AustrailaAustrailaNew York 5am to 5pm, Mon - Friday +61 03 9597 9966 Mon - Fri 10:00-18:00 +34-354-5468-8
Info@gartlyadvisory.com.au
Number #1 Accountant
in Ormond Melbourne
Registered Tax Agent
20 years +
Trusted By
Small Business
Get A Quote

Tag

small business
11discounting in your trade business

Customer Discounting for a trade business leads to profit leaks

Customer Discounting in your trade business is a quick race to the Bottom

Some tradies will start customer discounting to land enough renovation or trade jobs to just survive in the current building market downward trend or to keep their sales pipeline busy. So right they have work, they will survive?

WRONG – don’t do customer discounting!

Right about the “just survive” bit because survival is all you derive when you discount.

Discounting really is a race to the Bottom. The bottom line and an empty bank account is what hits you with this stragey!

Geoff Gartly has been looking after small business trade clients for many years. He has seen what works and what doesn’t. We know that discounting is NOT a recommended business strategy.

Profit can be tight sometimes when you are quoting but don’t discount to get the job!

We got your back – our tips on how not to dig a hole with customer discounting!

So here are a few tips to help you quit discounting in your trade business.

Decide that you can’t afford to discount

Unless you have heaps of spare $$$ in the bank you can draw on to tide you over several years make the decision that you cannot afford to customer discount anymore.
It’s a bad habit to get into at the best of times. But, if you do it for too long, it can become a hard habit to break. Sure, you may need to adjust your prices to meet market conditions, but that is quite different from getting into a discount war against another builder or tradie. Do that, and you both lose?

We help our tradies get the pricing right so that the hourly rate allows for GP, admin , mistakes and anything else that can impact.

Re-evaluate your service.

Make a (long) list of all the things you provide for your customers and make customer discounting not one of them. List things that are not in a typical estimate. If you are a good builder or tradie, you actually provide your client with many things that they don’t pay for. So, increase the value of your estimate by letting them know all the other things you provide. Improve your sales delivery and your customers will feel like they are getting a fair price!

Determine to walk through the fear (of missing the sale).

This is the hard part because it’s so personal. Yet it is an absolute requirement if you are going to rise above the discount mentality because facing fear head-on is the only way to overcome it. Sometimes you just need to talk to someone who has done it before to know it is OK

It takes courage to stick to your prices, but if it ensures you retain decent margins and make decent money, then it’s worth learning to do. Right?

To do it right, you need to add value to your trade business by marketing quality and service, not cheapness and discounting. Set your trade companies vision and start marketing this to your customers

11newsletter

Weekly Newsletter March 31st

The Federal Budget 2022


Here is our quick summary of the Federal Budget handed down on Tuesday. The Budget focused on keeping business and the economy going during uncertain times. It would be also be drafted with a focus on the following Federal Elellection due soon. Media reports indicate that if there is a change of Government, the ALP will publish a newly revised budget in July or August this year, which may not result in all initiatives etc., being fulfilled or modified.


Here are the critical points that we believe will impact our clients:
• 120 % tax deductions for small and medium business spending on Training and new technology
• No further extending the temporary full expensing of equipment investments
• $1.3 billion to businesses to fund apprenticeships
• ATO will be allocated more money to chase tax cheats
• PAYG system to better match a business trading result
• TPAR reporting changes to make it easier for businesses to report
• Super pension drawdown rates halved till the start of July 2023
• As previously announced before the Budget, the work-related COVID 19 test expenses incurred by individuals will be tax-deductible.


Small Business Full Expensing is finishing up!


The full expensing instant tax deduction has not been extended, meaning businesses will have to install or use the new equipment by June 30, 2023, to claim full expensing provisions.

In replacing full expensing, we have a New Technology & Training Tax Break


The new temporary tax break is for businesses that invest in either new technology or employee training and skills development.

Employee Training
As of Tuesday night, for every hundred dollars a small business spends on training their employees, they will get a $120 tax deduction,

Technology incentive

As of Tuesday night, every hundred dollars small businesses spend on digital technologies — such as cloud computing, e-invoicing, cyber security and web design — results in 120% tax deduction.
Limited to Investments of up to $100,000 per year will be supported by this new measure; however, if you are spending more, please see us as the existing immediate write off provisions still apply till 2023

How it works in real life, reducing the cost of Training or technology!


