While the home office has become a necessity for many of us over the past year.  Those who have run businesses from home for years say most people get it wrong when trying to create the right environment and mindset for working and running a business from home.

Retailer Dave Strutton splits his time between his store on the outskirts of Adelaide’s CBD and his home office in the Adelaide Hills.

He believes we must maintain a functional workspace in our homes at all times to accommodate the changing nature of work and the threat of sudden lockdown.

“Over the past year, many business owners have found themselves having to work from home for the first time – either full time or in hybrid situations – and I expect that will continue for some time,” Mr Strutton said.

“For that reason.  I think it’s more important than ever that we have a dedicated home office that mirrors as much as possible our workstations in our business premises” he said.

The owner of a Howards Storage World franchise says the key to a good home office is setting up a space that is properly laid out, well equipped and kept neat and tidy.

“Everyone’s homes are different.  What works for one won’t necessarily work for another, but you don’t have to have a big space – or even a separate room – for a home office.

“Look for customised and adjustable shelving and storage units that allow you to set up a workable space that utilises whatever space you have available.

“This also gives you the flexibility to move things around should your circumstances changes.”

• Location – Start by selecting a quiet room or space away from distractions and interruptions, such as children, pets and the TV. Don’t plonk yourself on the dining table or spread work across the kitchen bench.  You’ll end up with food stains on essential documents as you rifle through your things looking for a phone charger! Set aside a permanent space just for working or studying.
• Equipment – Make a list of everything you need – not just a desk and chair. You’re basically recreating your office workstation, so you will need essentials at your fingertips. Drawers and draw dividers, overhead shelves, filing systems and a cable organisation kit will help you maintain order. A wireless charging pad and labels are also useful. If you’re splitting your time between work and home, put items that will be moving between locations in a separate box or basket for a seamless transition.

Workplace expert Maureen Kyne from Maureen Kyne and Associates works from her home in regional Victoria.

She believes there needs to be a clear delineation between your designated work and home zones.

“The lines between home and work have blurred, and there are many pitfalls when it comes to working from home or dividing your time between home and the office,” Ms Kyne said.

“You have to be disciplined to create the right environment and the right mindset.  Those who are splitting their time between home and the office really should be aiming for ‘hybrid harmony’.” 

• Dress code – get dressed in the clothes you would normally wear for work. Ms Kyne also applies make-up and puts on her high heels before entering her home office and shutting the door behind her. Dressing appropriately gets you into the right frame of mind.
• Behaviour – Don’t keep any items nearby, such as books and magazines you’re reading, avoid distractions and don’t get in the habit of doing chores or housework, such as putting the washing on or cutting up veggies for dinner during work hours.

Both experts agree a well-planned and well-organised home office can make working from home a more enjoyable and productive experience.

Check out our guide on buying supplies to set up your office

Dave Strutton is the owner and operator of Howards Storage World in Adelaide.
Maureen Kyne is the principal of Maureen Kyne & Associates

The post Home Office Hacks For Business Productivity appeared first on Small Business Answers.

WHY should I worry about Wi-Fi black spots?

 Wi-Fi is designed for in-building use with a range of about 10 to 30 meters. Its range is such as to not interfere with someone else’s Wi-Fi network in the next building. Wi-Fi is unlikely to pass through water or thick steel but can pass through walls which will reduce the signal strength.

The better the connection you have (signal strength), the more reliable and faster your connection will be.  Remember, though, your internet connection will never be faster than the broadband plan you have subscribed to.  See our guide on Internet Plans and Provision.

WHAT do I need for Wi-Fi?

Everything you need to know about setting up a Wi-Fi router and a computer network can be found in this guide.

HOW to Improve Wi-Fi?

Our sister publication has created a simple guide for improving Wi-Fi performance.

1. Place your Router in the middle of all the Wi-Fi action
   The best place to position your Wi-Fi router will be in the centre of where the devices (or people) are located in your office.
2. Connect data guzzlers to your Router by Ethernet cable
   Your Router will have some ethernet plugs on the back of it.  Any device that uses lots of data like a network backup drive or a busy printer may be best directly connected via an ethernet cable.
3. If your place of business is dual-level or longer than 30m, you need Wi-Fi extenders
   Some Wi-Fi routers are better than others at transmitting; however, the 10m to 30m limit is real, so a product called a Wi-Fi extender placed within the range of the Wi-Fi router will then extend the coverage a further 10 to 30m.
4. The trick is Ethernet backhaul – not Mesh Wi-Fi
   Referring back to point 3. A long ethernet cable plugged into the Wi-Fi extender (especially if out of Wi-Fi range) will provide you coverage at a greater distance and at a faster speed.

