Let’s look at a common question many SMEs ask themselves: how much time, money and most importantly energy do I have to expand on networking to achieve rewards for my effort?
When you’re in business, the most important thing to do is to make decisions, which means taking a risk. Sitting on the sideline will get you nowhere.
Here’s some things to consider: do you pride yourself on making instant decisions,and believe that sitting down and thinking a problem through is a total waste of time?
Making decisions this way, you believe, enables you to get on to the next problem – and there are always problems, you can never get away from them, they never stop.
Well, consider this: could it be that these incessant problems arise from the snap decisions on which you pride yourself?
John Arnold says that problem solving is a skill, a process with a beginning, where you identify and analyse the problem; a middle, where you consider a variety of solutions; and an end, where you implement your decision, and follow up and evaluate the results. To shoot-from-the-hip, tackling problems methodically and objectively may seem painful and a time-wasting exercise. However, in the long run, carefully defining and analysing problems actually saves time.
Isn’t nipping trouble in the bud the easiest way of resolving it?
Ideally your antenna should be tuned so you’re alert to potential problems. And you’re right to avoid the temptation of ignoring symptoms because they won’t go away and they’ll erupt, eventually.
A wise person does watch for those early-warning symptoms and heed their message. Arnold says that you should think of the time you lost a valued employee: when she handed in her notice, you were shocked to the core. Later, when you recovered from your hurt, your annoyance, your concern about whether you would find someone as good to replace her, little things started niggling your brain. Absenteeism marring her previously perfect attendance record; her recent penchant for cynicism; the way she had become slightly withdrawn. John Arnold says that if you had been alert to these symptoms, you may have been able to address the problem before losing this talented team member.
Experts like Arnold say that the data is always there, whether in employee problems, production problems, supplier problems, computer problems, customer problems. He advises people to read reports that a computer churns out and to look and listen to what is going on in your environment.
During the identification process, he advises that you monitor yourself to ensure you consider only relevant facts; inestimable amounts of time can be lost examining irrelevant facts. He says another time-wasting trap is seeking out additional facts when those that are already available paint a complete picture.
How do I work through to a decision?
After identifying the problem, you need to decide the end result you want: that is, the outcome you desire after you take appropriate action.
Arnold says to help you clearly establish your criteria, divide them into ‘musts’ and ‘wants.’ For example: your current computer system has to be either replaced or upgraded in order to install certain software essential for improving the efficiency of your business. Your ‘must’ list will include your absolute budget limit for the project and the essential features necessary for your computer to run the software. Your ‘want’ list will include all the features you would like to have in that computer system.
Once I’ve worked out a problem how do I solve it?
You can’t remedy a problem until you uncover what caused it, so you must now determine its cause. Remember: symptoms are the results of problems. Arnold says that focusing on symptoms won’t solve the real problem, all they do is alert you to the fact that a problem exists.
He says that analysis is the painstaking “sit down and think it through, examine it from every angle” aspect that many of us prefer to skip. Yet taking the time to assemble the facts and obtain input from everyone involved can save you a great deal of trial and error in formulating an effective solution.
Avoid the temptation to jump to conclusions about the cause of the problem, or settling for the first remedial action that pops into your mind.
So Arnold advises that you:
1. Analyse the symptoms.
2. Work out the likely causes of the symptoms.
3. Examine those causes to ascertain if they are indeed the root cause of the problem.
Using the example of that key staff member you lost: for months, or years, she never took a sick day. The first day she calls in sick, everyone is in a state of shock. A month later, she is absent for two days – unheard of! Over the next six months, she has several more single days off.
You didn’t take a great deal of notice because, although you were surprised at her absences, the amount of time she was taking off wasn’t really out of hand. You assumed that she, like half the population of the country, was catching every cold and ‘flu doing the rounds that season.
20/20 hindsight tells you that you were wrong to jump to those conclusions.
Arnold says that if you had taken the time to analyse her absenteeism, you may have come up with several other causes:
- Impaired immune system. (Why? Stress, overwork?).
- Relationship or family problems, at home or work.
- Unhappy in job: lack of promotion prospects, no new challenges, boredom.
- Attending interviews for other jobs.
Taking into account those other symptoms – her new tendency to be cynical and withdrawn – the alarm bells should have jangled a warning in your brain, prompting you to investigate the cause of those symptoms, find the problem, and take remedial action. You may have been able to retain her services.
How do I find the right solution?
