A couple of weeks ago, we were doing some thinking work with one of our customers regarding the accommodation landscape in Ballarat. As part of our research, we had a look at AirBnB to see what they had listed.
Imagine our surprise when we found that Ballarat, on any one night, has in excess of 550 venues available! This seems incredible. So, we had a good look at what was there.
The number of AirBnB listings was amazing. They range in price from “cheap and cheerful” to a little bit OTT, but they all seemed to hit various sectors of the market.
This is really good for visitors to our fine city, however, there are some consequences which our earnest AirBnB providers need to consider:
- The Australian Tax Office (ATO) gets data feeds from AirBnB;
- The ATO therefore knows what your income is from your AirBnB activities are;
- You had better declare your income on your tax returns; and
- You are, where you’re using your private home as the rental, exposing yourself to Capital Gains Tax consequences when your sell your property.
There are numerous other issues around the whole traveller accommodation business which we cannot cover in a short blog post. One of them is your insurance cover.
A lot of people get into AirBnB because they can see an easy way to make some good money from their home. Yes – it is a good return for only short term inconvenience. However, the activity which seems pretty easy to do can have some profound and long term consequences for you from a tax perspective. This needs to be carefully considered when you are looking at embarking on this course of action.
Oh, one other thing – if you have a couple of AirBnB properties in your own name or through your business structure, you will be required to register for Goods and Services Tax (GST) once your gross revenue exceeds $75,000 per year (pro-rata). This is another little challenge for AirBnB operators. And with the new ATO data capture and analysis systems, you will be found and they will ask questions.
At the end of our research, we determined that the AirBnB space is already a significant disruption to the classic accommodation business model. It does, however, present challenges. After the first year or two when the ATO comes hunting, it may well lose some of its attractiveness to a number of the new players in the market.
If you’d like to discuss the potential impact for you of commencing and AirBnB operation with your property, come and have a chat with us!
Absolutely love getting a testimonial from a customer that finishes with the phrase: “I would highly recommend it to any business as the results are immediate and very effective”.
Received feedback from Leonie Spencer at Lifestyle Travel in Ballarat. Leonie runs a very successful travel agency and they have been providing exceptional service to their clients for well over ten years.
One of the things that inspires me about Leonie is that she is always willing to look for better ways of doing things. She is very open to new opportunities to enable the business to serve their clients. In this vein, Leonie engaged us to provide some communication training for her team prior to Christmas. It went really well and the sessions with had with the individual team members, the management team and the whole group were not only very effective, they were also good fun. They’re a wonderful group of people.
I was absolutely chuffed to receive the following from Leonie early this week (and I have not edited a thing – I have highlighted a couple of bits though):
Our business, Lifestyle Travel Ballarat, undertook the TTI Disc program facilitated by MTA Accounting a few months ago. We experienced immediate positive results with our team especially in our communication with each other.
The program is very empowering and enables each individual to understand their natural style of giving and receiving communication and in turn how to adapt and understand the preferred style of communication of fellow team members & clients. In effect, speaking to others in the way they prefer as opposed to interacting with everyone in the same communication style. Our business is totally reliant of good client relationships and already we are seeing great benefits in applying the techniques learnt in the program.
We are saving valuable time on emails, quoting and creating proposals for our clients, by simply being more specific and asking clients how they prefer to receive correspondence from us. Some just want the facts and others need more detail so we can adapt accordingly. Using effective communication eliminates all the grey and both parties are on the same page.
The key major benefit from a management perspective is that we now have clear direction in the best & most effective way to communicate with our team. Every person is different and this program highlights exactly how each individual likes to be spoken to and the way they prefer to be given tasks & direction.
There have been many positive and practical examples of where our team have purposely considered the style of the other person before reacting or responding to an issue. Thinking about the best way to address an issue has allowed us to view & accept each other based on our differences as opposed to judging and reacting based on our own thoughts and style.
Thank you to Matthew, Simone & Madeline from MTA Accounting for the professional delivery of this program. I would highly recommend it to any business as the results are immediate and very effective.
Having seen the difference the program made to Leonie’s business and received feedback from various team members in the business, it is abundantly clear that this has worked exceptionally well for them.
What would be the impact on your business if your people had this competitive advantage? What would it mean for your culture, your effectiveness and your results?
