specific ‘timesheet’ format that must be completed by the VMO and is then submitted by the VMO to the health authority within 14 days of the end of month for payment. However, some of the State Health authorities require the VMO to provide a ‘Tax Invoice’ (if registered for GST) or an Invoice (if not registered for GST).

We recently found an error with a VMO’s payments made by a one of the State’s health authorities. For 6 months of a financial year our VMO client received payments with no GST included (so was paid Nett of GST), then for the remaining 6 months received the GST (so received his payments plus GST). On enquiry with the State health authority, it was found that their system had not adjusted itself for the VMO’s GST registration and as a result, the VMO was backpaid just over $5,000 in unpaid GST. Had this error not been found, the client could have been $5,000 out of pocket.

A Tale of Two Eateries

Imagine the scene – local restaurant district on a busy Sunday lunch time, people bustling on the footpaths, the diverse aromas distinctive as we pass each restaurant but gradually mingling into one delicious lunch time smell. Noisy chatter, clinking glasses, patrons busting out the seams of each eatery. And then we arrive at our restaurant of choice to fulfill our booking.

Not a single person seated. The Maître D and wait staff jump at the opportunity to seat us and attend to our every whim. Although we feel uncomfortable at the fact that we’re the only people in the restaurant and have to fight the urge to make a run for it, I find myself more and more delighted that we don’t – the prices are very reasonable, the food is delicious and the service is exemplary.

So what’s the problem? Why can you hear a pin drop in this particular bistro when all around it you’d have to wait for a seat? What sets it apart? I believe it’s that one thing that many businesses that are excellent in every other way often come up short on – marketing. Sure, you’ve got plump, succulent prawns, but how would I know that? Yes, your prices are wildly competitive, but I’m not going to find out if you don’t draw me in enough to even look at the menu.

Sometimes, even doing everything right just isn’t enough, especially for a start up business. If it’s a name that everyone knows and loves, chances are you might not have the same issues. And if you are a start up business who does everything right, you’re likely to win fans by people like me telling all of my friends how fantastic you are. But can you hold on long enough until the word gets out there without helping it along? Chances are, you can’t.

So what’s the solution then? Get serious about your marketing strategy. If you’re not sure where to start, take a look at what your competitors are doing. Get on board with technology and social media. Think about initiating a loyalty program. Introduce special offers, shake up your product offering, use traditional marketing methods if they work in your industry, get your website up and running finally… there is much that can be done.

In product related industries like retail and hospitality, social media can be a godsend. If referred, it gives you a warm introduction from existing friends and puts you in direct contact with the very people you are trying to sell to. Special offers are quick, easy and free to announce to people who already love what you do. Your audience has a chance to get to know you and importantly, for you to listen to what it is they want to buy, and then deliver on it. Yes, it takes time. Yes, it needs to be updated regularly and consistently. But the rewards can be great if used properly. You know you’re onto a good thing, you just need to let everyone else know.

A Letter to Your (younger) Self

A friend recently told me about a book called “Dear Me” which features a series of letters written by famous people, to their 16 year old selves. What a great concept!

Do you remember what 16 feels like? The uncertainty about where you’re going and how you’re going to get there? The excitement about what the future holds? The frustration brought on by the constraints of being 16? And of course, looking back now, you realize how uncomplicated things really were.

Think about it for a minute – what would a letter to YOUR 16 year old self look like? What lessons that you’ve learnt along the way would you deem important enough to share? Make a list, start a letter… you’ll possibly find that even now, you’re still not taking your own advice. Let go of toxic people, remember that nothing stays the same, do what you love, nurture yourself, wear sunscreen…

If you’re in business, apply the same exercise. Do you remember how you felt when you first started out in business? The excitement, the nervous anticipation, the dreams and goals you had? Life, and business, can be tough. It’s important to take a step back from time to time to regroup and remember why we’re doing what we’re doing, and not get lost in the daily grind. Remember the passion that you had at the start of your great idea?  Do what you need to, to get that back.

