Healthy Business For Kimberley & Pilbara Cattlemen’s Association Conference, Kununurra 27 October 2017 Presented by: Simon Chesson, AustAsia Group S
Disclaimer S The information in this document has been obtained from sources deemed by AustAsia Group, AustAsia Legal, AustAsia Accounting Services, AustAsia Financial Planning and AustAsia Finance Brokers. S The information in this presentation is of a general nature. You should seek professional advice before you act on any of the information in this presentation, and consider if the information is suitable to your circumstances. S AustAsia Group and its related entities takes no responsibility for any damage, injury or loss incurred as a result of this presentation, due to the general nature of the information contained herein.
Overview S What is a healthy business? S How do you know if you have a healthy business? S Key features of a healthy business S Where to start?
Some Startling Facts: Family Businesses S In 2013 the average age of a family business owner was 58 years old compared to 55 in 2010 S 64% would seriously consider selling if approached, up from 61% in 2010 S 58% of family business owners/managers see themselves working beyond the age of 65.
Some Startling Facts: Family Businesses (cont) S 55% of Family Business Owners don’t have a strategic plan S 48% of Family Business Owners don’t have a business plan S 55% of all business exits are due to: S Death, disability or sickness; S Bankruptcy, receivership, liquidation; or S Simply closing the doors as the business was unable to be sold in its current operating state
Causes of Business Failure S Business owners don’t read the warning signs and get help early enough - because they are often busy building their businesses. S Many businesses are looking at turnover and profit as the only gauge for their success. S Many businesses don’t realise that you can have a profitable business and still run out of cashflow.
Causes of Business Failure (cont) There are usually only three reasons why business owners find themselves getting into financial trouble: S They are getting poor advice; S They are getting good advice but are not implementing it; or S They are not seeking the advice in the first place.
What is a healthy business? “Have you ever asked yourself what is the purpose of a business? Most business people never ask themselves this interesting question. If you think about it, what is the purpose of a doctor or hospital? Is their purpose to maximize profits?” John Mackie, Founder Whole Foods Market
What is a healthy business?
What is a healthy business? (cont) S A healthy business can be defined in a number of ways: S Regulatory definition: S You can pay your debts as and when they fall due S Personal definition – The business is able to: S Do business the way you want S When you want S How you want
What is a healthy business? (cont) S What is a business health check? S How is the business structured? S How much tax are you paying? S Has the business changed this year compared to last year? S Has the industry changed to affect the health of your business?
What is a healthy business? (cont) “I pay whatever tax I am required to pay under the law – not a penny more, not a penny less. The suggestion that I am trying to evade tax – which is what you are putting forward – I find highly offensive.” “I am not evading tax in any way, shape or form. Of course, I am minimising my tax. Anybody in this country who does not minimise his tax wants his head read. I can tell you as a government that you are not spending it so well that we should be donating extra.” Kerry Packer - During the Investigation into Tax
How does your business operate?
Who do you seek help from?
How do you know if you have a healthy business? S Checking your business health depends on your definition of a your business health S Generally we look at: S Operating Structure – Company, Trust, Partnership, Sole Trader S Operational Performance – sales, expenses, profit S Cashflow performance – how you turn the profit into cash or assets
How do you know if you have a healthy business? (cont) S The number 1 question that we are asked each year with clients when discussing financial performance is: “My financials say that I made a profit, but where is it?”
How do you know if you have a healthy business? (cont) S Income is Vanity S Profit is Sanity S Cashflow is King
Key features of a healthy business S Revenue / Sales / Income S Are you aware of your sales income? S Do you have the right sales mix for your product?
Key features of a healthy business (cont) S Profit S Are you making a reasonable margin on your revenue? S Did you use the correct feeding & supplement program for return? S Is your mustering cost reasonable and with the right margin?
Key features of a healthy business (cont) S Cashflow S Where is your profit? S Is it in assets that can be turned into cash or have you reinvested into the business?
Key features of a healthy business (cont) S Keys to cashflow S Quality stock S Repeat sales and end markets S Ability to breed cattle, or buy cattle in that put weight on S Getting paid on time S Contingency for when seasons change
Key features of a healthy business (cont) Quote adapted from Central Station: One day an old man was walking through the bush when he came across a frustrated Jackaroo. The Jackaroo was trying to cut down a Mulga tree, to build a yard, and was swearing and cursing as he labored in vain. “What’s the problem?” the man asked.
Key features of a healthy business (cont) "My saw’s blunt and won’t cut the tree properly”, the Jackaroo responded. “Why don’t you just sharpen it?” “Because then I’d have to stop sawing”, said the Jackaroo. “But if you sharpened your saw, you could cut more efficiently and effectively than before” “But I don’t have time to stop!” the Jackaroo responded, growing more frustrated. The old man shook his head and kept on walking, leaving the Jackaroo to his pointless frustration.
Where to start? S Don’t know where to start? S As set out above, most business owners fit into one of three categories: S Obtained poor advice S Obtained advice but didn’t implement it S Obtained no advice
Where to start? (cont) S A few options: S Existing accountant or business adviser S Financial adviser S Specialist adviser S Second opinion
Last Words “Coming together is a beginning; Keeping together is progress; Working together is success.” Henry Ford
Questions Come and see us at our booth, or contact us: AustAsia Group Pty Ltd Ph. (08) 9227 6300 Level 1, 412-414 Newcastle Street, West Perth, WA, 6005 Simon Chesson Katherine Pole simon@austasiagroup.com katherinepole@austasiagroup.com
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