If you’d like to find out more, please drop us a line. We love doing this type of work – because it works!
When you’re ready for “immediate and very effective” results, why not give your business the opportunity that Leonie gave hers?
Welcome to another new year! In 2017, are you returning to school?
Over the coming weeks, many apprentice human beings will be getting ready to embark on their education journey whilst the older kids will “dread” the return to school.
How do you view the coming year? Is 2017 your return to school or is it “just” more of the same?
Over the past decades, we’ve seen many businesses where the plan for the new year consisted of “last year plus 5%”. Is that you?
Why not change your view and your approach?
There are some absolutely fantastic new platforms available now which make it incredibly easy for people to access useful and timely information relating to their business. Are you using it or do you have access to this? If not, why not? By having the information more readily available, you are better placed to use it to make far better decisions and inform your analysis with more meaningful and timely data.
Couple this with the seamless integration with some really sexy cashflow and profit modelling tools and you have the capacity to radically change how you have used your financial information to what you’ve been doing in the past. We’ve been using some of the platforms for quite some time now and they are amazing.
I don’t know about you, but I was always more excited about getting ready to go to school than I was actually returning. All the new books, the new uniform stuff and new pens and stationery – all prepared for another year of learning. Have you prepared yourself for the new year or are you just dusting off the same old stuff you’ve been using for years?
There is one thing that I have found out over the years – the better prepared you are, the more likely it is that you will succeed. So have you prepared to return to school?
One thing about this aspect of launching into the new year is having your mind open to learning and developing new skills and greater understanding. You knew when you went back to school that you were going to expand on your knowledge and be challenged to try new and different things. What would happen if you adopted this approach – consciously – this year?
Your “First Day”
Remember the first day back at school? There were new kids in class. There was a new timetable. There were new teachers for different subjects. There was greater expectation placed on you. There were different lockers. There were different sports teams and times. But you adapted and made good. And you got through.
How did you approach your first day back this year? Was it with anticipation? Was it with excitement? Or was it with a sense of resignation and “ho-hum”?
What would happen if you were to recast and re-run your first day again this year? What would you change about your approach and your view?
Don’t we just love the media? Lots of stories about Trump, Brexit and the like. Depending on which media you consume, it’s either absolutely terrible or fantastic. The environment for 2017 is certainly going to be different to 2016. And that’s a good thing.
Using your new-found ability to access useful information from your financials, your preparedness to expand your horizons and your re-jigged approach to your first day, you will be in a far better mindset to position yourself to take advantage of the opportunities that will arise this year [Hint: they are always there].
If I can ask you to do one thing this year – spend the time to have more interaction with people face-to-face. Don’t do it two dimensionally (on a computer), make it personal. People appreciate it so much more and you’ll feel better doing it. Diverting off a bit here – it seems that the more connected the world gets, the less true connections you have in your life. Make the effort – you will be glad you did!
2017 is upon us – are you returning to school?
MTA has a range of services that can assist you and your business return to school really well. From financial reporting and analysis through to helping you identify and exploit the opportunities that abound, we can help you make this your best year yet. To find out more, give us a call – we’d love to meet up and discuss your needs.
What, really, is the cost of replacing staff in your business?
In many businesses, the major issues impacting the “health” of the business revolve around their people. The culture within a business is often a significant driver to results. Show me a good culture, and I will show you a great business. As the late, great Peter Drucker is often quoted: “Culture eats strategy for breakfast”
I reflected on this after reading one of Theo Winter’s recent posts. Theo is a terrific writer and thinker and I encourage you to regularly visit the DTS site.
Anyway, back to the issue – what is the cost of replacing staff? According to the study Theo had linked to, the cost can be up to 213% of their annual salary. This seems a tad high for mine, however I do believe the costs of replacing team members can be significant. We are often reminded that “people don’t leave jobs, they leave managers”. This may well be true (hence it hurts when I reflect on the staff who have been and gone through my business over the years!)
How do you minimise the chance of people leaving your business? We have found that by understanding how best to communicate with them and work with them will make a significant difference. We understand how important it is to work with people in a way that works for them.
How do you get to this level of knowledge?