To find the solution that will best achieve your objectives, you need to come up with several possible solutions, even though only one may be effective in the long run.
Arnold says that generating ideas demands that you switch off your logical, left-brain thinking, and rev up your creative, right-brain thinking. He says that brainstorming does this: you can brainstorm alone, or involve others who may be able to offer valuable input.
Arnold identifies five rules for successful brainstorming:
1. Don’t judge any idea – either positively or negatively – because seemingly crazy ideas can spark practical ones through the process of cross-fertilisation.
2. Go for quantity rather than quality of ideas. Just let them flow – it doesn’t matter how wild or unworkable they appear.
3. Don’t constrain your thinking. Allow your thoughts to freewheel, to travel in all different directions.
4. Write the ideas down because they can dissipate if not captured immediately. If you are in a group, use a board or flip chart so that everyone can see them; if you are alone, a notebook is fine.
5. Don’t give up the moment you hit a block and the ideas stop coming; hang in there for a couple of minutes until they start again. Only when you experience the third dry spell should you stop.
Now you can pass judgment on those ideas, weeding out those that are unsuitable. Problem solving now metamorphoses into decision-making. Keep in mind that a solution is rarely perfect: inevitably, there will be some negatives. However, Arnold says that asking these six questions will help evaluate each idea, eliminate the ones that are unworkable, and arrive at the solution that will have minimal negative consequences.
1. Will it achieve the desired outcome?
Strike out any ideas that don’t meet the criteria set out in your ‘must’ list.
2. What are the financial and resource costs of implementing this idea?
Delete any ideas that would demand more than your budget or that staffing would allow.
3. If you choose this idea, will it impact on other employees or departments?
Make sure you have covered all contingencies, and that your decision won’t create a precedent that may have undesirable repercussions later on.
4. Will implementing this idea create other problems?
Be sure that by solving one problem, you are not setting off a domino effect of others.
5. What could go wrong if I went with this idea?
Decide how serious it would be, and what steps you could take to lessen the effects.
6. Will this solution be readily accepted by employees/customers/suppliers/financiers?
Consider their objections and how you can sell the idea to overcome their reluctance.
When you have chosen the most suitable solution, commit yourself to working with it until it succeeds.
Once I’ve made a decision how do I put it in place?
A little more time is needed to plan the implementation of your decision. You must first decide how, what, when, and who does it. What you need to do is to assume the role of devil’s advocate and think about what can go wrong, how you’d recognise potential problems, what damage-control actions you can take, and how you’d recover if the worst-case scenario did occur.
Few decisions are made in isolation. If your decisions affect others, make sure that you talk to them regularly. Keep the lines of communication open throughout the decision-making and implementation process. Answer any questions that they might have truthfully and thoughtfully. This is particularly important when dealing with employees: by seeking their input, communicating with them each step of the way, you have a much greater chance of gaining their co-operation and making the solution work. When you regularly talk with your staff you can also help them overcome any resistance they might have to change. It’s best to remember that most decisions mean disruption of familiar routines. You’ll also need to engage your motivational skills to sell your decision to employees, to inspire them to accept it and make it work.
Anything to do after it’s implemented?
Never just implement a solution and leave its success in the lap of the gods! Things will probably go wrong: that’s not being negative, just practical. And the more people involved, the more chance of hiccups.
Regularly check in to see that things are running smoothly, according to your plan. Doing this will highlight errors or problems before they get out of hand. Talk to everyone involved to find out how the new procedure is working, whether it has improved efficiency, if more training is needed, if they are aware of any potential problems.
After you have allowed sufficient time for your decision to bed down, evaluate the results. Has the solution achieved the desired outcome – the objectives you set at the very beginning of the problem-solving process?
If your plan did not achieve those objectives, find out why. Decide what corrective action you should take. The important thing is to look closely at any failures, highlight where you went wrong, what errors you or others made that can be avoided in the future. Seek input from others about what went wrong, why it did not work. Solicit their advice about how things can be improved.
Arnold says to review the seven-step problem-solving process you used to see if you made errors of judgment. Perhaps you did not spend enough time on one of the steps – or even omitted it completely?
If your plan was successful – congratulate yourself! However, do take the time to look at precisely why it was successful so that you can use those ideas or methods in the future.
Think like a manager
Managing a small business demands that you develop not only a whole new set of skills, but also a completely different way of using existing skills.
