Many business owners think you need to increase sales substantially to make more money. But often that’s too difficult, especially in the short term.

Take, for example, the prospective client I met a year or so ago in difficulty.

He kept on and on about increasing sales to new customers. But I worked out that his average sale per customer and his prospect conversion rate were so low that he needed 3,750 meetings with prospective customers in the next year just to get back to breaking even!

There’s another way to make more money, which is to increase your profit margins. Same customers, same level of physical sales, same systems, no more staff or extra overhead costs, existing premises and capacity—isn’t that a thought?

Here are 10 tips:

Make sure you know your up-to-date, overall gross profit margin. It’s no good using estimated inventory figures or working from the figure ... Continue reading]]> Many business owners think you need to increase sales substantially to make more money. But often that’s too difficult, especially in the short term.

Take, for example, the prospective client I met a year or so ago in difficulty.

He kept on and on about increasing sales to new customers. But I worked out that his average sale per customer and his prospect conversion rate were so low that he needed 3,750 meetings with prospective customers in the next year just to get back to breaking even!

There’s another way to make more money, which is to increase your profit margins. Same customers, same level of physical sales, same systems, no more staff or extra overhead costs, existing premises and capacity—isn’t that a thought?

Here are 10 tips:

1. Figure out your gross profit margin:

Make sure you know your up-to-date, overall gross profit margin. It’s no good using estimated inventory figures or working from the figure in your last Annual Financials. Prepare some interim accounts to the last month-end from your MYOB accounting software. Using the inventory system in MYOB means there’s no need for a stock take. Get some benchmarking figures from your accountant. How does yours compare to the industry average?

2. Analyse your profit margins

Your overall gross profit margin could be deceiving. Find out the gross profit margin on each of your products and services, and, in addition, analyse your gross margins over different business divisions, product categories, suppliers or customer categories according to your business. This way you can identify both low margin or loss-making items and profitable activities or products. Then you can stop selling low margin lines and focus on the ones that work.

3. Increase your prices

Yes, I know it can be difficult. But often we business owners are more worried than our customers about price, and, let’s face it, our overheads are going up all the time. Yes, we might lose the odd customer — hey, won’t these be your worst customers? However, if your margin is 50%, a 10% increase in prices means you can lose 17% of your customers yet be no worse off!

4. Review all your prices

Do you charge all customers the same price? If so, why? You’ll invariably find that some are less price sensitive than others, especially if they’re not paying for the bills themselves, e.g. government or larger organisations. Have you increased your prices to match supplier price rises and kept up with the competition?

5. No discounting

Discounting can be the death of many businesses that don’t realise how badly this destroys your margins. At that same margin of 50%, if you discount your prices by 10%, you need a 25% increase in sales just to stand still. Say goodbye to your day off!

6. Don’t compete on price

Differentiate yourself in other ways, whether by giving superior value, going the extra mile or reducing all the other (non-monetary) costs of doing business with you—effort, time, anxiety and emotional costs. See my blog on Adding Value Made Easy.

7. Take cash discounts from suppliers

It’s normally a much better deal than trying to delay payment, even if you’re borrowing.

8. Prevent theft

Whether stolen by staff, customers, losing cash is very costly. Do you have anti-shoplifting or theft prevention systems in place, even for staff? Do you balance your tills? Who does your banking?

9. Watch supplier bills

Check these personally. After a while you’ll get a “feel” for things which aren’t right. Don’t be surprised to find that you’ve been overcharged for goods or services you haven’t received or been billed at the wrong prices.

10. Use inventory systems

Use the inventory system on MYOB to keep track of your inventory. You’ll find you have less working capital tied in inventory, suffer less theft and stock obsolescence, know when you’re running out of products that are selling well, and know exactly how much each of your products cost you without wading through old purchase invoices. It’s easy, and it works well.

Increasing your margins is all about making the most of what you sell right now. As Jay Abraham, that fabulous US marketing guru would say, “Get everything you can out of all you’ve got!” And yes, buy the book of the same name; it’s a great read!

Like it or not, income tax is high in New Zealand. As those of us in business know, it can be a struggle to pay in lump sums especially when the prices of what we buy keep going up, and our customers and clients lack the cash to pay for our goods and services. Therefore, it is very important to make sure that we’ve done all that we can to maximise our tax deductions.

