If you’re about to launch or you’re in that exciting first year of business, make sure you get a solid grasp on the ‘money side’ early on. While your focus might be on building a customer base and driving sales, developing good cash flow habits stabilises your business and should be equally prioritised – if not more.

Poor money management can tear apart even the most profitable businesses. But the good news is, you don’t have to be an accounting whizz to set your business up for success.

There are a few simple rules that can help you manage your money easier and use your resources effectively, without getting overwhelmed.

And if you’ve already started your business, it’s never too late to embed these practices into your operations.

1. Separate your personal and business accounts

Separating personal and business transactions is one of the most useful things you can do. This makes it easier to track your cash flow, manage tax deductions and apply for finance if you need it.

You can also budget business expenses better, simplify accounting, create consistency and gain peace of mind your bookkeeping is clean. The sooner you separate accounts, the easier it is to reduce your legal liability.

Try this:

• Open an account strictly for business with a debit card

• Consider attaching a small business credit card to the account

• Separate receipts in case of an audit

• Look for an account with a zero monthly fee option. This is particularly relevant to online-only businesses.

• Set up recurring payments

2. Crush cash flow problems with tidy records

Keeping meticulous books, no matter what is key to crushing cash flow problems. If you’re spending more than you’re receiving you may find yourself in a challenging position or start digging into your personal expenses.

Set up good financial habits by tracking expenses and planning for potential issues. Be sure to include and keep receipts for fuel, supplier costs, client meetings, business subscriptions and website and marketing expenses. You can log them in a business spreadsheet or automate the process with bookkeeping software such as QuickBooks or Xero.

Try this:

• Set clear payment terms and stick to them

• Track each business purchase and transaction weekly or monthly

• Budget for tax by putting aside 10 per cent into an account each pay

• Don’t let your record-keeping slide

3. Recognise cash flow warning signs and have a backup plan

Handling money well is your most important business tool. Skills and passion can only get business owners so far, but if you don’t recognise cash flow warning signs, finances can get messy very quickly.

Common money mistakes include no backup funding, cost-cutting to increase profits and failing to handle unpredicted finances. Mixing accounts, unrealistic budgets and paying off debt with personal funds are also common culprits.

Try this:

• Create an emergency fund for unexpected business purchases

• Price products and services correctly

• Use authoritative sources for cash flow tutorials

• Plan for when business is slow

• Don’t ignore your taxes

• Know your customers and their paying habits to plan accordingly

4. Pay yourself!

Another common money mistake is not paying yourself first.

Especially when you’re just starting out, it’s normal to prioritise other expenses such as suppliers and marketing costs. But if you don’t get into the habit of paying yourself early, you could end up paying more income tax and put unplanned strain on your cash flow. As your profits grow make sure you build your salary.

Try this:

• Make ‘you’ the priority and put aside 10 per cent of each pay

• Understand the different ways you can pay yourself

• Open a high-interest savings account to pay yourself into

• Set up smart alerts with your business transaction account to monitor if funds are low, high or you’ve just been paid

• Don’t overlook Government support for grants and COVID payments

5. Invest in invoice automation

Bookkeeping and tax headaches are very real for business owners. Preserve your sanity by investing in automation, which benefits your business through professionalism, time-saving organisation and reduced operation costs.

Invoice automation also strengthens your brand identity and customer relationship management. You’ll get paid faster by clients, ensure a transparent and accurate process, and minimise stress come tax time. If you need extra support consider engaging a bookkeeper to finalise monthly statements.

Try this:

• Move beyond manual data entry and double-handling

• Experiment with two or three free versions of bookkeeping software to determine which one works best for your business

• Use automation data to see how your business is performing and make necessary adjustments

• Automate accounts payable

• Use your invoices as a way to brand your business with logo, colours and font through a clear and professional design.

• Include your ABN, contact information, business account details, payment terms and hidden charges

Starting a new business is rewarding, but its success relies upon how well you manage your money. It also depends the strength of your idea, your business plan and your marketing plan. Call us on Phone: 07 5641 4134 or Download Flying Solo’s free Starting Out Kit to help you nail all those elements in one.

Source: Flying Solo October 2021

This article by Jayde Walker is reproduced with the permission of Flying Solo – Australia’s micro business community. Find out more and join over 100K others https://www.flyingsolo.com.au/join.

Important: This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business, nor our Licensee take any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) ac www.flyingsolo.com.au

NFTs have been circulating in recent headlines, along with words like “blockchain” and “cryptocurrency”. You may have seen them parodied on the U.S. television show Saturday Live or heard them discussed on your favourite podcasts. So what’s all the hype?

• What’s an NFT

• What are you actually getting when you buy one

• What risks are involved in buying an NFT

NFT stands for non-fungible token. Non-fungible is a word used to describe an item or artifact, meaning the item can’t be exchanged with a similar item of the same value. It’s one of a kind. A tangible example of a unique non-fungible item is Van Gogh’s “Starry Night”. Buying a post card, print, or replica doesn’t have the same value as buying the original painting.

If we take the same idea and make it digital, we’re looking at an NFT—which can be almost anything (a game, digital art, music, or sports memorabilia). Similar to fine art, NFTs rely on scarcity.

Creating an NFT involves making and minting it by paying a fee to download the product onto an NFT marketplace. A buyer can then place a bid online to purchase the NFT.

So what do I get when I buy an NFT?

