Issue Number 55 - September 2010

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1 INDEX Leadership 1 A Needs Analysis Can Assist 2 Do You Know Your Competitive Edge? 2 ATO Benchmarks 3 Business Plans - Questions To Consider Part 24 4 What's It Mean? 4 Characteristics Of A Well-Run Business 4 Issue Number 55 - September 2010 Leadership Why invest in developing leaders in your organisation? There are a number of key points to consider. A national survey of "business concerns of 2010" identified the following: "skills shortages will increase in critical roles and industries"; "staff turnover will be a significant cost"; and "leadership development will be the main priority for employers". The third forecast, if seriously implemented from top management down, will critically influence and minimise the negative effects of skills shortages and staff turnover. "The successful leaders of today must understand that their power rests with the people for whom he/she is responsible. To tap that power, the leader must abandon the old baggage of dominance, control and self centeredness" Don Argus, BHP Billiton Chairman, The Australian 25 March Managers and supervisors who are good leaders know how to retain staff by creating the environment in which people and teams normally work together to efficiently and effectively achieve common goals. They also understand that, like good health, good leadership is preventative in that it greatly lessens the "illness" of negative workplace occurring in the first place. Unfortunately, whereas it is difficult to convince managers that leaders development is an investment in "preventative medicine" many are willing to pay for cures by having managers and supervisors attend conflict resolution training which is focused on trying to remedy the problems after the "illness" has done its damage. We are endeavouring to assist clients to develop their leadership skills by making available papers and resources to assist leadership development in small medium enterprises. The leadership package includes: Teams and Teamwork Leadership - Making The Difference Developing Leadership - People Skills Developing Relationships and Trust Motivation Coaching and Counselling Delegation Problem Solving and Decision Making If you are interested in receiving any of the papers and other material comprising the leadership training packages, please contact us.

2 A survey form has been developed to provide a broad view of the leadership skills of supervisory and management staff, e.g. management, superintendents, supervisors, team leaders, foremen, or equivalent, who have an authority over others in an organisation. Questions asked address the leadership issues which have been identified as being very important for small medium enterprises. The results of the survey will identify issues relevant to a particular business. If you would like to receive the leadership development pre-facilitation survey form for use in your business, please contact us and we will forward this to you. A Needs Analysis Can Assist We are keen to assist you in the evaluation of your business to identify areas where additional work may be required to add value to your business performance. Some of the matters which we would like to discuss with you include: What are your key business concerns? Analysis and interpretation of financial results including: Sales, margins, stock turnover, team productivity? Debtors review - day's outstanding, debtors financing? Cashflow management/budget cashflow forecasts, submissions to banks/lenders? Government grants - have you heard of some grants that might assist you? Are you happy with your role in the business? Australian Taxation Office benchmarks - do you know how they might affect your business? Business plan update, or preparation, to document your strategies for future operation of your business? Business valuation - would you like to know what your business is currently worth? Are you planning to expand or sell your business in the next 2 years? How are your business and other investments performing against your wealth creation strategy? Risk management - have you evaluated the risk to your business and considered risk management strategies that you might take? What strategies need to be implemented to improve your business? Leadership training? Risk management advice? Management training? Human resources strategies? New premises? Corporate governance issues? New equipment? Succession planning/exit planning? Staff training? Family businesses? Business health check? Exporting? Government grants and assistance? Buying/selling a business? Business plans? Capital/loan raising? Budgets and cashflow forecasts? Leadership training? Cashflow management advice? Estate planning? Will you need to raise capital or loan funds in the next 12 months? Business valuations? What other services would you like to discuss with your accountant? If you have any queries on any of these items please contact us for a discussion. Do You Know Your Competitive Edge? In business you can never be everything to everyone. To be successful you need to come up with a specific proposition or compelling claim that is targeted at your customers in such a way that they would be foolish to go elsewhere. This is your 'differentiation' - your 'competitive edge'.