HINTS – How to improve Wi-Fi

A speed test like www.speedtest.net  will give you an indication of what speed your internet is running at.  Do a test with a PC connected by ethernet cable directly to your Router, then do a test over Wi-Fi. This will show you what the best case is and if you have a problem.  The faster speed is better.

Visit Gadget Guy to read the one-page guide on Kill Wi-Fi blackspots in 5 simple steps

SUMMARY – Improve Internet speed

Put simply, if you have poor internet, look for a solution.  We suggest you start by understanding your broadband plan speed. Test its actual speed, then the speeds of your Wi-Fi connected devices in your office.

You will be pleasantly surprised by the effect of fast internet on your and any employee’s productivity.

The post How to Improve Wi-Fi appeared first on Small Business Answers.

WHY buy a Van?

If you need to transport goods in an enclosed vehicle that will not fit in a car, that needs to be protected from the weather and be kept secure whilst still being very maneuverable and economical to run, then a van might be the answer for you.

The small van is synonymous with small businesses whether it’s a tradesman, delivery driver, or even a mobile barista.  They offer great cargo carrying capacity whilst driveable on a standard license and can still be easily parked.

WHAT factors should influence my decision when buying a Van?

When considering buying a van you should evaluate the following:

Specifications

• Size – When you consider your needs, vans will normally be described as a short wheelbase or long wheelbase, which is an indication of length.  Think about what you need to carry and thus your required dimensions. Width is also key if, for example, you need to be able to load a standard size pallet in the rear. The bigger the van the harder it will be to park and manoeuver.
• Roof height – Being able to walk around upright may be a requirement but remember you might now no longer be able to drive into a loading dock or carpark that has height restrictions.
• Payload – What is the maximum weight the van will carry?  Note this measure will also have to include vehicle occupants and fuel weight. A twin rear wheel axle will allow additional weight to be carried.  It is important to know that a gross vehicle weight over 4.5 tons will require a special driver’s license.
• Engine – Traditionally petrol gives better speed whilst diesel provides more pulling power and fuel economy.  Another advantage is a diesel engine will have a longer service interval and designed to do more kilometres keeping your van on the road longer.
• Drive train – An automatic transmission although more expensive may significantly reduce your driving fatigue if you are negotiating city traffic.  In the country, an all-wheel-drive variant might be needed to get you the places you need to go.

Passenger considerations when buying a van

• Doors – Door configuration can also be very important depending on how you want to use the van.  Say you want to reverse up to a loading dock, then barn style doors with 180-degree hinges allow you to do this.  Sliding doors on both sides allow better access to contents etc. If you have ladders on the roof will a lifting tailgate allow you to access them?
• Weekend warrior – If the van will also be your transport during your time off is there any considerations you need to make like extra seating or provision to carry a bike or surfboard.
• Seating– If your van is to carry the workers and the tools, extra seating is available in some models.  Indeed most car manufactures offer a small minivan in the same format for moving up to 12 people (a special drivers license is required if you have more than 12 seats)
• Comfort – Vans typically have a very upright seating position.  If driving all day consider this carefully when test driving vans. You might also be able to pay extra to have more creature comforts like climate control air-conditioning.

Nice to haves when buying a van

• Parking aids – Rear parking sensors and a camera will greatly assist in reversing into those hard to get spaces.
• Safety features if available might save someone’s life or making driving just that much simpler and could include adaptive cruise control, hill start, speed limiters, blind-spot monitoring, autonomous emergency braking, automatic headlights, lane departure, road sign assist, etc.
• Internal fit-out – You want your van fit for purpose and lots of options are available and could include interior lining, refrigeration, safety barriers, built-in navigation, racking, draws, tie-down hooks, on-board power, etc.
• Accessories – A van can become more versatile with optional accessories like roof rack, side awning, roof ladder, interior lighting, towbar, rear step, cargo barrier, grab handles, etc.
• Branding – A van is also a mobile billboard and gives you the canvas to create advertising on its sides to promote your business.  Some businesses might want to stay incognito if the van carries expensive items.
• Warranty & reputation – Check to see how many years warranty you get if used in a commercial environment, also check online forums where others may share their experiences of driving that vehicle.
• ANCAP Safety is a measure of how safe your car/van will be in the event of a crash.  Ratings for vans in Australia can be found here. Simply the more stars the better.