You’re essentially buying a digital receipt of ownership. Anyone can replicate or distribute a copy of the digital art or other item you’ve purchased, but you have the original.

How do I know what I have is unique?

An NFT exists as an encrypted string of data stored on a blockchain ledger. This ledger contains records of who bought sold the NFT and when, which helps authenticate the NFT.

But although you can view an NFT’s ownership history through blockchain, this ledger can’t guarantee authenticity. Sometimes, it’s not the original creator selling the NFT. Someone might steal a creator’s work, mint or download the piece as an NFT, and claim they’re the original creator. Unfortunately, there’s no current way of proving otherwise, unless the true creator steps forward. But even then, some creators have found that their stolen work is still remains available on NFT sites.

Possible impacts of NFTs

There are many risks involved in owning an NFT.

First, there’s the risk you could lose access to the artifact you purchased. Most NFTs don’t house the actual artifact—the object itself is usually found through a link to another site. This means there’s no guarantee the server holding your digital item will remain operational, the owner of the domain will continue to route you to the NFT you bought, or the creator will continue to pay the host to keep their creation online. If the server goes down, or the creator fails to pay to keep their content on the site, you may be left with an expensive “file not found” message instead of the unique item you originally bought.

Additionally, NFTs share the risks of other digital assets:

Liquidity risk

NFTs are unregulated and behave more like fine art than stocks. To off-load an NFT, the seller needs to find a willing buyer. Certain market conditions, like plummeting values, can make it difficult or impossible to sell quickly and at a reasonable price.

Pricing risk

NFTs are traded in decentralized markets. These online marketplaces and exchanges lack the regulations, controls, and investor protections available in traditional stock, options, and futures markets. For these reasons, there’s no single pricing mechanism that reflects digital asset values.

What does Vanguard think?

Vanguard believes NFTs are highly speculative and may not deliver long-term value. Because of the significant risk they carry, we don’t think they’re well-suited for our clients’ portfolios.

While we offer a variety of investments with different strategies, one overarching theme runs through the guidance we provide our clients: Focus on the things within your control. Instead of chasing investment fads, which come and go, follow our four principles for investing success:

• Create clear, appropriate investment goals

• Develop a suitable asset allocation using broadly diversified funds

• Minimize cost

• Maintain perspective and long-term discipline

If you’d like to understand more about an NFT, call us on Phone: 07 5641 4134.

Source: Vanguard December 2021

Reproduced with permission of Vanguard Investments Australia Ltd

Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFS Licence 227263) is the product issuer. We have not taken yours and your clients’ circumstances into account when preparing this material so it may not be applicable to the particular situation you are considering. You should consider your circumstances and our Product Disclosure Statement (PDS) or Prospectus before making any investment decision. You can access our PDS or Prospectus online or by calling us. This material was prepared in good faith and we accept no liability for any errors or omissions. Past performance is not an indication of future performance.

© 2021 Vanguard Investments Australia Ltd. All rights reserved.

Important:
Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

What is FIRE?

If you’ve ever considered early retirement, you could join the FIRE movement. FIRE stands for “financial independence retire early.”

During their working years, FIRE investors invest as much of their income as possible in hopes of attaining financial independence at a young age and maintaining it for the long term—a.k.a. retirement. Their goal is to live off their investments so they’re free to enjoy an independent lifestyle without needing income from a traditional job.

Not all FIRE investors have the same approach to financial independence. They don’t necessarily work 70 hours a week, live in a tiny house, and eat ramen noodles every meal. The FIRE movement has a diverse following, and each investor has their own “rules” for pursuing financial independence and security.

How to think like a FIRE investor

The level of commitment to living frugally and investing aggressively varies by investor, but most FIRE investors adhere to the following best practices.

Plan ahead

Make a specific retirement goal. Start by asking yourself a few questions:

• What’s my income?

• What’s my current retirement balance?

• What’s my savings rate (the percentage of income I’m saving)?

• What’s my spending rate (the percentage of income I’m spending)?

• How do I envision my post-retirement lifestyle? Do I think my spending rate in retirement will be higher, lower, or the same as it is today?

• How could my expenses or income change through my long retirement? Do I plan on moving house? Will I need to consider the age pension in my future plans?

• How soon do I want to retire?

Avoid debt

Avoiding debt is good advice for anyone, but it’s especially crucial to investors who’d like to live off their investments long-term. Bottom line: If you have debt, make a plan to pay it off. And don’t take on any new debt, especially high-interest debt like credit cards.

For example, let’s say you have a $5,000 credit card balance with an interest rate of 15%. If you pay $100 a month, it will take you about 6.5 years to pay it off, and you’ll have paid almost $3,000 in interest—money that you could’ve been investing.

Reduce your spending

The aim here is to reduce discretionary spending where possible. This may be challenging for some, so a strategy to help may be to wait a set period of time before purchasing anything over a certain dollar amount. This will give you time to carefully consider how the purchase will impact your life and eliminate the temptation of instant gratification.

Earn as much as possible

Take advantage of any opportunity to increase your income. That could mean taking a higher-paying job with less convenient hours or filling your spare time with a part-time job or freelance work.

Invest as much as reasonable, and invest appropriately

Your asset mix affects your investment returns more than any other factor within your control. Choose an asset allocation that complements your goals, time horizon, and risk tolerance.