For example, Smith Co Pty Ltd has engaged an RTA business in Australia to provide Training staff to its employees online. The total cost of Training was $10,000. Smith & Co Pty Ltd will be able to claim 120% (i.e. $12,000, as a tax deduction concerning these expenses)

The True Cost of the Training from a cash point of view


Cost of training $10,000, payable now when you buy it
Claim tax deduction of $12,000 (still to be clarified – 2023 year )?
Real cash tax-saving @ company tax rate $ 3120
Net cost of training $6,880

A reminder that Loss carryback rules still apply for the next two years

Loss carryback provides a refundable tax offset that eligible corporate entities can claim:
• after the end of their 2020–21, 2021–22 and 2022–23 income years
• in their 2020–21, 2021–22 and 2022–23 company tax returns.
Eligible Companies can obtain the offset by choosing to carry back losses to earlier years in which there were income tax liabilities. The offset effectively represents the tax the eligible entity would save if it could deduct the loss in the earlier year using the loss year tax rate. As it is a refundable tax offset, it may result in a cash refund, a reduced tax liability or a reduction of a debt you owe us.
Loss carry back tax offset – Australian Taxation Office. https://www.ato.gov.au/Business/Loss-carry-back-tax-offset/?=redirected_losscarryback

Fuel costs temporary relief

Petrol and diesel excise will be reduced by half for six months, saving 22 cents for next six months. Hoping this is passed on to the small business at the petrol bowser

Tax Bonus when you lodge your 2022 return

Low Middle-income tax offset (LMITO) — in 2022 can put up to another $1,500 against your tax refund once you’ve done a tax return in 2022

Draw down rates for Self Funded Retiree Pensions – 50% reduction till June 2023

11business startup

New business startup what to do!

Starting out in a new business and being your small business startup journey

I remember many years ago how exciting it was to begin the small business journey.

It has been a journey twenty years later that’s is full of ups and downs, fun and pain and plenty of laughs.

Twenty years in and I have no regrets. In fact, anyone that can do it, should. Yes like all of us I have made some dumb decisions but I don’t have any regrets? No way, in fact, I have also made some good decisions too.

There have been a lot of characters I have met in my business career over the last twenty year’s. Some shady ones, some terrific ones and some that have become lifelong friends. Yes, I have been used, abused and ripped off but I have also been supported, encouraged and led to opportunities.

Starting out needs support


Your business startup relies on lots of support from friends family and associates. You really know who are your friends and where your support comes from. For me, it was my wife and kids who have driven me to success. There have also been many friend’s who have looked out for me along the way.

You see as an accountant many don’t see you as a small business person but there to help others. It took me a long while to accept that I too am a small business owner with the same pain, enjoyment and problems that you too have in small business.

Tips for business startups

So what advice can I give you as a new budding small business owner :

1. Just go for it! Have no regrets and enjoy the ride. Believe in yourself! Destroy the non-believers and the dream stealers. If you make strategic decisions based on evaluation then your business will grow.

2. Set goals. Set a road map don’t amble along in business with no direction. A person who knows his direction might get lost along the way but will always find the way to their final goal or destination.

3. Celebrate success, acknowledge others and enjoy the ride. Failure will happen but pick yourself up learn to understand what went wrong. Remember the sun shines tomorrow and you can do it all again. Don’t give up and follow the plan.

No matter at what stage you are in business a big congratulations It’s not easy to run a small business and the statistics say many don’t succeed in the first three years.

Live life to the fullest and grab every opportunity with no regrets. All the best.

Many of us launch a new business based on an idea or a need to sell our professional or trade expertise.

Business startups offer challenges

Starting a new business will provide you with new challenges and opportunities! It’s fun, it’s exciting and it will be rewarding.

Whatever your reason for starting your new business, your future will be an exciting time. However, it requires careful planning, lots of energy and the ability to follow through with the journey during times of toughness.

Geoff and his experienced team of professionals can guide and advise you on launching your new business and making it successful from day one!

Whether you are yet to start or are in the early stages of launching your new business, we can help you to work through the logistics and questions that everyone has.