Running costs

• Capped servicing – Some van manufacturers will offer a fixed price servicing plan which helps you with your budgeting.
• Running costs – Be realistic on just how much it will cost you to keep your van on the road and use this cost in your business planning to understand costs vs revenue.
• Repairability –  Chances are as a commercial vehicle your van will do many more kilometres than a car.  This unfortunately increases your chances of having an accident.  How easy is it to get replacement panels and at what cost?  Because of the nature of this being a commercial vehicle it is likely the interior fittings will be designed to take some punishment.
• Insurance will differ by make and the drivers’ age and driving record.  Vans generally will do more kilometres so more likely to be in an accident and will attract higher premiums.

HOW do I buy a van?

What is your budget? Just like cars there are dealers for both new and 2^nd hand. You can of course buy privately.

Car dealers might offer drive-away deals and special financing deals to encourage you to purchase.  Look out for bonuses like roadside assistance or scheduled servicing thrown in.

Check the latest rules as you might be eligible for an instant asset write-off from the ATO.
Car dealers might also offer fleet deals or a special price for ABN holders.  The GST on your vehicle may also be claimable

Note: Registration is generally more expensive for a business vehicle but is also claimable as an expense.

HINT – Buying a van

Before you rush out to buy a van there are a few further things you need to know. 

Vans are built to a price and that normally means cheap.  Although some vans come with a 5-star safety rating some do not, and due to maximising cargo space might be very unsafe in a head-on collision. Please consider what your personal safety is worth. In Australia, vans were not required to have stability control (reduces the chance of rollover in a poor traction situation) until November 2017 so consider this when buying 2^nd hand.

Vans are not cars, thus comfort, aesthetics, and multimedia will not be of the same standard. A van is designed to carry weight and as such suspension will be hard and unforgiving in corners. When the van is empty it leads to poor rear braking and front heavy handling.  Drivers often sit ahead of the front tires increasing the risk of cutting a corner early.  Rear and side vision is restricted. Engine noise will be greater if the engine is below the driver’s seat.  

A great guide for buying 2^nd hand vans can be found here

SUMMARY – Which Van

Which small van or which large van is the one that meets your business needs best!

If you own a delivery van every friend and family member will want your help on the weekend.

That aside it is a great representation of your business from both functionality and advertising.

The post Buying a van – which one? appeared first on Small Business Answers.

WHY will a new mobile make a difference to my business?

Whilst evaluating a smartphone you should consider just how important this device will be in helping you run your business.  For example, beyond making phone calls you could be using it to take food orders, process an EFTPOS payment, make roster changes to staff shifts, take photos, check your bank balance, pay your staff, enter a receipt or check your current business profit.

WHAT you need to know about Mobile Phone Retailers

You can buy a mobile phone outright or via a phone plan.  Buying a phone outright means paying upfront versus via a plan where the payment is spread across several years. Which way is cheaper depends on whether a mobile phone carrier has subsidised the phone via a phone plan to encourage you to join their network.  Subsidies normally only exist on the most popular handsets to encourage customers to join their network.

Be sure to read our essential guide on Mobile Phone Plans. Each of the phone vendors has lots of information on their web sites and by visiting a phone shop or consumer electronics retailer you can see many models on display including some powered up for trial. Different retail stores will be aligned closely with one phone carrier and range might be limited based on who the carrier is aligned with.  Traditional retailers like JB HiFi or Harvey Norman will have a greater range to choose from.

HOW to make a decision on Mobile Phone Features

You should consider which of the following features when deciding which phone will suit your needs:

