Tag Archives: startup

Business Blog No 38 – ATO Digital Showcase

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Last week I attended the ATO Small Business Digital Showcase at the new ATO Offices in Dandenong.

It is clear that the ATO are working hard to engage with small business and help with your tax and superannuation obligations and improve your overall experience with the ATO.

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The showcase was split into 6 individual showcase rooms with each group of around 15people being taken around the six separate displays areas one group at a time. Key points from the morning showcase are as follows: –

  • The ATO’s Small Business Newsroom will deliver all the latest tax and super news straight to your email inbox. So, I suggest you sign up for this.
  • ‘Alex’ the ATO’s new online Virtual Assistant, will help answer basic tax and superannuation questions.
  • The free ATO app gives quick access from your mobile devices to key dates and frequently asked questions. A voice authentication option is available with a small business record keeping function under development.
  • Your Sole Trader myGov account can be used to manage and view tax instalments, make payments and lodge statements.
  • Sole Traders can now use voice authentication and cloud authentication to access online services.
  • There is an online tool available to help you determine if your workers are classified as an ‘employee’ or ‘contractor’ (and hence clarify your obligations to them).
  • All businesses with employees are now meant to be on SuperStream with the free online super payment clearing service available to pay contributions in one transaction available.
  • A new simpler BAS product has been launched with a Single Touch Payroll product under development.
  • There is an online checklist for ‘taking on a new employee’ at business.gov.au

Some key ATO phone numbers for your reference follow: –

Business: 13 28 66

Super: 13 10 20

24-hour self-help service: 13 72 26

SUMMARY

The ATO are actively trying to reduce red tape for small business. The showcase was a great example of the ATO’s pro-activeness in this area. Jump onto their website at www.ato.gov.au/SBsupport for more information.

Ross – Billson Advisory

Business Blog No 31 – Agri StartUp

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This week, I thought I would follow on from the theme of last week’s blog on food and agriculture, and introduce you to the area of Agricultural Technology StartUp, or Ag-Tech. Things such as the commercial application of drone technology, robotics and sensors to the agricultural sector are examples of such ag-tech.

Given the world’s growing population and finite resource availability, agriculture needs to become more productive and innovative to feed the growing population. Agriculture has always been a key industry for Australia and with the opportunities presented by our location and region, and China in particular, our ageing agricultural producer population is seeking to bring scientists and IT professionals to the industry. Along the way inspiring a new generation of agricultural personnel.

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A new entity has recently been created by a joint venture between the National Farmers Federation and a private equity partner. This new entity creates an Ag-Tech support centre to kick-start start-ups for the sector focussed on developing new agricultural technology.

SproutX

The entity, SproutX, launched recently and is based in Melbourne. It is the first entity of its type in Australia and has received State Government support. It is now accepting applications for its Pre-Accelerator program and will soon be accepting applications for its Accelerator program.

The Pre-Accelerator program is currently open and offers a free 6-week course to prepare start-ups for the Accelerator program itself, by fleshing out ideas, providing mentoring, online lectures and some cash to go towards bringing ag-tech ideas to life.

The Accelerator program itself is backed by a $10million fund. It gives ag-tech start-ups access to all the best practical and mentoring advice, cash grants, distribution opportunities, media, PR and office space in an ag-tech hub with direct access to experts and connections to the agriculture industry. The goal is commercialisation of ag-tech ideas. Applications open in November for this program.

An aside

Ironically, I heard 2016 Casey Cardinia Business of the Year, Australian Fresh Leaf Herbs, co-founder Mr. Jan Vydra speak at a business breakfast last week about the need for evolution of the sector and the challenges of making farming attractive to young entrepreneurs.

The SproutX initiative presents a great opportunity for fledgling agricultural startups to provide a sound foundation for business success, as well as the success of the agricultural sector itself.

Next Week

Due to recent requests, the blog next week will focus on management reporting and analysis covering the end of the first quarter of this current financial year. We will start with the Profit and Loss Report next week.

Ross – Billson Advisory

Business Blog No 30 – Trade Show

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I recently attended the Fine Foods Trade Expo at the Melbourne Convention and Exhibition Centre on a cold wet Melbourne Day. You might be wondering what an accountant is doing at such a trade show event?

I find attending such an event gives me a perspective and update on the state of such a key industry. It is a source of ideas and inspiration for me and my clients and, naturally, a place to network with prospective customers.

Officially titled the ‘Fine Food Australia: The 32nd Australian International Food & Drink Exhibition’, the annual four-day trade only event alternates yearly between Melbourne and Sydney.

Over 1,000 exhibitors and 25,000 visitors salivated at the array of available samples alongside over 3,500 interstate buyers and over 700 international buyers from around 50 countries. The 30k SqM of exhibition space was split into 10 smaller zones:- Catering Equipment, Retail Equipment, Hospitality Equipment, Packaging, Baking Food, Fine Food, Meat & Seafood, Free From/ Natural Products, Dairy World, Drinks World and Flavours of the World (International Pavilions).