You are responsible for everything: setting it up, getting it established in the marketplace, growing it, employing staff and moulding them into effective, empowered team members who will support you in achieving your goals and objectives.
The first principle for improving your management skills is to identify areas where your performance is not up to scratch. Once you know your weak areas, you can start working to improve them: read magazines like Grow Your Business, buy self-improvement books on the specific subject, find a mentor who can help you, attend seminars or courses.
Consider your performance in the following areas of effective management.
As a manager, you’re responsible for creating a happy, fulfilling, challenging work environment and keeping your staff motivated. Motivation is the ‘enabler’ that inspires your employees to willingly do what you want them to do, embracing your goals as their own. In turn, the confidence that flows from employees’ increased sense of accomplishment fires greater drive and incentive to give their best.
Employees crave managers who can assist them to enjoy, and derive satisfaction from, their jobs. A manager who sincerely believes that most people a) are not inherently lazy and b) do not like being lethargic and bored, and also understand that their role is to channel their team’s energies into an acceptable work performance, has a head start to becoming a top motivator.
While numerous theories about motivation have been formulated through the years, the tools of motivation can be distilled into two basic types:
Tools of maintenance
The practical tools that maintain rather than inspire employees’ efforts on the job. They include salary, fringe benefits, job security, working conditions, company policy and administration, status, and management competence.
Tools of satisfaction
These are the less-tangible tools that inspire employees to greater achievement. They include recognition, the work itself, achievement, advancement, additional responsibility, and personal growth. Research shows that the last factor is so important that employees often accept a lower salary in exchange for the opportunity of growth.
While it’s essential to get the maintenance tools right in order to satisfy basic needs, the majority of your motivational efforts should focus on tools of satisfaction.
Praise, feedback and open, free communication are the primary motivational keys in a small business.
Be generous with feedback and sincere with praise. Routinely thanking employees for their daily efforts is essential, but it is especially important to recognise extra effort, as people need this individual recognition and boost to their self-esteem.
Recognition not given for work ‘above and beyond’ has an extremely de-motivating effect that leaves employees wondering why they bothered – and next time, they won’t!
Be imaginative so that praise never becomes mechanical, and personalise it by making specific mention of the action you are praising. Sometimes public praise is appropriate, at other times a personal handwritten note or even a token gift is warranted.
Encourage open, honest, two-way communication with your staff in an atmosphere of trust. Talk to them about how they are doing, their progress, problems that may be evident. When you need to discuss a shortfall in performance, use the opportunity for coaching.
Get the message out
If you choose to enhance just one set of skills, make it your communication skills. Even if your overall management skills are superb, poor communication ability can result in less than optimal performance.
Good managers keep their staff informed, knowing that open sharing of information leads to empowered people. The more clearly you detail your expectations, goals and objectives, the more concisely you give instructions for each task and explain the reasons for doing it.
The more feedback you provide about completed tasks, then the greater the chance that employees will meet performance requirements and expectations, and the less chance there’ll be of serious mistakes arising from misinterpretations.
Plan of attack
Many managers get so caught up in the day-to-day running of their business that they find they have no time to spend in forward planning. Big mistake: lack of planning makes it almost impossible to achieve business goals, which puts your business’ future at risk.
Ideally, your basic planning tool should be the business plan you prepared when you set up your business. Keep this plan alive and evolving: conduct a major review at the end of each financial year, comparing results against estimates, analysing the differences to identify where you’ve fallen down and where you’ve done better than predicted, and determine – in both instances – how you can further improve performance.
Measure your performance against your mission statement to ensure the two remain aligned.
Prepare a SWOT analysis (strengths, weaknesses, opportunities and threats) and write up a plan to build on your strengths, address your weaknesses, capitalise on opportunities and address threats.
Update your plan for the coming financial year by preparing new sales, expense, profit and cash flow budgets for the entire year, and also broken down month by month.
Each month, compare your actual financial results with your budgeted figures. This lets you identify potential problems such as poor sales performance or expense blowouts and nip them in the bud before they get out of hand and negatively impact your business.
With each goal you achieve, set a new one so that you are constantly stretching your own and your staff’s abilities.
If your business starts moving ahead more quickly than you anticipated, more detailed planning becomes critical to ensure you can sustain that growth and your cash flow.
It’s also important to have five and 10-year plans in place to help you structure long-term growth strategies such as expansion through branch offices, e-commerce, diversification; increases in staff numbers; creating new jobs and reallocating tasks within existing jobs to make better use of the employee skills.
When you talk growth, inevitably the question of finance will come up: any bank manager will tell you that they like organisations that use their business plans as an operational tool. A dog-eared, annotated, coffee-stained business plan is always looked on more favourably than a pristine document clearly produced to impress.
A manager needs vision
A man whose greatest claim to fame was that he was a good encyclopaedia salesman has become the guru of small business owners, writing the greatest selling small book of all time called The E-Myth.
Michael Gerber said the biggest mistake made by a small business owner is to believe that his or her business is different to every other business.
“Many business owners are simply technicians and not true entrepreneurs,” he argues. “Technicians see their business as a job but it should be a product of an entrepreneur.”
The argument runs that as a consequence the technicians, be they hairdressers, consultants, retailers or manufacturers spend most of their time working in their business, where on the other hand, entrepreneurs work on their business.
Gerber says the starting point for creating a successful business is to look to the future, then look back at your life. “You need a retroactive view of your life as if you are at your own funeral,” he says. “You need to create a vision of your business and your related life and be happy with it.”
Implementing systems throughout your business creates the opportunity for the entrepreneur to work on the business.
“The technician is work-centric, the manager is systems-centric and the entrepreneur is vision centric,” Gerber insists.
The bottom line is that becoming managerial and implementing systems creates the time to work on the vision for the business. “Vision is the most critical thing,” Gerber says. “The vision will determine whether you are really going to be successful.”
Goals and vision
Having answers to the most important questions to determine the success of your business should be your key aspiration. But I reckon knowing the right questions to ask is more important. After all, you can always pay an expert to help you.
Give me money – but happiness too
There’s a business owner in South East Queensland who wanted to ramp up his business and he was asked what he wanted to get out of being in business. He came up with the typical response of money – but when drilled down into the issue, he had happiness as the end play. What a softie!
After a bit more Q & A, he finally linked a materialistic hook to his happiness dream. That gave him a chance to then connect his big life goal to what is sometimes called a BMG or big measurable goal.
What’s your BMG?
A BMG needs to be thought about and, inevitably, has to be put into words. Experts insist that dreams and goals need to be put into print and dated, so you have something to shoot for in the future. You need to picture it! Visualisation types would have you see it happening everyday until it gets out of your head and become a reality.
Aussie breast stroker, Leisel Jones, would have gold at Beijing as her written down goal while Russell Crowe, more than likely, would have his newly-acquired Rabbitohs winning the competition within three years.
This is your vision
Of course, this is all about the vision thing which should show what your business looks like. This creates a target and keeps you committed to the goal.
Okay, that’s enough of dream-land; let’s get back into the land of the living and business.
(It’s good to dream but we should as, Ali G would advise: “Keep it real!”)
Make it come true
Here are questions to help weave your dream.
o What do you sell? And how might that change as you grow?
o How big are you right now? You can measure yourself on indicators such as sales, profit, business value and employees.
o What’s your current business growth? You can use sales, profits or even goods and services sold.
o How many business locations can you see in the future?
o How important are you in the market and where do you aspire to be in the future?
o How long do you need to create the vision? Some businesses shoot for a 10-year plan while others like five years, or even shorter.
o How do you compete now and what will you have to do to make it happen? This goes to the heart of how you make your BMG come true.
It takes two
Peter Drucker, the great US business mind, gave us the ultimate lesson that business is essentially made up of two things – innovation and marketing.
It’s simple, but spot on: innovate to give yourself an edge, then market the living daylights out of it. Even use innovation again to market smart (and even cheaply) to double ‘wow’ the process.
On this subject, you need a plan, which has a purple cow ‘wow’ factor.
The colour purple
Another Yank, marketing guru, Seth Godin, says you have to make your business like a purple cow!
His story says when we go driving in the country, the first cow is a blast and will thrill young children, in particular. However, after 30 minutes, cows become a bore and that’s what happens to many of our businesses, with everyone out there with predicable marketing messages.
A purple cow would really grab a bored traveller’s attention! And that’s what you have to drum up to make BMGs come true.
All tints and shades of purple!
But you don’t only need to purple up your marketing. Why not go long on the colour purple?
Take the colour to your products, your employees’ customer service and workplace practices, the look of the business, the efficiency of the operations, etc.
Remember, everything you do in business becomes advertising if a customer sees it – so don’t tolerate anything connected to your business being second-rate.
Look at me!