• Android vs IOS – or Google vs Apple. The choice you make here will limit which phones you actually consider and possibly the apps available to you. If the app you need to use is only available on one platform then your decision is made.  You might also consider what you are familiar with today.
• Country of origin – almost all phones are made in Asia, a lot in China.  They may be designed somewhere else and the software will come from an American company.  Most recently there have been lots of security concerns relating to the country of origin but there is no proof either way of its validity.
• Prices – whether buying a phone outright or on a plan a $3000 phone is still expensive (especially if you lose or break it).  You are likely to have the phone for 2 to 3 years so it is worth considering a mid-range phone from about $700 up and it will do everything you ask of it.
• Screen size – This is a diagonal measure of the screen represented in inches.  The larger the screen the easier it is to see content such as text or pictures.  The downside is a larger screen means the phone will be bigger to hold and store as well as consuming more battery life. Some users may prefer a small smartphone.
• Screen resolution – More expensive phones have a higher resolution which means you will have a crisper image on the screen. Also consider what the screen is made of which will determine its likelihood to break.  Gorilla glass is good, the bigger the number the better.
• Processor – Just like a PC the better the processor the faster the phone will complete tasks. More expensive phones have faster processors.
• Battery Life – Some brands don’t even quote battery size, for example, 3000mAh. In reality battery life is dependant on how much you use your phone and for what.  A phone vendor will normally promote battery life if that is a key feature of their phone. Some phones have user-replaceable batteries.  Battery life does deteriorate over time based on the way and number of times you charge your phone.
• Carrier frequency – A phone bought overseas may not be suitable for Australia.  Carriers in Australia use different radio frequencies to make mobile phone networks work which may be different again overseas.  Make sure the phone you choose is designed to work with the carrier you choose.
• 3G, 4G, or 5G – This refers to the technology behind how your calls and data are sent and received. The key benefit is the bigger the number the faster the data (and lower latency which is reaction time) will be.  Note this is not your allowance but rather how quickly you can download a large file. The phone and the phone network need to be compatible.
• Camera – It is amazing the photos you can take on a phone but this is also a measure of price.  Consider if you want that functionality and how much you are prepared to spend on this feature quality. Camera features include quality represented as megapixels, zoom, wide-angle, telephoto, focus ability, low light, and software manipulation features such as stabilisation.
• Warranty – For how long and what will they include?
• Reliability/Service – How easy is it to get phone support or repairs and where would you have to go to get a repair done?
• Cost of Repair – If you break a phone screen what is the cost of getting a new one.
• Rugged – Some phones are ruggedized which means they will better survive a drop from a height. Great if you are a tradie.   At the very least we suggest you consider an optional case to protect your investment.
• Water-resistant – You should never take your phone swimming but a lot of phones these days will survive a brief dunk in water without failure. This is a key feature but is likely to deteriorate over time with knocks and bumps.
• Storage – How much memory does the phone have and or can you add a microSD memory card to expand it.  If you are taking lots of photos or storing large files on your phone you should consider this. Cloud storage is also a feature and Google or Apple will provide a certain amount free after which you pay.
• Other – Other things you may consider are weight, design, colour, bendability, and how you unlock your phone.

HINTS

When getting a new phone consider what optional accessories may make your life easier. These may include a second charger – one for work one for home, a car charger and holder, a case and/or screen protector to keep it safe, or a power bank to make sure you always have power.

SUMMARY – Visit GadgetGuy.com.au for Phone reviews

Unfortunately, even if you buy the best phone available today a new one will come out before you know it.  You might have phone envy but remember this is a key tool so make sure the features make you more efficient in your business.

Be sure to visit our sister publication GadgetGuy for all the latest news and reviews on Mobile Phones.

The post Buying a Mobile Phone (Smartphone) appeared first on Small Business Answers.

Now we certainly do not want to talk you out of this amazing journey as many successful millionaires grew from a small business.  The most important thing you can do here is plan well, understand the effect it will have on you and your family, and understand the implications if it does not work. This guide will give you a process to work through to maximise your chance of success.

WHAT is important to consider before you start a small business?

Here at Small Business answers, we want to bring you the best-unbiased advice and in this case, one of the best resources on this subject is available from the Federal Government website.

As part of your research you should visit https://www.business.gov.au/guide/starting.  Here you will find information to guide you such as, are you ready, making decisions, planning, etc.  You can even find information here on government grants, events, and training that may help you get started.

A checklist is also available that will guide you through the most important factors you need to consider.  This includes checking your rationale for starting the business, determining the right business structure, tax implications, and insurance. There are tick boxes for you to check off and in the long run, will put you in a much better and safer position. https://www.business.gov.au/Planning/Business-plans/Starting-a-business-Checklist
Be sure to read our essential guides on business structure, tax, GST, record keeping, marketing, building a website,  insurance, or just explore our many guides designed to make your decision-making easier.

HOW do you write a business plan

A business plan will normally include the following:

• A summary of what your business will do
• Where will it be located
• If it will employ staff, what will that structure look like?
• What products and services will you offer, where and for how much?
• How will you manage risk including insurances?
• Are there legal considerations?
• What do you need to buy in the way of fixed equipment like a computer or inventory to sell or make something?
• What hours will you be open and how will you collect payment?
• How big is the market potential and do you have competitors?
• Who is your customer and where are they?
• A list of Strengths, Weaknesses, Opportunities, and Threats of your business (SWOT).
• What is your Sales and Marketing Strategy?
• What is your vision and what objectives need to be met to get there?
• How much money do you need to start your business?
• How much revenue do you believe you can make?
• Will you make a profit or a loss?
• At what point you will actually pay yourself
• When do you plan to break even?
• What information have you used to back up these other questions?

