Your Business Angels

In the opening paragraph of an article by Fiona Smith in the Workspace section of the Australian Financial Review on 24 August 2010 she says “ Employers should prepare for the greatest period of workforce destabilisation in more than a decade, as workers storm the exit doors, resigning at a faster rate than they could be replaced”. It goes on “ According to research by recruitment company Hudson, about 40% of those in the workforce have a goal to be in a new role within six months. At the same time, employers have ramped up hiring plans, with 84% acknowledging they laid off too many during the downturn.”

Many businesses will now find themselves between a rock and a hard place. Recently I was asked to prepare submissions for a group of companies that operate in supplying bricks and roofing and services to the building industry. I was told that these businesses have seriously good turnover but many of them had suffered dramatically through the last two years and were struggling financially.

If what I read in the industry reports from IBIS are true, the problem is further exacerbated for them.  The brick and roofing supply businesses have suffered more than the housing and apartment (units townhouses etc.) industries that they supply. But there predicted uptake over the next two years is more than the housing industry. In other words these businesses will now require more cash to buy the stock that will be needed to cover increased demand as well as have the money to bring staff on, and pay them in preparation for this development.

As businesses work out what to do to survive, change and grow even in the sluggish economy hiring and keeping and training staff is an expense that has to be taken on and worn during this recovery period. Too many businesses have probably cut their staff back too far and the stakeholders are doing too much and this probably needs to change. To make this change business stakeholder will need to identify the money that will be needed to bring staff on and hold them into place as the business reforms and grows.

I suggest that you get hold of the article or contact us and we will scan and email it. You may also wish to look at the Hudson website and subscribe to their bulletins and information to bring yourself up to speed. Like the heading on the Fiona Smiths article says “A resume tsunami is about to hit employers”. The upside is that for everyone leaving your business there may be someone trying to get in.

Over-staffed or under-staffed, if you know anyone struggling with their business profits, assure them that help is at hand.

A free consultation with Your Business Angels, (beginning with a conversation with a real person!) can arranged on 03-9898-2559.

In an article in the financial services section of the Australian Financial Review on Monday, 23 August 2010, Matthew Drummond reports that “Westpac Banking Corp has set aside 6 billion dollars and pre-approved lending facilities for small to medium enterprises; equal to a first of its current SME loan book, in an attempt to head off the suggestion that the sector is being starved of credit.” It further goes on “ Rob Coombe, who took control of Westpac’s retail and business banking division six months ago said he was annoyed at the sentiment that we are not out there to lend to the sector”.

Let’s get the facts right – banks do not lend businesses money. They pretend to lend businesses money by taking security over property or identifying where the property is so that they can secure themselves twice – once over the real estate property and also over the business. Try stepping into your local Westpac branch, present them with a business that’s running well and profitable, and a business plan that indicates sure understanding of the market, your ability to stay compliant and all the other things that demonstrate you’re a great business operator and ask for a loan for business development or growth. I’d be surprised if you can possibly get a loan here or at any other bank.

Banks have pushed the warm and fuzzy button. Have you noticed how many banks have exposed the name of their manager – we saw this before banks used to have managers than they were taken away, then it just became the person who took the application that went to some faceless credit manager. I’m yet to be convinced that our banks have changed; they are simply selling mortgages that are branded as business loans. I’m not fooled and when you pull this one I’ll ring a bell to say I think it’s garbage.

If you have read my book “ How Not to Commit Business Suicide” you will see that I strongly recommend you borrow the money under your own steam; that is the bank will lend you the money against your property and you will lend your money to your own business. In other words you will be the bank or creditor of your business – not the bank. If they got your house why the hell should they have your business?

The banks had deposits guaranteed and every piece of help from our government during the global economic crisis – banks were on welfare with my money – now they’re making massive profits again and as far as I can see still offer nothing new. A smelly deal for SMEs is still a smelly deal -it doesn’t matter how much perfume you spray around it. Don’t let banks give you a business loan, borrow it in your own right and you lend the money to your business. All of this of course is detailed in my book.