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Regular demonstrations and educational presentations were in evidence along with the usual networking opportunities. Previous Fine Food Show statistics from the 2014 Melbourne Exhibition identified $90k+ in sales leads were generated from an average 100+ leads for each exhibitor. At $3.5k for a 3metre by 3metre booth, the return on investment is sound. Even if you are not directly in the Food business, it might present an opportunity to think outside the box and figure out how you can get involved in this growing agribusiness sector. Packaging companies, ingredient producers, transport entities, shop-fitters etc. should consider attending.

My Take Out

My take-out and thought provoker to you is ‘Have you considered taking out a stand or booth at trade events or expo’s?’ It might be worth considering as it could present an opportunity to find new customers or expand your business networks.

Do you go to any trade shows or expo’s as a visitor just to get some differing incites, trends and ideas you might apply to your own business to provide a sound foundation for business success?

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Ross – Billson Advisory

Business Blog No 28 – Franchising

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I recently went to the Franchising Expo in Melbourne at the Exhibition Centre to listen to the latest developments in the industry. The sector is governed by the ACCC’s Franchising Code of Conduct.

As a bit of background, there are over 1,000 franchise networks in Australia employing almost half a million people so franchises are a significant part of the economy. Franchises are everywhere, ranging from the iconic McDonalds, the stable of “Jims” franchises through to more recent franchise models such as HR services for business.

Advantages and Disadvantages

Franchising is a 2-sided relationship with the franchisor entrusting their brand and reputation to you as the franchisee.   Franchise fees range between $5k and $1miilion plus ongoing monthly fees.

The advantage of taking out a franchise is that you have access to a ready-made business brand, support, infrastructure, marketing, mentoring and systems so you are ‘not on your own’.

Whilst I acknowledge franchising is not for everyone, it certainly does increase your chance of business success with far fewer businesses failing than traditional owner-operator businesses in percentage terms.

I would suggest that before you consider whether Franchising is an option for you, reflect on your motivations and how you prefer operate as a business person.

If you think you are ‘buying’ a job or creating an ‘annuity’, I would suggest you think carefully as buying a franchise is a big commitment and investment and it has all the risks of business, so is not a guaranteed recipe for success nor is it a cruisy way to make a living.

Do you like structure and procedures or do you like to do your own thing? If you don’t like following set procedures and would rather be a genuine entrepreneur, then perhaps franchising is not for you.

blog-27-franchiseFigure 1 Hang on, who is this speaking…

Franchising Due Diligence

One of the key obligations under the Franchising Code is the obligation of the franchisor to give prospective franchisees a disclosure document along with a copy of the franchise agreement. Please ensure you get a good lawyer to review these documents as they can be quite complex.

Before you commit to a franchise agreement, do your due diligence and ensure you talk to existing franchisees as a key part of the evaluation process. Do your numbers carefully, and as I keep saying in these blogs, make sure the 3 key strategic objectives of profit, cashflow and return on investment targets reflect the risk you are taking. Do a pre-purchase review with a good accountant and complete your business plan.

Don’t rush any decision to join a franchise. Ensure you treat this decision as you would any business investment decision and have a sound strategy in place as a foundation for your franchise business success!

Ross – Billson Advisory

Business Blog No 27 – StartUp Success – Uber?

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The Uber Start-Up Story

I am sure all of us have heard of Uber, the ride-sharing start-up service disrupting the traditional taxi services industry.

What you may not have heard is that globally Uber reportedly lost US$1.2billion (that is BILLION, not million) in the first half of 2016 and the losses are continuing to grow! Does that mean the “sharing economy bubble is bursting” and that the US$69million valuation of Uber is baseless?

When will Uber make a profit and what is in their strategic plan to get to profit? Are they ‘investing’ in the future rather than ‘making losses’? What will it take to make money in the longer term? In my view they will have to increase prices and fees to become a sustainable business at some point. The likelihood of having fewer taxis on the road driven out by competition of a lower cost disrupting business which may then be followed by hikes in prices by Uber is a scenario I see happening, particularly if the taxi industry cannot get its act into gear.

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If a business is not profitable in the medium to longer term, it impacts far more people than just shareholders and investors. There are employees, customers, suppliers, banks and the overall economic impacts that can suffer if a business fails.

What you may not have heard is that Google launched a pilot ride-sharing program in May in California to directly compete with Uber. It is clear that the disruptor Uber is now being disrupted by Google so nothing stays the same for long! Having said that, it is clear that Uber have created a new way of getting from point A to point B and that as such, ride sharing is here to stay. The question is in what form will that take in the future?

Questions to consider?

