To maximize your profit is not that hard. It would be best if you focused on a few changes in your business. Running a business allows your creativity to thrive. You are in charge and can make decisions that push you out of your comfort zone. Making a profit is one of the most important business operations.

When you make more than you spend, you are technically making a profit. Even a small profit is worth celebrating, so look at our short guide on maximizing your profit when running a business.

How to maximize your profit and run a successful business Four Points to maximize your profit.

Cost-effective decisions

Always ensure your decisions are cost-effective. Consider whether your decisions will increase your income or overall expenditure.

● For example, if you want to sell artwork and make a living in the creative industry, it will be worth considering whether you could make more money selling your wares online or in a shop.

● A shop has overhead to consider, but an online space is entirely digital and may mean you ultimately make more money.

Overhead that eats into your profit!

Remove unnecessary overhead. If you aren’t making money on a specific product or service yet still spending money to source, stock, or create, you may be making an unnecessary loss. Focus on removing any unnecessary overheads.

● Consider ways to cut back on expenses and save money. For example, if you are selling goods, ensure you shop around to get the best deal from the wholesaler.

Water and nurture will help your business grow!

Start small and grow gradually. When you are working to turn a profit, make sure you keep an eye on the services or products that sell.
● Avoid spending significant amounts of money on stock if it repeatedly fails to sell. Stick to your popular services and products and maximize profit by always selling what people will buy.

● Keep an eye on the specific services and products you have and make a list of the most popular sellers. Consider creating promotional tools and making those items or services as prominent as possible to catch attention.

Promote

Concentrate on your marketing. Remember, potential customers need to be aware that your business exists.

● Consider how you can market your business for free or as little expense as possible. Remember, you are trying to profit, so keep your expenditures low.

● Social media can be a powerful free tool. Consider using it to promote your business and enlist the help of your friends and family to get them to spread the word.

● Spend time pushing the products that sell well and develop innovative marketing campaigns for struggling stock. If customers know a particular item or service exists, it might pique their interest and make you an unexpected sale.

● Ask customers to leave you reviews and allow everyone who uses your business to offer feedback. You’ll build up a trusted customer base and be seen as more reliable than other businesses. It’s a great way to stand out from the crowd!

Tip – watch what you spend!

The most important thing to do is to keep your expenditures low. Once you’ve made enough to cover your outgoings, you’ll find everything else is a profit. Ongoing profit reporting is a must. Knowing your profit or loss every month means you are reviewing every opportunity to maximize profit.

Be bold and ensure people have a positive experience working with your business. Be creative and adventurous, and stand out for all the right reasons.

Navigating the Challenges and Moving Forward

Divorce and your business. It can be a difficult and emotionally challenging process, and when a small business is involved, it adds another layer of complexity. A failed marriage may not directly cause a business to fail; it can significantly impact the business. Let’s explore where husband and wife work daily together in the business and where the wheels fall of the marriage.

The intersection of personal and professional lives can create unique challenges for couples who decide to end their marriage while still running a business together.

According to the website Marriage.com, it has been estimated by divorce lawyers that the divorce rate among entrepreneurs is approximately five to ten per cent higher than the average rate.

This means that, with the divorce rate in the USA being around 38%, the divorce rate for entrepreneurs could range from 43% to 48%. No doubt, it is similar trends in Australia as around the world.

Understanding the Emotional Challenges as the matrimonial dispute heats up!

Divorce is an emotionally charged event, and when business ownership is involved, the stakes can feel even higher. The tensions between the former spouses who continue to work together at the company can also create challenges.

The end of a personal relationship can significantly impact the dynamics of the business, affecting decision-making, communication, and overall productivity. It’s crucial for both parties to recognise and address the emotional challenges that may arise during this process.

One partner may often leverage the situation to cause employee unrest or divert funds to their own advantage.

Communication Breakdown

One common issue that arises during divorce is a breakdown in communication.

As emotions run high, it can become increasingly difficult for divorcing spouses to communicate and make decisions together effectively. This breakdown in communication can directly impact the business’s day-to-day operations, leading to delays, misunderstandings, and potential financial losses.

Conflicting Interests when it comes to divorce and your business

Another emotional challenge is the conflicting interests of the divorcing spouses. While they may have shared goals and visions for the business before the divorce, their individual priorities may shift as they navigate the separation process.  One partner may want out. This misalignment of interests can create tension and disagreements, making it challenging to move forward and make decisions that are in the business’s best interest.

As with any business dispute, a strategy needs to be carefully considered. We can assist here as we specialise in helping people exit from their business in times of dispute to protect their interests. Sometimes, you may feel you are being forced out by an aggressive partner.

Legal Considerations for Divorcing Business Owners

When going through a divorce and your business as a small business owner, it’s essential to understand the legal implications. Therefore, you need to consider the best course of action for the business. Ensure you have a good lawyer who understands how business works and divorce implications.

Business Valuation helps set an independent value.

One of the first steps in the divorce process is determining the value of the business. This involves assessing the business’s assets, liabilities, and overall financial health. Hiring a professional business valuator, independent of both partners, can help ensure an accurate assessment and avoid disputes over the value of the business.

In some cases, it is logical that one partner continues and the other is bought out. This may be an easy discussion or an emotional one where one partner feels like they are forced to leave.

Property Division

The division of assets is critical to any divorce settlement, and the business is no exception. There are several approaches to property division, including selling the business and dividing the proceeds, one spouse buying out the other’s share, or continuing to co-own and operate the business together. Interestingly, of late, we have seen many clients romantically separate but still come together for the business. An improved relationship helps rebuild the years of bitterness that prevented the business from growing in the past.

Shareholder Agreements and Operating Agreements

Reviewing any existing shareholder or operating agreements is essential if the business is co-owned with other partners or shareholders; this is especially critical if outside owners are also involved. These legal documents may outline the process for transferring ownership in the event of a divorce and provide guidelines for resolving disputes. Therfore it’s imperative to seek the advice of a good lawyer here.

Moving forward after divorce and your Business!

Create strategies for Success

A collaborative approach can be particularly valuable for couples who choose to continue co-owning and operating the business post-divorce. By establishing clear roles, responsibilities, and decision-making processes, the former spouses can maintain a productive working relationship while keeping personal issues separate from business operations.

In some cases, once the initial anger, separation and legal matters are dealt with, there can be a sense of calmness. Former couples then acquaint each other and use the business as a common neutral ground to continue moving forward.

It can sometimes improve the business as matters of personality and indecision have been resolved, and a new journey begins.

These are crucial considerations, as the fate of the business can be impacted by the decisions made during the divorce proceedings. In any dispute of divorce and your business, what strategies will each partner employ to gain an advantage? How will a marital dispute affect the division of the business assets? These are all important factors to consider when navigating a divorce involving a business.

Once the divorce process is complete, developing a plan for moving forward and ensuring the business’s long-term success is essential. Here are some strategies to consider:

Redefine Roles and Boundaries post-divorce and your business.

After a divorce, redefining roles and boundaries within the business is crucial. Clearly establishing each party’s responsibilities, decision-making authority, and areas of focus can help minimise conflicts and ensure a smooth transition. This also includes parity of reward vs effort and how major decisions will be made.

Develop a Succession Plan

A succession plan is essential if one spouse decides to leave the business or circumstances change. This plan outlines how ownership and management will be transferred and ensures business continuity. This can assist in the divorce settlement negotiations.

In many cases, there may be a plan that will exit the business, and a value-building plan is implemented to plan for the sale of the business. In any divorce and your business, distractions and emotions can lead to further hemorrhaging of profits. Once a plan is devised, stick to the narrative.

Navigating the complexities of divorce and your business ownership requires professional guidance. Working with experienced attorneys, accountants, and business advisors can provide valuable insights and help you make informed decisions that align with your personal and professional goals.

Divorce and small business ownership present unique challenges that require careful consideration and planning. Divorcing couples can navigate the process more effectively by addressing the emotional issues, understanding the legal implications, and adopting a collaborative approach. Moving forward post-divorce requires redefining roles, developing a succession plan, and seeking professional guidance. With the right strategies in place, it is possible to separate personal and professional lives while ensuring the business’s continued success.

Disclaimer: The information provided in this article is for educational purposes only and should not be considered legal or financial advice. It is recommended to consult with qualified professionals for personalised guidance based on your specific situation. Please reach out for a confidential discussion about your personal situation.

How do I sell my commercial business property? When selling your business, your business operations and HQ are an essential and strategic part of your business.

Most businesses operate from a premise of some sort, so when it comes to exit planning, your decisions on what to do with your business premises is equally important as one of the essential items that require serious discussion and planning.

When it comes to planning, the first thing to do is to review how and what you use your office, factory shop, etc., as part of the business on a day-to-day basis. For that reason, the location may be the reason for the business’s success,. Coupled with the possibility that the business building and surrounds such as a hotel, fun park or caravan park may be the selling point. The business HQ property may also have been purpose-built, and your business sale value may be exploited if the business and property are sold as one package.

Further your business may have multiple premises to consider, which factor into the strategy along with what can be sold, consolidated, and required moving forward.

Strategic Review of the Business, how it operates and where

As part of the exit strategy, take a moment to review the business. In short look at the location it operates to help you work through your exit planning:

• Will, upon exiting or selling, the business be relocated?
• If the business is to be sold separately from the property, how does this affect the business disruption?
• CGT issues?
• Will the owner wish to sell or retain the property for the next generation, and how will this take place?
• Are there other uses for the property, e.g., development or retirement?
• If the business operates from home, consider whether this is the right location for selling the business.
• What are his wishes for the family and passing the property on to the next generation?

Is your property ready for Sale?

The owner needs to review the property to ensure it is in a sellable state. Take a moment and look at:

• Access and potential change of Council Zoning. What points of access are there in and out of the property?
• Fire safety:  Does the property comply with fire safety and other emergency safety factors?
• Security:  Is the property safe and secure?
• Surfaces:  Do they feature lead paint and dust? Are the floors slippery, OHS?
• Hazardous materials and toxins:  Does the building present any dangers associated with asbestos used in its construction?
• Old fuel tanks and other old substances – Banks hate these when it comes to financing
• Installed plant and equipment:  Is the equipment, such as air conditioning systems, in good working order and maintained?
• Lighting: Is the property well-lit for the purpose you intend to use it?
• Air quality: Is the building adequately ventilated?
• Is your property have sentimental memories? Will this influence you and should be considered as being held for the next generation

Consider all options!

