
			August 2009

www.ulton.net

In This Issue

Business

Health Check

Managing

Tax Debts

Best Practice Business

Transition &

Its Benefits

Business

Alliancing

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Client Briefings

How is your business performing?

Does it need a health check?

Ulton know that the key to operating a successful business and making money in an economic downturn or recession is to know where your business performs well and where it can improve.

The 'signs' of a healthy business are sustainable profits and strong trading cash flows whereas the 'symptoms' of a business underperforming and at risk of being 'infected' by a recession or downturn include declining sales with high fixed costs.

Read More >

New measures help small businesses

The Australian Tax Office (ATO) recently announced new measures to help small businesses that are struggling to manage their tax debts in the current economic climate.

ATO will assist small businesses by deferring the payment date for activity statements and offering twelve months of General Interest Charge free payment arrangements.

Read More >

Building a Best Practice Business

Business owners understand the driving forces behind competition, supply and demand. So when;

More businesses are for sale - lower prices result.
With fewer qualified buyers - it becomes a buyer’s market.
In a buyer’s market - buyers can be selective and value driven.

Read More >

HAS YOUR RETIREMENT NEST EGG CRACKED?

The Government recently announced a halving of the amount that can be contributed to a superannuation fund on a concessionally taxed basis. This will result in many Australians being unable to fulfil their retirement dreams. Or will it?

Our Financial Strategists have developed a number of dynamic strategies that will enable you to continue to accumulate wealth in a more effective manner.

We will be holding special strategy briefings in Bundaberg, Gladstone and Hervey Bay to outline some of the new opportunities available.

For further details and registration, click on the links:

BUNDABERG & GLADSTONE BRIEFINGS

HERVEY BAY BRIEFING

	What is transition and what are its benefits? Transition involves the selling down of equity in your business to staff, family or others over an agreed period of time on an agreed basis. This method of sale can provide many benefits including: • Controlling the process; • Controlling the time frame; • Maximising the return from your business assets; • Securing and retaining services of key staff; • Family businesses passing on in an effective manner, and • Funding of future owners secured over business assets. Read More >
	What to look for in a business alliance 'Alliancing' (or 'outsourcing' as it is also known) is becoming more and more popular as businesses are adapting to an ever-changing way of doing business and combating spiralling costs. Business alliances are generally established for mutual benefit, with each party leveraging off the other's clients, products and services. One of the main benefits of alliancing is that it allows you to retain the focal point of your business whilst expanding your service offering through your alliance partners. Alliancing also allows for the pooling of knowledge and resources and provides opportunities for economies of scale and increased profit margins. There are significant opportunities for business owners to develop strong relationships with key business associates / alliance partners. However, many relationships that are formed are loose, casual relationships. Read More >