3 In developing your competitive edge, you need to consider what you have to offer that someone else doesn't:- What competitive edge can you present? Have you got happy customers? How do you create happy customers? What are the benefits of a small business in dealing with customers? Have you considered what the 'moment of truth' is in your business? A 'moment of truth' occurs every time your business and a customer come into contact. This may be direct contact, as in face-to-face, by telephone, by direct mail or indirectly by way of the delivery firm that you use as a sub-contractor. What your customers experience at these times will have a lasting impression. You need to know when a 'moment of truth' will occur and ensure that your team members and sub-contractors have been appropriately trained on how to react at that time. ATO Benchmarks The Australia Taxation Office is using benchmarking tables, in particular industries, to monitor information disclosed in income tax returns. The ATO has compiled the benchmarks over the last few years based on income tax returns lodged and some industry participation. The ATO has indicated that the benchmarks provide a snapshot of what, on average, is happening in businesses operating in a particular industry by providing a measure of various business costs in relation to turnover in regional areas and in capital cities. The ATO has commenced taking action against some tax payers where the ATO considers that the information declared in the taxpayers tax return has a significant variance to what the ATO believe is the benchmarked business model for that type of business. There is nothing to fear if full disclosure has been made of all income and expenditure and the end result for a particular tax payer just happens to be significantly different to what the ATO consider the benchmark for that industry is. However, if a business lodges a tax return which is of significant variance to the benchmark for that particular industry then, in all probability, a detailed review will be undertaken by the ATO into all aspects of the individual taxation return. Industries that the ATO has announced that benchmarks have been established for are as follows: Building & Construction Trade Services Administrative, support and personal services Health Care and Personal Services Professional, Scientific and Technical Services Manufacturing Other Services including Retail Trade Automotive Electrical Services Accommodation and food services Machinery and equipment repairs and maintenance Transport, postal and warehousing Video and other electronic media rental and hiring. If you would like to receive details as to the ATO benchmark for your industry, or a more detailed list of industries in the various services, please contact us. REMINDER: Export Market Development Grant applications have to be lodged by 30 November Please contact us if you require our assistance.

4 Business Plans - Questions To Consider Part 24 Human Resources Questions Have you reviewed your systems relative to the Fair Work Act and Modern Awards relating to:- 12 months parental leave? Cashing out of annual leave? Payment on dismissal? Redundancy payments? Have you implemented a small businesses' Fair Dismissal Code checklist? Have you reviewed all aspects of employment documentation? Does your business have an effective staff training program? Have you implemented procedures for employing new team members so that they will learn and stay with the business, including: Inducting new team members? Inviting new team members to participate in discussions in regard to the direction the business is going? There are over 50 questionnaires relating to the preparation of a business plan... in the next issue we will consider Debtors. What's It Mean? Cost of Goods Sold means The amount calculated in a trading and profit and loss account to represent the cost of the goods that were sold during an accounting period. e.g. one month. Cost of Goods Sold is the result of a calculation:- Opening Stock Plus purchases Plus freight inwards Less Closing Stock Equals Cost of Goods Sold. Gross Profit means Sales Less Cost of Goods Sold Equals Gross Profit. Gross Profit % means Gross Profit Divided Sales Multiplied by 100/1 Equals Gross Profit ratio. EXAMPLES:- $74,000 28,000 2, ,300 61,000 $43,300 $77,800 43,300 $34,500 34,500 X ,800 1 = 44% Characteristics Of A Well-Run Business There are many characteristics of a successful business; here we list some of them. Not all of them will be applicable to each business, but approximately 80% of them will apply to all businesses. Characteristics are: Personal Capacity And Development Customer Knowledge And Service Product/Industry Knowledge Excellent Systems Excellent Analysis Of Results Market Research/Marketing Cash Flow Management Stock Management Work In Progress Control Debtor Control Cost Control Selling Skills If you would like to discuss any of these items, please contact your accountant in our firm.

5 An Important Message While every effort has been made to provide valuable, useful information in this publication, this firm and any related suppliers or associated companies accept no responsibility or any form of liability from reliance upon or use of its contents. Any suggestions should be considered carefully within your own particular circumstances, as they are intended as general information only. Contact us: Collins Mellody P: F: E: W: Whitehorse Rd, Balwyn, VIC, 3103