Everybody is different so it should come as no surprise that everybody is different too. We each place different demands on our physiques beyond the whole heart, lungs and brain function imperative – something that came up in a roundabout way earlier last month, we met Chef Pete Evans. We talked through brands and business-building but at some point we drifted onto different ways of eating. Now if you want to set a match to the highly flammable, crude oil of dietary debate, vegan versus paleo is a great place to start. Spice your conversation with the vegetarian option and that should keep things cooking for the whole evening.
The undeniable truth is that it is up to the individual to make their own choice and they themselves will either get to embrace the benefits or deal with the consequences. That doesn’t mean that others don’t get to voice their opinion. Finding the best qualified opinion is the key though and oftentimes the quality of the questions determine the quality of the answers.
The same could be said of selecting the most appropriate business structure. Think back to your high school maths tests – multiple choice. Is it all coming back to you?
The teachers, the good ones anyway, would explain that out of the 4 alternatives (a,b,c,d) there would be an answer that is just dead wrong. Then there would be one that was wrong but at first glance you could be mistaken for thinking it was right. Finally, you’re left with two answers and frustratingly they would both be correct. However, one of them would be a slightly better answer. Your job, they told us, was to determine “the best” answer. And only that answer would be deemed correct even though technically there was another answer that would still satisfy the equation.
So complicated, but in life and business and diets, you’ll always derive more benefit from the best possible answer – especially over the longer term.
The benefits of selecting the best possible answer instead of one that simply fits, extend way beyond your high school test scores and into quality of life and business benefits.
As I mentioned, sometimes the best answer is a simple but deceptively in-depth question. And here is the question that should be asked by your:
“What is the end result you are looking to achieve and why?”
By focusing on the goal, having understood where you’re starting out, a logical map can be plotted between the two points. This is the difference between micro, task-oriented service and bigger picture strategic planning. If followed, you may be pleasantly surprised when you reach that destination and how many more opportunities you can see from that vantage point.
If you have a question about where and how your business is going, just ask us because our goal is to help you to reach yours, for you, your family and your future… and now for that paleo cheesecake and a run.
Everything ends badly. If it didn’t, it wouldn’t end…
That is a very pessimistic view – let me say that right out of the gate. But is it the view of a pessimist, a realist or perhaps a pessimistic reali… I’ll stop. Take for example the fairly recent case of Mercedes Corby’s business partnership with her “bestie” that went horribly and quite probably, irreversibly wrong!
Here’s the link. Yikes!
If you don’t think you can stomach the news clip or are simply averse to broadcast journalism – here’s the skinny.
The two ladies, by all accounts very good friends, went into business under the partnership structure (as opposed to a trust or a company structure) suffered some business-related adversity, turned on each other and the business is now in tatters. Presumably, aspects of their lives may also be in disarray and this is an all-too-common occurrence when people enter into a partnership with ineffective or zero, safeguards, by-laws, advice…
No doubt partnerships are absolutely the right business structure for certain entities but even so there will be good times full of laughs (Boston Legal – old school but funny) and trying times full of fears and paranoia (Suits series 1 – forever).
After the proper due diligence and talks with trusted advisors a lot of people opt for the relative safety and peace of mind that a Trust or Company structure can offer. In very basic terms (and please do contact us/ if you want to learn more) these structures protect you and your personal assets from aggrieved stakeholders, workers, teammates in the business and so on.
On the other hand those locked into partnership business structures may lay awake at night wondering if an oversight by one of their partners may mean a teary farewell to a chunk of their assets.
Sleep on it (if you can) and maybe give us a call for a chat if you are thinking about which business structure might be best for you.
Most stable companies should be able to post a profit of 10% – 25% after all expenses.
But, to start off, begin with low threshold, where maybe 5% of every inbound dollar goes to the War Chest.
Over time, slowly increase the percentage. Monitor your cashflow to see if your business gets woosey.
Just like donating too much blood in one sitting is harmful, rapidly draining cash from a business can cripple or kill your organisation.
Once you have adjusted expenses and cash outflow to sustain your Profit War Chest withdrawals, you will quickly accumulate a tremendous cash reserve.
In this case, should tough times come knocking on the door, and they often do, you will have our Profit War Chest to back you up and if necessary, bail you out.
Of course as your cash reserves grow, they will be in excess of your rainy day needs – our recommendation is 3 months of business expenses.
At that point, you should take a portion as an equity distribution.
Trust me, it’s a really nice way to reward yourself for running a healthy business.
If you’ve never given blood, I strongly recommend you do it. If you don’t regularly donate to your company’s Profit War Chest, I strongly encourage you to start, there’s no question.
There are three key people that should be in your A team.
They process day to day transactions of your business and they reconcile your bank statements and sometimes they have accounts payable and accounts receivable functions.
Sometimes, they also process your payroll!
But what’s important about them is, what’s the relationship between a business owner and a bookkeeper is relaying information between each other so that the bookkeeper knows exactly where to allocate those numbers and to show you what’s important in the day to day numbers.
In the day to day running of your business, your bookkeeper will be the best person to ask because they will know exactly how much money is coming in, where it is going and where it is being allocated to.
Tip: outsource your bookkeeping as soon as possible!
You can find a good value bookkeeper at around $50-$60 per hour.
If your time is worth more than a bookkeepers time, so if you’re let’s say charging for an hour, you can make at least $120-$150, you should outsource your bookkeeping process.
As an accountant myself and working with Ben, what we do is we take your books at the end of the year, and do your tax returns and financials.
We advise you on the correct structures to implement so that you can achieve such tax savings.
They look at key performance indicators, KPI’s, and they make any recommendations for improvement either through cost management strategies or revenue growth strategies.
Let’s say if you wanted to buy a new building in your business, who makes that decision?
As a business owner, you might know one or two things, but if you had all the information from the bookkeepers and accountant and if you’re a CFO and you’re experienced enough, what you know is, you can make a decision based on the financial statements that are provided.
Not only that, the CFO also judges the performance of the business either through comparing with industry benchmarks or comparing with their budgets and their targets for the month, the week, the year.
What we can see is there’s a bookkeepers, an accountant and a CFO and all three of them are important.
This is how you build an A team.
With these three key people in your business, you will always know where you are heading, where you’re at and how to achieve your goals in the future.
Book in, to TEST DRIVE AN ACCOUNTANT – a 15 min rapid fire Q & A session with an Inspirational Accountant.
I’ve put together some resources that I mentioned throughout the Business Structuring and Tax workshop that was held at the Commonwealth Bank, organised by the Brisbane Junior Chamber of Commerce.
Have you ever wondered whether or not you’re in the right business structure?
Or if you have no idea why you’re set up the way you are?
To clear up the mist surrounding business structures, we’ve put together an eBook that answers the most common questions about business structures.
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