A great question to make a dream come true is to continually ask: what can I do to stand out from the crowd of competitors I’m up against?
So what do you have to do? Well, try completing this template, which shows you how to put your goal into words:
“In five years time, we will sell ‘x’ products/services, worth over $’y’ million out of ‘z’ locations. We will be seen as the best business in the industry and our reputation will be the benchmark for all our competitors. However, we will never be complacent.”
What is it about cash?
There’s one thing for certain and anyone in business knows it. If you don’t understand the impact of a cash flow gap (the time between cash going out and cash coming in) you can turn a profitable job or project into a financial mess.
Nearly every business experiences this: the money flows out before it starts to flow in.
Make it easy
What most people don’t always know is how to find a solution to this pressing problem. One way to reduce the cash flow gap is give your customers easier ways to pay you on time.
Let’s get real here. If a customer’s only option is to write a cheque, address an envelope, find a stamp and post the letter – you’re really are putting a lot of obstacles in the way of getting the money you so badly want. Offer customers a range of payment options. These include BPAY, Credit Card and Postbillpay.
Electronic payment methods can streamline your banking. Giving your customers access to these payment methods means payments can credited directly to your bank account. In many cases these payments will be credited as cleared funds, which enhance your cash flow and removes the uncertainty of whether or not a cheque payment will be honoured.
What else can you do?
A sensible business does cash flow forecasts which make it easy to see when expenses occur and when income can be expected. This help to plan your need for cash.
The next thing to do is to keep updating your cash flow forecast to see whether you need to access additional cash – through sources such as a line of credit or a bank overdraft.
Why do cash gaps occur?
Well there are lots of reasons, but try these for starters:
o You buy stock before you sell any goods
o If you’re a manufacturer, you pay many of the costs of manufacturing a product before you can sell it
o If you’re just a one-man band, you still need pay the costs of your own labour (that is, pay yourself a wage) until you complete a job and get payment. If you have employees, then they won’t stay with you for long if you don’t have the money to pay them!
When you do your cash flow forecast include:
o Gas, electricity and phone
o Office consumables (such as stationery, photocopying and postage costs)
o Advertising and printing
o Tax office payments (BAS, GST etc, when they fall due)
o Credit card payments etc
Control the flow
Learning to control factors that affect your cash flow is the first step in reducing the potential cash shortage.
When developing a cash flow management strategy for your business, you need to take into account how your customers pay you. For example, are you paid in advance; when the sale occurs; or do you offer credit?
If you’re lucky enough to receive payment in advance, your cash flow gap should be minimal. However, if you regularly invoice for goods or services after you have provided them, you’ll have a greater cashflow gap.
The longer your customers take to pay you, the greater the impact on your cash flow.
Worst case scenario is that these debts that are taking too long to be paid turn into bad debts and become extremely hard to receive without employing a debt collection agency, this is why you need to stay on top of your debtors and keep your cash flowing making it easier to run your business and grow.
Do you find it hard to keep staff? Do you have staff you’d rather not keep? Motivating staff can help keep the ones you want, and possibly even help you get more out of the non-performers.
Knowing how to motivate people is important. When successful US businessman, Charles Schwab was asked why he earned such a huge salary, he commented, “Lots of people work here who know lots more about steel than I do. I can inspire people. I consider my ability to arouse enthusiasm among employees the greatest asset I possess”.
Now I’m not going to say that motivating people is an easy job. It’s tough and you have to keep at it constantly. Successful business owners always acknowledge the role that good people play in their operations.
Here are some relatively simple things you can do to keep your employees on their toes – it’s good for them because they can feel personally satisfied when they give their best (and they get rewarded) and in turn, top performers produce better results for your business.
It doesn’t matter how much you ask your staff to pull their socks up, if they’re not motivated, they won’t do it. Bob Hazell, a director of Advanced Training, in Oxfordshire, UK – which specialises in helping companies instil passion in the workplace – says that drive, attitude and confidence are three keys to motivation.
So how do I motivate my staff?
Hazell says that good managers learn what they need to do in order to motivate people. The essence of management is to actually ask yourself how you would like to be treated.
Most people agree that it would be lovely to receive a ‘thank you’ and a ‘well done’, every so often. Putting yourself in the shoes of your employees and treating them accordingly is the best way to motivate your employees and produce a positive vibe.
Drive alone won’t do the job. An optimistic attitude is essential to motivate staff. Attitudes often breed from negativity. In many businesses, there is one person, a ‘rotten apple’, who is pessimistic and seems to be able to bring out the worst in every situation.
