Lending options for your business

Whether your business is experiencing sudden growth or financially struggling, it is crucial to manage your cash flow effectively. Cash flow gaps or being unable to access extra funds can put a real strain on a business. However, there are lending options available to businesses that can help with different cash flow needs.

Before considering lending options, businesses should draft a cash-flow projection to predict their sales and expenses such as cash in, monthly loan repayments, stock levels, set-up costs, and fixed and variable expenses. Cash flow forecasts can help to prepare for best and worst-case scenarios while allocating what times of the year extra cash are needed.

To best meet your cash flow requirements, lending might be necessary. The lending option chosen should meet your business’s needs. For example, a business credit card may be appropriate for immediate purchases and paying off smaller bills. Alternatively, a business overdraft is more suitable for larger, more frequent seasonal gaps.

Inventory management is key to good cash flow. Stock levels should co-ordinate with high and low sale seasons. For example, if you run a seasonal business where peak sales are during the holiday season, you must account for higher levels of cash to be available.

A business line of credit may be a viable option for long-term or larger purchases. A business line of credit provides lower interest rates with the flexibility of an overdraft allowing long-term access.

For business owners looking towards long-term investments to re-invest in the business, a business loan may be more appropriate. If you are seeking to purchase new equipment or business vehicles, asset finance may be suitable. Asset financing uses assets such as accounts receivable, as security interest to borrow funds.

Lending is a great way to stay on top of your finances provided that the lending solution is correctly matched to your business’s needs.

Who is your target market?

Having a clear definition of the exact type of customer your business is trying to reach can make the most of limited marketing dollars and have the biggest impact on your bottom line.

Narrowing the type of customers you’d most like to reach (and the kind that are most likely to be willing, eager and able to buy from you) is a key building block to success. Defining your target market gives focus to all your marketing and sales activities, helps you craft your advertising messages and images, choose where and when to advertise and influences which distribution channels you use.

When defining your target market, keep the image of an actual target in mind. The outermost ring of the target is the universe of potential customers — everyone who might ever possibly be interested in your product or service. As you get closer to the centre of the target, focus on customers who are more likely to actually make a purchase. The group at the centre should be those you would most like to have as customers, who you can reach and sell to affordably, and who are most likely to buy.

Some of the factors to help you close in on the bull’s-eye:

• The features and benefits of your product or service

• The competition

• Market trends

• Most motivated buyers

• Ease of reaching and selling to your prospects

Tips to speed up tax refunds

Many problems can occur when processing activity statements and tax returns which can lead to a delay in the ATO issuing refunds.

However, these problems are often caused by small issues and can be easily avoided. Here is a list of tips to help minimise some of the issues that can prevent a speedy tax refund:

• Keep personal details, such as postal address, bank details and authorised contacts updated

• Lodge all outstanding activity statements as the ATO are unable to process the refund until they know the extent of the credit

• Keep good records and hold onto receipts

• Keep the statement clean. Do not write notes outside the space provided, do not use symbols and show whole dollar amounts only

• Do not double up by lodging both online and in person

• Refer to a specialist if the process is complex

Claiming tax deductions for your website

Designing, creating and maintaining a website for your business can be complicated. Many of today’s small businesses employ the services of a web developer and designer to take care of getting a website up and running since they don’t have time or expertise to be able to do it themselves.

Often, this can be an expensive venture. But luckily, small businesses can claim deductions for website development costs.

Businesses that incur the cost of developing a website before they begin running their business can claim 20 per cent of the cost each year over five years upon starting up.

Businesses that are already up and running with an aggregated turnover of less than $2 million can use the simplified depreciation rules;

• If the cost of the website development is less than the instant asset write-off threshold of $20,000, owners can claim a deduction for the full expense amount in the income year they acquire the expense.

• If the website costs the same or more than the instant asset write-off threshold, owners can allocate it to a general small business pool.

Business owners cannot use the simplified depreciation rules if they choose to allocate expenditure on the software to a software development pool.

Business owners are also able to claim an outright deduction for specific running and maintenance costs, such as server hosting fees, domain name and registration fees in the same income year the expenses are incurred.

Offering great customer service through social media

Offering customer service through social media can be difficult. People are used to speaking to a real person, and since social media is all online, businesses cannot add a personal touch to what the customer wants to be addressed.

It is also challenging since businesses cannot see a customer’s face or their reaction. The tone of a business’s message may unintentionally come across as being rude.

But it is possible to turn customer service into a positive experience for both businesses and their customers. Offering great online customer service isn’t costly; it is purely a great sales opportunity.

So if you have customers that follow your business online, here are some ways you can use that to your business’s advantage.

Create a defined social media strategy
Businesses need to incorporate social media management into their strategy that supports their objectives. They also need to know where their customers are to properly address them. If most of them are on one platform i.e. Facebook, then businesses should focus on that platform only.  The social media strategy for that platform must be relevant and concise.

Think before you speak
Although the majority of social platforms do provide an edit or delete option, businesses need to think through how they will reply to a customer before posting anything on social media. Professionalism must be practiced as often as possible.