Using a range of behavioural/communication tools with our customers for many years has delivered great success. The tools identify what styles of communication work for the people concerned and highlight how they are better able to be effective in what and how they communicate with each other. We’re doing some work with a really progressive business at the moment – the knowledge they have already gained is making a difference not only internally, but in how they are communicating with their customers. End result? Better results.
Think about what the impact would be if you knew how to be more effective in your communication with your team. What would be the impact of your team understanding what approaches work best with your different customers. Ultimately, what’s impact if, having this knowledge and investing in your team, they stayed and you didn’t have to replace them.
Through investing in your people and helping them be more effective internally and externally, you will be able to achieve far more, improve the culture markedly and enable your people to thrive. Whilst you are doing this, you’re also saving money as they are staying with your business!
I have previously posted about the success we have experienced in one of our more recent engagements. Imagine what the impact would be for you?
The best bit? The price for undertaking this work is very reasonable. Put it this way – for our most recent engagement, the total price for developing the whole team, doing their reports, debriefing them on their results and undertaking a group training and development session is WAY less than the cost of replacing just one person within that business.
To save your business money and develop the culture, why not get in touch and have a chat about what can be achieved in your operation?
I suppose the only thing you have to lose if you don’t is your staff.
So, the US election results are in. How will this impact our domestic interest rates and taxes?
The Republicans (Trump) have now been voted in to the Presidency and now have control of the Congress and Senate (for at least two years). This also means they have the wherewithal to appoint the next Justice to the Supreme Court. This will therefore make the highest Court in the US conservative in approach.
What do the US election results mean for Australia?
In all honesty, probably not much. We have a very secure and long-standing alliance with the Americans. Can’t see that altering.
The only things that might occur are:
It could increase pressure on the RBA to further drop interest rates over here. The rationale behind this thinking?
- if Trump does change the various Free Trade Agreements currently in place, there is a chance this will devalue the US Dollar (note that, as of writing this, the USD has only “come off” about one cent – from 77 to 76 cents);
- where the US dollar devalues, the price of our exports will increase (relatively);
- this will have a significant impact on the global competitiveness of our exports;
- to enable exports to be “cheaper”, the Aussie Dollar needs to be lower;
- the only real way to lower the exchange rate is to reduce Australian interest rates to make the currency “less competitive” on the global stage.
It may have some flow-on effect where large businesses relocate their Head Offices and or operations to the US to take advantage of the (proposed) lower corporate tax rate. Put it this way, if you’re operating in both Australia and the US and taxes in the latter are 50% of those that apply here, why wouldn’t you relocate? If Trump does get a significant reduction in taxes through, it may place pressure on our government to address the taxa rates over here.
So, on the ground, we possibly won’t notice much. However, if all goes according to the crystal ball, we need to consider the impact on our interest rates and taxes and what it means for your business and our nation.
Cashflow management is a critical issue for many business owners.
Typically, your cashflow comes under strain in the following circumstances (not an exhaustive list):
- your business is growing
- stock levels increase (eg: lead-up to Christmas for retailers)
- bringing on new staff
- increasing production capacity
- diversifying your business activities
Each of these things can be a “cash thief”.
Let’s consider the issue of inventory(stock) management. The more stock you have on hand, the more cash you have tied up. I explain this in more detail here, here and here. By reducing your stock levels, you free up a lot of cash, however you need to balance out the level of stock you need. You cannot sell what you don’t have! Effective stock management makes a huge difference to your cashflow.
Cashflow management can also be impacted by increasing production capacity. Being able to make a lot more “stuff” requires you to have the raw materials, equipment and people to do this. All this costs. Your wages come in each week, your suppliers need to be paid each month and the equipment needs to be purchased/financed. All this robs cash from the business – and you haven’t yet produced anything you can sell. By building your capacity, you will be able to (hopefully) generate more sales and/or better margins. But you have to spend first. This is where your cashflow management needs to be carefully curated.
A number of our customers have pretty regular sales. They use this to reduce their margins (sometimes!) to generate additional sales and hence cashflow. You find that there is a very clear cycle for this.
One of my favourite fishing tackle stores is in Melbourne. They have a great range of products, know what they are on about and provide great service. Over the past year or so, I have noticed that they are having regular sales in the sixth week after the end of each quarter. This is because they have the Tax Office commitments to meet. They need to free up cash to pay our friends in Canberra. Knowing this, you, as a customer, can manage your time for purchasing gear.