Do it your way

The best part of the FIRE movement is that it’s not all or nothing. You can tailor your spending and saving behaviours to align with your goals. But even if you choose to follow just a few FIRE best practices, you can help improve your financial outlook over the long term.

If you’d like to discuss options for you to start saving for an early retirement call us on Phone: 07 5641 4134.

Source: Vanguard November 2021

Reproduced with permission of Vanguard Investments Australia Ltd

Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFS Licence 227263) is the product issuer. We have not taken yours and your clients’ circumstances into account when preparing this material so it may not be applicable to the particular situation you are considering. You should consider your circumstances and our Product Disclosure Statement (PDS) or Prospectus before making any investment decision. You can access our PDS or Prospectus online or by calling us. This material was prepared in good faith and we accept no liability for any errors or omissions. Past performance is not an indication of future performance.

© 2021 Vanguard Investments Australia Ltd. All rights reserved.

Important:
Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

Organisations promoting a supportive, open workplace culture are more likely to have better employee engagement and retention, as well as higher profits.

Every business owner likes to think they’re fostering a great work environment, but sometimes this is a case of over-optimistic thinking.

If you have problems finding the right talent or you have a high turnover rate, these are signs you have a problem with your workplace culture. Addressing this aspect of business management should be handled early and revisited regularly for best results.

What is workplace culture?

Workplace culture, like culture in general, is a collection of rules, customs and social behaviours unique to that group of people.

This can include values, expectations and practices that are often unspoken, and describes the ways in which people within that organisation interact with one another.

But don’t stop at the list of employees; the way people within your business interact with those outside of the business are also worth including as a key part of your workplace culture.

While everything else in your business, from your processes to your skillset, can be replicated, your culture is as truly unique as the community of people living it on the daily.

Why promote a positive workplace culture?

In a healthy, supportive culture, team members are motivated, inspired and positive about coming to work.

In a toxic, overly competitive or bullying culture, those same people can become demotivated, unhappy and unproductive.

In this way, culture becomes self-perpetuating; a healthy culture fosters positivity, which feeds back into the culture.

Studies have shown a workplace culture that’s perceived to be more positive and supportive delivers multiple benefits, including:

• Higher employee engagement: +72% according to this study

• Increased profits: +22% (linked to higher employee engagement)

• Improved employee retention: 38% of employees want to leave roles because of negative company culture or poor cultural fit

• Better hiring outcomes: 35 percent of people say they’d pass on a dream job if the company culture wasn’t appealing

So a good culture delivers better profits, employee engagement, easier recruitment and better retention. It can be a key difference between a market leader and a business that struggles to keep up. But changing a culture can be very difficult.

If you suspect that your culture could be holding your business back or needs a tune-up, here’s how to change it.

How to affect change in your workplace culture

1. Attempt to describe your culture as it exists

Every single person in an organisation will have a different opinion of what the workplace culture is and isn’t – a challenge for anyone seeking stakeholder buy-in who might end up inundated by qualitative feedback.

Another approach would be really to home in on a model for discussing workplace culture in a simple way, which can then be used to tease out insights and actions.

For example, a 2018 article from Harvard Business Review defines the following eight distinct culture styles:

• Caring – relationships and mutual trust

• Purpose – idealism and altruism

• Learning – exploration and creativity

• Enjoyment – fun and excitement

• Results – achievement and winning

• Authority – decisiveness and boldness

• Safety – caution and preparedness

• Order – respect, structure and shared norms

None of these styles is inherently negative or positive, but each has its pros and cons, and when combined with others may exacerbate certain outcomes.

For example, a workplace culture that’s built around caring and order will have a lack of conflict and low staff turnover, but may tend towards consensus-based decisions and stifled innovation.

If this model of discussing workplace culture works for you, or you can easily adapt it to fit, then you can more easily start to assess how your cultural style is manifesting itself.

Next, you’ll be able to ask reflective questions, such as ‘What are the key things that define our organisation’s culture as it exists, both good and bad?’, ‘Are there any clear examples of outcomes that can be attributed to workplace culture?’ and ‘What are the possible factors contributing to that culture?’.

2. Highlight key areas to work on

Once you’ve made a thorough assessment of your workplace culture as it stands, enact strategies with clear goals in mind, and which are all consistent in their application of your organisational values.

According to HBR, in a caring/order organisation, the injection of a learning spirit may make all the difference. On the other hand, an authority/safety culture might find a bit of fun means more to them.
Whatever your particular case may be, you’ll want to take an open approach to strategy and planning to ensure transparency where it’s most needed.

After all, you won’t be able to affect cultural change by acting as an outsider, so make sure you’re working from a position of broad support to maintain momentum.

3. Get started, get social

Sometimes the first conversation is the hardest part of enacting an
entire strategy, especially if it requires a level of reflection and transparency beyond the current practice.

If you’re serious about making improvements to the way your organisation handles workplace culture, then there are a few personal habits you should take on.

6 healthy habits for promoting a positive workplace culture

1. You’ve got to be in it to win it

Dedication to the cause should be a personal motivator as well as a broad cultural trait in a positive workplace.

We may sign onto a job with expectations that change over time, or we might start a business that goes off on an unexpected direction, but we still need to be able to maintain our engagement with that work in order to be productive.

What gets people out of bed in the morning are important things to embrace as a foundational part of your workplace culture.

2. Lead by example

If you’re going to promote positive change in an organisation, you need to be able to demonstrate and model those changes as a surefire path to getting everyone on board.