To thrive in business you must first survive. If you’re struggling with your ”business road map” – the journey that takes you successfully from sales to profit, call Your Business Angels now for a free consultation.

Once upon a time there was a stimulus package for a nation that was gasping at what may happen if the problems that has slammed into its big brother the United States, and it’s now distant cousin Great Britain. Right or wrong, the stimulus package was there to soften the blow for a nation that was facing disasters with an economy that would slow and fall away if something wasn’t done. The leaders of the nation came up with a number of ideas that included allowing some of the money that have been collected and tax to be put back into people’s hands so they would spend it (ideally the money would go around several times before the government got it back in tax money to spend on schools and other projects).

The other part of the stimulus package that didn’t seem to be formalised was the instruction to the tax department to ease up on collection of money.

No matter what the case the tax department was happy to cut deals where businesses had a long time to pay off their debt as well as stay current. Here’s the problem – we have reached the point where these businesses now need to pay their final a large payment if they have survived to that point in many respects we are still trudging through what looks like some sort of recession or ongoing difficult period.

Now the tax department needs to start chasing money because that’s their job and because the government really now needs to get all this money back in. The problems of businesses have been move through time rather than solved. If those businesses have to go into some sort of insolvency process it would be interesting to see if any of these insolvency firms have cut a deal with the Australian Taxation Office (ATO) who place a claim against those businesses for insolvent trading.

Has the government through the ATO actually encouraged insolvent trading? Can it now be argued that any business that had a deal with the ATO was encouraged by the Australian Government to trade while insolvent? In other words the difficulties the businesses will now find themselves in are old unresolved issues that existed before they were allowed to cut such a reasonable deal.

Companies, especially small companies or what we call “mums and dads” businesses where the stakeholders have risked everything, placed all their own property on the line to support bank loans, held on to their employees and keep paying them and tried to do whatever they could to keep going should never have to face claims of insolvent trading if it’s clear they have with good intention battled on to try and keep their businesses going – and especially if they have either an informal or formal agreement with the ATO an insolvent claim should never ever be placed against the stakeholders of these sorts of businesses.

Insolvency practitioners who are in the habit of send threatening “insolvent trading” letter to stakeholders who have battled and work hard to try and run a business should be called to task or should be calling the ATO to task for encouraging the business to continue. And what about the fact that maybe these companies have continued to at least assist with the economy in continuing to pay wages, pay creditors (or some creditors at least) and try and work through their problems?

In the coming year, as the ATO becomes far more robust in collecting their money and more business people face company or personal insolvency, I want to know about any insolvency firm that wants to bully the stakeholders in “ mums and dads” businesses and company. Especially were the ATO has been cutting deals and allowing them to trade on. We need to get these business owners back out there, not working out how the hell we will punish them.

Because Your Business Angels has been working in the pre-insolvency and insolvency world for 15 years we have now made a decision to try and advise anyone who has been bullied by insolvency practitioner, where we feel a claim of insolvent trading is clearly unjustified and a piece of bullying. Clearly we will need to get legal advice on how to include the ATO involved in any insolvency claims because they have been quite frankly and clearly party to it.

The best way to get through any recession or sluggish period in our economy is to get people out there working in their businesses providing services and creating a grand economy. There are lots of businesses struggling it’s time to make sure that small businesses survive as much as possible without the punishment that can come when the business or business owner faces business or personal insolvency. Sure we want everyone to be able to pay their bills on time, especially when they are trading with other businesses and it’s important that if the business needs to reform itself is a fair amount of knowledge and skills that business owners need to pick up. And it certainly time to review how all this works in Australia.

To hell with our ugly attitude of “tall poppy syndrome” let’s go back to celebrating having a go. It’s not illegal to fail in business, nor is illegal to fail on more than one occasion – entrepreneurship and risking is not valued enough by any of the political parties (politicians retiring on great pensions) or our bureaucracy (sweet jobs and perks for life).