How to improve staff retention:
1. Talk to your employees. Ask simple questions like ‘how are you’? It doesn’t take much to just be nice to people
As the owner of the business, you’re busy. But if an employee has an issue, then make sure that you take the time to listen
2. It’s funny, but from my own experience as an employer, there are so many times when a pay rise or a reward is not seen as important as the boss saying ‘thank you’ for a job well done.
Today’s workers need – and expect – to be thanked and if they’re not recognised, they’ll get on Seek and start looking for new jobs.
I’m not saying the people don’t like money and tangible rewards like a weekend away or a dinner for two. What I’m saying is that these tangible rewards aren’t always expected – but people do like to hear a thankyou’ for a job well done. Always make sure that you acknowledge a job well done.
The person who has done the job will be looking for praise and if you don’t give it to them they’ll start to look for it elsewhere
3. You’re the owner of the business and your priorities and stresses are often quite different to your employees. You might feel that you’re caring all the burden and stress but in reality that’s not the case.
Your staff could be at the coal face taking complaints or dealing with difficult customers. If they come to you for support or advice then show empathy
4. As your business grows and you take on more people, you will have to delegate some jobs that you could like or be attached to. But if you want to grow and prosper, then letting go is important. The best thing is when your staff member does a job previously done by you either equally as well or even better. Make a person feel important when thy achieve things in your business
5. Make sure that you acknowledge an employee’s strengths and always encourage them to play to those strengths. If you want to keep staff you are going to have to offer them opportunities to develop their skills.
Most people seek professional development and some small businesses worry that if they train people they will leave and the business has lost money. That’s true to a certain extent and you do run the risk of training them and they go elsewhere. But if you don’t train them and they stay, they could be under-skilled in their jobs and this will impact on your business
6. When a new person comes into your business make sure they are given specific instructions about all aspects of their job. These should be written into a specific manual, so while they are settling in, they feel comfortable because they can read what the job entails without constantly having to ask a colleague or their manager. This framework gives them the confidence to perform and helps them settle in a lot easier.
Remember it takes time for a new employees to know your standards and expectations. This isn’t to say that they can’t ask questions but having action plans about their specific tasks gives them a reference point to check that they’re not making mistakes
7. Your employees could have valuable ideas that could contribute to innovations in your organisation that could lead to bottom line improvements. Ask for input when decisions are being made. And reward them if one of their innovative ideas has benefits in your business.
Tips for getting the best from your employees
oMotivating employees is the only way to give them drive
oIf you’re a manager, put yourself in their shoes and find out how you’d like to be treated and treat them accordingly
o Please, thank you and well done can go a long way
o Put out a positive vibe
o Try to make the workplace enjoyable.
o Instil optimism within the organisational culture
o Don’t let one negative person affect the whole organisation
o Don’t accept a pessimistic attitude from any member of staff
o Make change a regular occurrence
o Make change a fun thing and have it anticipated by staff.
o Encourage your staff to better themselves
o Let your staff know that you believe in them and their ability
o Delegate jobs to staff, not just the bad jobs
o Boost their morale by taking the time to talk to them and show them how to do tasks.
Recognise that every employee in your business has the potential to lift their game and the ability to do this comes down to confidence. For staff to have a good attitude and to improve their skills, they must have confidence in themselves. Often a person will have a poor attitude because they’re not encouraged in the right areas.
Hazell says that confidence is what facilitates a healthy attitude and is something that can be developed. “Habits are formed over 39 days, or thereabouts so we’re told, and so if you do something naughty for 39 days, on the 40th day you will do it automatically. Therefore, it means consciously working on your attitude for 39 days and after that it will be easy. Once this is achieved, the biggest objective is to keep away from negativity and do your best to keep positive and self-assured,” he says.
It makes sense then to say that employees with this type of mindset are invaluable to your business. “They are people that when the boss is out and a decision needs to be made or something needs to be done, they actually take responsibility and say ‘I’ve got the confidence to run with this and take the rap if it doesn’t work out’.”
Hazell believes this type of confidence is beneficial, especially for small and medium businesses, “Where the business owners can’t look over the shoulders of their employees at all times”.
An employee will feel more confident when their manager has confidence in them. A lot of managers and business owners find it difficult to delegate because they don’t have complete belief in the ability of their staff.
