Avoid changing horses in midstream

Avoid changing horses in midstream

It’s rare that Accountants are spoken of as examples of great marketing. So please indulge us as we share with you a wonderful campaign run by the Institute of Chartered Accountants in England and Wales back in 1995.

So proud were the Institute of their campaign that they bought serious billboard space in London. On the billboard was written in huge writing:

“It’s easier to sleep with a Chartered Accountant.”

Talk about impact. The number of letters this campaign generated to the national press in England was amazing. It probably even turned up in comedians’ lines, news bulletins and so on.

And then, six months later they changed it.

What to? Well, we can’t tell you. Because we haven’t noticed any of their campaigns since — nor have there been reports of any letters appearing in the Times!

So, the question to ask is obvious. Why change it? Or more particularly, why change something that was working brilliantly?

They changed (like most other people) because they figured it was “time to change.”

In doing that, they fell into the trap into which many businesses fall — change for change’s sake. It’s wrong!

Many companies indiscriminately change campaigns in midstream. In the process of that change, they:

1. Don’t allow the cumulative effect of a winning concept to work for them.
2. Don’t allow the dynamics of testing to work for them.
3. Make a patchwork quilt of their company’s image and position.

The truth is that you get tired of your own campaign long before it’s done its work out there in the marketplace.

Don’t arbitrarily abandon it. Only replace an approach when you’ve verified and validated a more successful and profitable successor. Again, that requires measurement, management and testing. And, as you’d understand, as Accountants we’re well-placed to help you with implementing those measurement systems. Please reach out if you’d like to discuss how we might do that.

Combat the increase in audit activity

The government has proposed a 55% increase in audit funding over the next four years. A target of $3.7 billion is anticipated for the gross revenue that will be raised as a result. So what does this mean for you? We suspect an increase in audit activity in relation to individual, business and SMSF lodged returns. 

Our recommendations to combat the increase in audit activity

1. Be in the know
Gain a better understanding of your financial position and tax particulars by talking with your accountant. Your accountant can also conduct a risk assessment, and in doing so you could both discover a better way to structure your affairs. 

2. Seek expert advice
In the event that you are contacted by the ATO or other government revenue agencies, the best action for you to take is to advise them that you would firstly like to talk to your accountant. As your accountant, we have the experience in dealing with these matters and will be more likely to reduce the time and cost required to attend to the audit activity in question.

3. Consider Audit Shield
We proudly offer our Audit Shield service as a mechanism to protect you against unplanned professional fees that can arise as a result of audit activity. With the government’s focus on increasing gross revenue, taxpayers will be scrutinised – increasing your chances of an audit, enquiry, investigation or review. Even if no adjustments are required to your lodged returns, significant costs can still be incurred in order to satisfy the requests of the ATO or other government revenue agencies responsible for the instigation.

If you would like to hear our experiences with the increase in audit activity, or if you would like to learn more about how you can protect yourself with our Audit Shield service, please contact our team. 

The Fatal Assumption

The Fatal Assumption

Let me start with a somewhat Sad story;

The story of the Employee who is great at getting the work done – let’s call them “Technically good” – this employee constantly gets frustrated and fed-up with the Boss and one day has an idea that they can do it better than the boss so they go out and set up their own business.

They now become a “business owner", with great Technical know how but no real idea about all the other pieces in running a successful business.  The Sad part of the story is that for many of these business owners this becomes their fatal assumption.

The Fatal Assumption that is made is 

if you understand the technical work of a business then you also understand the business that does the technical work.

And more often than not this is not the case.

Now for the shocking news

The Australian Bureau of Statistics  found that if you open a small business your chances of still being in business after 3 years is only 50%. 

This means that of almost 300,000 businesses that opened there doors in 2011 in Australia 150,000 or less were still in business in 2014

THAT’S HALF GONE IN 3 YEARS

This Fatal Assumption isn't even a recent development.

You may have heard of a man named Michael Gerber – In 1995 Gerber published a best-selling business book called The E-Myth: Why Most Businesses Don’t Work and What to Do About It.