Here are some practical things you can do to place yourself in the best possible position to maximise your tax deductions:

Keep good books and records

Yes, maybe it’s not very exciting, but nevertheless, it’s the key to capturing all your business costs and expenses as tax deductions. With online accounting software, it’s a lot easier than it was, so your excuses are wearing thin!

Keep all receipts and invoices

With the move towards a paperless environment, this would require a bit more ... Continue reading]]>

Like it or not, income tax is high in New Zealand. As those of us in business know, it can be a struggle to pay in lump sums especially when the prices of what we buy keep going up, and our customers and clients lack the cash to pay for our goods and services. Therefore, it is very important to make sure that we’ve done all that we can to maximise our tax deductions.

Here are some practical things you can do to place yourself in the best possible position to maximise your tax deductions:

Keep good books and records

Yes, maybe it’s not very exciting, but nevertheless, it’s the key to capturing all your business costs and expenses as tax deductions. With online accounting software, it’s a lot easier than it was, so your excuses are wearing thin!

Keep all receipts and invoices

With the move towards a paperless environment, this would require a bit more discipline than it used to. If you don’t want to waste toner and paper, set up some electronic folders in which to save everything, and adopt the US date format so that it’s all organized according to each month and year.

Get a great, proactive accountant and pay them the going rate

Don’t just stick with the same old accountant out of blind loyalty; move to one who is interested and will help you save tax. To get the best from your accountant, it is very important to tell them what’s going on, and promptly supply them with all the information they need. It’s also vital to get one you can ask questions of without fear of receiving a huge bill every time.

Do some research, and get a book or two on tax

Don’t leave it all to your accountant because getting involved yourself will make a big difference. Google tax deductions (just New Zealand, of course), and have a browse. Books on tax in New Zealand for the layman are unfortunately few and far between and get out of date rapidly. The best one on tax deductions, Slash Your Taxes Now by Peter Sibbald, is now way out of date. Use it only for ideas, and check each book carefully for up-to-date edition.

Don’t ask the IRD

 It’s the job of the IRD to collect tax, right? So why on earth would you expect them to go out of their way to tell you how to maximise your tax deductions? In addition, they tend to be trained to just deal in individual areas of tax rather than tax as a whole. Nevertheless, many taxpayers think they are saving money by asking the IRD rather than an accountant!

Use a business bank account, and channel all business expenses and costs through the account.

With different channels to spend money (or channels smart entrepreneurs have invented to get you to spend your money!) such as credit cards, store cards, suites of multiple bank accounts, Bartercard and Paypal, it’s easy to lose track of all your business expenses.

The way around this  is to use a specific business credit card or business bank account, and channel all business expenses and costs through that account. Set up an AP or a DD so that the credit card bill is paid from the business bank account.

Consider alternatives

Tax is very complex, and there are often alternative ways of claiming a tax deduction. I find that the more common the tax deduction, the more complex or greater number of alternatives there are.

Take motoring costs for example. Do you bite the bullet and just pay the FBT,  charge the FBT equivalent to your advance account, keep the vehicle in your own name and claim the generous (!) mileage allowance, do likewise but claim AA rates, or use a vehicle just for business? In circumstances such as these, it’s important to consider all the alternatives and see what’s best for you.

Grey areas

Despite all the tax legislation and IRD pronouncements on this or that, there are still many grey areas in tax. For example, consider the use of home for business. Just how do you apportion power costs without a separate meter? Or allocate the appropriate property costs of working from your yard and maintaining a security gate like my mechanic client who works from home?

And how do we work out the amount to claim for areas that are used for both business and domestic purposes? It’s necessary to adopt an approach based on the facts and your specific circumstances, which you can support with everything documented in full to protect you down the track.

As with many areas in life, the key to success in maximising your tax deductions is common sense. Invest time, do some research, get organised, and seek out good advice. It’ll pay off handsomely!

The information provided here is of a general nature and only applies in New Zealand. You should not act upon this information without obtaining appropriate professional advice and only after a thorough examination of your particular circumstances by an experienced tax adviser.

 Looking at buying a business?

There are many reasons that drive people to consider buying a business. Maybe they have been made redundant from their employment and they need to “buy a job.” Maybe they discovered an opportunity they can take advantage of being in the right place at the right time, or they want to expand their business quickly.

Here are my top 3 tips to guide you through the decision making process:

 1.  Due Diligence is a must before any offer is made.

Due diligence consists of conducting a detailed review of all aspects of the business you are looking to buy, particularly in relation to its strengths and weakness, whether they exist now or could arise later.

What are the items to look at?