As for me, I think it’s high time I revisited “Ferris Bueller’s Day Off” – surely a few life lessons in there! Or just a nice trip down memory lane. Long live stonewashed jeans.


http://www.dearme.org

What does the new PPS reform mean to you?

What does the new Personal Property Securities (PPS) reform mean to you? It’s good news for businesses who lease or supply goods, because by registering your security interests in the goods you supply or lease, you help ensure that you get paid even if a debtor defaults or goes bankrupt.

The new PPS Register took effect on the 30th January 2012 and replaces various Commonwealth, State and Territory registers in one central, online register, available in real time 24 hours per day, 7 days per week.

Personal property is any form of property other than land or buildings and fixtures which form part of that land. It can include tangibles such cars, boats, machinery, crops; as well as intangibles such as shares, intellectual property and contract rights.

Buyers purchasing a car from an individual you will be able to conduct a search on the register to ensure you are receiving clear unencumbered title to the car. This will replace the current REVS system.

Under the new laws Retention of title terms currently used by businesses will no longer exist and new security interests will need to be registered on the PPS register to be effective protection.

For more information on the new PPS and how it will affect you, contact us on 07 5594 3434 or go to http://www.ppsr.gov.au/.

The Power of Planning

Ever feel like you, or your business, are drifting along on a current, just reacting to whatever is thrown at you? You feel like you’re continuously working hard at something, yet still you somehow seem to get nowhere day after day, year after year.

We all know the saying, “Fail to plan, plan to fail”, but how many of us actually take the time to take stock of our current situation, set some goals and formulate a plan to make them happen?

The beginning of the year is the perfect time to do that, and before we’re all bemoaning how we can’t believe it’s already February, take the time to set some changes in motion. Don’t let another year, in fact another day go by, drifting on that current. I guarantee, you’ll feel better for it!

1. Start off by thinking about the “big picture” – what do you want your life / business to look like? Personally, think about aspects such as Relationships, Family, Health, Finances, Career, Personal Development, Spiritual Wellbeing. In business the issues might be Cashflow, IT, Staff, Customer Service, Marketing.

2. Next, break your big picture ideas down into bite-sized pieces. For instance, your “Health” goals might be to lose weight and get fit. Now, if you’re overweight, this in itself could seem like an insurmountable task, and the more you think about it, the more overwhelmed you’re likely to get and ultimately end up in a packet of Tim-Tams. But break each step down into more manageable, achievable tasks, and the achievement you feel from ticking each task off the list will spur you on to the next one.

3. Dissected, your actions for “losing weight and getting fit” might include 1) walk for 30 minutes every day, 2) pack lunch instead of hitting the drive-through, 3) get out in nature at least one day on the week-end (rather than sleighing yet another zombie). Take it a step further by creating a daily to-do list – go grocery shopping, create an exercise playlist for my iPod, pump bicycle tyres. The forward momentum you create from small accomplishments will propel you towards your goal.

4. Be realistic. There are going to be times when life gets in the way and the no amount of planning could have foreseen your biggest client walking out on you, or your file server crashing. Accept that things may not always go according to plan, and be flexible enough to roll with the punches. A sense of humour is always handy.

5. And finally, track your progress. Set some time aside to go through your daily, weekly, monthly, annual goals and to-do lists to make sure you’re on track. If you want something badly enough, it’s worth the time investment it’ll take to make it happen. If it isn’t you may need to start from scratch and rethink your goals – perhaps that uni degree or toned stomach isn’t really as important to you as you first though it was? Was it really what you wanted, or just what you thought would make your Dad proud?

It’s your money. It’s your health. It’s your business. It’s your life. The difference between a dream and a goal is a plan. You know what you need to do – go to it!