It all sounds a bit daunting! But if you work through these points, rather than starting a business on a gut reaction, you will have a much clearer picture.  Downloading the government guides really do make the whole process that much easier. Business plan guide and business plan template available from  https://www.business.gov.au/planning/business-plans/how-to-develop-your-business-plan

HINT

Another great place to consider learning more is via a TAFE course where you will benefit from a face-to-face discussion on the subject.

The great feature of the Small Business Answers website is we are pulling together the most frequently asked questions in starting or running a small business. Please continue to visit this site as we continually update with new information to help you succeed.

SUMMARY – Start a Small Business templates and checklists

Make sure you a ready to start a small business and have done your homework on the opportunity. Use some of the fantastic templates and checklists available from the government to help you build out a business plan.

The post How to start a small business? appeared first on Small Business Answers.

If you do not have the available cash, further details on ways of acquiring finance can be found in our guide on Financing.

WHY should I lease versus buy?

To understand which is best in your situation it is best to understand the various advantages and disadvantages of each.

Leasing advantages include: making lower monthly payments rather than buying upfront, getting a fixed financing rate instead of a floating interest rate, benefiting from tax deductions on leasing costs, conserving working capital and avoiding cash-devouring down payments, and gaining immediate access to the most up-to-date business tools. The equipment also shows up on your income statement as a lease expense rather than a purchase. If you purchase it, your balance sheet becomes less liquid. The leasing company may also be responsible for repairs saving you maintenance costs.

Leasing disadvantages: You may pay a higher price over the long term versus buying. Leasing commits you to retain a piece of equipment for a certain period, which can be problematic if your business is unstable. Some brands or models may not be available to lease.

Buying advantages: Allows you complete control over your purchase including selection, modifying, and selling the asset for cost recovery. You can control repairs and service intervals. In certain cases, you can claim depreciation as a tax deduction. No agreements or contracts to agree to.

Buying disadvantages: Requires you to have cash flow and might force you into buying a cheaper model. If technology is outdated you have no easy upgrade path other than selling. Unless a warranty or insurance policy exists, repairs and maintenance will be an additional expense.

WHAT do I need to understand about leasing?

If you are just starting a business you may find it difficult to lease equipment. Lease companies will look at your lack of credit history but may consider your personal rather than business credit history during the approval process.

There are four types of equipment leases:

Finance Lease: Ownership of the equipment is with the business. It is on-balance sheet. Lease payments are tax-deductible. At the end of the lease, the equipment is returned to the Lessee or purchased by the business for an agreed price.

Operating Lease (Rental): Ownership of the equipment remains with the Lessor (it is off-balance sheet). Financing payments are tax-deductible. At the end of the lease, the lessee returns the equipment to the lessor or purchased by the business for an agreed price.

Commercial Hire Purchase: Equipment is owned by the business and it is treated as on-balance sheet finance. Only the interest portion of the payments is tax-deductible. The business can claim depreciation deductions on the equipment. At the end of the term, the equipment remains with the company. Sometimes there is a residual value payment required.

Chattel Mortgage: Equipment is owned by the business and the interest component of the payment is tax-deductible. The business can claim depreciation deductions on the equipment. This is a traditional secured loan where the equipment acts as security for the Lender. At the end of the finance term, the borrower remains as the owner of the equipment.

Watch for balloon payments, here you make small monthly payments with a large payment at the end. While this allows you to conserve your cash flow, the final balloon payment may be more than the equipment is worth.

If your lease requires you to return the equipment at the end of the lease and it’s worth less than the value established in the contract, you may be responsible for paying the difference.  Also, watch for additional charges such as wear and tear.

HOW to buy or lease equipment?

Buying equipment is fairly straight forward however when selecting the right product you should consider:

• What you need both now and in the future?
• Would it be more cost-effective to have someone else’s plant or machinery do the task for you?
• Do you have the right environment or space to operate this product?
• Is the quality or reliability of product critical and does the extra cost make sense?
• Do you need to buy new or will 2^nd hand work?
• How easily and/or quickly can the product be repaired or serviced?

If you decide to lease, the above list also applies. You can secure an equipment lease through:

• Banks and bank-affiliated firms. Banks may offer advantages, like lower costs and better customer service. Check whether the bank will keep and service the lease transaction after it’s set up.
• Equipment dealers and distributors can help you arrange to finance using owned leasing subsidiaries or an independent leasing company.
• Independent leasing companies.
• Commercial leasing broker. Much like mortgage brokers, these people charge a fee to act as an intermediary between lessors and lessees.