	How is your business performing? (continued) People who care about their health visit an expert - their doctor. Business owners who care about their business should similarly visit an expert - their accountant or financial advisor to complete a business health check. Prevention is better than cure! To ensure your business remains healthy and continues to prosper in these uncertain times Ulton are providing clients with the opportunity to access our online business 'health check'. The technology, named Trust, is new and includes value driver and risk assessment gradings for businesses and pin points opportunities for value improvement; the cure. Trust also captures a unique ‘snapshot’ of your business and highlights key areas for development and identifies ways to minimise losses and maximise gains. In this ever changing and increasingly complex business environment, Ulton know how crucial it is to maintain a lean, healthy and well managed business to be able to stay ahead of the competition. Ulton will make the Trust online ‘health check’ assessment available to regional businesses and clients of the firm. Business owners can access their free business ‘health check’ at TRUST or call Jason Krenske on 07 4154 0430 for more details on Trust. Return to Top
	New Measures Help Small Businesses (continued) Any small business currently with an Integrated Client Account debt can apply for a General Interest Charge free payment arrangement on that debt from now until 30 June 2010. During this 12 month period all General Interest Charges will be remitted providing the payment arrangement is maintained. Small businesses can also request a deferral of payment on their June 2009 Business Activity Statement. Businesses that are experiencing short term cash problems that usually pay quarterly or annually may be granted a deferral of up to 2 months. Businesses that pay monthly may be eligible for up to one month's extension on the provision that all activity statements are lodged on time. Contact Jamie Rach on 07 4154 0442 or email jrach@ulton.net for more details. Return to Top
	Building a Best Practice Business (continued) It is important for business owners to ensure their business value. *How can businesses ensure their business value?* Start by becoming a Best Practice Business: Best Practice Businesses ensure their business value by recognising the operational and strategic drivers of business value and they have systems in place to capitalise on them. What are the 4 drivers of business value? *1. A business with good systems that is not reliant on its owners* It is important to have procedures and systems in place that operate seamlessly regardless of the presence of the owners. The business will be more attractive to prospective buyers knowing that they don’t run the risk if the owner exits. A Best Practice Business has all systems and processes documented and all staff are aware of their role and responsibilities within the business’ operations. Having all systems and processes documented ensures that valuable information about the day to day running of the business and its client base does not leave when the owner exits. *2. Loyal customers* Without repeat business many businesses would not survive. Customer surveys indicate: It is 5-10 times more expensive to gain new customers than retain existing customers. Repeat customers spend 67% more than new customers. Repeat customers refer on average 7 other potential customers. 20% of customers account for 80% sales. It makes sense to follow the Best Practice principles of identifying your demographic, valuing your customers by providing them with the goods and services that they want to purchase, communicating well with your customers and rewarding them with great service, great value and loyalty rewards. 3. Benchmark performance Business value is directly linked to profitability. Maximise your profit by: Increasing the number of customer demographics that you want to attract to your business. Increasing the number of times customers return to your business. Increasing the average value of each sale. Increasing the effectiveness of each process with the business. A Best Practice Business continually monitors their key performance indicators against industry benchmarks to ensure that they are reaching or exceeding their potential. Tracking key performance indicators is the result of sound reporting principles. Best Practice Businesses produce financial reports on a monthly basis. 4. Quality Staff Successful business owners develop an outstanding team of people, all contributing towards the successful operation of the business and the desired rate of capital return. Best Practice Businesses have procedures for the appointment of staff, orientation of new team members, employment guidelines, team meetings and good communication with all staff. Best Practice Businesses position themselves in the market as an employer of choice. Anyone can become a Best Practice Business provided that they have the discipline and desire to endure change. Implementing best practice involves everyone in the business. Depending on the business' current practices, implementation of best practice may involve a high level of change. Some practices may require only a small change, some may need completely new procedures to be introduced, and some things may not change at all. Becoming a Best Practice Business will involve: Acknowledging the need and having the desire to become a Best Practice Business; Gaining the buy-in of key stakeholders in your business - this could be your staff, your spouse and family, your trusted advisors including your accountant, and Implementing policies, procedures and systems to become a Best Practice Business. Contact Jason Krenske on 07 41540430 or email jkrenske@ulton.net for more Best Practice tips. Return to Top
	What is transition and what are its benefits? (continued) What is the transition process? The transition process ensures effective transition of ownership of the business to future owners and involves five steps: Step 1 – Education Step 2 – Alignment of goals, values and reaching consensus Step 3 – Developing a business transition strategy Step 4 – Documenting and formalising arrangements Step 5 – Support post transition If you have key staff in your business who you believe have the skills, passion and attitude to become future owners, transition may be your best succession strategy. Unique Services Ulton is considered one of the leading succession and transition specialists. We are passionate about helping business owners reach their potential from effective succession planning. Ulton offers a unique service to business owners providing a complete solution to their business transition and succession planning needs. Please contact Jason Krenske on 07 4154 0430 or email jkrenske@ulton.net for more details about the benefits of transition. Return to Top
	What to look for in a business alliance (continued) *What level of alliance are you looking for?* The first step in forming an alliance arrangement is to determine the level of alliance you are looking for. There are three main levels of business alliances: 1. Transaction based alliance 2. Income alliance 3. Capital value alliance Transaction based alliances are where one party refers clients to another party. The work is done and there is no revenue sharing involved. This type of alliance is ideal for businesses wishing to expand their service offering to their clients without having to employ more people to do so. An income alliance is more formal and involves the sharing of income between the two parties. The income sharing details, including amount and timing of payments, are to be agreed prior to commencement of the arrangement. An income alliance is best suited to situations where a business is wanting to value add to the services offered to their clients and improve fee quality at the same time. The amount of revenue sharing depends on the type of activity involved. A capital value alliance involves the formation of a separate entity under a joint venture agreement. This arrangement involves the creation and sharing of capital and ongoing profit streams. Alliance relationships are often progressed in stages - start off with a transaction based alliance and work towards building this to an income or capital value alliance. This allows the parties to become comfortable with each other before moving to the next stage. How to form a business alliance 1. Understand the commercial opportunity and the reason why you cannot provide the services yourself. 2. Understand what the other business does. Obtain as much information as possible about the alliance business and its products. It is very important to invest time and energy into understanding what the other business does. 3. Ensure that the alliance business compliments your business. It is important that both businesses are a good fit and complement each other through commonly aligned objectives. It is also important that you are entering into a business alliance with like minded people in terms of business practices, ethics and values. 4. Conduct a benefit / cost analysis to assess if the alliance is going to be beneficial to your business. Your analysis should also explore the proposed time commitments involved and whether you have that amount of time available to dedicate to the alliance. 5. Align your expectations. Explore what each party expects from the alliance and ensure that expectations are aligned from the outset. Planning is a very important part of a successful business alliance. Plan who is going to do what and how you are going to meet goals and expectations. *Entering into a business alliance – points for consideration* When entering into an income or capital value alliance, commitment and clear lines of responsibility are very important. It is worth considering the following: • There will need to be commitment to the formation of a business relationship for mutual benefit. • There will need to be agreement in terms of client identification strategies and client ownership. • There should be an up front agreement in terms of the sharing of any financial rewards from referrals (commission splits, fees). • Both parties need to commit to the development and implementation of effective Client Relationship Management (CRM) practices. • Both parties to agree on a commencement date and termination procedures. • Both parties to agree on a method of apportioning costs and resources. • There should be clear guidelines developed in relation to communication between the parties and with clients; and in relation to compliance issues. • The obligations of each party should be documented clearly. • Discuss the possibility of an exclusivity period with the alliance partner. The development of the above policies and guidelines are very important as they will govern the future business relationship. You will also need to work at building trust, respect and commitment into the relationship to enable good communication and cooperation. By securing commitment from your alliance partners at the outset and developing policies to govern the relationship there is a greater likelihood of success. *Impact on your succession plan* If you are contemplating entering into a business alliance, consider the impact the alliance will have on your succession plan. Further points for consideration include: Remember that the most important person to protect is your customer; Consider the alliance in terms of your overall succession strategy; Will the alliance partners enhance or restrict your succession opportunities? Have you determined criteria for selecting your alliance partner? Return to Top

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General Advice Disclaimer

This article has been prepared on a general advice basis only. The information has not been prepared to take into account specific objectives, needs and financial situation. The information may not be appropriate to your individual needs and you should seek advice from your financial advisor before making any investment decisions.