Most people spend more time planning their holidays than they do planning their business. I strongly believe this statement to be true. Many business owners fail to plan because they get too busy. They are also often focused on the wrong things, such as running a tight ship, rather than investing in the appropriate resources to enable the business to grow. The upshot of this is that in many cases, the owners run out of hours in the day to hold regular Board or management meetings, and it is extremely rare to find a small business with the discipline to hold an annual planning session for the year ahead.

Going back to the original statement, you would have to think that business owners do not spend much time planning their vacations either (if, indeed, they even take them!). So my conclusion is that the amount of time allocated to planning is pitiful.

I ... Continue reading]]>

Most people spend more time planning their holidays than they do planning their business.
I strongly believe this statement to be true. Many business owners fail to plan because they get too busy. They are also often focused on the wrong things, such as running a tight ship, rather than investing in the appropriate resources to enable the business to grow. The upshot of this is that in many cases, the owners run out of hours in the day to hold regular Board or management meetings, and it is extremely rare to find a small business with the discipline to hold an annual planning session for the year ahead.

Going back to the original statement, you would have to think that business owners do not spend much time planning their vacations either (if, indeed, they even take them!). So my conclusion is that the amount of time allocated to planning is pitiful.

I considered calling this article Strategic Planning for SMEs, but I had a change of heart, fearing that the term Strategic Planning might scare off many of the readers of this blog. Let me make something very clear; I am not advocating that you write a 39-page business plan. Most business plans are not worth the paper they are written on and rarely see the light of day once they have been written. What I do think you should be doing is holding an annual planning session, preferably facilitated by an independent professional. (For example, if you have a proactive accountant, he or she could play this role very effectively.) The desired output of such a session is a concise action plan with clear accountabilities for implementation.

In our business, we have adopted the One Page Plan format promoted by international growth expert, Verne Harnish (www.gazelles.com.) Our process has been as follows:

1. Annual planning session with all managers and directors: We work through our core values, our BHAG (big, hairy, audacious goal) and then agree upon our 10-year target. We then pare that back to 3-year, 1-year and quarterly goals and set the key priorities for the year ahead—and how we will measure the progress towards those priorities.
2. Follow-up session with the entire team: we assign individual accountabilities around projects and key performance indicators (KPIs). All of these must feed through to the company priorities.
3. Quarterly review meetings (management followed by team): update, revise or raise the bar on targets.
4. Weekly team meetings with the entire team: each team member gives a brief update on progress.
5. Daily 7-minute management meetings: we make commitments to each other as to what we will achieve that day. Agenda: what’s up; daily metric; where are you stuck?
6. Daily 10-minute meeting with all team members in the office: same agenda as for the daily management meetings.

This process has seriously improved the way in which manage our business. When I look back from where we are now to the time we started our One Page Plan process, the number of projects we have implemented has been phenomenal.

Another equally viable alternative is to follow this simple process, which I have regularly used in planning sessions with smaller businesses. It goes like this:

1. Determine profit improvement potential.

As part of engaging a client in a planning session and determining and strengthening objectives, I demonstrate the profit improvement potential in the business by looking at what-if scenarios based on tweaking the key drivers of revenue, cash and profit. This is why it is helpful to get your accountant involved in the process.

2. Discuss different financial scenarios.

I prefer to discuss three scenarios, which I loosely call Low Growth, Medium Growth and High Growth. Working with the business owner, I determine the scenario with which the owner is most comfortable (it needs to be both achievable and stretching), and we then lock in that scenario.

3. Discuss key points for attention relevant to the preferred scenario.

Prior to the planning session, I have the business owner answer a series of questions that have he or she thinking about their performance in a range of different areas of their business. In the planning session, we then go through the responses and pay particular attention to those issues that need to be addressed to ensure the preferred financial scenario has the best chance of being over-achieved.

4. Develop an action plan.

Your most important tool in the planning session is a ream of flipchart paper. You will use this consistently throughout the day. When an idea comes up, capture it on the flipchart paper. By the end of the session, you should have paper plastered all around the walls. During the day, you can refer back to previous issues and remind yourself of what you felt was important. Out of this emerges the action plan.

The key to a powerful action plan is relevance. Your must be able to discern a clear link between the items on the action plan and the achievement of the goals and objectives that you have agreed upon. Short and concise beats long and waffly every day of the week.

As you consider the validity of an item proposed for your action plan, you should consider why you are proposing this particular action item. To what greater gain does its implementation contribute? To which specific objective does the action item pertain?