The same thing occurs in a lot of businesses (especially retail). Have a look at the sales cycles and you will see a trend. The margin is better in your pocket than the retailer’s!
Any time you look at the cashflow in your business, get behind the issue to find out what is driving it. Sales too low? Margins being squeezed? Inventory too high? Expanding? Diversifying? Any and all of these can have a significant impact on your cash reserves.
Cashflow management can be difficult. But when you look behind the numbers and develop your understanding of what drives your cashflow, you will be in a far better position to make the decisions and changes needed to improve things.
We have access to some really powerful cashflow modelling tools that will enable you to see the real picture – going forward. If you would like to have a chat with us about how we can help you get a better handle on your cashflow management, give us a call!
The most astute business owners understand the power of investing in people.
The other week, we received some very satisfying feedback from one of our customers.
We have been doing work with the Executive Team at Federation Business School at Federation University over the past few months. The work has revolved around the way the Executive works and communicates together.
Bob O’Shea, the Executive Dean of the Business School very kindly sent through a testimonial and here are some quotes from it to give you an insight into what they’ve experienced (our highlights):
- … only one month since we had the group feedback session facilitated by you I can tell you that is has had a very positive effect on the way the group works together
- … let me say that we have all been very impressed with the way you handled the whole process from the very beginning
- The personal feedback sessions you … had with each member discussing their results and their profile in depth and without raising defences was very powerful and taken on by all in a very positive way
- I have noticed (and other Team members have told me that they too have noticed) a marked change in the dynamics of our Executive meetings
- It is fascinating to observe as for example previously aggressive members are moderating their language and style in order to have a [more] positive impact
- Interestingly and importantly we are each experiencing this sort of behaviour modification outside of the meetings where individual team members are using their [personal] insights to enhance one-on-one meetings they have with their fellow team members
- …[two senior team members have] said that they now consulted each other on matters previously avoided
- …[Professor] told me that these meetings were the most productive senior level meetings he had been involved in for 20 years
- … it is early days yet but the signs are there that this is a very worthwhile investment
I have shared the above with a number of people across various industries (from education to medical, legal, real estate, insurance, retail and manufacturing). When sending out the letters and emails, I was reviewing in my own mind whether the recipients would be interested in learning more.
It became a fascinating experiment. There were, of the numerous business owners I contacted, a couple who I thought – “yep, these guys are future-focused, interested in learning and wanting to challenge things whilst bringing their teams along”. The others would give me the “usual brush-off”. Guess what happened?
Using the exact same email/letter format, those whom I expected to come back with interest did so. I don’t know whether this is confirmation bias or not. I don’t believe so.
Similar to Bob at Federation University, some business owners understand the importance investing in people. They also understand that any investment they make in this space will have a very significant positive return.
Are you one of these?
If you are, give me a yell.
Do you ever feel like you know you have potential to be better – particularly with your communication? Are you constantly frustrated with being unable to do what is needed? When looking at business and people development, what glasses are you wearing?
Your position is not abnormal – it is in fact very normal. But, what can you do about it?
People tend to see the world, their situation, other people or things as either “good” or “bad”. They can fall into the view of black v white. This again is natural and your normal approach will be to follow your tried and true strategy.
I know this very well as one of my relatives is a constant “nay-sayer” -nothing is ever seen in a positive light. When at a restaurant, they will place their order. As dishes come out of the kitchen, you will hear “oh, I should have ordered that”.
We see this too in many businesses – owners/managers of businesses will recruit people who are just like them. This is generally because the “feel” is right – there is an automatic preference for liking someone like them.
Great teams consist of a broad range of people who work well together. You want to have a diversity of views, a range of communication and listening styles and a healthy attitude to risk. Style blending will see better decisions made and more effective analysis performed. You don’t want all the same type of people just agreeing with each other!
Considering issues around strategy and business management, only looking at things from one perspective. This can result in either missing opportunities completely or being so focused on one aspect of an option the “big picture” is overlooked. There are obviously other forms this can take. The main point though relates to the ability to have robust (sometimes “prickly”) discussions and being open to a range of contributions/inputs.
Understanding that recruitment and development of people with differing styles adds a depth and robustness to your business is a real positive. Differing approaches will keep things bouncing along. Your conversations will go “broader and deeper” than having a lot of the same folk discussing an issue.