If you’ve a clear idea of the key areas to address in the current workplace culture, have you considered how you and your leadership team may be currently adding to or alleviating them? You may not need to implement a full-blown change management process if a few considered actions can be taken on a personal level.

3. Write everything down

Taking notes won’t bring about a cultural change overnight, but putting your intentions to paper will send a message to your team that this is the new way of doing things.

Do you regularly review and update your values, goals or other guiding principles? How are these currently being communicated and is the organisation measured against them in some way?

If ‘what gets measured gets done’, the first step to getting anything done is to record what it is in the first place. So even if you don’t know exactly how to measure something 100 percent accurately (and when it comes to workplace culture, this may often be the case), you can at least begin to discuss the strategy and some rough benchmarks to begin with.

4. Find comfort beyond the comfort zone

Depending on the depth of change required, cultural change can mean people no longer find their fit within the organisation. This is an unavoidable fact that, when handled well, doesn’t lead to animosity or ill-will.

And even when cultural change doesn’t entail changing roles and resources, it will almost certainly require some challenge conversations on a regular basis.

In either case, when seeking cultural changes, make sure you’re comfortable in pushing yourself and others outside of the comfort zone when it comes to transparency and open discourse.

5. Hire for culture first

If you’re hiring, skills and experience matter, but not as much as cultural fit.

While skills and experience can be gained, behaviour or personality can be difficult to shape, and if that makes a person less equipped to succeed in your organisation, then you’ll want to identify it early on.

Selecting for cultural fit at the hiring stage can make the difference between a high-performing, longstanding employee and one that quits after a short, unimpressive tenure.

6. Champion everyday cultural exemplars

Take note of the people or groups who are living the best parts of your culture and seek ways to appropriately recognise them for it.

By consistently holding up exemplars of your winning workplace culture, you’ll further reinforce support in it, delivering further engagement dividends.

Recognition and rewards are a tricky area of workplace management to get right in any organisation, but if you create fair systems that offer real value to the people doing the best work in the best possible way, then you have an ideal vehicle for the promotion of a healthy workplace culture.

Don’t let negative workplace culture undermine your business

Left unexamined and unspoken, workplace culture can undermine your best efforts to hire, upskill and modernise your business.

To aim for a workplace culture that delivers positive, motivated staff, a competitive edge and better profits, you have to start from the top. With your management leading the way, identify what a successful culture looks like for your business and what must change to reach that ideal.

Write down your intention, hire for cultural fit first, don’t worry if some people are uncomfortable with the changes and be sure to praise those who are taking your new measures on board.

Gradually you’ll see better staff retention and productivity as positive culture feeds back into your business.

Want more information on developing your business for success? Call us on Phone: 07 5641 4134.

Source: MYOB August 2021

Reproduced with the permission of MYOB. This article by Felicty Brown was originally published at https://www.myob.com/au/blog/how-to-create-a-positive-workplace-culture/

Important:
This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.

Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

A payday loan, also called a small amount loan, lets you borrow up to $2,000. You have between 16 days and one year to pay it back.

While it might look like a quick fix, a payday loan has a lot of fees. For example, to pay back a $2,000 payday loan over one year, your total repayments will be about $3,360. That’s $1,360 more than you borrowed.

There are cheaper ways to borrow money when you need it.

If you’re getting a payday loan to pay off another loan, talk to a financial counsellor. It’s free and confidential.

Cheaper ways to get money fast

If you need to get money fast, these options are cheaper than a payday loan.

No interest loan

• Borrow up to $1,500 for essential items like car repairs or a fridge.

• You must have a Health Care Card or a Pensioner Concession Card or an after-tax income below $45,000.

• You only repay what you borrow. There is no interest or fees.

See no-interest loans for how to get one.

Centrelink advance payment

• You can get an advance payment of your Centrelink benefit.

• Most people who receive a Centrelink payment can apply.

• There is no interest or fees.

You can apply for an advance payment through the Service Australia website.

Help paying your bills and fines

If you’re struggling to pay your bills, don’t get a payday loan. Talk to your service provider straight away. They can help you work out a payment plan to pay bills or fines.

The government and some community organisations offer rebates and vouchers that can help you pay utility or phone bills.

See problems paying your bills and fines to find out more.

If you’re struggling to make ends meet, talk to a financial counsellor. They offer a free and confidential service to help you understand your options and deal with money issues.

National Debt Helpline — 1800 007 007

The free National Debt Helpline is open from 9.30am to 4.30pm, Monday to Friday.

When you call, you’ll be transferred to a financial counselling service in your state.

Mob Strong Debt Helpline — 1800 808 488

Mob Strong Debt Helpline is a free legal advice service about money matters for Aboriginal and Torres Strait Islander peoples from anywhere in Australia.

The helpline is open from 9.30am to 4.30pm, Monday to Friday.

The cost of payday loans

Licensed lenders can’t charge interest on payday loans, but they can charge a lot in fees. You will have to pay back a lot more than you borrowed.

Most payday lenders charge an establishment fee of 20% of the amount borrowed and a monthly fee of 4% of the amount borrowed. For a $2,000 loan, that’s a $400 establishment fee and $80 for the monthly fee.

Fees on payday loans

Under the law, there’s a cap on most payday loan fees. If you’re charged more than the maximum fee, get free legal advice on how to get your money back.