Dear SMEs

(Sweat. Miserable returns and Extremely long days)

You probably missed seeing my name on the ballot papers, the one that said tick here and make Gavin Waring “Prime Minister” for a couple of years. So here’s what I would’ve liked to deliver, but we will probably not get from our Prime Minister after the election outcome..

1) You will get from day1 Fair Commercial Contract law that has a serious dose of unconscionable conduct to travel with it. Small Business Australia will no longer support the cash flows of large corporations by being screwed on payments, sickening bullying contracts and foul treatment. Real legislation that spells out what is fair without the need for a lawyers feast ever to prove anything.
Allowing the million or so small businesses to breathe and develop, create and employ will get this country much further than the big bully boys. Small Business Australia works and serves the community, the economic value as well as the social benefits of this legislation would reach well in the future – this would have been delivered by the end of the week (Canberra will now work SME hours)

2) Superannuation needs an overhaul and change in what it really is. It’s a tax currently at 9% on Small Business Australia to have a middleman invest it in large corporates. The excuse that it’s the savings for the future for Australians will be exposed as the fraud that it is. The Governments of Australia will in future take up some of the responsibility of promising to care for future generations, and these funds now may be available for Australian infrastructure as well investment needs to be considered for all areas of Australian Business, so those investments serve all of Australian Business and community.
I know this sounds like some sort of SME socialism, but quite frankly I don’t think that enough recognition is given to SME’s that generate these funds that go straight to top end of town investment. There has to be a rethink here, especially when the superannuation companies have given over the last few years some pretty shoddy performances (don’t give me the GFC excuse, the SME’s who generated the funds go up every day and keep working and producing)

3) Create compulsory training for anyone who applies for an ABN and goes into business.  There are too many who enter business who even knows what the responsibility is to be in business. As well as the dreams and goals someone has when entering business they must also know that there are responsibilities and process that goes with that. It’s not just a product or skill to sell, it’s the responsibility to pay tax, employ people with dignity and know where all the pit falls are. If I am to enter say a building site I must have had at least the basic occupational health and safety training and I will probably (should) have an induction into that site, being aware of the dangers and risk. This has certainly reduced the number of industrial accidents, so why not have the same process applied to going into business.

4) I would make work cover insurance companies pay the claims. The absolute mind field of  crap a SME has to go through to have an employee paid who has had an accident or is absent for work related injury would stop. If a business has paid for insurance, well that’s exactly what they would get – an insurance company paying the wages while the employee is away, deal with the injury and rehabilitation with the alliance of the business instead of making an enemy of them.

Dear SMEs

(Sweat, Miserable returns and Extremely long days)

OK I wasn’t Kevin Rudd’s biggest fan, but he stuck to a fight and somehow I like that.

He wanted large mining companies to pay more tax. I dunno, was it that iron ore prices have doubled in the last 12 months? Was it the fact that brown coal prices ripped through the roof that he saw that to balance things out the mining companies should pay a bit more?

OK by me, small businesses employ the most people, compete against mining companies for skilled staff and have struggled much with the burden of the economic downturn; along with generating most of the superannuation that is, well invested into those mining companies. You could say they “triple dip” into small businesses. Yes, the large companies had more money to throw at the fight ensuing but somehow I wasn’t buying their story; they are making plenty that is sitting in “our” land.

Along comes Julia – wow a deal with the three largest mining companies, and they were brought off with the reduction in company tax for small businesses. Now I know that governments on both sides have absolutely nothing, ever, for those of us that run small businesses, but the reduction in the tax was the only thing I can ever remember seeing in a long time. Our only gain from a federal government (since I can remember) was sold to shut up 3 of Australia’s largest companies.

Julia Gillard isn’t someone I would want in my team in a fight, and as the economic crisis isn’t going to go away in a real hurry, (small businesses in Australia still have a way to go to get their businesses through) Kevin is looking pretty good.