Today I’d like to talk a little about some of the “not-so-obvious” items you need to budget for in a start up enterprise, either new business or acquiring an existing one…

These items are in addition to your general profitability and cash flow budgets – while they impact on these budgets, the below items are generally one off, but can play an important part in the ongoing success of your business.

Firstly, you should always consider any lag in time before earning (and receiving) income – this lag time will depend on the type of business you are operating, but it can be significant!  The reason this lag time needs to be determined is that while you are waiting for the cash to come in…there will usually be expenses that need to be paid.

The other two items I want to mention are accounting and legal – every new business owner should seek accounting and legal advice before entering into an arrangement!

I’m sure you can all appreciate that seeking legal advice is of utmost importance and can save a lot of headaches down the track…

And in defence of my own occupation – most new (and second and third time around) business owners need to seek advice on the appropriate structure for their business and the taxation implications.  Included in this initial advice might also be assistance in setting up and training in accounting systems to enable a smooth operation in this area…all of this will be of help when it’s time to complete your Business Activity Statement (BAS) and year end financial statements and tax return.

So if you are considering entering the business world, make sure you allow for these items when you are preparing your start up budget, getting good quality advice from the start is paramount – of course if you need help, you know who to Contact!

Regards

It’s “Frivolous Friday” and after the busy few weeks I’ve had, I’m asking myself this question – where does the time go?

I know that I am considered a very organised person, you never find me far from my diary and I love making plans – even if it means they are well into the future!

I’m about to embark on my third trip to Melbourne in as many weeks – don’t get me wrong, I LOVE Melbourne…but how bad is it that it took me all yesterday afternoon to catch up on three weeks worth of washing?? (lucky I have a lot of clothes…)

We’ve just seen the end of March pass us by – as an Accountant this is a pivotal date!  Apart from being the end of another financial quarter, we are now well and truly into the business end of the financial year.

If you are yet to lodge your 2014 tax return and you’re after some help, please get in contact as soon as possible.  Likewise, if you are considering any major business changes or software installations…now is the time to start thinking seriously!

Of course I wouldn’t have my life any other way, I love being busy and making the time I can for my clients, my family and my friends.  Now I best go knuckle down for the day…there’s plenty to do – have a good one!

Regards

The start up phase of an enterprise can be a very exciting time – I love seeing clients turn their skills, passions and interests into a business scenario – the enthusiasm is infectious!

Of course there are risks associated with doing so and it is important to take the time needed to perform good quality planning and budgeting before entering into any business arrangement.

I consider start up enterprises to fall into one of two categories:

1. A new business being established or;
2. Purchasing an existing business

Each of these categories has different needs and requirements – we will take at look at some of these today:

1. A new business being established should consider the following in their planning and budget preparation:

• Product development and research or details of services to be provided
• Franchise fees if applicable
• Initial registrations and licences
• Sourcing property if required and entering into a lease arrangement (including security deposit)
• Plant and equipment requirements including software
• Marketing, logo and collateral

2. Purchasing an existing business requires attention to these items in their planning and budget preparation:

• Purchase price including adjustments for rent and staff entitlements
• Plant and equipment – retain or replace?
• Transfer of registrations and licences including assignment of property lease (and security deposit)
• Restraint of trade from Vendor

The above is not intended to be an exhaustive list, each situation should be considered on its own merits and you should seek professional advice before entering into either arrangement.

Keep an eye out for Part 2 where we will take a look at the general principles of budgeting that cover both categories.

Regards

FACT – everyone in business wants to be successful.

One way of measuring success is of course by looking at financial outcomes – but how can you determine if the outcomes are successful, unless you have a yardstick against which to measure?

In accounting, we use budgets as a tool to measure the financial performance of a business – but even within the concept of finance, there are different types of budgets which can be used by businesses.

For small business, the most common types of budgets I use are:

• profitability budgets
• cash flow budgets
• start up/establishment budgets

Over the next while, I’ll be taking a look at these budgets and some of the information you’ll need in order to prepare your own – or to have handy when you call me!!

The important thing to remember with budgets, is that they are a guide only – but they are invaluable in assisting with decision making in both the financial and operating areas of your business.

If you have a budget for your business, now is a great time to get it out of the filing cabinet and review it – and if you don’t have a budget for your business, stay tuned…

PS Household budgets are equally important, I’ll be discussing those a little later

Regards