In researching for his book,  Gerber found that too many businesses are started by technicians (the ones that are great at getting the work done) who haven’t learned the basic skills or knowledge, or still assume that business acumen is the minor part of owing and running a business.

Again The Fatal Assumption rears it’s ugly head

What’s interesting about Michael Gerber’s findings, and the studies since, is that we have seen no evidence that the percentage of new business successes have improved over the last 20 odd years.

Now that’s surprising given where we are with technology and the masses of information that is available to us with internet and the like. 

To me this just means we keep repeating the same mistakes.

In a related study, the Australian Securities and Investments Commission found that new Australian businesses fail for the following reasons:

•     44 per cent failed because of a lack of strategic management

•     40 per cent failed because they were unable to manage their cash and

•     33 per cent failed because they just could not make any profits.

Depressingly, these numbers aren't surprising. After all only about 4% of small businesses started in Australia even bother to prepare a business plan.

 Again and again, The Fatal Assumption is made.

CLAIM BACK 546 HOURS A YEAR

As a fellow professional, we know that every day we seem to be doing more and more. Let me ask you this... Do you find yourself checking email while writing reports? Fielding phone calls, dealing with unexpected walk ins and solving co-workers problems and generally reacting to the day to day? Every day something else gets added to the load, and the results of all this juggling just keeps compounding your frustration and costing you more time and money. According to a recent study we read the mistaken belief is that we are part of the 2% of people who can successfully multi-task, rather than the 98% who can't. This is costing up to 2.1 HOURS A DAY or 546 HOURS A YEAR. To a business owner, that's potentially costing you over $10,000 per employeeeach year lost.

Source

Two suggestions on what to do to reclaim your time. Leave your email off until you’ve finished the first big task of the day.   Allocate the time to the jobs you know need to be done, and be honest with yourself. If a job is going to take 45 minutes, don’t block out half an hour and do it hurriedly, or two hours and waste the time.

Why Not Give it a Try Implement just one of the above. You may find that you not only get back your lost time but you can free up even more time that you never thought you had. We're here to help you and your business. So if you would like to talk more, reply to this email, or give us a call on (07) 3252 4655.

The One Mistake Nearly All Failing SME's make - 'Failing to Plan is Planning to Fail'

The One Mistake Nearly All Failing SME's make -
'Failing to Plan is Planning to Fail'

Through our Accountancy practice, we see and speak to many business owners from all walks of life in all types of businesses. One thing we all have in common as business owners is that we haven’t gone into business to fail. Quite the opposite! We have that dream, that vision of being successful whatever that measure of success may be. Sadly though, many businesses and I would say at least 80% of the ones we see, are struggling to get there.

While there are many different reasons why this could happen, there's one that we've seen in nearly all instances. These people, well meaning, and intelligent as they are, failed to make an appropriate Buisness Budget and Cashflow Plan. We've covered this in some detail in a previous video.

Cashflow and Budget planning is the sot of topic that bored these business owners to tears. Their 'plan' insomuch as it exists, is to simply 'wing it'. For a while this might seem to work, but eventually their luck runs out, they hid a hard patch, and 2/3 of these well meaning, intelligent business people, fold under the pressure.

It's like hopping in your car and setting off, without more than the faintest clue as to where you're going, and how you're going to get there. The further you get from the areas you're familiar with, the more you rely on guesswork, until you're pulled over at the side of the road, completely out of fuel, out of reception and out of your comfort zone, wondering how it got so bad.

Just like planning ahead would save you in that scenario, so too does making a realistic Business Budget and Cashflow Plan save your budding business from a fiery wreck.

Let’s start with a Business Budget 

Budgeting provides you the business owner with greater control over the direction of your business because it allows you to plan your future strategies and set targets.

For example  

• What sales or income would I like to make in the next 6 or 12 months?  
• What will be my anticipated expenses be ?  
• How many staff will I need to achieve this? 
• What will I have to spend in advertising?
• Do I need to buy another work vehicle?
• What materials, credentials or information will I need, etcetera, etcetera.