HINTS

Every lease decision is unique, so it’s important to study the lease agreement carefully. Compare the costs of leasing to the current interest rate, examining the terms to see if they’re favourable. What is the lease costing you? What are your savings? Compare those numbers to the cost of purchasing the same piece of equipment, and you’ll quickly see which is the more profitable route.

SUMMARY – Leasing versus buying equipment

There are advantage and disadvantages of both buying and leasing.  Make sure you:

1. Understand the tax consequences.
2. Make sure the product and the financing meets your needs.
3. Understand what the implications are at the end of a product’s useful life or the end of lease terms.

Your accountant should be able to advise you in these matters if you require additional assistance.

The post Leasing vs Buying Equipment appeared first on Small Business Answers.

The research shows that most Australian SMEs (53 per cent) are optimistic about the year ahead. Despite the ongoing pandemic and the expected end of JobKeeper in March, which according to 55 per cent of respondents, helped or was vital in keeping their business afloat during the health crisis.  

 However, SMEs’ feelings of optimism are tempered by the knowledge that more than two in five businesses will need to access additional capital in the form of a loan this year. One in four (26 per cent) say as a direct result of JobKeeper ending. On average, those seeking a loan intend to request just under AU$100,000 ($97,225). 

 According to Martin Seward, Vice President of Global Commercial Services for American Express Australia, “Many businesses are still feeling the full impact of the Covid-19 crisis, while others have rebounded with their sights firmly set on growth. We have taken a transformational step to evolve our business beyond our existing card offering to help support businesses on their journey forward.”

 The American Express research reveals that the top business resolution for nearly two in five SME operators this year is to try new ways to grow their business. More than a quarter of that group believe this growth could be more significant with the appropriate amount of capital.

Top 5 reasons for accessing capital in 2021:

1. To grow/expand their business
2. Buying equipment
3. To ensure their business’s survival
4. Marketing and advertising
5. To cover essential operational costs

 And yet, nearly half of SMEs seeking funds from other lenders during the pandemic said they faced challenges – from finding the process complex to being asked to use personal assets as security.

 Of those small businesses that attempted to gain capital for their business from other lenders during the pandemic, top challenges they faced were:

• Finding the process complicated and lengthy
• Needing to approach several lenders before they were successful
• Not receiving the entire amount of funds requested

“We don’t believe SME’s growth should be hindered by red tape or unneeded complexity, and certainly not at the expense of having to put your house or business on the line – something that extraordinarily a third (32 per cent) of SMEs needed to do to raise capital during the pandemic.  Our unsecured business loans remove some of the existing complexity that comes with many other loans on the market, with funds deposited into a customer’s account typically within two business days of approval,” concluded Seward.

 American Express is partnering with ODX to provide small business with a digital and frictionless experience to tap into financing.

“We are proud to work alongside such an iconic brand in the pursuit of making working capital readily available to businesses in Australia to fuel the recovery” added Brian Geary, President of ODX

About the American Express Business Loans

• Unsecured funding from $5,000 to $250,000
• Annual interest rates from 10.95% p.a.
• Terms of 6,12,18 or 24 months
• Quick and simple online application process
• No set-up or early repayment fees. A $30 fee for a missed payment
• Fast decisions with funds usually delivered within two business days of approval
• Loan approval is subject to American Express eligibility criteria

For more information on Business financing read Small Business Answers guide on Loans & Equity Funding

_{About the research: The research was commissioned by American Express and conducted by Lonergan Research per the ISO 20252 standard. Lonergan Research surveyed 1,009 Australian small to medium-sized (up to 199 employees) business leaders. Surveys were distributed throughout Australia, including both capital city and non-capital city areas. The survey was conducted online amongst members of a permission-based panel, between 18 and 28 December 2020. After interviewing, data was weighted to the latest population estimates sourced from the Australian Bureau of Statistics as of the 2016 Census.}

The post The year ahead – without Job Keeper appeared first on Small Business Answers.

WHY do you need a loan?

You may need a loan to start or expand your business to take advantage of a growth opportunity.  Although harder to get, funds may also be acquired when times are tough or you owe money.

WHAT are the available Debt options:

Self-funding: If you have personal finance you can put more money into the business yourself.  You are of course entitled to get that money back without personal tax implications unless you pay yourself interest.  Other forms of finance, like investors and lenders, will expect you to have some self-funding before they offer you money.

