IT'S A NEW YEAR- A GOOD TIME TO PLAN AHEAD FOR YOUR BUSINESS

Reasons for Preparing a Business Plan

• It is a valuable tool  for the development, expansion and ongoing operation of a  business, whatever the sector the business may be in
• It helps the business to work smarter, not harder
• It will be necessary when you are selling the business to investors and lenders
• It specifies the objectives of the business and how these are to be performed  
• It enables you to think through your ideas and exposes possible shortcomings (such as lack of sufficient market research) that you need to address.
• It forecasts  the assets that will be required by the business to achieve these objectives (plant, vehicles, buildings, staff, cash)
• It enables the businessman to establish what commitment he is prepared to make to the business.  
• It helps build commitment because you have publicly named your objectives.
• It gives your business a sense of direction and action timelines to reach desired targets.
• Acts as a measure against which actual results can be measured and appropriate steps taken for variances .  
• It allows you and your staff to measure progress towards targets, which leads to a shared sense of achievement (and makes recruiting more good staff easier)
• It builds credibility and convinces others (including lenders) that you know what your doing and where the business is heading.
• Planning significantly increases chances of success.   It enables you to perform better than you would without a plan.   Research shows that businesses that undertake regular business planning have higher profit margins than those that do not.

Main Components of a Business Plan

Cover Sheet

• Identifying information e.g. business name, address, principals  

Executive Summary

• Outlines the business plan, its major objectives, how these objectives will be accomplished and the expected results
• It is just a summary so should be reasonably short

 Table of Contents

• Gives headings and page numbers for contents of the plan

History of Business

• History of business

People

• Information about the principals- their positions, experience, skills, qualifications
• Numbers to be employed and in which job functions  

Location

• Location
• Premises
• Will premises be sufficient for business plan
• Details of lease agreement if applicable

Product

• Listing of its products and services.
• Any trade marks, patents held
• Past and future development of the product or service.
• Major suppliers of raw materials

Marketing

• Target trading area and customers.
• Promotion strategy
• Distribution strategy
• Price strategy
• Competitors- who they are, their strengths and weaknesses

Financial

• Indicate the expected cash flow, profit and loss and balance sheets, financial ratios
• Project asset purchase requirements, funding required
• Should show prospective investors and lenders why they should provide funds, when they can expect a return, and what the expected rate of return on their money is.

Appendixes

• Organisational charts
• Resumes of the key staff and directors
• News items
• Letters of recommendation.

 

7 STEPS TO PERSONAL FINANCIAL FAILURE

Want to face endless financial difficulties during your lifetime? There are a few simple things you can do. For all of you who are sick of hearing all the talk about ways to improve your financial position, you are not alone, judging by the popularity of these 7 easy steps to financial failure.

1. Pay no attention whatsoever to where your money goes
Keeping a budget, tracking spending and knowing how much is in your bank account could all potentially make you realise that you are frittering away your hard earned money on unnecessary expenses. This might lead you to feel that you need to cut down on these areas, so try to avoid any knowledge of your financial affairs.

2. Use credit cards for anything and everything
Of course, you want to be sure that you never pay the card off in full, and of course rather than shop around for a card that suits your spending, make sure that you choose one with high interest and fees and no rewards. This way you can be sure to pay interest close to 20% on everything that you buy, while getting nothing in return.

3. Don’t save anything
If you can possibly spend everything you earn, then do. The last thing you want is to have money lying around tempting you to invest it – that would only achieve financial security.

4. Invest in last year’s winner
If, despite all your efforts above, you do wind up with leftover money (we can hardly call it savings if it is purely by accident that you have it at all) then try to invest in whatever performed best last year. Since financial and investment markets move in cycles, the odds are against you doing well with this strategy.

5. Ignore asset allocation
Pay no attention whatsoever to asset allocation principles, or the level of risk you can tolerate. Five years to retirement? High volatility is the name of the game if you want to lose the lot. If you are still young, go ultra-conservative to make sure your investments don’t keep up with inflation and lose spending power over time. Ideally, keep it all in a bank account that pays 0% interest.

6. Put all your eggs in one basket
Diversification would only reduce the risk of you making a poor decision on one investment, or increase the chance you’ll pick something of high quality.

7. Never seek professional advice
A professional should make sure you avoid steps 1-6, and they’ll probably find other ways for you to save more, invest wisely and be financially secure both now and in the future. 

Of course, if the idea of sleepless nights, paying endless amounts of interest, and living out your retirement solely on superannuation doesn’t appeal, then maybe financial failure is not for you – in which case you would want to ensure that you avoid the suggestions in steps 1-7 above.

SECONDHAND GOODS AND GST

For GST, secondhand goods are goods previously used and paid for by someone else. It doesn't include:

• new goods
• primary produce (unless previously used)
• goods supplied under a lease or rental agreement
• livestock
• secondhand goods consisting of any fine metal of any degree of purity.

Land is considered to be secondhand goods.

The same rules for GST and tax invoices apply to secondhand goods as for all other goods liable for GST. 

Secondhand goods if seller is not GST-registered

If the seller is not registered for GST or the goods are private (exempt), there will be no tax invoice or GST charged. However, if the purchaser is GST registered they can claim a credit for GST purposes.

Regardless of the accounting basis you use, you must make a payment before you can claim the credit for the purchase.

In these cases the purchaser must record:

• the name and address of the supplier
• the date of the purchase
• a description of the goods
• the quantity of the goods
• the price paid.