Preventing a business burnout

If you’re the kind of business owner whose average working day consists of feeling anxious, exhausted, helpless or stressed, then you may be teetering on the very brink of burnout.

Burnouts are a state of physical, emotional and mental exhaustion caused by excessive and prolonged stress. They usually occur when owners feel overwhelmed or unable to meet the constant demands of running and managing a business.

In addition to negatively impacting on a business owner’s individual work performance, burnouts can also create secondhand stress for the owner’s employees or coworkers.

While running a business can take up much of an owner’s time, it is important for owners not to neglect their responsibility of staying physically and mentally healthy. To avoid burnout from happening to you, here are five tips to creating a happy, thriving workplace:

Realise that you can control your emotions
A person’s thoughts ultimately determines their feelings. We have 100% control over what we think i.e. the way we interpret situations, the expectations we place upon ourselves, so make the conscious effort to find a benefit from every situation and go easy on yourself if things don’t necessarily go to plan.

Focus on goals
Becoming goal-oriented instead of time-oriented can help to maximise efficiency and stay focused on your business’s key objectives. Regularly think about your reasons for starting the business to make sure they align with your professional and lifestyle goals.

Establish boundaries
Try to avoid working beyond a set number of hours each week, make sure you unplug from technology when you get home and spend some uninterrupted, quality time with family and friends.

Avoid multi-tasking
Multitasking has been found to reduce productivity by 20-40% and can increase the chances of making mistakes or errors. Try developing the habit of single-tasking throughout the day so you can focus completing a task with maximum efficiency.

Nurture your health
Being healthy can shield owners from stress and improve their resiliency. Regularly exercising, eating a balanced diet and getting a sufficient amount of sleep each night are all small changes that can make a big difference.

Using social media to recruit top employees

Most businesses take the approach of using social media platforms like Facebook and Twitter solely for marketing or sales purposes only. However, these communication channels can be just as valuable when it comes to customer service and recruiting future employees.

Using the below ten ideas can help leverage the opportunities social media offers to find new employees. Putting the effort in now to growing your network now can pay off next time you have a job opening.

Unique branding opportunities
Using social media to show off a business’s working culture and environment can help attract those looking for a work environment that looks positive and relatable. Many social platforms allow businesses to demonstrate their values and the working benefits that may appeal to future candidates.

Greater visibility
As long as businesses continue to post engaging content for their followers, their brands will regularly show up in user newsfeeds. Regularly posting means it is more likely businesses will stay top of mind in prospective employees’ minds when they are on the hunt for a new job.

Broaden the applicant pool
Businesses on social media are more likely to reach more potential candidates. The larger applicant pool, the more choice a business has over whom they will hire.

Use current employees as referrals
Since current employees already know and understand a business’s culture, they often produce the best referrals since they know what kind of employee a business wants or needs. Using social media simply makes this referral process easier, as all an employee needs to do is share or retweet a job posting on their social media profile.

Speed up the hiring process
It only takes a few minutes to post on Facebook or tweet on Twitter about a job opening at your business, whereas publishing a job listing on other job seeker sites may take a little longer.

Nominating a beneficiary

Superannuation can often form a significant part of an individual’s wealth. Therefore, the transfer of such an asset upon their death can potentially cause dispute among the deceased’s family and potentially others.

Unlike assets owned in an individual’s personal name, superannuation does not form a part of their estate when they pass away. Instead, it can pass directly to a beneficiary rather than via a Will. However, this depends on who the beneficiary is and how the nomination was made.

Under superannuation laws, a nominated beneficiary must fall within at least one of the following categories of dependants:

• Spouse (includes defacto or same sex but not former)

• Financial dependant

• Child of any age (includes step or adopted)

• Legal Personal Representative of the deceased member

• Interdependent person

Broadly speaking, beneficiary nominations can be binding or non-binding.

Binding nominations compel the trustee to act on the deceased member’s instructions (provided the nomination is valid). While the trustee must pay the beneficiaries nominated in such a manner, the form of the payment is still left to the discretion of the trustee.

If a deceased individual’s family is blended or has a history of conflict, a binding nomination may be the most appropriate option, as it ensures that the designated beneficiary is provided for according to the deceased member’s specific wishes.

A non-binding nomination is not compulsory for the trustee to follow, and the trustee would use this nomination as a guide in paying out the member’s balance upon their death. Non-binding nominations can provide more flexibility for planning to achieve the most tax effective outcome, especially when the beneficiaries receive different tax treatment.