If you have something like this written down, and I mean written down, not just an abstract thought in your head, then well done, you're ahead of the game.

More likely though, you don't. There's not enough time in the day, it doesn't matter, it's not like it will be helpful, yada yada. We've heard all of the excuses and made more than a few of them ourselves, and to date, we've all been proven wrong.

Next up the Cashflow Plan

Here's where you take the admittedly abstract Business Budget and convert it to the life-blood of your business, cash.

It's more than a metaphor. Every situation that causes hurt or worse in you, blood not getting to where it is needed, or being spilled and wasted, has a direct business correlate. Departments being starved of cash wither, and if you lose too much cash the business dies.

But unlike in your body, this isn't a system that works perfectly without you, you're going to have to help.

For this reason it is essential that you as the business owner are able to forecast (predict) what is going to happen to the cash flowing into and out of your business to make sure the business has enough of it to survive.

Will you be able to keep the doors of the business open ??? 

By creating a Cash Flow Plan, you can anticipate when a cash shortage might happen, how bad the shortage could be and its overall impact on the business. 

The Cash Flow Plan helps you to determine if and when you will be able to meet your expense obligations, when loan repayments are due to be made, when you will need more funding for your business expansion etc .. etc … 

When should you make these plans?

Why not now?

We both know that 'soon' and 'eventually' never happen, so just block out the time, turn off the phone and close the email browser and write something out. I guarantee you will be better off for it, every issue that you detail and write down is another one that won't take you by surprise.

If you have any questions, leave a message on our Facebook Page, or send me an email at advisor@prudentgroup.com.au

About Us

Prudent Partners in its current form was established in the year 2000.
The purpose of its establishment was to bring together talented professionals, each with years of expertise gained from the experience of working in a number of other Accountancy firms and private enterprise.
 
By dealing with a diverse spread of clients from a complete cross section of our community we have developed the necessary mix of skill demanded by our ever changing business environment.

We are a team of enthusiastic, client centric professional Accountants and Advisors in Taxation, Business Structuring, Profit Growth and Business Strategies.

We partner with our clients and are committed to enhancing their financial success. As our clients grow and achieve their goals - so do we.

We stand by our motto of being – Responsive, Approachable and Proactive – three attributes which are fundamental to our business core values and expected from our clients.

Our business operates around 6 core values:

1. Ethical - Doing the right things.
2. Courage - Having the strength to be bold and stepping up.
3. Caring - Building genuine relationships.
4. Open-minded - Open to new ideas and change.
5. Fun - Do what you love and love what you do.
6. Practice what we preach - Doing what we tell others to do.

Our aim is to have a positive influence on the people and businesses we come in contact with.

Joe Bucolo

Joe Bucolo

Joe Bucolo, Partner at Prudent Partners - Accountants, loves his neighbourhood for its proximity to the city, diverse culture and its abundance of restaurants, bars and cafes.

Outside of work, Joe has a keen interest in current affairs and enjoys reading biographies, watching motorsport, playing tennis and spending quality time with family and friends.

Joe commenced his Accountancy career in 1993 and then moved into Public Practice in 1995, becoming self employed in 2000, helping establish Prudent Partners.

Joe holds a Bachelor of Business (Accountancy), a Masters in Commerce and a Diploma of Financial Services (Financial Planning). He is also a registered Tax Agent, a Fellow of the Institute of Public Accountants and Member of CPA Australia.

At Prudent Partners, Joe’s goal is to provide families and small businesses with quality financial advice. He understands the importance of offering his clients a complete financial solution and takes a practical and hands on approach to servicing his clients.

“I am committed to delivering on my promises - I strive to ‘walk the talk.’ My aim is to have a positive influence on the people I come in contact with - I like to be around positive people who consider the ‘glass to be half full’ and I believe in partnering with my clients in a mutually beneficial way.”