Payday lenders can charge you these fees:

Paying back your payday loan

If you can’t keep up with repayments, visit the National Debt Helpline website for help on how to repay your payday loans.

By law, licensed payday lenders must lend responsibly. This means they can’t give you a loan if they think you won’t be able to repay it or it could cause you substantial hardship.

If you think the lender didn’t lend responsibly, call us on Phone: 07 5641 4134 or get free legal advice.

Case Study

Alisha gets a no interest loan instead of a payday loan.

Every homeowner loves the idea of becoming mortgage-free faster and paying less interest in the lead up to that landmark event. Fortunately, there are some easy steps you can take to get there sooner – whether you’ve just got your first home loan, want to increase your property equity or become mortgage-free as soon as possible. Let’s go over them.

Get your mortgage right

First up, switch to an interest and principal repayment loan. Paying just the interest may be great for your immediate cash flow but it is only kicking your principal repayment down the road. Your principal does not reduce during the interest-only period of your mortgage. This means your debt isn’t going down and you end up paying more interest. Interest-only loans tend to be at higher rates as well, so as soon as you can afford it, get in touch to make the switch.

Increase your frequency

Move to fortnightly or weekly repayments. While there are 12 months in a year, there are 26 fortnights, not 24. So, by paying every two weeks, you’ll be repaying an extra month every year – enough to help you get mortgage-free a few years earlier.

‘Set and forget’ can be costly

Keep a look out for a better rate. It’s a good idea to check in with us to review your current interest rate, to ensure it still works for you and is competitive. We can work out what features of your current loan you want to keep and compare the interest rates on similar ones. If there’s a better rate somewhere else, we can ask your lender to match it or offer you a cheaper alternative before making the move.

Top up your repayments

Increase the amount you pay whenever you can. Anything extra you pay reduces your interest repayments and shortens the life of your loan. Since most of us don’t miss what we don’t see, automatically rounding up your repayments is a painless way to do this. For example, you could round up to the next hundred. If you pay $850 every fortnight, make it $900. That’s $1300 a year off your principal and therefore lower interest repayments every month.

Try to stick to the same repayment amount even if you switch to a lower interest rate. If you keep making the higher payments, you’ll be repaying a little extra every time. Say your minimum repayment goes from $1000 a fortnight to $800. Keep paying the $1000 a fortnight and you’ll be taking an extra $5,600 off your mortgage every year. And with interest rates always threatening to change, it’s a good idea for us to periodically check you’re on the best split of fixed and variable rates for your circumstances too.

Offset everything you can

Get an offset account and make the most of it. This savings or transaction account links to your mortgage with the balance reducing your mortgage by the same amount. Interest is calculated daily, so every day your money is in your offset will help lower your principal and therefore interest repayments. And don’t forget that your mortgage interest rate will always be higher than the rate you earn in a regular savings account, so it can be a good idea to keep all your savings – as well as your salary – in your offset account.

Compared to the size of the average mortgage, all these steps may seem like they’re making only a tiny difference to your debt. However, over the life of your mortgage and when combined, they can add up to significant savings on interest repayments and the length of your loan.

If you’d like help planning or implementing the best combination of mortgage reduction strategies for you, please get in touch on Phone: 07 5641 4134. You could be living mortgage-free a lot sooner than you think.

Whether you run a small business or a large enterprise, having a well-planned technology strategy is essential to the growth and ongoing success of your business.

Well thought out technology strategies should not simply provide support for existing operational tasks, they should also proactively plan for future technology needs and contain policy and procedures relating to the implementation of those strategies, when required.

Due to the rate that technology advances, without careful future planning for tech improvements and budget for investment, reliance on reactive technology strategies will only lead to higher maintenance costs, lower productivity and decreased capacity for growth.

In fact, a trans-Tasman study commissioned by MYOB demonstrated that organisations were losing, on average, one and a half days per week, per employee, due to ineffective business and people management solutions.

In addition, a recent report from the Australian Productivity Commission shows that economic growth, per person, over the last decade, has slipped to its lowest level in 60 years. This lack of productivity is largely attributed to under-utilisation of modern technology.

In addition, the mass shift towards cloud business trends after COVID-19 increases risks relating to slow or inadequate technological uptake. This has the potential to cost lagging businesses even more as their competitors make the most of online data storage and security, and technological strategies such as automation, machine learning and AI-powered services.

With all of this in mind, it’s important to understand how to correctly plan for technology advancements, formulate correct budgets for the investment and then calculate the ROI on technology spend. Let’s break it down.

How to develop a technology strategy

Your technology strategy should be always on and ever-evolving. In order to help you achieve that, here’s a six-step cycle you can apply for tech adoption and appraisal.

1. Discover

Like any strategy, you should begin by undertaking some pretty exhaustive research.

You must assess your company needs and gather feedback from every relevant user within the company. This could be done via focus groups, online surveys or face to face interviews.

Solicit information about operational problems facing your company and hear first hand from your team about where the current technology is letting them down.

2. Align

Once you identify your team’s needs, it’s important to also identify your company’s strategic goals and compare the two to ensure alignment or identify any potential issues that could impact tech adoption and utility.

While some technology may help with the way things are running in your business today, if you’re planning to change systems or change your company goals — any new technology will need to fit the future plans.

3. Budget

Next, you need to understand your budget.

This can be tricky as technology costs can vary significantly and program capabilities can change so quickly.

A great way to manage costs is by creating a portfolio of your current IT investments and identifying any gaps.