There are some options to consider when it comes to your business real estate you own. These can be classified as follows:

• Keep the property and treat it as a long-term investment
• Transfer to SMSF
• Sell with business
• Sell the property separately from the business
• Relocate the business and develop the property before selling the business
• Leave to next-generation – family farm
• Sale-leaseback arrangement

Sell or keep your freehold property

Let’s first look at why you may not sell the freehold property and choose to keep it and sell only the business:

• It might be too hard to consider – too much work
• The passing of the land onto family – save for subsequent generations, so needs to be kept
• The property value may exclude or reduce the number of  potential interested  buyers if the property is sold with the business
• You may start another business on the property
• It is better sold as a development opportunity
• Maybe a good long-term investment
• Strategy – especially for hotels etc., where you may wish to sell the business but take back long-term for a family
• Your real property may have been used to guarantee a business loan, i. Selling the property may impact another loan security used in another part of the business that is not being sold.
• The business may have multiple uses, or some businesses may work on the same premises.

Why you may consider selling the best option!

Opposite to the above, here are some valid reasons why you would sell the property at the time of selling the business:

• Some businesses need specialised buildings and assets from which to conduct their operations. Therefore, you may have the opportunity to sell the property to a buyer who appreciates the attributes of the building.
• When deciding to sell the business,  will the purchaser of your business wish to relocate it to another location and may leave you with an unwanted property in the future
•  Investors avoid investing in highly specialised assets like laboratories or dedicated production facilities. The primary risk for investors is the use of the building should the tenant company, the buyer of the business, default or not renew at the end of the lease period.
• If your business is specific, it would most likely be best sold with the business for the buyer to have business certainty.
• Time to reassess the financial plan for retirement
• Issues of maintenance that will require significant capital moving forward.

Whatever you intend to do, take time to make sure the structure you have chosen to hold the business vs the property works for you from a tax and estate planning perspective.

Reduce the CGT pain – use the tax concessions available for small businesses and the sale of your business commercial property:

• General 50% discount but not for Companies and reduced for SMSF
• 15-year exemption: If your business has owned the premises for 15 years and you are 55 or over, retiring, or permanently incapacitated, you will not have an assessable capital gain when you sell.
• If you have held the property for less than 15 years – it must be held for 7.5 years
• 50% active asset reduction:  You can reduce the capital gain on your premises by 50%.
• Retirement exemption:  Capital gains from the sale of your premises are exempt up to a lifetime limit of $500,000. If you are under 55, the exempt amount must be paid into a complying superannuation fund or retirement savings account.
• Rollover: You can defer your capital gain from the sale of the business until another event happens that crystallises the gain. For example, suppose you sell your existing business premises and buy different premises for your business within a specified period. In that case, you can defer your capital gain until the new premises is sold down the track.

Traps when utilising the CGT concessions.

It is crucial to check that assets, such as the business real property owned by the taxpayer, have been held by a ‘connected entity’ for at least half the business ownership period (or 7.5 years).

Where the necessary level of ‘connection’ does not exist, it may be possible to implement a restructuring without material cost to ensure that the entities are ‘connected. ‘

Selling your business property: do you meet the definition of an Active Asset?

Where there is a question of whether the amount paid constitutes “rent”, a pivotal factor to consider is whether the occupier has a right to “exclusive possession” of the property. The payments will likely be classified as rent if such a right exists.  – means no active asset!

If the arrangement allows the occupier only to enter and use the premises for specific purposes and does not amount to a lease granting exclusive possession, the payments are unlikely to be rent.

In summary

• Exit planning requires advisors to review all aspects of the business operations, and the business location and premises impact the pathway chosen to obtain the best result for your client.
• Don’t ignore the legal implications of the property regarding lease and ownership.
• Think of generational ownership issues and how they may impact
• Look at specific property types and intrinsic matters
• If you ask a purchaser to relocate the business away from the present location – think about how and the implications for the business sale and ongoing stability. Also, the cost of relocation
• Plan the Tax, GST and stamp duty implications of the decision
• Don’t leave the planning too late

Of course, planning for any business should be part of every person’s business exit plan. Please note this is general advice. We welcome you to book a time to discuss your affairs and help you plan for a wealthy retirement.

Enjoy the read! This month our newsletter contains tax issues such as:

• Tax debt & why do I have one?
• Gifting to employees – is this FBT?
• R&D – the basics
• Super withdrawals – what are my options?
• Should I have a Family Trust?

Click here to download our August Newsletter

Contact us on 03 9597 9966 if you have any questions relating to matters raised in any of our Client Newsletters.

As we start the New Financial Year, this month our newsletter contains topics including:

• Small Business Lodgement Amnesty
• Is it time to restructure my Business?
• SGC increase to 11% for Employers to pay
• Work-related car expenses updated

Click here to download our July Newsletter