Small Business Overview

BEGINNING IN BUSINESS

Small Business Overview

Alan Lewis AAccccoouunnttaannttss

www.lewistaxation.com.au

"A business in which all the critical management decisions are made by one or two people, without the aid of internal specialists"

1. Characteristics Of Small Business


95% of businesses are small

2. Size


Self motivated Seek business independence Very little knowledge of:

◦ general management◦ bookkeeping skills◦ management reports

Do not understand the "business of business"

Neglect can erode the business base

3. Who Are Small Business Operators?


75% failure rate within three years

4. Lack Of Success

Inadequate planning Lack of professional

advice Insufficient capital Management skills Bookkeeping systems Accounting systems


5. Particular Problems Facing Small Operators


Cashflow - especially payment of GST and PAYG tax

Lack of cash for growth Debt financing Cash management Taking too much money out Meaning of profit Poor debtor, stock, work in progress

control

5. Particular Problems Facing Small Operators cont'd....


Bank relationship Location Pricing Partner Delegation Big outside

organisations Disinterest by owners



People management skills Equity finance Succession Thinking through problems Mixing personal life and

business Staff relationships Major customers



What business are you in? Not understanding the market Relations Business Plan Budget and Cashflow Forecasts Lack of outside advice No strategic planning Empathy with customers



In focusing on the problems of small business

6. Government Attitudes


Cost of labour Charge out rates Documentation of estimates Control of business overhead

costs Break-even level Cashflow control - especially

related to GST and PAYG

7. Weaknesses Of Small Business Operator


Control of work in progress Progress claims Changing economic conditions Review of Government decisions Taxation Office requirements Taxation Office power to fine

7. Weaknesses Of Small Business Operator cont'd....


Subcontractor control Non recording of important matters on paper Funding of debtors, stock and work in

progress Submissions to banks and financial

institutions Regular periodic financial reports Budgets, Cashflow Forecasts and other

estimates



Relationship with bank manager Business Plan Board of Directors/Board of

Advice Customer Advisory Committee "Think Big" in small business! Quality control Keeping records in a shoe box



Get advice before starting Business Plan Budget and Cashflow

Forecast Accounting records Regular financial reports Review Budgets and

Cashflow Forecasts Conduct market surveys

8. How Do You Succeed In Small Business?


Contact with customers Business location Update your product and technology

knowledge Review quality control procedures Hire and keep good staff Use financial data for managing the business Know your customer

8. How Do You Succeed In Small Business? cont'd....


Use an accounting firm Some accountancy practices

offer a wide range of services Use professional advisors as a

team Appreciate that you will need

outside advice

9. Achieving Expectations