4. Due diligence

Once you understand what you need, look for programs or tech systems that may be able to help you consolidate — using a more capable and advanced program in place of three others.

In addition, ensuring the programs are used correctly, and to their full potential will also ensure systems are as productive as possible.

5. Audit

Once you have a plan and understand your technology needs and costs, it’s essential to evaluate your IT on a regular basis, at least annually. This includes evaluating the technology you are using, as well as what technology may be required by the company in the next 12 to 24 months.

6. Look forward

Implementing a policy and procedure guide for staff to make suggestions or requests and encouraging them to outline technology they feel enhances the company’s goals is a great way to ensure you’re on the right track, but the real key is ensuring you stay updated on any technological developments in the market.

Understand how technology can help you

Staying on top of technological advancements is essential.

Adopting a ‘if it’s not broken, don’t fix it’ approach simply doesn’t apply to the world of technology and business, you must take an offensive and proactive approach.

This includes keeping up with industry trends and advancements, reading case studies of similar companies using new technology and then considering how technology can be used to increase your productivity across a range of practices, such as those listed below.

Customer Service

In today’s competitive world, customer satisfaction and retention is one of the most effective ways to grow your business. It is essential that your systems run as efficiently and as quickly as possible, without any customer inconvenience.

Each company’s customer service is different, but it’s a good idea to research technology that can help your customers get the information, services or responses they need, quicker and more effectively.

Streamline operations

As technological capabilities advance, there are more and more opportunities to make your operations more efficient.

By understanding technological capabilities and specific industry trends relating to your business, you can help your business run more efficiently, and therefore reduce unnecessary time spent on manual tasks that could be automated.

Competitive advantage

If you’re not actively moving forwards in your business, you’re going to fall behind those competitors who are. Keeping up with industry trends and advancements will ensure your company remains relevant and competitive.

Long term reliability

Using dated technology, both software and hardware, puts you at risk of breakdown, data loss or cyber attacks.

Upgrading your systems and implementing new strategies can seem expensive, but you must weigh this up with the cost of fixing systems when they inevitably break down or become obsolete.

Scalability

Ensuring your business is prepared for growth is essential.

If you are encouraging growth within your company, you must be planning ahead so that you can accommodate it. Scalable bandwidth preparation means your company is able to adopt or introduce changes to technology in a planned way, avoiding disruptions to your existing operations

Calculating the ROI on technology investments

ROI (return on investment), the textbook term for financial managers and is the accepted metric used when valuing a company’s technology. But, unlike some more simple calculations (such as straight up profit from sales of goods), ROI on technology can be calculated using different methodologies.

The best method of calculating ROI is to understand what you expect the benefits and costs to be of your technology investment, and then assess the likelihood of that scenario being correct, and then determine how much wiggle room you have on those plans to still consider the outcome a success.

There are a few ways to start estimating a project’s ROI.

• Firstly, look at the breadth of technology investment. How many people in your company will benefit from the investment. Will this be used by a few, or by many? Will the investment benefit the company widely, or is it more niche? The greater the number of people’s work that is enhanced, helped or made more efficient by the investment, the greater the ROI usually is.

• Secondly, look at the repeatability of the investment. How often is this investment going to be used? Is it something that is used in the company daily, or less frequently? The more frequently that the investment is utilised, the greater its ROI.

• Finally, you can also look at estimating the cost to your business should you not move ahead with the investment in terms of lost productivity, poor customer experience or other foreseeable impacts to business.

Comparing the breadth and repeatability of an investment doesn’t require tricky spreadsheets or crunching endless numbers. The more people in your company who will use the investment, the regularity of that use is a great indicator of how necessary and valuable the investment is.

To add to this, there are two further criteria which can be used to measure ROI.

1. Cost comparison

This is comparing the cost of the task currently undertaken manually with the cost of the technology that will either take over that task, or reduce the human hours required to complete it.

This calculation requires a little more calculator work — but understanding the human cost versus the technological cost will help you understand if the technology will save you money in the long run.

2. Adoption and utilisation

As outlined above, unless your team is able to use the technology to its full potential, then you are at risk of under utilisation of your technology, and becoming part of the ‘lost profit’ statistic.

The greater potential there is for the technology to be used correctly across the board, the greater its ROI over time.

Weighing up the results

Once you implement the technology, it can be a bit harder to assess the ROI with actual figures, although gathering a wide range of data is essential in order for you to make the best possible calculations.

A common timeline for tech ROI calculation is three years, looking at costs and benefits that are either directly quantifiable or indirect productivity based gains.

If your final calculations yield a lower ROI than you expect, it’s also important not to panic, as this can often be the result of breadth and repeatability issues.

Take a second look at your calculations and consider ways you can address the situation. This might include spreading costs out, negotiating new rates, training staff to use programs more efficiently, looking at outsourced solutions or re-examining your numbers to ensure you’re not being too conservative.

Overall, planning for technological advancements, setting budgets and then calculating your ROI is not a difficult task, but can seem overwhelming.

Undertaking a structured approach to creating a technology strategy is essential and, when done correctly, will provide the perfect roadmap for supporting the growth of your company.

Source: MYOB October 2021

Reproduced with the permission of MYOB. This article by Renae Smith was originally published at https://www.myob.com/au/blog/how-to-plan-for-ongoing-tech-investment/

Important:
This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.

Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

The array of mortgages available helps a good finance broker to tailor a package to suit your needs. Here are just some of the options.

Fixed-rate mortgages

With a fixed-rate loan, you know exactly how much you’ll pay per fortnight or month for the fixed period of the loan (usually one to five years).

Variable rate mortgages

Repayments can change during the life of a variable-rate loan, so you may pay more or less as interest rates rise or fall. If you’re fairly sure that rates are set to fall, this is a good option.

Principal and interest mortgages

In this mortgage, you are paying the amount lent to you plus the interest.

Interest-only mortgages

With interest-only, you are paying just the interest on the loan – you are not paying off any of the original principal.

Split home loan (fixed and variable)

You can choose to have part of your loan at a fixed rate and the other part can be at a variable interest rate. If rates do fall, the interest will go down on the variable part of your loan, but you aren’t taking as big a risk should rates rise.

Redraw facility

If you have a variable-rate loan and you make extra repayments, then you can withdraw that additional money when you need to (you can’t do this on fixed-rate loans).

Land loan

A land loan lets you buy a block of land without the pressure to build on it as soon as possible. Land loans are usually variable interest for up to 30 years.

Construction loan

For buying land, building or renovating your home, a 12-month construction loan can be the best way to go. Usually, up to 90 per cent of the property value can be borrowed.

Non-PAYG loans

For self-employed people, a home loan can still be arranged using differing supporting documentation that shows your ability to service a loan and might include BAS and bank statements. You self-certify your income, which will need verification. You may be able to borrow up to 80 per cent of the property’s value.

Equity release

This loan type allows you to convert a portion of your residential property ‘asset’ into cash or an income stream while still allowing you to continue to live in your home.

Source: MFAA https://www.mortgageandfinancehelp.com.au/investing/what-type-loan-right-you/

Reproduced with the permission of the Mortgage and Finance Association of Australia (MFAA)

Important:
This provides general information and hasn’t taken your circumstances into account.  It’s important to consider your particular circumstances before deciding what’s right for you. Although the information is from sources considered reliable, we do not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any investment decision. Except where liability under any statute cannot be excluded, we do not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.  Past performance is not a reliable guide to future returns.

Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author.

Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

Written by Tony Kaye, Senior Personal Finance Writer

After months in lockdowns and living under tight restrictions, many Australians have gone on a “revenge spending” spree.

Revenge spending is the term widely being used to describe how some people are taking out their revenge on the COVID-19 pandemic by spending money on things they haven’t been able to do for a long time.

This includes activities such as going out to restaurants and entertainment venues, buying household items, and getting much-needed personal grooming treatments.

High on the revenge spending list is travel. People are finally able to book in holidays to places that have been off-limits due to border closures for the best part of two years.

Domestic and international flights, and accommodation vacancies for the remainder of 2021, and well into 2022, are filling rapidly.

Of course, these new spending freedoms all add up. Which is why it’s so important that any revenge spending you choose to do is within your existing financial limits.

Do look before you spend

It may sound basic, but it’s always wise to look before you leap.

In other words, it’s sensible to check your financial situation to make sure you can actually afford to go on that long-awaited trip or to buy all those items sitting on your spending wish list.

Let’s call this a financial stocktake. You may have more money in your bank account than would normally be the case, because you haven’t been able to spend on these things for a while.

Then again, you may have used your accumulated savings over 2020 and 2021 to take advantage of record low interest rates and pay down outstanding debts.

Either way, it’s about taking a close look at what’s logical and achievable.

An obvious first step is to check your current savings balance, and then your personal or household financial budget if you have one.

Keeping a budget ledger (such as an online spreadsheet) is the best way to track your ongoing income and expenses, which should give you a fairly accurate picture of how much you can afford to spend.

Are there any large spending events on the horizon that you know are likely to come up in the short or medium term?

Another consideration is whether you’re intending to keep a portion of your current savings aside as an emergency buffer to cover unexpected events?

Don’t let your emotions rule reality

Revenge spending is largely the product of pent-up emotions.

Over the last 18 months COVID has brought up a range of emotions for many but those general feelings are now shifting fairly quickly towards the positive because we can start doing most of our normal activities again.

Increases in spending goes hand-in-hand with any negative-to-positive emotional transition. It’s often referred to as retail therapy.

For example, you may be feeling that you desperately need to take a holiday, that it’s non-negotiable.

And while that’s understandable, consider if you’ll need to use a high-interest credit card or draw down funds from your mortgage to pay for that holiday?

If you’re prepared to take on extra debt, that’s fine. The key though is to assess whether your short-term spending decisions make sense and how they may impact your longer-term financial goals.

Do realign to your financial goals

Your financial goals may have been affected by the onset of COVID-19, either directly through the loss of earnings, or due to other related factors.

If that’s the case, take a look at all your financial goals to make sure you’re still on track to achieve them.

If you don’t really have a proper financial plan, or haven’t reviewed your plan for a while, here’s a few things to consider.

• What are your actual financial goals?

• If you already have a financial plan, has it changed over time?

• Are there any limitations (short, medium or long term) that you need to keep in mind that may stop you from achieving your goals?

• How much investment risk are you comfortable with? And are you more of a hands-on or hands-off investor? This may influence the type of investments you choose.

• Do you have a regular investment plan, for example to make fortnightly, monthly, or quarterly contributions into one or more managed funds?

• If you do, will your spending plans potentially derail your investment plans?