A loan: We all understand the basic principle. Normally a bank lends us some money and in return, we pay it back in instalments plus some interest.  A bank wants the confidence it will get its money back so will look at your business closely to understand your turnover and assets.  A bank may require personal collateral, like your home, to secure the loan.  Banks are however not the only source of lending.  Family and friends are a source but tread carefully. If things go sour you could ruin friendships and possibly others’ livelihoods.  Other organisations like finance companies will also offer loans but be aware, the easier it is to get the loan the higher the interest charges will be to compensate for the greater risk they are taking.

Line of credit:  This is similar to a loan but gives you access to a predetermined amount of credit. You can draw down on that credit and pay back whenever you need it.  You will pay interest only on the outstanding balance.

Overdraft: This is a line of credit attached to your bank account that allows your balance to go below zero.

Invoice financing is a way for a business to borrow money against the amounts due from outstanding customer invoices.  The funding company will provide a percentage of the invoice value to you upfront and when the customer pays you will receive the remainder less the funding company fees.

Leasing: Instead of buying equipment you essentially rent/borrow in return for monthly payments.  A lease normally has a set term of 3-5 years the financier purchases it on your behalf and you then lease it back from them for an agreed (and fixed) monthly payment. When the lease is up, you can either re-finance the residual amount and continue a new lease on that vehicle for another set period or pay a final instalment for the ‘residual value’ of the lease and take ownership of the car. You can trade it in and upgrade to a new vehicle. A lease makes it simple to upgrade equipment like a car at the end of the lease. More details can be found in our leasing guide.

Asset financing refers to the use of a company’s balance sheet assets, including short-term investments, inventory, and accounts receivable, to borrow money or get a loan. The business borrowing the funds is providing some of its assets to secure the loan. Default on the loan and your assets will be taken away.

Store Credit:  Many retailers, for example, Harvey Norman, will offer their own financing package potentially with an interest-free period.  Generally the interest rates are high and failure to pay on time comes with large penalties.

Trade Credit:  As an example, you buy your supplies from a company and they give you a 14-day invoice due for payment in 14 days. Thus giving you 14 days to pay for what you have already received.

Factor Companies: A factoring company will buy your outstanding invoices from you for a reduced cost and then chase up the debt themselves.  It is a fast way to get cash but at a high cost compared to other methods.

HOW do I get a loan?

Finance companies also provide debt but must be registered, check the Australian Securities & Investments Commission (ASIC) register https://connectonline.asic.gov.au/RegistrySearch/faces/landing/ProfessionalRegisters.jspx?_adf.ctrl-state=1cuetuxolm_4

As part of the process of getting a loan your credit history, assets and income will be reviewed.

To understand and compare loan costs and  options from different institutions visit https://www.finder.com.au/business-loans

WHY do I need equity?

Equity is a great source of cash if you cannot either get a loan or a large enough loan.  It is also a method of spreading risk but assumes the equity provider believes they will get their money back plus some.

WHAT are the sources of Equity funding?

As a source of additional cash in return for a slice of the business, equity funding can be done in the following ways:

Self Funding: as before, you inject additional personal money taking a larger share (assumes you are not a sole trader)

Family or friends will take a share or partnership in your business in return for their money. Remember to consider the implications.

Private investors: Same as above but not a family or friend.  A new partner can often bring new valuable skills into a business.

Private equity/Venture capitalists:  These are firms who search for high growth potential businesses to invest in. They usually come with loads of experience and inject their management into the business. They often insist on a controlling percentage of the business.

Stockmarket: A small business is unlikely to list on the stock exchange but this complex procedure allows individuals to publically buy and sell shares in the business.  Shares are issued in return for a one time only cash payment.

Crowdfunding:  This is a very modern way of raising money for a business.  Essentially you ask a very large number of people to either invest or donate money in your business idea via the internet.  In return you give nothing if they donated, or if they invested, a product or a cheaper product when you are up and running, equity or money back with interest. See ASIC for more details https://asic.gov.au/regulatory-resources/financial-services/crowd-sourced-funding/

Government:  The government does not provide finance and is not likely to buy equity in your business however they do provide grants which may assist you greatly. The types of grants and assistance normally come in the following areas innovation, research & development, exporting, and business expansion.  Some information on grants can be found at https://www.business.gov.au/Grants-and-Programs

HINT

More information on funding options can be found at the Australian Small Business and Family Enterprise Ombudsman https://www.asbfeo.gov.au/resources/business-funding-guide

SUMMARY – Get loan or equity advice

We strongly recommend that you speak with your accountant or business advisor before committing to loans and equity funding options.  Always shop around for the best deal and always think carefully before doing business with family or friends.