“This type of approach won’t benefit anyone in the business or the business itself. When a staff member goes to an owner or manager and asks them how to do something, then the manager should take the time to show the employee what to do. If a manager does the task themselves, then they are blocking the employee from doing the job they have been paid to do, as well as stripping them of confidence,” adds Hazel.
If you don’t develop employees, they tend end up with jobs no-one else wants to do, which is de-motivating. So find ways to delegate work, and develop your employees while they’re doing a job, to ensure they’re happy.
I hear it all the time from people who want to grow their business. “I know I need to do some work ON my business, but I just don’t have the time – how can I find the time?”
And you know what? You don’t have the time. So the question is, what are you going to do about it? And if you don’t address this issue now, is anything ever going to change?
We all know we need systems and that they will improve our business, but when we’re working 70 hours a week, we’re thinking how am I ever going to find the time to design and then implement systems on top of this workload?
As a business owner your challenge is that it is your business and you are the only person who can make things change. The questions to ask yourself are: what are the ramifications of you not implementing the systems you know you need? And, what will be the benefits of those systems once implemented?
The problem is not that you are doing too much work – you are simply doing the wrong kind of work. Start by listing all of the things you do in a week and how much time you spend on them. Categorise them: client relations, office administration, administrative support, bookkeeping and so on. Ask yourself what you would pay someone to do each category of work. Chances are a lot of it will be between $12 and $20 per hour. Add up the hours. Consider what you value you put on your time as the owner of the business.
Now work out how much you are costing the business by spending so much time working in the lowest paid area of the business. It is only when you can get a picture of what you are costing the business that you can come to terms with what needs to be done.
Start working on the systems in those areas and then get someone in on a part-time basis to follow them, freeing up some of your valuable time. When you have that extra time, don’t just throw yourself into more of the same. Remember why you did it – and use the time wisely to develop some more systems that will free up more of your time, which you can then spend on activities that have significantly more value to the business. A business is going to take a very long time fulfilling its objective if the owner is its most expensive clerical worker.
A client of mine Glenn came to me recently with an interesting dilemma. He owns SprayIt Solutions ( if you ever need residential or commercial insulation go and say hello!) and he has a great salesperson working for him, who looks after the majority of his clients. However, Paul feels as though he is losing personal contact with them due to his stellar salesman. He is worried that if the salesman leaves, he could very easily take some of the clients with him. So how does Paul reconnect with clients without overstepping what his salesperson is doing?
My answer to Paul went along the following lines:
It would seem that the current client loyalty is with the salesperson rather than the business. Therefore, the task is twofold: build customer loyalty to the business (rather than you personally – because that will inhibit your growth) and get everything that happens in the sales area onto paper in the form of a system.
It’s not so much that you need to reconnect with the clients, more that you need to connect the clients with the business so that they associate the service they are receiving with the business name, not just the salesperson.
There are several ways in which you can reconnect and also value-add service:
o Set up a regular form of communication with clients, such as an electronic newsletter
o Institute a biannual or annual review of their portfolios at which you can be involved together with the salesperson
o Develop a status report on the property market, both locally and interstate, for the previous and coming six months and discuss their ramifications for market trends
o Offer seminars on the property market and/or similar topics.
In this way, you are letting them know who you are and affirming your credibility and that of your company, and giving them more reasons to stay with the business, not just the salesperson.
You may have a great sales person, but what happens when they leave? When you have great systems, you have a great business.
When it comes to matters of tax, most people don’t know what they don’t know! That’s why seeking out expert help is important.
The key to running a good business is finding experts, such as an accountant, business coach, bank manager or lawyer, who can add value.
When the end of the financial year approaches, the focus for most businesses is on how they can minimise their tax. But you should work with your accountant several times during the year not just at the end of the financial year. Quite often cashflow issues at this time can reduce your options for reducing your tax.
A trustworthy accountant who can work with you on developing strategies to take your business forward, is not easy to find. Many accountants are either busy tending to compliance or don’t have the skills to be a business adviser. Still, you shouldn’t give up the search.
The key thing to remember is to see your accountant well before 30 June – after that date there’s nothing that can be done to improve your tax situation for the previous year.