It’s a good idea to document all your answers, and discuss them with your family, so you can assess them and come back to them later on.

Any revenge spending plans you have should definitely be factored into the overall equation.

There’s nothing wrong with spending more over the short term to make up for lost spending time.

What’s important is to join all the financial dots, between your short-term wants and your long-term needs.

Feel free to call us on Phone: 07 5641 4134 to discuss your financial goals. 

Source: Vanguard November 2021

Reproduced with permission of Vanguard Investments Australia Ltd

Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFS Licence 227263) is the product issuer. We have not taken yours and your clients’ circumstances into account when preparing this material so it may not be applicable to the particular situation you are considering. You should consider your circumstances and our Product Disclosure Statement (PDS) or Prospectus before making any investment decision. You can access our PDS or Prospectus online or by calling us. This material was prepared in good faith and we accept no liability for any errors or omissions. Past performance is not an indication of future performance.

© 2021 Vanguard Investments Australia Ltd. All rights reserved.

Important:
Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.

Cash flow is critical to keep any business profitable, enable growth, and stop it from going under. Sometimes, however, it seems easier said than done, especially when it seems at times that there’s more money going out of your account than there is coming in, writes business turnaround specialist Domenic Calabretta, CEO Mackay Goodwin.

Maintaining positive cash flow means that the money keeps moving (in and out), and you have enough coming in to cover the expenses you need to pay. To scale your business or even simply to keep operating, you must have more coming in than you do going out (positive cash flow).

A negative cash flow is when there’s more money going out on expenses such as loans, rents, stock and salaries than there is coming in from customers or clients for your products, goods or services. When you are in that situation, you could find yourself trading insolvent. It feels like you are robbing Peter to pay Paul (as the old saying goes) to stay afloat. And the sad truth is, you probably aren’t staying afloat at all.

Before you start your new business get the foundations right

Before you even start your business:

• Take the time to develop a business plan.

• Understand your business cash flow.

• Project your income.

That means looking at your marketing strategy, expenses and also your pricing. Don’t set your profit margin low simply to undercut the competition. Instead, calculate your costs and outgoings to identify how much money your business needs to make to cover your expenses and still make a profit.

More than 60 per cent of small businesses in Australia close within their first three years, so to make sure yours isn’t one of them, it’s critical to get the foundations right.

Of those businesses that didn’t get going, 38 per cent failed because they ran out of cash or were unable to raise capital, and 15 per cent failed because of cost or pricing issues. That’s more than half of new business failures coming down to cashflow issues.

When your business is a start-up or new business, you may not have enough new customers or clients to manage many of the new start-up expenses, which can quickly kill a business before it even gets going. Ideally, it’s best to have the capital to launch your business debt-free, but if you have built a solid business plan and researched lending requirements, this is also an excellent time to consider a modest business loan that will get you up and running.

I say ‘modest’ because you may not need all the bells and whistles upfront. Look at a loan that’s just enough to get started and launch your new business while still being affordable enough to pay down as quickly as possible and build money in your account.

Once you build your business and brand, and have a steady source of income, then start thinking about what you can do to invest in growth strategies (and bells and whistles). In the early growth stages of your business, set aside as much cash as possible so you have money to cover unexpected expenses or emergencies. Ideally, aim to keep six months’ worth of operating costs tucked away.

How to stay cash flow positive

You can do a few things to maximise your chances of the business remaining cash flow positive.

1. Stay on Top of your Accounts – Reconcile your books a couple of times a week to understand what money is coming in and what is going out. There are several fantastic accounting software products on the market that are very affordable and intuitive, from simple sole trader platforms to software that grow with you from sole trader to multi-national. Invest in one that suits your needs and your budget, and stay on top of all entries. It’s critical to have more money coming into your account than you have going out. If you find it’s working the other way, consider how you can trim your costs to manage the business within your means.

2. Invoice regularly – If your business relies on invoicing clients, do it regularly, and make it a habit. Don’t sit on invoices until the end of the month or the quarter, and then hope all your clients pay on time. It’s far better for your cash flow to have invoices paid to meet your outgoing expenses throughout the month. And the same can be said for paying your business expenses on time.

3. Keep your payment terms short, and if your invoices are large, consider offering clients an option to pay in instalments, or pay a deposit and regular progress payments.

4. Shop around for price and quality – Whether it’s sourcing stock or buying goods or services for your business, shop around. Get the best quality you can for a price you can afford. Often you don’t need the biggest and the best.

What happens if your cash flow is negative?

If you find you don’t have enough money coming in to cover the outgoings, you could be trading insolvent. Insolvent trading is when a business is unable to meet its debt obligations when they are due and, as a result, may fall into further debt. If your business is Pty Ltd, you need to ensure it is solvent before getting into additional debt. Failure to do that may see you personally liable for any legal repercussions.

If in doubt, waste no time and seek professional advice from your accountant or a qualified business advisor, who may be able to help you create some strategies to address the debt and continue trading.

Contact us on Phone: 07 5641 4134 if you need help with your business’s cash flow. 

Source: Flying Solo November 2021

This article by is reproduced with the permission of Flying Solo – Australia’s micro business community. Find out more and join over 100K others https://www.flyingsolo.com.au/join.

Important: This provides general information and hasn’t taken your circumstances into account. It’s important to consider your particular circumstances before deciding what’s right for you. Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business, nor our Licensee take any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) ac www.flyingsolo.com.au