When it comes time for you to consider what sort of person you want to recruit or promote/develop, have a serious think about choosing someone who has a different style to you. Sure, there will be times when the discussions will be a tad uncomfortable, but doesn’t this give a better result in the long run?
If you just want someone to agree with you all the time, get a dog.
To maximise your development, improve your strategy and make your business management a lot easier, think about glasses. Different eyes see the same things differently.
We have access to world-leading tools to assist you and your business identify the different styles and inform you of the differing ways people approach issues and communicate. Having access to this information enables a far deeper and more open conversation to occur. To find out more, give us a yell – we would love the opportunity to show you how these tools can really help you and your business flourish!
Budgets, don’t we love them?
In your small business, what approach do you use for your budgeting? Most budgets I see are based on the thinking of “last year plus 5%”. I have also seen budgets done by some pretty large franchise businesses that are, to put it bluntly, crap.
A budget needs to be approached from the aspect of “is it realistic, is it achievable, is it based on solid assumptions?” It also needs to take note of the environment within which the business operates. Over the past couple of decades, we have seen budgeting and planning programs proliferate. Search “Budget template” on Google and you will get 108 million results. Like anything, having a tool and knowing how to use it are two completely different things.
When you’re looking at your budgets, the issues you need to consider need to be delved into in some detail. Here are some examples (and the questions aren’t extensive):
- Increased sales (everyone works on this assumption) – where are they going to come from? Who are we selling to? Do we offer what they need? Can we supply the additional product/service and at what cost? Is the market being disrupted? Can we divert focus in to one or two high margin products that will deliver a better result?
- Profit margins – what do we need to do to improve them? What options do we have with pricing? What product mix works to deliver the best margins? Does our marketing support our pricing to deliver the margins? Does our sales team understand the impact of margins (hint: most don’t)? What are our competitors doing and where do we see them going?
- Operating overheads- what are we doing to ensure we are getting “bang for our buck” on expenses? What is happening with regard to our overheads and the potential to replace old approaches with new ones (esp software applications)? What control do our people have over the costs incurred in operating the business?
- Staffing – What do our team understand about the expectations and accountabilities of their roles? What additional training and support would enable them to flourish? What is the ideal team mix for a business such as where ours is moving?
- Capital expenditure – do we have the right gear, in the right condition, to enable us to deliver what is needed to support our team and customers? Do we need to invest in additional equipment to save costs over the medium/long term? What is the best utilisation of our capital to deliver strong, sustainable results over the medium/long term?
As stated, the list above is only a “taster” for the questions that need to be asked prior to even thinking about what the budget looks like. More often than not, where these types of questions are asked, they are asked after the budget has been done. This is like putting the cart before the horse.
Once you have done your overall budget, I strongly recommend that you do a cashflow budget that ties in to it. The assumptions you make in this should also be assessed to ensure you are making the right qualitative decisions for your business. For example, we have been dealing with one of our customers relating to one of their major debtors. Sure, the debtor (owes money to our guys) is a big customer. But the margins they make on the work they do for them are really small. Then, the debtor takes nearly four months to pay their account. Is he really a customer that they want? By the time they do the work, spend three months chasing payment (including heavy involvement from the Directors who could be better utilised building the business), the profit from doing the work has disappeared. Is that really what you’re wanting in your business? Maybe you already have it!
Doing the cashflow budget may cause you to go back and revisit your operating budget. The assumptions made might be called into question. This is a really powerful process to go through as you are considering all aspects of the performance of the business.
Remember that a budget is a forecast of what your results are going to look like. Doing your budget with the approach that your inputs will drive your results will give you a far more robust, realistic and achievable plan than doing it “the old way”.
By approaching the process in a way that allows you to develop solid, detailed and explainable budgets, you will actually be in a position where you are in far greater control of your business and you will be able to use those budgets to make better decisions along the way through the year. This moves you from working “in” the business to “on” the business.
Establishing budgets can be a time-consuming process. Yet it is be very valuable. The emphasis should be on qualitative questions to drive the quantitative outputs. By just focusing on the quantitative aspects of budgeting, you are missing out on a great opportunity to maximise your return. And isn’t this what you, as a business owner, should be looking to do?