This leads me to the question; what is your business model? Is it sustainable? Is a profit objective at the core of your strategy? If you are a start-up are you growing too quickly and not managing that growth? If your business model is to disrupt an existing industry via the use of technology or other means, can you and your financiers survive the initial pain of losing money to build your market position?

What’s the take away from all this? Ensure you have a sound strategy in place as a foundation for your business success!

Ross – Virtual/Part-Time CFO

Business Blog No 26 – Succession and Exit Strategy

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When you start planning to start your own business, you should be also planning how you will exit that business. Starting your own business is perhaps your biggest financial investment, along with your home, and you will want to ensure that the return on this investment is maximised. Will you sell your business through a business broker when the time is right? Will you plan to hand the business onto your children? Will you have a successor ready to take over when you are ready to exit? Or will you simply close the doors and leave it all behind? The ironic thing is that recent surveys indicate that less than half of surveyed SME owners have a succession or exit plan in place.

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Your exit strategy is a key issue because you want to maximise the value of your business and get the timing right and make sure you don’t have to delay your retirement. An interesting statistic is that the average age of a SME owner is 56! Our ageing population means more and more businesses will come up for sale meaning by pure supply-demand economics, business sale prices will fall. This is particularly relevant as more baby boomers head towards retirement and are looking to exit their businesses.

Before exiting your business, you need to document processes and formalise customer, supplier and employee relationships and ensure that the business is not dependent on you for it to succeed. The business’ profits need to be sustainable in a potential purchasers eyes. Nobody will be interested in buying or running a business which collapses following your exit if you are in reality the business.

It is generally accepted that it takes 3 to 5 years to have a business ‘sale ready’ so don’t delay developing your exit strategy. You want to be ready in case an unexpected offer to buy your business materialises.

Due Diligence

Any potential purchaser of your business will undertake a due diligence process which will cover all aspects of your business to ensure it is legitimate and sustainable and that the numbers presented stand scrutiny. From that due diligence process, a potential buyer will put a value on the business most likely a profit multiple ratio depending on the industry type, scale of business, concentration of customers and key suppliers and the risk profile of the business. Profit multiples used to value a business are falling in recent times illustrating that it is a buyers market when it comes to business sales.

Another option is to put a board in place prior to putting your business up for sale. A board can add value to your business and also make it more saleable and can present an opportunity for you to stay involved as a board member if the new owner so desires (and you too)!

So ensure you have your succession and exit strategy in place as a foundation for business success.

Ross – Virtual/Part-Time CFO

Business Blog No 25 – Casuals and Redundancy

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Casual hours to count towards redundancy payouts

Last week, the full bench of the Fair Work Commission resolved that periods of regular casual employment will now be counted towards redundancy entitlement calculations. The advantage to employers in ‘casualising’ their workforce is slowly being eroded away, and this latest decision is another step in that direction.

The decision means that workers who start as casuals before their positions become permanent, either full-time or part-time, will have their full length of service recognised in the calculation of their final redundancy pay out.

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An appeal by the Australian Manufacturing Workers’ Union was upheld reversing a decision made earlier in the year which allowed a ship building company to only count the period of permanent employment in the calculation of redundancy payments.

To be included in the calculation of years of continuous service, the period of ‘regular and systemic casual employment’ must be part of the period of employment from which an employee is being made redundant. There can be no break between the period of regular and systemic casual employment and the transition to permanent employment.

The decision does not apply to employees who were casuals when their employment was terminated however.

If you are in this situation, you should talk to your Industrial Relations advisor to ensure you are calculating redundancy payouts correctly.

Ross – Virtual/Part-Time CFO

Business Blog No 24 – Startup Tax incentive

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Did you know that on July 1st, 2016 some new tax incentives came into force for start-up investors?

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These are new tax incentives are a key part of the federal government’s $1billion innovation agenda to encourage innovation and investment in early stage entrepreneurship in the start-up sector. This is designed to encourage early stage investment and funding in such entities which have limited access to traditional sources of funds at the development phase of their start-up journey. It is estimated that over 4000 early-stage companies are missing out on equity finance each year. To address this, the government is targeting $1 billion to be raised in the early years of the new tax incentives.

The key points of the new tax incentives are that they offer up-front tax offsets of 20% to a maximum $200k, plus 10year capital gains tax exemptions for eligible investors in eligible entities.

A startup entity that qualifies for such treatment for investors is defined as an Early Stage Innovation Company (ESIC). This basically means that the entity has been incorporated less than 3years ago, has income of less than $200k and costs of less than $1million for the financial year ending June 30, 2016, and is developing new or significantly improved innovations with the purpose of commercialisation.

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If you think you might be eligible for such incentives as a startup investor or want to use the legislation to encourage investment in your startup, speak to your tax accountant.

Ross – Virtual/Part-Time CFO