In our coaching work with accounting firms, we allow just three projects to be entered onto the 90-day action plans prepared by our clients on a quarterly basis. We have found that implementation is higher and much more focused with a small number of items on the action plan.

Let’s take ourselves back into the meeting room toward the end of your planning session. We are nearing the end of the planning session. There is flipchart paper all over the walls, and it is time to pull everything together into a coherent plan. Here is how you do it, and feel free to pass on this process to your independent facilitator if he or she does not have a process of their own:

• Move to the first flipchart paper. (It is important to number your pieces of flipchart paper so that you can summarize in an orderly fashion.) Spend no more than a minute summarizing the discussion you had that led to the points noted on that piece of paper.
• Go through each point in turn. If a point is duplicated elsewhere, cross it off. If several points can be categorized together, bracket them as one action point.
• Move to the next piece of flipchart paper, and repeat the process. Go around the room until you have discussed them all.
• Write down the top three projects that you will commit to implementing in the next 90 days. Think long and hard about these projects.

Double check your projects by ensuring they stand up against the following questions:

• Going back to our preferred financial scenario, which dimension of the business is this project aimed at? (For example: increasing the number of customers, increasing average transaction value, improving margins, etc.)
• Specifically why do you feel this project is important? (Guidance: what is the critical success factor that requires attention?)
• Who is going to be accountable for the delivery of the project?
• By when will it be implemented?
• What goals will be achieved by implementing this project?
• How will you measure progress and outcomes in respect of this project?

If you follow this process, you will note that it is essential to revisit the plan every 90 days to ensure the projects you selected have been implemented, that progress is being made toward the financial scenario you selected and that appropriate accountability is in place to ensure implementation. Once again, your proactive accountant can play an important role here.

Don’t fall into the trap of being all consumed by what your business does. As the owner, it is critically important that you step out of working ‘in’ the business at least once a quarter and spend some quality time planning your business (and personal) future. With the steps provided in this article, I trust I have given you a way to do that.

Do you spend more time planning your business, or your holiday?

I once had a client in the UK who used to save tax by never paying any of his takings into the bank. He was a sort of cross between Arthur Daley and Del Boy—a loveable rogue—but I liked him a lot, as he was always cheerful and smiling, no matter what scrapes he got into. Eventually, however, he came to grief; his wife left him because she never had any money to pay their bills and the IRD bankrupted him when they caught up with him!

Now whilst my UK client’s method of saving tax is as old as the hills, it’s not for the faint hearted nor for those who like to sleep soundly. For most of us, there are better ways to save tax. Why don’t we talk about my client who owns a successful hairdressing business—we’ll call her Amanda, although of course that’s not her real name. ... Continue reading]]>

I once had a client in the UK who used to save tax by never paying any of his takings into the bank. He was a sort of cross between Arthur Daley and Del Boy—a loveable rogue—but I liked him a lot, as he was always cheerful and smiling, no matter what scrapes he got into. Eventually, however, he came to grief; his wife left him because she never had any money to pay their bills and the IRD bankrupted him when they caught up with him!

Now whilst my UK client’s method of saving tax is as old as the hills, it’s not for the faint hearted nor for those who like to sleep soundly. For most of us, there are better ways to save tax. Why don’t we talk about my client who owns a successful hairdressing business—we’ll call her Amanda, although of course that’s not her real name. Amanda also saved tax by not banking some of the takings until her best friend Lizzie (a hairdresser, too) was on the receving end of a nasty IRD audit, which resulted in a $35,000 additional tax bill.

After that, and following a disappointing chat with her anything-but-proactive accountant who used to work for the IRD (who incidentally hadn’t been to see her for 5 years), she was referred to me by a friend. I went to meet her at the salon. She recognised at long last that she needed a proactive accountant who would save her tax yet keep her out of trouble with the IRD.

This is some of what I discussed and suggested to Amanda:

• Amanda and her partner Mark (who stayed at home and looked after the children) had a big home mortgage and no business borrowings. They also had a substantial amount of money owed to them by their company, which they couldn’t withdraw because the monies were tied up in the business. So first step: restructure their finances, borrow in the company’s name and repay part of their loan to the company to redeem their home mortgage. Same security, so no increase in interest rates, yet now they could deduct the loan interest in the business. Wow! So simple, and yet so tax efficient!