If you want to (metaphorically) fall in love with your budgets once again, take the time to approach the process in a way which will enable you to get the reward and return you’re seeking. Last year plus 5% doesn’t work.
If you want to discuss how we can assist you in developing a really solid budget (and cashflow budget) for your business in the lead up to the end of financial year, please get in touch. Our first meeting is at no cost to you and is designed to provide you with significant value. It just might lead to you achieving the results you’ve always wanted.
“I get the figures, but I’m just not that happy” – so said the Engineer customer to me recently when we were discussing a range of issues impacting on him and his business. His three-plus decades of professional training and practice have been based around detailed analysis of numbers and formulae. Very clinical, very precise and, to his mind, now very wrong.
Sure, he can outline margin, profitability, ROI and all sorts of easily measurable results. Some years they are up, some years they are down. That’s business – and he knows that. He knows why his margin has dropped, he understands why the ROI sits where it sits and he can detail precisely his asset utilisation rates. Perfect.
He is able to rationalise all this based around the numbers, however the answer he is getting from undertaking this process isn’t the one he is looking for. It’s not that he’s asking the wrong question, he is looking in the wrong spot for the answer – because it is where he has always looked.
As we delved further into his thinking, we started getting into the “why” questions and that “what” drivers. I found it very sad that his answer to the question “when was the last time you drove into the office really looking forward to the day ahead” was “never”. How soul destroying!
The process many people adopt in reviewing their position and opportunities tend to revolve around the same approaches they have taken in the past. They tend to adopt the same metrics to analyse and assess their “success” each month, quarter, half-year or year. The results are a scoreboard which tends to drive how they “feel” about their performance.
My experience has been that having assessments which are based on metrics that don’t resonate with satisfaction or happiness tend to be low-value.
For example, as I discussed in a recent podcast I did with the guys from Grow My Accounting Practice in the US, the feeling of being “happy” or “satisfied” rarely has anything to do with hard, numerically-based metrics. Satisfaction comes from achieving things that mean something to you. Sure, I acknowledge that there are metrics that can inform this, but you’re unlikely to have the feeling of deep satisfaction purely based on a margin improvement!
When we bring up kids, we don’t measure our success or failure as parents based on their academic scores. To do so removes the focus from where (I believe) it should be. You cannot objectively measure the things that really matter in your role as a parent. I know from the various posts I see on social media that when people post things about their kids, they aren’t about their test results. They are about instances where the kid has demonstrated care, concern and love. Not getting into a heavy theoretical/philosophical discussion here, but how do you measure love? And what, exactly, is a “good kid”?
In talking through the issues with my customer, we covered a lot of ground which had to do with his thinking about and approaches to what actually mattered in his life. His concerns were around his family, his kids’ education and his staff. Hard to objectively measure.
As he indicated to me during the conversation, he finds it difficult to assess how the really important things are going in his life but can be really precise about the looking-backwards results and his forward budgeting. Once he has done his budget, they try their level best to achieve it, but, given the industry he operates in, it is difficult to drive additional revenue or improve margin by “throwing things at them”. And, at the end of the day, the results the business achieves are only relevant in so far as they enable him to do the things outside of his business that are important to him.
Focus on business yes, but realise that it is only a stepping stone/tool to fund the important things that you want to achieve. Of course we want to make sure our businesses operate well, but is that the end game? My argument is that it’s not.
After a very enjoyable meal and nice bottle of red wine, we decided that he would spend some time thinking about the things that really mattered to him and where he could increase his level of satisfaction. He is going to gain a better idea as to what he does and work out the things he loves doing. This will then inform our planning as to what he keeps doing and what he stops doing.
The analysis process he had adopted caused him to direct his focus on metrics that resulted in him losing sight of the bigger picture. As part of our discussions, we worked out that there were available and easily exploitable opportunities for him to more than double his profit each year. Because he had fallen into the rut of using the same metrics that were precise and he was comfortable with, he had not seen the opportunities that are, quite literally, sitting on his doorstep (actually, inside his office).
Beware of too much focus on analysis – the old adage “paralysis by analysis” was proved to work in our discussions as it had given my customer a tunnel vision that fed his dissatisfaction and unhappiness with his position.
When it is just about the numbers, the meaning is lost.