What are CGT events?

A CGT event occurs when an individual or company makes a capital gain or capital loss by selling or disposing of an asset they own. Determining the timing of a CGT event is quite important, as it determines which income year an individual will report the capital gain or capital loss, and may affect how their tax liability is calculated.

When a CGT asset is disposed of, the CGT event usually takes place when a contract for disposal is entered into. When there is no contract, the CGT event happens when an individual is no longer the owner of the asset.

When a CGT asset is lost or destroyed, the CGT event happens when the owner of the asset receives compensation for the loss or destruction. If no compensation is received, the CGT event takes place when the loss is discovered or when the destruction happened.

For some CGT events, such as exchanging an asset for a replacement asset, the law permits individuals to defer or roll over any capital gain they make until another CGT event takes place.

If more than one CGT event happens, individuals must apply the rules for the one that is most specific to their situation.

Some CGT events include:

• selling or giving an asset away
• the loss or destruction (voluntary or involuntary) of a CGT asset
• receiving compensation for the loss, destruction or compulsory acquisition of a CGT asset
• the disposal of a depreciating asset used for non-taxable (private) purposes
• capital distributions to company shareholders or unit holders in a unit trust or managed fund
• shares or units being cancelled, surrendered, redeemed or declared worthless
• when you stop being an Australian tax resident

Home-based business expenses

Over the last few years, there has been a significant increase in the number of home-based businesses starting up in Australia.

While working from home can help improve a person’s work and life balance, when it comes to claiming home expenses for these business owners, there are a multitude of factors that need to be considered. There are two types of house expenses home-based business owners can claim:

• Occupancy costs, including council rates, house insurance, rent and mortgage interest

• Running costs, like electricity, phones and gas

For home-based business owners to be able to claim occupancy costs, the house that they run their business in must be clearly identifiable as the place of business, and include an area that is specifically allocated for the business. Business signage, a unique access point for customers or clients and an area of the house devoted to the business can be used as evidence to claim occupancy costs.

Unfortunately, quite a few home-based businesses fail to meet these criteria i.e. tradespeople who carry out the majority of their work onsite. For these kinds of home-based business owners, it is much easier to claim for running costs. This is because all that needs to be proven is that there is an office in the house that is used for business purposes i.e. tradespeople would be eligible to claim running costs for an office they used to prepare invoices, quotes or for research and planning.

Even though claiming occupancy and running costs as a tax deduction can provide home-based business owners with a tax benefit, it can have an expensive flip side. Owners should take note that once their home becomes more than their main residence, there is a high chance that it will end up in the CGT system.

While a general CGT exemption exists for main residences, it can be lost due to the extent that the home is used as a place of business.

Dealing with unsecured family debt

Many loans exist between family members, such as parents helping their children to buy their first home or siblings helping each other out in emergencies. These types of loans are often informal and rely on the trust and relationship of the family members involved.

However, this lack of security can carry damaging consequences for a family’s relationships as well as for the enforceability of the loan. When a loan is not a gift, it should be documented and secured to the extent possible.

When families apply to the Family Court for a property or debt settlement, the court takes the assets and the debts of the parties into account. However, the court may disregard the debt in the division of the parties’ assets where an unsecured debt owed to family members is included.

If a debt is genuine, the fact that it is owed to friends or relatives of the party is not relevant. The court will instead take the debt or interest into account when determining the division of assets between the parties.

Issues can also arise when the loan:

• is vague and uncertain

• was unreasonably incurred by one party

• is a strategy to decrease the assets available to be divided with the other party

• is unlikely to be enforced/collected.

Determining whether a debt is genuine and repayable often depends on written evidence, how the parties have treated the debt and the credibility of the parties.

If any evidence provided by the parties is vague, or if there was an “understanding” that the debt would not have to be repaid, the court may find that the debt was not repayable. However, the court will only take this step after careful consideration of the evidence and circumstances of the case.

The art of effective negotiation

The key to success is remembering that everything is negotiable, and that to get a deal you must ask for one. Many people stop there because negotiating makes them uncomfortable. They view the process as a contest of wills in which power determines outcome, each party seeks to best the other, and the little guy doesn’t stand a chance. That kind of positional bargaining may produce some short-term results, but it is a distasteful, win-lose process that can leave both sides exhausted, resentful and dissatisfied with the outcome.