Fix complaints, immediately
While negative online comments or reviews from customers can be scary, businesses can prevent these, or turn them into a positive experience, by solving the customer issue immediately. Customer service is critical, and businesses need to go the extra mile and fix customer complaints as soon as possible.

Businesses could also add a personal touch in solving complaints by taking the situation “offline”. Sending a private message or giving the customer a call are also viable ways to solve the customer complaints.

Dealing with workplace accidents

Despite a staff member’s or employer’s best intentions, there is always the chance that things can go wrong in the workplace. And when accidents do happen, it is important that businesses know how to respond and follow correct, lawful procedures.

An important step is to report the injury to the workers compensation insurer as soon as possible. Often there is an excess to be paid if the report isn’t made within a certain time frame.

Also, getting quick treatment for the injured employee helps them to return to work quickly, minimising the impact their absence would have on the business.

No matter how small the injury may seem it is still important to report it. What may initially appear as a minor injury could end up with serious consequences, especially in relation to muscle strains.

If the employee is unable to resume their regular job, it may be an idea to give them other tasks so that they can still be involved in the business.

The most important step in dealing with workplace accidents is to show concern and support for the injured worker and assist them in making a return to the business.

Transferring existing super to an SMSF

Individuals who plan to transfer their existing super from an industry fund into an SMSF needn’t worry about going over their superannuation contribution limit.

Transferring these funds, also known as ‘rolling over’, is not considered to be a super contribution since the money is already somewhere in Australia’s superannuation system. It also does not count towards an individual’s non-concessional (after-tax) contribution of $180,000 a year (or $540,000 if using the three-year averaging provision).

Individuals can have multiple super accounts including an SMSF. However, when they transfer money from their industry fund, it is important to ensure that doing so will not forgo benefits such as cheap life and TPD (total and permanent disability) insurance.

A popular strategy to avoid having to sacrifice these benefits is to leave a minimum $5000 balance in the industry fund to keep the life and TPD policy. Industry funds will often require individuals to pay their guarantee monies into that account, however, they can transfer that out at a time that is most convenient.

SMSF trust deeds

Trustees of SMSFs are governed by the rules and regulations set out in the Superannuation Industry (Supervision) Act 1993 (SIS Act) and the fund’s trust deed. Trustees need to regularly review the trust deed, as a transaction that is permittable through the SIS Act, may be prohibited according to the trust deed.

Superannuation laws are constantly changing and the trust deed must adequately reflect these laws. To ensure the SMSF is allowed to access strategies permitted by the SIS Act, the trust deed should be reviewed and updated regularly.

If a trustee wishes to use the SMSF for activities such as an investment strategy or pension income stream, the activity will need to be included in the trust deed.

For example, the SIS Act allows a transition to retirement strategy for members over 55, however, the trust deed may only permit a payment when the member reaches the retirement age resulting in the member not being able to access to transition to retirement strategy.

A regular review and update of the SMSF trust deed will ensure the SMSF trustees have access to a range of strategies and activities, whilst also remaining a compliant fund.

Dealing with difficult employees

Having to deal with someone who isn’t coping in the office is not a pleasant situation for anyone.

There may be a variety of reasons for this, such as personality clashes, the employee having a bad work ethic or the workload proving to be too much for the employee to handle.

Whatever the reason, it’s a situation that no employer wants to find themselves in, for it can severely affect the working environment of your office, as well as the quality of work expected from your clients.

Although discussing the issue may be daunting to some, the sooner action is taken, the sooner a solution can be reached. Here are some tips to get you started on what you should prepare before addressing the issue with your employee.

Be specific
It is no good just telling an employee that you’re unhappy with their work attitude or quality of work produced. Make sure you are clear with what is displeasing you.

Record everything
Try to maintain a record of the problems that have arisen due to the employee. This will then form the basis of your evidence if the employee denies anything that has happened. Or it could even give you a better understanding of why they behave in a particular way if you see a pattern forming.

Take the time to listen
If an employee has been underperforming for quite a while, many employers may eventually find themselves focusing solely on the bad behaviour or quality of work produced. Instead, they should be stopping and paying attention to what may actually be the cause of the bad work. Sometimes just listening to your employee can make all the difference in the world. Perhaps they noticed a change in their quality of work as well and were too afraid to say anything, or perhaps they just needed a quick chat with the boss to let them know what was going on in their life.

Cash flow strategies for small businesses

Without profits and positive cash flow, a business is going to struggle to survive. This is why cash flow strategies should be taken seriously.

Aim for long term financial stability
When setting finance and cash flow goals for the business it is important to aim for long term stability.  Businesses should realistically assess how and when it wants to reach its long term goals.

Don’t forget to consider customers who allow purchases on credit as it will help in forecasting how much cash is coming into the business and whether it will be enough to cover expenses.

Profit first and growth later
Businesses should aim to increase profits in the present and use them to grow the business in the future. Approaching it the other way around isn’t always a good idea, especially for start-up companies.

Be aware of timing
Businesses need to be aware of exactly when money is coming in and when it is going out. Although owners may not be directly responsible for the accounting side of the business, they should at least be aware

It is also important to have a plan in place to ensure that clients pay promptly so that the business can know when to expect a payment.