Lessons from Qantas

The decisions and actions of Alan Joyce and the Qantas board will no doubt be studied in text books for many years to come...was grounding an entire airline at a moments notice as a form of reprimand the correct management decision that could be made? I'm not sure, and it's not for me to say as I am sure there are many, many facts and circumstances that Mr Joyce, the board and senior management of Qantas are dealing with daily that we will never be privy to. Maybe under the circumstances it was the only course of action.  The purpose of this article is not to validate or criticise the managements decisions but to look at what lessons that can be learnt from this monumental event.

Every person in business can learn from this. We all have people we need to satisfy in our business's on a day to day basis. Maybe we have employees, we definitly have customers or clients. The Qantas case involves both employees and customers.

The other big discussion point in this exercise is brand damage and whether or not the actions taken on the day have damaged the brand and image of Qantas.  If we go back to the very ingredients of any business whether you are a small sole trader or multi-national public company, the following points are critical to remember:

1) Customers/Clients are critical to your business. Without them you have no business or revenue. They need to be serviced and looked after so they become an advocate of your brand and keep coming back and buying from you.  People need goods and services everyday but where are they going to get them?

2) If we have customers/clients that need servicing in a particular way as discussed at point 1, we need people and systems to do this efficently . It is vital to the ongoing success of the business that the people we have doing this are equally motivated and engaged in providing the level of service and skills that are required. Is it better to have 1,000 customers serviced exceptionally well and thus positive advocates of your product or 1,000,000 customers receiving mediocre service by disgruntled staff, thus negative advocates? Yes, revenue might be higher initially but obviously not for long.

3) This is where the brand comes in - through constant delivery of exceptional service and supply of product  the business brand grows customers/clients associate and assimilate with the brand in their lives. The brand can have different meanings and feelings to different people but the more consistantly you hit that chord the stronger the brand grows. This is the same for the employees of the company. The strength of the brand grows as their emotional and motivational perception of the brand increases. Attracting people to work in your business becomes easier with the strengthening of your brand.

If we apply the basic ingredients above to the Qantas scenario you will see that there are some very delicate relationships that need to be mended by the management and board of Qantas.

For Example
If we simply legislate through Fair Work that there can be no industrial action and all employees need to just get back to work, will point 2 above be satisfied? Will employees feel engaged and motivated to deliver exceptional customer service and building a brand? Or will the extra touches of customer service go undone and over looked?

Equally if the employees hold the company to ransom through strike action, does that help the company to remain viable and assist in better working conditions?

Does awarding the CEO a $2 million dollar payrise at a time of such cultural turbulence help engage your employees in the debate? Does it make it hard for Mr Joyce to go to the bargaining table now and say we can't afford to meet your requests?

If we just throw millions of dollars in free flights to our customers as an apology will this help everybody to move on if we still have disgruntled employees? Or will it make matters worse as we encourage more people to take a trip on our disgruntled air service?

At the end of the day as I said, there are no doubt many facets in this debate that have not surfaced or we are not aware of, however from an outsiders perspective and looking for the lessons to be learnt on what we do know...

It doesn't matter how right you think you are, how unreasonable you think someone is being or how wrong the opposing opinion is. If they are critical to the success of your business, which they clearly are, you have to be prepared to give and take to find common ground.

If you are the CEO of an organisation and you are arguing with your employees that our productivity needs to improve and we need to put restraints on wage growth you will have an impossible time selling this argument and thus finding common ground and maintaining respect by awarding yourself a large pay rise and blowing millions of dollars fixing a problem you didn't need to have in the first place.

As Dale Carnegie quoted in his book How to Win Friends and Influence People published in 1937, "If you want to gather honey don't kick over the honey pot." 

People have pride. Alan Joyce is a proud man, the employees of Qantas are proud people, the unions that guide them are also proud.  To say any of them are wrong for what they believe to be right will not repair Qantas. It is only respected leadership that can pioneer common ground and a strong win/win for all parties that will ensure a business's longevity and profitability.

There is a lesson in this for us all in business and in life...

"Do you want to be happy or do you want to be right?"