Tax saved = $4,000 per year

• Amanda liked cars so had bought an Audi A6 “on” the business. Her accountant had advised that because of the private use of the car, Fringe Benefit Tax should be paid without even suggesting any of the alternatives. Because Amanda and Mark were still owed money by the business, I suggested that they stopped paying FBT and instead, made good the FBT equivalent via their loan advance to the company. No more writing cheques for FBT or struggling to work out the FBT payable, a tax so stupidly complex that many business owners (and accountants!) ignore it!

Tax saved = $3,300 per year

• Amanda and her staff use lots of hairdressing products making their customers’ hair look lovely and kept about $15,000 of these products on hand. Every year-end, Amanda would work out the value of these and send it to her accountant along with the products in stock that were sold to customers. In the tax world, these are called consumable aids. You’re not normally obliged to include these in your annual stock value, but the accountant had, just to be “on the safe side”! Reducing your stock value means lower profits. Lower profits means keeping more of what you earn, which is something we all deserve very much in this day and age.

Tax saved = $4,200 one off

• Now the hairdressing products sold to customers for use at home were valued at cost, but often, Amanda would be upset to see that a lot of the stock became unsaleable due to the arrival of brand-new products and different varieties. She could not bring herself to dump these, so she kept them and duly included them on the annual stock list sent to the accountant. I asked how much was involved, and Amanda worked this out to be $6,000 worth, so I advised Amanda to substitute realisable value instead of cost, which reduced the stock value further.

Tax saved = $1,500 one off

• Writing down those unsaleable products had reduced the overall stock value to just under $10,000, below which small businesses don’t have to bring stocks into their annual accounts. So no stock at all had to be included for tax purposes. How good is that?

Tax saved = $2,600 one off

• Mark was busy with the kids and did not do much work for the company, so the accountant had said it was far too risky to pay him a shareholder salary, which meant his enticing and valuable low tax rates were going to waste whilst Amanda paid tax on all their income at 33%. Looking at this further, I asked Mark to keep a note of just how many hours he worked for the company so he could be paid. In addition, he was a director and attended directors meetings. Lastly, he had been obliged to provide personal guarantees for the rent and a couple of the bigger suppliers. So I suggested he was paid for the work he did at an hourly rate, receive directors’ fees and a guarantee fee to reflect the risks he was taking, all of which meant there was less to allocate to Amanda, and we could instead use up Mark’s 10.5% tax band.

Tax saved = $1,500 per year

• Although Amanda had a salon, she also worked from home in the evenings and used the garage for storage. No claim had ever been made for use of home because the accountant felt it too much trouble to work out. Out came the tape measure; the job was done in 5 minutes, and there was nice big deduction!

Tax rebate = $1,250 per year

• Amanda’s and Mark’s kids go to kindergarten, and they also make regular donations to charity every year, as Mark’s dad had died of cancer. No one had ever told them they could claim a tax rebate for these, and the accountant had said it wasn’t his job. I made a claim for them going back 4 years, which took me 15 minutes at most.

Tax rebate = $2,750 one off and ongoing $750 per year

• Three years ago the business had a bad year, and profits had dipped right down such that Amanda and Mark were entitled to Working for Families for the first time. The accountant had never mentioned it. I made a claim in arrears. The cost in my fees was $250, but the rebate was worth it.

Tax rebate = $7,750 one off

By now you’re getting the picture, right? Yet each and every one of these strategies, applied appropriately and in the right circumstances, is quite legal and just takes advantage of existing tax law and practice. Good accountants in the know use them every day to save their clients tax, legitimately and safely, without risk from attack by the IRD. Whose tax savings strategies would you rather use: Arthur or Del Boy’s or Amanda and Mark’s?

The information provided here is of a general nature and only applies in New Zealand. You should not act upon this information without obtaining appropriate professional advice and only after a thorough examination of your particular circumstances by an experienced tax adviser.

I believe I merged successfully in 2009 with my current business partner. At the same time, we saw another operation go through a similar merge, but their approach led to confusion, resentment and eventual break up. While every merger has its problems, we approached it with our eyes open, having scoped each other out for years. We also addressed issues before or as soon as they arose to minimise damage. We actually benefited from lessons learned but freely admit we made plenty of mistakes in the process. A merger is not an acquisition; it is a full consolidation of two previously separate small businesses. A true merger in the legal sense occurs is when both businesses dissolve and fold their assets and liabilities into a newly created third entity. This entails the creation of a new business.