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WHY should I pay my debts

If you don’t pay money that you owe to others, they have the right to recover those funds.  If you don’t have the funds, you become insolvent or essentially bankrupt.

Before January 2021 it was illegal for a business to trade if insolvent. The Australian government has introduced reforms that will allow a small business more time to restructure and survive the financial effects of COVID-19.

WHAT do insolvency reforms mean to me?

If you find your self insolvent and your debts are less than $1million, you will be eligible. Note that you must also have paid your employees their entitlements including superannuation and have your taxation lodgements up to date.

The small business reforms package consists of:

• A debt restructuring process providing a quicker and less complicated procedure for financially distressed but viable firms to restructure their debt.

• A liquidation process to allow faster and lower-cost liquidation, maximising returns for employees and creditors.

These reforms have been announced as temporary so at some point they will be removed!

Most importantly, this means that you can keep trading under your control while developing a debt restructuring plan.

HOW do I get help?

Traditionally you would need an administrator who would take control of your business which would be placed in voluntary administration.

Now a small business restructuring practitioner is recruited, which will reduce the complexity involved.

If you are facing financial stress, you should approach a practitioner immediately to discuss your options. There is a flat fee to do this but remember it is the difference between closing your business immediately and trading out of your insolvency.

The practitioner will work with you over up to 20 days to create a plan that your creditors must vote on.  If the plan is approved, the practitioner will administer the plan, including making payments on your behalf to creditors as set out in the plan.

HINTS – Small Business Reforms Package

A government fact sheet can be found here

You can find a registered restructuring practitioner here. Only a person registered with the Australian Securities & Investment Commission (ASIC) as a “registered liquidator” can act as a business restructuring practitioner.

SUMMARY – Can’t pay my debts

Key to your business success is good record keeping.  Knowing your financial position and understanding if your business has become insolvent means you may be able to trade out of your issues.  Alternatively, shut your business down without also destroying any personal assets.  The recent government reforms show sympathy and understanding of small business. They are making it easier to get back on your feet.

The post Can’t pay my debts – Insolvency Reforms appeared first on Small Business Answers.

This means for Small Business with a turnover of less than $50 million; you can immediately deduct the business portion of that asset for both a new and 2nd hand asset you have purchased until June 2022. Note that there are rules around passenger vehicles which in the 20/21 financial year have a limit of $59,136 unless a commercial vehicle with a carrying capacity of more than 1 ton or more than 9 seats.

We do recommend you keep good records and more information an record keeping can be found here.

This is welcome news for SMEs who have, to quote Queen Elizabeth from her 1992 address, endured an ‘annus horribilis’; firstly with the catastrophic bushfires in January then debilitating COVID for the most part of the year.

Under the new Instant Asset Write-Off scheme, businesses can now claim an immediate deduction of up to $150,000 for the purchase of new or second hand goods.  With this new arrangement, SMEs will pay less tax in 2019-20 helping business cash flow and withstand and recover from the economic impact of the Coronavirus.

For businesses with a turnover of under $10 million have access to a tax-free payment of up to $25,000 to help boost cash flow.  The threshold applies on a per asset basis, so eligible businesses can immediately write‑off multiple assets.

One business that has witnessed the momentum of the stimulus first-hand is Pickles.  As Australia’s leading marketplace for transport, construction, mining, aviation, vehicles, and salvage assets, Pickles has been inundated with enquiries and has been working with its SME vendors and buyers on how they can take advantage of the increased Instant Asset Write Off.

“Buying heavy equipment and machinery is a significant expense for any business, and with 2020 bringing more challenges than normal, the Government’s $150K Tax Break couldn’t have been a better reward for surviving the year,” says Pickles Director, Industrial, Bruce Connors.

Aside from the obvious advantage that buying used heavy equipment and machinery allows for a cheaper outlay, it also helps with resale value if and when a business does look to move on from its equipment. 

Connors adds: “The increased Instant Asset Write Off has allowed our customers to set themselves up for a strong 2021 while giving them a much-needed cash injection now.  We have seen a sales spike in earthmoving, haulage, forklifts, and general vehicles.”

Key benefits to SMEs

1. The instant asset write-off has been supercharged – threshold increased to $150,000 for businesses with an annual turnover less than $500 million.

• Accelerated depreciation scheme to support business investment – deduct an additional 50 per cent of the asset cost in the year of purchase.

• A cashflow boost will be provided to small and medium-sized businesses.

To check your eligibility for the increased Instant Asset Write Off go to ato.gov.au.

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