Practical startup tips

Here are some practical tips that can help you start your new business:

  • Talk with us so we can gain an understanding of what you are trying to achieve, your dreams and business aspirations.
  • If you are buying an existing business, we can help make sure it’s the right one for
  • We will discuss and explain the different structures available (sole trader, partnership or company).
  • We can set up your company or family trust if that is the right structure for you.
  • We can clarify what you need to do to meet ATO regulations when getting started and applying for an ABN.
  • We will help you establish a practical business plan, cash flow projections, budgets and trading forecasts. We will help you set a 90-day action plan.
  • We can help you present your program to your Bank manager if you’re looking for finance.
  • We can also advise on the best sources of finance.
  • We can work with you to ensure that you set up the right accounting systems in place to manage the financial paperwork.

We have helped lots of small businesses start out. We know you will have lots of questions such as dealing with government red tape and other businesses as this may be something you haven’t done before. We can help you determine what are the essential tasks in the first few months to get your business off to a flying start.

We welcome you to contact us for a FREE initial consultation. Please call us on 03) 9597 9966.

11Cashflow stratgey

A smart Cashflow Strategy will generate better business profits!

For many businesses, cash flow is an issue that holds the business back. But, unfortunately, there never seems like there is never enough cash when you need it.

With Christmas around the corner, it’s time to plan. Naturally, a business owner will not want to reduce their cash balance unnecessarily at this time. But, on the other hand, an increase in cash into the business can make life easier and lower the cost of financing. Moreover, squiring the money now can pay dividends in the post-festive month of January.

How to reduce cashflow leaks

 To help you preserve or increase your money, here are our five cash management leaks to avoid.

1. Bloated Bank Fees

Some banks are more business-friendly than others.  Therefore, we recommend you assess the fees you are currently charged and aim to eliminate any unnecessary services.

  •  Is it practical to maintain a   cash balance to avoid monthly fees? Do you charge merchant fees to recover?
  • Are you being charged online banking fees, and are these still necessary?
  • Are you being charged for a high volume of transactions or cash drawer services, and are these competitive with other banks?

Banks are open to negotiation, and we sharpen their pencil for a long term relationship.

2. Are you sure you are paying the lowest amount of taxes you legally can do without entering into tax avoidance? 

 There are several opportunities to review to ensure that you are not overpaying taxes anywhere in your business or personally:

  • Payroll taxes
  • GST tax
  • State and local income taxes
  • Property taxes
  • SMSF – are you in pension mode if you are retiring etc. and can have your smsf pay zero tax

3. The Cheque Is in the Snail Mail!

Customers who take too long to pay you are one of the biggest cash drains in your business. Consider reviewing your terms, asking for deposits, or becoming more aggressive with collections to bring your DSO (days sales outstanding) down. 

When you do, you will see an instant, permanent cash flow improvement. Don’t do work for people that can’t or won’t pay you or are slow

4.  Watch for those unknown bank errors and scammers

You may have an eagle eye on your most extensive bank account, but what about your other cash stashes? 

 PayPal, petty cash, credit cards and business savings accounts are among the places that may not get daily scrutiny.  Ensure those accounts are properly reconciled and have the proper controls so funds don’t go missing or someone else’s transaction ends on your account

5.  It’s in Your Interest

An excellent problem to have is when your bank balances get to be significant

What is your optimum working capital level? First, you don’t need the money immediately, so make it work for you.  Then, make sure that money is still working hard for you by putting the excess in an interest-bearing account, reducing loans or used for more resourceful opportunities. 

Cash is King and so is a good cashflow strategy

We always recommend a cashflow strategy of ensuring your trading company does not become a cash-rich piggy bank. In case of if things go wrong, you leave your cash exposed. Reach out if you would like to discuss this aspect further.

Cash management is important when conducting an import or export business. Planning for funding of containers, currency fluctuations and disruption are all strategic planning matters. We have assisted clients in scenario planning for lumpy cash flow and large inflows and outflows that can happen with these types of operations.

Cash can also disappear when job planning does not happen or the project goes pear shape. Read our article about job management.

Make a your cashflow strategy a priority

If we can help you plug any of these cash leaks into your business, please don’t hesitate to reach out and let us know. A cash flow forward strategy allows you to plan where your working capital can find it hard. If you aren’t using a cash flow plan, then let us help you start the process.

Estimated reading time: 3 minutes

Text Widget

Nulla vitae elit libero, a pharetra augue. Nulla vitae elit libero, a pharetra augue. Nulla vitae elit libero, a pharetra augue. Donec sed odio dui. Etiam porta sem malesuada.

Our Cases

11
11
11
11
11
11accounting experience
11