It doesn’t have to be that way. Effective, principled negotiation will efficiently produce an agreement that meets the needs of both sides while improving or at least maintaining personal relationships. In negotiating the key is to focus on four areas:

People
Separate the people from the issues to avoid personalising them. Make sure each party understands the other’s perception of what is involved. Identify the underlying emotions on both sides and acknowledge them. Listen actively and speak to be understood, not to argue a position. Don’t debate-cooperate.

Interests
Focus on interests instead of positions. Behind each position lie compatible interests as well as conflicting ones. To identify the interests, put yourself in the other person’s shoes. Why would he take such a position? Does any aspect of your proposal conflict with those interests?

Options
Work with the other party to generate a variety of options. Separate the brainstorming from the decision-making process. Look for areas of agreement by identifying shared interests. Look for ways to dovetail differing interests by exploring options that are of low cost to you and high benefit to the other party and vice versa.

Criteria
Insist upon negotiating within mutually-agreed-upon standards of fairness. These criteria may range from current market value to procedures for resolving conflict, and will bear directly on your ability to come to an equitable final agreement. Standards such as these are also crucial to establishing a foundation of trust on which to build a relationship.

Thinking about your cash flow

If the three most important things in real estate are “location, location, location,” the first three rules of business are “cash, cash, cash.” It is necessary to be profitable, but “profit” is a number that shows up on your accounts at the end of the year; cash is the money you have in the bank. In a small business, it is cash that determines whether you can pay your bills.

Businesses can’t get money in unless they get their invoices out. However, many business people delay sending out their bills. This may be because they feel uncomfortable asking someone for money, afraid of being challenged on how much they’ve billed, or just too busy working to bill for it. The longer you wait to send out your invoices, the greater the chance you won’t get paid.

No matter what business you’re in, you’re going to have a lag between outgo and income. If you’re a consultant, you have to pay for your phone, stationery, marketing materials, and rent before you get your first client. Once you’ve got them, you’re not going to see complete payment for at least 30-60 days after you finish a project. Things are much worse if you’re a manufacturer. You’ve got to pay for raw materials and equipment many months before you’ll see final payment.

Draw up a cash flow projection. Even if you don’t write up a budget or income statement, it is a good idea to sketch out when you expect money to come in and when you need money to go out. In your projection, be sure to include:

• Cash receipts, including income from sales and income from financingCash disbursements, including all expenses (cost of goods, operating expenses, loan payments, income tax payments, etc.)

• Net cash flow — opening cash balance plus receipts, minus disbursements

• Ending cash balance

Utilise your small team for success

Small teams provide many benefits to both employees and employers. In comparison to larger teams, small teams are shown to have higher levels of productivity and effective communication. However, a vital component to the success of these teams relates to the support and coordination provided by management. Ways to maximise your small team’s efforts can include:

Cross-functional communication
If your employees understand how the other functions of your business work and how their work will directly impact all aspects of the business, it can provide them with more responsibility. It allows for all staff to work towards a common goal. The key is to provide staff with holistic training and education that fosters greater understanding.

Delegate with descriptive job roles
Delegation can provide employees with guidance on what needs to be achieved to reach the end goal. It can provide clear direction for staff while employers can oversee budget and timing schedules. It also allows the employer to focus on other opportunities such as business growth.

Break down large goals into small, achievable tasks
It is important to keep in mind the overall strategic goals when completing daily tasks. The daily tasks set should directly correspond with the larger goals. Reframe the way your employees can view large goals by sticking to the SMART principle that includes specific, measurable, achievable, realistic and timely objectives.

What is a transition to retirement strategy?

A transition to retirement (TTR) strategy is ideal for those Australians looking to ease into retirement by slowly reducing their working hours.

It is the kind of pre-retirement strategy that allows individuals to continue working while drawing down some of their superannuation benefits at the same time.

TTR uses a portion of an individual’s super to create an additional income stream (a retirement income account) while they are still working. The super account continues to receive contributions from the individual’s employer and any before-tax (salary sacrifice) contributions. The retirement income account uses some of the super savings to provide regular payments that top up the individual’s income.

Prior to the government introducing the TTR strategy, an individual could only access their super fund once they turned 65 or retired. Under the new TTR rules, an individual must be over the age of 55 and under the age of 65 to access the strategy.

The benefit of a TTR strategy is the fact that an individual can boost their superannuation savings while easing into retirement and pay less tax at the same time.

The investments in the super fund are free of CGT and earnings tax while an individual draws on their super, so a transition to retirement income stream provides some benefits beyond saving income tax.