How to find an accountant
The best way to choose a trustworthy accountant is to ensure they are a member of professional association and/or come with a personal recommendation.
o Ask your friends, family and other contacts (but remember, what works for someone else isn’t necessarily going to be right for you)
o Tap into the referral networks of your lawyer, financial planner or bank manager
o Call or visit the websites of professional associations, such as CPA Australia or the National Institute of Accountants (NIA). The CPA Australia website has a ‘Find a CPA’ quick link (www.cpaaustralia.com.au)
Here are some general answers to accounting questions frequently asked by small business owners:
What payroll methods can I use to reduce my employees’ tax bill?
A salary sacrifice arrangement is also commonly referred to as salary packaging or total remuneration packaging. It’s an arrangement between an employer and an employee, where the employee agrees to give up part of their future entitlement to salary or wages in return for the employer providing them with benefits of a similar total value.
Many of my staff require vehicle for their work. What is a novated lease?
A novated lease is a three-way arrangement between the employee, the financier and the employer, where a vehicle is leased under a finance lease in the employee’s name and assigned to the employer by way of a novation agreement. The employer recovers this amount from the employee’s salary package. The lease, the FBT and the operating costs associated with running the vehicle are deducted from the employee’s gross salary, therefore reducing their income tax.
Can I reward my staff without increasing their tax bill through cash bonuses?
Yes, use other methods such as hampers or tickets to sporting or cultural events. If the benefits are less than $300 and are irregular, then generally they’re not subject to fringe benefits tax (FBT).
What tax deductions can be made for the home and serviced office? Can I claim part of my mortgage repayment?
It’s not recommended to claim part of your mortgage repayment, as it could become partially liable for capital gains tax (CGT) if you sell your home (your residential property is usually exempt from CGT). This may also apply to council rates and water bills.
You can claim utility bills by estimating the percentage of business use (based on the number of rooms utilised). You should make a reasonable estimate of the area used for the business, for example, one third of the property equals 33.33% of the bill.
All of your office furniture and serviced office fees will be tax deductible. For simplified tax system (STS) payers, all assets less than a certain value means a straight deduction. On other hand, for non-STS payers, all items need to be depreciated at a percentage, as per the Australian Tax Office (ATO) guidelines (visit www.ato.gov.au for more exact details).
Therefore, it’s important that you engage a qualified accountant to ensure you receive the maximum tax deductions.
What records should I keep?
Keep all invoices to support a claim (for five years). If you lose receipts/tax invoices, make sure you have secondary evidence such as credit card statements, bank statements, a petty cash book or diary evidence. In the case of flood or fire, make a statutory declaration and keep the insurance claims documentation.
Can I claim entertainment expenses if I have a meeting at a café or restaurant?
If the meeting is arranged to discuss a business proposal and you simply have a cup of coffee and a biscuit, this cost would generally not be seen an entertainment cost, but a legitimate business cost.
It is recommended as a good business practice/policy to keep a diary with some notes from the meeting – for instance minutes of the meeting, who attended, reason for the meeting and so on.
If we travelled overseas for a business conference, can we claim the expenses? What if we included a side trip for personal reasons?
All travel expenses for business purposes are tax deductible. A side trip to Disneyland would be excluded from the calculation, as it’s non-deductible. Again, keep a diary to show what’s business and what’s personal and have a chat with your accountant if you’re not clear on this.
Are any courses we attend tax deductible or just ones related to the business?
Courses, seminars and any professional development (including business coaching) that is designed to bring in more revenue for the business is tax deductible.
Can I claim my dry cleaning?
This is very hard to claim, as the ATO’s view on this strictly classifies what is a uniform (it must have a logo or be registered with the ATO). A uniform is not a suit or shoes that you wear everyday, with the exception of protective shoes. The argument that you need to look presentable is not a valid one. If your income depends on your image eg a TV presenter it would be worth discussing this with your accountant.
What happens if I get audited?
You will be asked to provide all the documents to support your claims in the tax return. Your accountant is not responsible for the expenses that you claim, as the Australian tax system works as a self-assessment and whenever you sign the tax return, you’re signing a declaration that all expenses claimed in your tax return are correct as per your advice.
How can I legally reduce my tax bill?
o Use a qualified accountant who will claim the maximum deduction for you
o Talk to your accountant several times a year
o Keep a good record of all of your expenses (even the ones that you’re not sure about it), such as communication bills and consumables, postage, advertising/promotion, travel, motor vehicle (keep a log book for a minimum period of three months and renew every five years), bank fees, merchant fees, interest on business credit cards and loans and gifts for clients.
This information is provided as a general guide. You should seek your own detailed accounting advice to suit your individual business circumstances. Remember – that advice is tax deductible!