Dos

Whether your business is growing or struggling, managing your cash flow effectively is absolutely essential, and for many, the very key to business survival. You’ve probably heard the statistic that over 60% of businesses that go bust are still profitable, but just ran out of cash.

From a cash point of view, a business is like a sponge—it sucks in ever increasing amounts of cash, and, to get it back out again, you have to give it a good squeeze. If the business is growing rapidly or badly managed, squeezing hard won’t help, as the sponge will just get bigger and bigger!

You’re a small to medium business owner and as such, you are a risk taker whether you accept that or not. You have foregone a stable employment income for life as an entrepreneur. You experience all the advantages of self direction and being your own boss but with the headaches of unstable income flow and business risk.

According to a credit reference checking agency, Veda Advantage, over 90% of businesses survive their first year but less than 45% last 9 years or more.

Risk is a small word, but it comes in many forms for a business owner to deal with. So how can you manage risk?

The first step is to identify the specific risks that could affect your business, and then you can formulate a plan to mitigate those risks. Just ignoring risks by not looking for them is no solution!

Categories of Risk 

Maintaining profitability amidst a struggling economy and rising costs is a real challenge for many businesses at the moment. According to our latest MYOB Business Monitor, one of the top 3 things keeping business owners awake at night are price margins and profitability levels.  It seems more of us are seeing increasing costs and are finding it harder to lift our prices with more and more competition.

If you’re looking to help make your business more profitable, it isn’t always just a question of selling more products or finding more business. Taking a good long look at your business model, and making some minor adjustments – especially to the way you think about pricing and procurement – can make a real difference.  Here are our 4 top tips for improving profitability.

1) Make well-informed pricing decisions

Pricing can be one of the most important factors in determining profitability, so it’s important you are ... Continue reading]]>

Maintaining profitability amidst a struggling economy and rising costs is a real challenge for many businesses at the moment. According to our latest MYOB Business Monitor, one of the top 3 things keeping business owners awake at night are price margins and profitability levels.  It seems more of us are seeing increasing costs and are finding it harder to lift our prices with more and more competition.

If you’re looking to help make your business more profitable, it isn’t always just a question of selling more products or finding more business. Taking a good long look at your business model, and making some minor adjustments – especially to the way you think about pricing and procurement – can make a real difference.  Here are our 4 top tips for improving profitability.

1) Make well-informed pricing decisions

Pricing can be one of the most important factors in determining profitability, so it’s important you are making the best possible decisions about price levels. That means ensuring you have the best information available.

This is really a question of looking closely at your prices and examining how they compare to competitors, and how any changes in price have affected sales.  It might be useful to work with your accountant, when reviewing price points & cost inputs. A detailed understanding of these factors will help you make better pricing decisions.  We have an online GST & price calculator here, that you might find helpful.

2) Understanding the value you provide

As well as taking a clear-eyed look at your pricing levels, it can also pay to sit down and examine how exactly your business provides value. This means understanding your customers’ expectations and needs. Are they willing to pay a premium for better service? Are they attracted by low prices?

Once you understand what value your business is providing – and can communicate it clearly to our customers – you can begin to alter your offerings to maximise the value, which can allow you to increase prices without losing customers.

3) Establish a process for frequent profitability reviews

Since such a large part of improving your profitability is about getting better information about price levels, consumers’ preferences and sales records, it can be helpful to institute an organised process for reviewing profitability.

A quarterly review is an excellent tool for doing this. Setting aside time to take a detailed look at your key metrics around profitability, pricing, and costs gives you the assurance you are as informed as you need to be, but also gives you frequent chances to refocus your business towards better productivity.

For businesses in faster paced industries, a more frequent review may be required.

4) Build a relationship with your suppliers

An enduring relationship with your suppliers means they will be more likely to offer you choice and flexibility when it comes to procurement. It will also mean you will have greater standing in any negotiations around prices or costs. Getting a supplier that better fits your needs can be a real boost for profitability.

Julian Smith | General Manager | MYOB

Do you really want your business partner’s spouse as your next business partner?

Here is the problem: You have built up a business with a partner and worked well together successfully. However, you know that if your partner died, you would really not want to be running the business with their spouse. Most likely your business partner’s interest in the business is left to their beneficiaries who don’t have the skills, experience or expertise to contribute and/or may just not be compatible with your personality.

You may wish to purchase the outgoing partner’s shares in the business but don’t have either the funds or anything in writing giving you the right to purchase at an agreed price.

Sit with your partners and adviser, and ask some simple questions: