Marketing to grow your business

Posted on July 14, 2020 by Angus Jones

There is a very good chance you are already doing marketing because a lot of it is common sense. For a small business, it lets people know you are in business and gives customers reasons why they should do business with you. In this guide, we will look at the basics of marketing and give you an action plan to develop some further plans.

Marketing refers to activities a business undertakes to sell more of a product or service. Marketing includes researching, advertising, selling, and delivering products to consumers or other businesses.

The simplest form of marketing is how you answer the phone or what you wear through to a complex integrated plan across newer mediums like the internet or older like radio advertising.

WHY do I need to do marketing?

For any small business to succeed you need customers who know or can find that your product exists and who trust your business enough to buy your product.

Marketing helps by looking at your business and adjusting how customers perceive your business.

Assume you are starting a new small business to paint people’s houses. You are a very good painter and plan to charge competitive rates. Imagine if you did not return phone calls, turned up to do a quote in dirty clothes and quoted by writing a price on a scrap of paper. The customer does not know if you are a good painter and interprets you as unreliable with poor attention to detail and therefore they don’t trust you to paint their house. Thus marketing is key to present your business the right way.

WHAT are the 4 Ps?

The 4 P’s describe how important it is to present a complete package to entice a customer. You cannot do just one of these and consider it is marketing instead you must do all 4 in some form, all working in harmony to drive the optimum result.

Product

To be successful in business you need a product or service that is needed or wanted by the end-user. You ideally find an opportunity or problem that needs a solution and has a market large enough to sustain providing a product or service. You cannot always design or build your product or service from scratch but you can pick the best product or solution to sell that best meets that need. The better your product or service is compared to competitors as seen by the consumer will give you an advantage.

Price

Many people work on the principle that the cheapest price wins the sale. Whilst this is often the case, it is not always and indeed you can easily under-price a product making people think it is not high enough quality or an uncool purchase. Make sure you do your homework to ensure you price correctly.

Place

Place refers to how you get your product to market. Where is it sold? A retail shop, a direct visit to the customer, or perhaps an eCommerce store. It is important to consider the best place or places to sell to be most successful. It is important to actually have what you sell available and understand the effect of selling in different places can have on one another. Having a product that you want to sell in a supermarket is no good if you can’t supply it or the supermarket will not put it on the shelves. Also, imagine what the supermarket would say if they found you selling the same item cheaper on your eCommerce store.

Promotion

Many confuse promotion or advertising as the only function of marketing. Without the other 3 P’s your likelihood of success is very slim. This starts with how you present your business from your website to business branding, your work vehicle, how you dress, and the way the staff answer the phone. Next is how you create awareness of your business which could be advertising, public relations, social media, and the content (words) you create to reinforce this. Last is understanding if the promotion you are doing is working and looking for ways to improve it.

HOW do I create a marketing plan?

A marketing plan is a systematic approach to work through developing products and services to fulfil customers’ needs.

A marketing plan should include the following elements:

Business Summary – Apart from an overview of your business the most important aspect of this section is to do a SWOT. See our full guide on developing a SWOT. In summary, SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. It is an excellent method to analyse your competitive position and get a clear roadmap of how to help you get to your marketing destination.
Marketing Objectives – This is a clear list of marketing objectives (not business objectives) that outline the strategic steps you will need to follow to reach the goal you hope to achieve.
Target Audience or market – Ideally, you will have the aid of some sort of research that will help you define the industry you are selling to. An analysis of your competitors, and a description of your ideal customer. Age, location, income, or interests can segment the customer.
Market Strategy – It is now time to take what we have collected in the first 3 points including the SWOT, objectives, and target market and using the 4 P’s we discussed above to build out the practical plan.
Budget – This is not only your plan about how much money you will spend but also how many resources you will allocate to making it happen. Your most important resource may actually be people’s time. Could marketing effort help you sell more than having that same person just concentrate on sales?
Marketing Levers – Last but not least, you know what you want to do and how much money you have, but with all the possible marketing levels you can pull which one will get you the best result. Marketing levers here refers to what marketing channels you select. Some of the more common include:

Traditional Advertising
- Newspaper
- Radio
- TV
Public relations
Social media
Digital Advertising
- Keywords
- Display ads
Organic assets. Includes your website or word of mouth
Philanthropic – giving back to the community
Direct mail
Catalogues

A comprehensive template from the Australian government can be downloaded here https://www.business.gov.au/Planning/Business-plans/How-to-write-your-marketing-plan

HINTS

Use as much customer feedback as you can to improve your offer to them.

Set clear objectives around what you want to achieve and how you can achieve them.

Be realistic around how much you can afford to spend on marketing and how many people are in your potential audience.

A mentor or coach may be of value here especially if you have no marketing experience.

A marketing consultant or agency for a fee can provide marketing services to you.

SUMMARY – Marketing to sell more

Marketing is about looking at how a business presents itself and working out how it can improve on that to gain additional sales. The process involves understanding an opportunity, finding a solution, understanding competitors, identifying your market and finally realising your marketing plan.

Contracts – written legally binding document

Posted on July 14, 2020 by Angus Jones

In our everyday lives, we are always making contracts, whether it be for a new mobile phone plan, to have electricity connected, or arranging for a plumber to fix a broken pipe. In this guide, we will look at what a small business needs to know about contracts and how to write or agree to one that is legally binding.

A contract is an agreement with specific terms between two or more persons or entities in which there is a promise to do something in return for a valuable benefit known as consideration. Contracts are at the heart of most business dealings. The agreement may be enforced in court.

WHY should I have a written contract?

A conversation and a handshake is indeed a contract. If a tradesperson writes a price on the back of a business card and you agree to go ahead with the work then that is a contract. This is all fine until something goes wrong and a dispute arises. A handshake cannot be enforced by a court.

A written contract, on the other hand, provides certainty to both parties and should set out what has been agreed. Typical items set out in a contract would include payment, timeframes and materials.

WHAT do I need to know about contracts?

A court will not enforce a non-written contract as they will be unable to prove the existence of a contract or its terms.

Depending on the type of contract being created or agreed to it may be a good idea to have a professional such as a lawyer or business advisor review or write it.

A written contract should always be used when:

The contract price is significant enough to affect your business if you don’t get paid.
Quality requirements, specifications or specific materials that have to be used.
Doubt that the hirer may not be able to pay you.
Insurance required for the type of work you are doing.
Key terms are used, such as a critical date for the completion of the work before payment.
Information must be kept confidential. See our guide on NDA’s
Legal obligation requires to have a written contract.

Beyond written and verbal contracts other contact types include:

Standard Form Contracts – is a pre-prepared contract that has most sections already filled out and there is minimal or no negotiation between the parties. Includes employment contract or insurance agreement.

Period Contracts– is used for business engagements where work is performed from time to time. Popular in building industry for contractors.

HOW do I create a legally binding contract?

For a written contract to be legally binding it must contain four essential elements:

an offer
an acceptance
an intention to create a legal relationship
a consideration (usually money).

However, it may still be considered invalid if it:

entices someone to commit a crime, or is illegal
is entered into by someone that lacks capacity, such as a minor or bankrupt
was agreed through misleading or deceptive conduct, duress, unconscionable conduct or undue influence.

A written contract will include conditions that if not met are grounds to terminate the contract and seek compensation or damages.

When negotiating the contract terms make sure the conditions of the contract are clearly defined and agreed to by all parties.

Contracts may follow a structure that can include, but are not limited to, the following conditions:

details of the parties, including ABN’s, ACN’s and any sub-contracting arrangements
description of the goods and/or services that your business will receive or provide, including key deliverables
payment details and dates, including whether interest will be applied to late payments
duration or period
definitions of key terms
ownership of intellectual property rights.
treatment of confidential information
key dates and milestones
required insurance and indemnity provisions
exclusivity agreements and restraint of trade
damages or penalty provisions
renegotiation or renewal options
complaints and dispute resolution process
termination conditions
special conditions

HINTS

Even if a contract is a low value, if it is in writing it removes risk.

You should read every word, cross out blank spaces, negotiate if appropriate and keep a copy of the contract. When negotiating be clear and remain professional.

If you are having some design work done like a logo created, the copyright remains with the designer unless the contract specifies the copyright passes to you.

Small businesses are protected from unfair terms in a standard form contract where it is for the supply of goods or services, the sale or grant of an interest in land, at least one of the businesses employs fewer than 20 people, and the price of the contract is no more than $300,000 or $1 million if the contract is for more than 12 months. https://www.accc.gov.au/business/business-rights-protections/unfair-contract-terms

More details on how to prepare a contract can be found here https://www.business.gov.au/products-and-services/contracts-and-tenders/how-to-prepare-a-contract

SUMMARY – contracts must be accepted

A written contract is a legally binding document that can be used in a court of law. It must contain an offer, an acceptance, an intention to create a legal relationship, and a consideration (usually money). The contract will include various conditions that should clearly define the agreement between the parties so there is no confusion on what will occur. If these agreed conditions are not met it is ground for termination and possibly damages.

Register a Company

Posted on July 14, 2020 by Angus Jones

In our guide Choosing a business structure, we listed the various choices including starting a company. In this guide, we will look at the process to register a company which is more complicated than the other business structures.

A company is a legal entity with higher set-up and administration costs. Companies also have additional reporting requirements.
A company is run by its directors and owned by its shareholders.
While a company provides some asset protection, its directors can be legally liable for their actions and, in some cases, the debts of the company.
Companies are regulated by the Australian Securities & Investments Commission (ASIC).
Australian Tax Office

WHY set your business structure as a Company?

There is less personal liability to its owners.

A company is its own legal entity and as such can borrow money, take legal action, and be legally sued by someone else. As a shareholder of a company whether it be 10% or 100% you are only liable for any unpaid money on your shares. So in theory they cannot come after your house, however as a director of that company if it is found you are in breach of your legal obligations to that company you could be sued. A company is owned by its shareholders but controlled by its directors.

WHAT you need to understand to register a company

A business name is not the same as registering a company name, they indeed can be identical bar the abbreviation but don’t need to be the same. See our separate guide on Registering a Business name. However in the case of a company you must register its name as well. For example you may have a company name “Your Town Fruit Pty Ltd” trading with your registered business name called “Your Town Fruit Shop”. We recommend you go through the process to determine your company name listed on the ASIC website. https://asic.gov.au/for-business/registering-a-company/steps-to-register-a-company/company-name-availability/. A company’s name must show its legal status and include an abbreviation at the end, for example, “Your Town Fruit Pty Ltd”. The abbreviation relates to the liability of its members.

Full Word	Abbreviation
No Liability	NL
Proprietary	Pty
Limited	Ltd

HOW to Register a Company?

At this point it is our strong recommendation that you get assistance from a professional. You can easily find them by Googling “registering a company”. For a minimal fee they will do all the hard work for you based on you answering some questions and providing information. These are usually accountants or solicitors and are known as Private Service Providers. More details can be found https://asic.gov.au/for-business/registering-a-business-name/before-you-register-a-business-name/private-service-providers/

One thing you cannot escape as a company director (assuming you make yourself a director) is your obligations to keep details up to date, maintaining records and details on a register and paying the annual fees. Australian companies also require 1 or more directors to reside in Australia depending on the structure.

HINT

The fees to register a company can be found here. https://asic.gov.au/for-business/payments-fees-and-invoices/asic-fees/fees-for-commonly-lodged-documents/starting-a-company/

If you do not go down the Private Service Provider route be prepared to understand and decide on a constitution or replaceable rules, share structures, etc.

SUMMARY – Company means less personal liability

A company structure will reduce your risk of personal liability but is more complicated to establish and maintain. Using a private service provider is an economical and pain-free way to do the setup.

Ending employment

Posted on July 14, 2020 by Angus Jones

OK, you have to fire someone, let them go, end their employment. Maybe one of your key staff has resigned. This can be an emotional exercise on both parts. In this guide we will cover ending employment, what is important for you to understand around entitlements and how to protect yourself from unfair dismissal claims.

Ending employment is an employee’s departure from a job and the end of an employee’s time with an employer. Termination may be voluntary on the employee’s part, or it may be at the hands of the employer.
Unfair dismissal is when an employee is dismissed from their job in a harsh, unjust or unreasonable manner.

WHY will someone leave your employment?

The most common reasons employment ends are:

resignation
redundancy
termination or dismissal

Resignation is when someone decides to leave on their own accord. It is their decision and you cannot reject a resignation. The most common reasons for people to leave are insufficient pay or unfair pay practices, lack of honesty/integrity/ethics, poor manager, lack of work-life balance, and unhealthy/undesirable culture.

Redundancy occurs when an employer either becomes insolvent or bankrupt or the job function is no longer needed. This is a tough decision especially if you are letting go of a hard-working and loyal employee.

Dismissal is when you let someone go for poor performance, conduct or changes to operational requirements.

WHAT is important to understand about resignation, redundancy & dismissal?

There are different rights, obligations and legislation that come as a result of ending employment.

Your obligations as an employer will depend on whether you are under the state or national industrial relations system.

Notice periods

You must provide a notice period to an employee when ending employment except for some cases of dismissal. The length of notice will vary based on their length of service, type of employment, award, agreement or employment contract, and age. You can have the choice to let the employee work their notice period or you can pay them out (known as pay in lieu of notice). If you pay them out, they must be paid the same amount as if they had worked to the end of the notice period.

During this notice period, the employee may take annual leave only if you approve it and sick leave with sufficient evidence.

Notice periods do not apply to employees who are: casuals, employed for a specific period or task, do seasonal work, fired because of serious misconduct (such as engaging in theft, fraud or assault), and daily hire working in the building and construction or the meat industry.

Employee entitlements

You must pay an employee all their entitlements when employment ends. These may include:

outstanding wages
accumulated annual leave
accrued or pro-rata long service leave
redundancy pay

Genuine Redundancy

Some businesses have wrongly used redundancy to unfairly dismiss an employee. According to Fair Work Australia:

A genuine redundancy is when:

the person’s job doesn’t need to be done by anyone
the employer followed any consultation requirements in the award, enterprise agreement or other registered agreement.

When an employee’s dismissal is a genuine redundancy the employee isn’t able to make an unfair dismissal claim.

A dismissal is not a genuine redundancy if the employer:

still needs the employee’s job to be done by someone (eg. hires someone else to do the job)
has not followed relevant requirements to consult with the employees about the redundancy under an award or registered agreement or
could have reasonably, in the circumstances, given the employee another job within the employer’s business or an associated entity.

Redundancy Pay

If someone is made redundant, they will be entitled to redundancy pay and special taxation rates will apply to those payments. https://www.fairwork.gov.au/ending-employment/redundancy/redundancy-pay-and-entitlements
https://www.ato.gov.au/Individuals/Working/Working-as-an-employee/Leaving-your-job/Redun d ancy-payments/

Unfair dismissal

You must have appropriate policies and procedures in place to manage employee performance. Terminating or dismissing an underperforming employee must be done in a manner that is fair, reasonable, and just.

HOW do you ensure you have terminated an employee correctly?

Small businesses with fewer than 15 employees have greater abilities to end employment via dismissal. The Small Business Fair Dismissal Code provides a framework for dismissal to ensure the procedure is fair. It also provides small business owners with some level of protection against unfair dismissal claims.

Under the Code an employer can dismiss an employee without notice for serious misconduct includeing theft, fraud, violence and serious breaches of occupational health and safety procedures.

In other cases, the small business employer must warn the employee a reason that he or she is at risk of being dismissed if there is no improvement. The reason must be a valid reason based on the employee’s conduct or capacity to do the job.

A small business employer will be required to provide evidence of compliance with the Code if the employee makes a claim for unfair dismissal to the Fair Work Commission, including evidence that a warning has been given. Evidence may include a completed checklist, copies of written warning(s), a statement of termination or signed witness statements.

The small business employer must provide the employee with an opportunity to respond when a warning is given and allow the employee a reasonable chance to rectifying the problem. Rectifying the problem might involve the employer providing additional training and ensuring the employee knows the employer’s job expectations.

An employee who is on a probation period is not likely to have worked the minimum period to qualify to make an unfair dismissal claim. The Fair Work Act 2009 indicates that an employee must be employed for a minimum of six months, or 12 months if the employer is a small business with fewer than 15 employees to make an unfair dismissal claim.

More details and a checklist can be found here. https://www.fairwork.gov.au/ArticleDocuments/715/Small-Business-Fair-Dismissal-Code-2011.pdf.aspx

Those businesses with more than 15 employees’ details around unfair dismissal can be found by visiting Fair work Australia. https://www.fairwork.gov.au/ending-employment/unfair-dismissal

HINTS ending employment

You should always treat people with respect and simply put yourself in their position and treat them how you would expect yourself to be treated irrespective of the circumstances.

An exit interview can be a great way to understand more about your business. This could help you measure morale, see what needs improving, and understand how well they were managed.

If someone is leaving for a better opportunity be happy for them and thankful for how they have helped you to date. Be proud that you may have helped them to the next step.

SUMMARY – ending employment via dismissal

People who leave by their own accord or others that you must remove have certain entitlements. The Small Business Fair Dismissal Code provides a fair framework allowing greater abilities to end employment via dismissal.

It is critical you perform this process correctly and follow the rules. If you are not experienced in this area we advise speaking with an employment lawyer or at the very least visit the Fair Work website for further clarification. https://www.fairwork.gov.au/ending-employment

Hire Staff – hiring the right people

Posted on July 14, 2020 by Angus Jones

A business is only as good as the people it employs. Do they work hard, do they work smart, are they loyal or do they just want that paycheck and be out of there. This guide will look at if you have a need to hire staff, defining the role they will do and the task that must be completed. Will they be full time, part-time, casual, or a contractor?

The common types of employment are:
full-time: an employee who works 35+ hours per week on an ongoing basis
part-time: an employee who works less than 35 hours per week and has a guaranteed minimum number of working hours
casual: an employee whose work hours may vary each week, depending on the work available
fixed term: an employee who works for a fixed period of time e.g. 3 months
shift workers: an employee who works shifts and gets an extra payment for working shift hours
An employee works in your business and is part of your business. A contractor is running their own business.
contractor can be great for short term projects and can also be paid by the hour without superannuation requirements.

WHY hire staff?

You may not have the skills or the time to do some tasks, or perhaps your time is better spent working on other parts of the business. If so and its time to hire staff assuming their efforts will drive more profit than their salary.

WHAT do I need to understand before you hiring staff?

Ask yourself, what level of skill will this person have and how much will you need to pay to attract the right candidate? You do need to comply with government legislation in regard to award pay levels which can be found here https://calculate.fairwork.gov.au/findyouraward and discrimination laws here https://www.humanrights.gov.au/our-work/employers/quick-guide-australian-discrimination-laws

HOW to hire staff?

Finding candidates

To find the right candidate, you can either do this yourself or use a recruitment agency. A recruitment agency will charge you either a set fee or a percentage of the employee’s salary. If you can afford this it offers a great way to only interview a small number of vetted candidates. If you decide to do this yourself make sure you don’t hire the first person you interview. Even if they turn out to be the right person you need a point of comparison. You can find people by word of mouth, an advertisement in your window, the local paper, social media post, or a post on your website or newsletter. A job board like LinkedIn or Seek is handy and with a small fee, it will significantly increase your pool of candidates.

Candidate selection starts before the interview stage where you decide who you will interview. Many businesses may have 100 applicants for 1 position. Start by setting the criteria that are most important from a skill perspective to perform the job, for example, must have managed people before. If the candidate has not they are out of contention. Seek has a function where you can ask candidates set questions during the submission process. Once this is determined start reducing your list of candidates down to around no more than six people. Your time is valuable and you cannot interview everyone. A very important criterion is to ensure the candidates have the right to work in Australia. There are ways around this but require a significant investment of time and regulation. https://www.business.gov.au/People/Hiring/How-to-hire-an-overseas-worker Even those with working or student visas have restrictions, students only being able to work 40 hours in a fortnight and holiday visa workers are not able to work for someone for more than 6 months.

Interview

Now it is time to interview. Consider where you will interview them, for how long, by whom, and specify if you want them to bring anything. Remember they are interviewing you as well as you interviewing them. A candidate wants to understand your business, and you as the boss, to decide if they indeed want to work for you. So some points to consider include what you wear, how you treat them and what questions you ask. You do not want to be a tyrant and you are not their friend so remember to treat them with respect. A successful practice is to ask each candidate the same questions and to rate them against each other. That way you have a clear comparison and a method of comparing the person you interviewed today with the one two weeks ago who you can hardly remember. You should take into consideration how each person fits with the skills set you defined earlier, how they will fit into your organisation culture, if they can show you their previous achievements and if they are passionate (remember a small business is only as good as its people).

In some industries it is common practice to test potential employees through a trial. We recommend that you pay them and give them a proper opportunity to show their worth.

You have now found the right person but before you hire them on the spot it is a wise idea to check references. Unfortunately, some people do lie, and the more you are sure about someone the better things will work out. Okay, all that checks out and the person has great references. Now it’s time to make them an offer. The offer needs to be clear around working hours, salary, place of work, anticipated start date, and may include additional items like employee confidentiality or IT policies. A template for an employment offer can be found here. https://www.fairwork.gov.au/how-we-will-help/templates-and-guides/templates

On-boarding

Once they accept, congratulate them and provide them with any further information to ensure they know the next steps, like what time you need them and what the dress code is, etc. Now comes the hard bit. Unsuccessful candidates interviewed with you and chances are they put a bunch of effort into that process. You need to contact them and let them know they were unsuccessful. Ideally be specific with the reason, for example, they lacked a specific skill, so they can improve next time rather than some generic statement like the other candidate was better.

The big day has now arrived for your new employee. Before they turn up you need to plan to induct them into your business and decide what they need to be taught and by whom. Chances are it is you and it will take a lot of effort to begin with, but if done well you will have a happy and hardworking employee in no time.

You are now responsible for a new employee both personally and from a legislative perspective. If you don’t already have systems in place you must consider reporting like timesheets, payroll and taxation, superannuation, annual and sick leave, insurance, and workplace health and safety. (Be sure to check out our essential guides on these topics)

HINT

Candidates may attempt to negotiate employment terms such as wages. Always listen but remember it does not mean you have to compromise.

Additional information can be found here

SUMMARY – Hire the right people

Your people are your business. Having the right employees is critical to your success. To Hire staff can be a rewarding process and will become simpler the more experience you gain.

Finding a business premises

Posted on July 14, 2020 by Angus Jones

You are ready to make that big move and open a restaurant, or maybe the home garage is not big enough anymore, maybe you want to be considered seriously and need a professional workspace. How do you go about finding that property? This guide will help you on that journey of finding business premises.

WHAT do we need to decide first to find new business premises?

Your journey starts by deciding on the criteria by which you will make your decision. The better your list the better result you will get.

You need to consider:

Will you buy or lease/rent a property?
Would you be prepared to share it with others? There are options around co-location or shared offices where you can run your business from a location shared by other businesses and thus share some of the facilities like a conference room or even a receptionist.
What are your needs and wants in a property? – If you are opening a restaurant you probably need to be in a popular location. If you are opening a retail store does that need to be in a mall. Will customers find you in an industrial estate? How much room will you need? If you are establishing an office you would need around 10 square meters per person. Do you need a kitchen or 3-phase power? How much parking will you need? Can trucks access your location easily? Do you need to be close to your customers? Is there a need for public transport so your workers can get to work? Do you need to consider your future needs?
Will council zoning impact your choice? For example, some business types cannot operate in a residential area.
What is your budget? Can you afford it? Also consider other outgoings like office set up, moving costs, annual rental increases.

HOW do I find the right business property?

Now the search begins in earnest! There are several ways you can find properties:

Find the location yourself by searching for your desired area. A For Lease sign is a dead giveaway
Speak to a local real estate agents
Contact a commercial real estate agent
Find a Property Broker, they will search on your behalf
Use the commercial sections of property websites realestate.com.au or domain.com.au

Using your search criteria and now having a list of possible locations, it is time to visit those properties. Be patient, do your homework and be careful not to make hasty decisions.

Once you have made up your mind it’s time to negotiate the price. Chances are you can get it for cheaper so start talking turkey.

HINT

A good idea is to ask existing neighbors questions about the location/ intended premises.

Be sure to read our essential guide on renting an office

SUMMARY – Finding the right business premises!

Decide if you will buy or lease then come up with a want/need criteria list. Be patient and don’t forget to negotiate on price.

Business Insurance – protect your business

Posted on July 14, 2020 by Angus Jones

In many of the guides available from this website we have been discussing liability associated with running a business. We have used extreme examples, like losing your house, so you understand worst-case scenarios. The good news is that we can protect ourselves against most of these liabilities and this guide will explain the key insurance types you should consider.

Insurance is a means of protection from financial loss. It is a form of risk management, primarily used to hedge against the risk of a contingent or uncertain loss.
An entity which provides insurance is known as an insurer, insurance company, insurance carrier or underwriter. A person or entity who buys insurance is known as an insured or as a policyholder. The insurance transaction involves the insured assuming a guaranteed and known relatively small loss in the form of payment to the insurer in exchange for the insurer’s promise to compensate the insured in the event of a covered loss. The loss may or may not be financial, but it must be reducible to financial terms, and usually involves something in which the insured has an insurable interest established by ownership, possession, or pre-existing relationship.
(source Wikipedia)

(source Wikipedia)

WHY do I need Business Insurance?

First consider your personal life. Do you insure your car, home, health, income, or life? Yes, most of you do protect yourself from unexpected expenses in the unlikely event something goes wrong. A business is no different!

WHAT might we need insurance cover for?

In business the sorts of things we would consider protecting include your workers, your personal liability, company assets like buildings, company revenue, and your customer.

HOW do I know which insurance policies I will need?

Some insurance is compulsory and includes Public liability, Third-party Personal Injury (if you own a car), and Worker’s Compensation (if you have workers).

Public Liability Insurance

Public liability insurance covers you for third party injury or death. It helps protect you and your business when you are liable for negligence. This can be as simple of someone falling over in your shop but other examples include:

food poisoning
property damage, such as causing a fire
providing bad advice, e.g. selling a commercial fridge to a restaurant that fails to keep its temperature meaning the restaurant incurs a loss of inventory
nervous shock, such as emotional distress or a recognised psychiatric illness

Third-party Personal Injury insurance

You cannot register a vehicle in Australia without this insurance however please make sure you declare you will be using the vehicle for business purposes.

Workers Compensation Insurance

If someone is injured or illness occurs in a workplace you have responsibilities to cover the costs which will be incurred, you cannot just send them off to a bulk billing doctor and pretend it happened at home. This insurance will cover worker’s compensation, first aid, and rehabilitation. There are authorised providers of this type of insurance and a list is available from APRA https://www.apra.gov.au/register-of-general-insurance

Some quick callouts. Sole Traders cannot cover themselves individually. Independent contractors may require their own insurance.

Other insurance policies you may consider include (not compulsory):

Accident and Liability Insurance

If your business is likely to be sued, then you should consider this insurance. For some industries this is mandatory, for others optional. Further information by industry resources can be found here https://www.business.gov.au/Planning/Industry-information

You might consider this insurance if you:

are a company director or senior manager
work in an industry that attracts large government fines
collect personal data of customers
sell, supply, deliver or in some cases service goods or services that could cause damage, injury or emotional distress
provide professional advice
sign contractual obligations that possibly could go wrong or not be met

Stock, Product and Asset Insurance

If your business would fail from loss of an asset or stock, insurance may reduce that risk and could include insuring for:

Building and Contents
Farm crops, livestock, machinery
Goods in transit either as delivery or perhaps you own assets being moved like a bulldozer
Electric or machinery breakdown and or including spoilt stock, for example food

Personal or Loss of Income Insurance

In the event of a disaster to you or your business could you or your family survive a loss of income? These are both personal and business insurances you may want to consider:

Income Protection
Life Insurance
Disability insurance
Business interruption or loss of profits (for specific insured dangers like fire)
Management liability (protects personal assets)
Employee theft or Fraud

Technology and Cyber Crime Insurance

Criminals are more likely to break into your computer network and damage or steal from your business than break into your premises today. Every year this becomes a bigger issue and you should take steps to protect both your expensive computer hardware and the even more valuable data that supports your business.

SUMMARY – Talk to an Insurance Brocker

Knowing what insurance policies you need can be complicated and we recommend that you speak with a licensed insurance broker or advisor. We also recommend they are licensed which can be checked on the ASIC website. https://connectonline.asic.gov.au/RegistrySearch/faces/landing/ProfessionalRegisters.jspx?_adf.ctrl-state=xxgvmg709_4

Payroll – paying employees

Posted on July 14, 2020 by Angus Jones

Within your small business, people are your most valuable resource but unless they are a family member they are unlikely going to work for free. This means that you will need to pay them. That sounds easy but you have to deduct income tax, pay superannuation, accrue holiday and sick leave and the list goes on. In this guide, we will look at payroll requirements, explain how you pay tax, and look at some of the solutions to make it easier.

There are 10 minimum entitlements you have to provide to all employees called The National Employment Standards (NES). The 10 minimum entitlements of the NES are:
Maximum weekly hours.
Requests for flexible working arrangements.
Parental leave and related entitlements.
Annual leave.
Personal/carer’s leave, compassionate leave, and unpaid family and domestic violence leave.
Community service leave.
Long service leave.
Public holidays.
Notice of termination and redundancy pay.
Fair Work Information Statement.
Note there are some exceptions for casuals. More details can be found on the NES website

WHY should I care about payroll?

The payroll process is important as a small business need to do two things:

Pay employees the right amount at the right time, every time. Fairwork provides a base pay calculator which can be found here. https://calculate.fairwork.gov.au/FindYourAward
Withhold the appropriate amount of tax, provide that to the Australian Tax Office with the required reports, and as part of this keep accurate records. You also need to provide the employee with a payslip and keep records for 7 years.

WHAT you need to know about Payroll and Tax

Three types of tax must be paid:

PAYG withholding – Pay As You Go tax is the employer assisting the employee meet their end of year tax liability. You must register to start the process, you must ensure the worker is entitled to work in Australia and you must withhold the tax every time you issue payment to your staff. Details on how to pay this tax can be found later in this guide. More details can be found on your obligations here. https://www.ato.gov.au/business/payg-withholding/
Payroll Tax – This is a state-by-state tax and is a tax on your business not the employee. It is calculated as a percentage of your total wage bill once you exceed a certain threshold. Further details can be found here. Threshold and payroll tax rates, as well as payment requirements, can be found here:
1. ACT Revenue Office
1. Northern Territory Revenue
1. NSW Revenue
1. Business Queensland payroll tax
1. Revenue SA
1. State Revenue Office of Tasmania
1. State Revenue Office Victoria
1. WA Office of State Revenue
Fringe benefits Tax – FBT is a tax that employers pay when they provide certain benefits to their employees, including their employees’ family or other associates. The benefit may be in addition to, or part of, their salary or wage package. More details and how to pay can be found here https://www.ato.gov.au/General/Fringe-benefits-tax-(FBT)/ A common example of this may be FBT payable on a company car used for work and pleasure.

A further requirement in the payroll process is the payment of Superannuation. If you pay an employee more than $450 a month then you must contribute a further legislated amount to an employee’s chosen superannuation fund. https://www.ato.gov.au/Business/Super-for-employers/

Leave is also an entitlement that must be calculated but is not compulsory on the payslip. The types of leave include:

Annual Leave – workers accumulate leave from the day they start at a rate of 4 weeks for every 12 months worked. It does not apply to casuals and should be accrued in your accounts so you know that you have a debt that must be paid at some time.
Parental Leave – Also known as Maternity leave, it is an entitlement of leave when a child is born or adopted. To be eligible you must have worked for at least 12 months for your organisation and the leave is up to 12 months unpaid. https://www.fairwork.gov.au/leave/maternity-and-parental-leave
Sick and carer’s leave – Full-time and part-time employees can take paid leave to help with personal illness or injury, caring responsibilities, and family emergencies. Employees are entitled to 10 days of sick leave for every year of service. Casuals get none. https://www.fairwork.gov.au/leave/sick-and-carers-leave/paid-sick-and-carers-leave
Public, Religious, and cultural holiday – Employees are entitled to paid leave on Public holidays that fall on a normal working day. Religious and cultural holidays do not have entitled leave however if you do not allow employees to celebrate these it can be discrimination. A simple solution is to celebrate them together through work events.
Long service leave – Employees get long service leave after a long period of working for the same employer. Most employees’ entitlement to long service leave comes from long service leave laws in each state or territory. https://www.fairwork.gov.au/leave/long-service-leave
(Casuals are entitled to LSL in some states and territories)

Allowances and deductions may also form part of the payment process with additional funds provided for uniforms or travel, normally the subject of some sort of award. https://www.fairwork.gov.au/awards-and-agreements/awards Deductions may include a car lease payment or an extra employee-contributed super payment coming out of their scheduled pay.

HOW do you pay an employee properly?

The more employees you have, the more complex your payroll becomes. You might have a mix of employees on hourly wages and salaries. Throw in some contractors, staff on commission, overtime, expense claims, allowances, and leave entitlements, and your payroll can be different every time you run it. Your options are:

By hand: Either on paper or a spreadsheet. Note this may not meet tax office requirements.
Payroll software: Apps can calculate pay and deductions and even fill out tax forms for you. Be sure to read our essential guide on payroll software.
Payroll service providers: You can outsource your payroll to experts. Some providers will do absolutely everything for you. Others will help with specific tasks.
Accountants and bookkeepers: You do not have to go to a specialist payroll company. Many accountants and bookkeepers can do payroll for you.

Now that you have managed to work out how to pay your employee you also have to report and pay the Australian Tax Office. You will have to abide by the Single Touch Payroll reporting guidelines. https://www.ato.gov.au/business/single-touch-payroll/in-detail/single-touch-payroll-employer-reporting-guidelines/ You will report to the ATO every payday how much your employees were paid, how much tax was withheld and what contributions were made to superannuation.

HINTS

Be sure to read our essential guides on Superannuation, roster management, and Payroll software.

SUMMARY – Adhere to Government Regulation around Payroll

Paying an employee is a complicated process with government regulation around conditions, awards, and taxation. It is important that you understand and follow the regulation and ensure your employees are paid the right amount on time every time.

There are lots of great tools and assistance available to help make this process easier.

Payroll Software – simplify paying people

Posted on July 10, 2020 by Angus Jones

our guide on payroll we discussed the process of paying an employee. Part of that discussion was the actual calculation and processing, we discussed options like using a third party or using software to do it yourself. In this guide we will review what you need to consider in selecting a Payroll software solution.

Chances are if you are considering payroll software you already have or are also considering an accounting package solution. Either way you are best to ensure the solution is either built into the accounting package or can be integrated. This will save you lots of time. See our essential guide on accounting software solutions.

Small business payroll software is a solution used in-house that helps you streamline and automate payroll processing tasks. The software saves time and effort through automation as well as reduces errors vs doing manually. It often includes modules for time tracking, tax filing, and benefits administration.

WHY do I need software to do my payroll?

Benefits of Small-Business Payroll Software

Automation of processes
Reduced labour costs associated with payroll processing
Greater accuracy and lower risks eliminate the possibility of human error. The software can also remind you of deadlines, so reduce your risk of fines.
Integration with existing software, for example, accounting packages or POS systems
Some packages will provides updated tax tables when the legislation changes so that the right PAYG Withholding is used.

WHAT you need to know about the ATO and Single Touch Payroll

As a small business in Australia you need a package that will comply with the Australian Tax Office Single Touch Payroll (STP) https://www.ato.gov.au/business/single-touch-payroll/in-detail/single-touch-payroll-employer-reporting-guidelines/. Larger business may consider a package that includes other HR functions but it is unlikely a small business you would consider this. Like the accounting, POS, and eCommerce software solutions the Payroll solution is most likely to be cloud-based bringing functionality at a reasonable price.

HOW do I make a decision on which Payroll Software

Features you should consider:

Designed for the Australian Tax System and reporting requirements
Performs Single Touch Payroll reporting
Direct deposit functionality into employees’ bank accounts
SuperStream standard compatibility for Superannuation compliance
Ability to integrate with other cloud-based software solutions you are using. This will reduce the workload
Additional information can be printed on the employee payslip such as annual leave owing
The ability to support employee deductions or allowances for example, car leasing or uniform allowance
Leave management including annual, sick, and long service
Employee portal to update banking details or enter leave
Mobile access from your smartphones, both for administration and employee
If employees clock on and off, the ability to integrate this process
Flexibility to handle employment options including variable hours, bonus payments, contractors, etc
New hire integration without external assistance
Reporting functionality including leave reporting
Alerts or reminders, for example, payment was not successful or Super payment is due
Security. Remember all your wage information is on the cloud. Consider in which country the information is hosted
Legislation updates. How quickly will the software be updated to abide by any new Government legislation?
Support. Various support or training might be available either included or at a cost.
Cost and cost of extra features

HINT

Make sure your software choice will does not have any compatibility issues with your and your employee’s bank account intergration. Also ensure the bank will process payments overnight so employees can draw cash the next day.

SUMMARY – Easy Payroll

This software can be accessed inexpensively and will make your life easier. More info on vendors can be found by searching for small business payroll software Australia.

Server – do I need one?

Posted on July 8, 2020 by Angus Jones

A server sounds a bit like a person who will bring you food at a restaurant but it is sort of right as it is a device that brings information to other devices. In this guide we will discuss why a server versus using the cloud and what you need to consider when buying one.

A server is a computer solution or a device that provides functionality for other programs or devices, called “clients”(Your PC is a client). This architecture is called the client-server model, and a centralised server running special software designed for it will provide data to client PC’s.

WHY do I need a Server?

The most common solutions a server would provide in a small business are to store and share large files that multiple people work on, including video. You may host your email on your server or even your own internal or external website. If you need a specialist machine to help you run your business to help control and monitor machinery. You may have a database that is like a massive computerised filing cabinet. You may use it to secure your business including managing secure logins (passwords) and to back up all your PC’s so in the event of a failure, you can restore your information.

WHAT is the benefit of a Server vs the Cloud?

The decision you must make upfront is whether you will use the cloud or an internal server. We have an essential guide specifically discussing cloud computing. The reality of this is the cloud is only a bunch of servers as well, owned by someone else. The advantage of the cloud is someone else is buying and maintaining the servers and as long as the internet is working you get access to them.

Reasons I would not use the cloud?

Cost. A server may have a large upfront cost but overtime will be cheaper than renting capacity on cloud servers. Note many software solutions (applications) are now only available on the cloud. You own your server you don’t own the cloud.
Speed. If you are working on large files that you need to access constantly the internet may not be fast enough. Internally you might be able to serve files at 10Gbps, via the internet this might be 100Mbps thus 100 x faster. Having some sort of file sharing server internally makes sense if your employees are sharing files.
Internet Bandwidth. If you data allowance is not unlimited moving files to and from the cloud can quickly consume your allowance.
Privacy and jurisdiction. While most cloud service providers have excellent security operations that protect your privacy, there is nothing more private than having all of your data located on-premises. The cloud can also be anywhere in the world, meaning your data could be sitting in America or China.
Local Applications. Some server software is not available on the cloud so you must run it locally.
Management. You must maintain your servers which means paying someone to do that, you must power them and give them space. You do however have control of them and at any time you can add more storage or memory and if there is spare capacity have them do another job without additional hardware investment.

HOW do I make a decision on what hardware I need?

A server is not something you buy off a shelf and it is normally tailored for your needs.

Where would you put a server? A server needs a spot that is clean, secure, is unlikely to get knocked over, has power, and network access. You may consider a dedicated rack or room.
A server needs someone who can set it up and maintain it. Great if you have someone on staff but otherwise you will need to hire external help. See our article on IT support.

Below are some of the basics in understanding various options involved in a purchase:

Brand. We recommend you purchase one from a reputable brand that has years of experience producing a reliable solution and the warranty network to keep parts available. Servers are designed to run 24×7 unlike your PC but moving parts do fail.
Redundancy. So if moving parts do fail, servers allow redundancy to be built in. You can have redundant fans, redundant power supplies, and redundant disk drives. All components with moving parts and the most likely to fail.
Expansion. Servers are normally built with the ability to expand. You can add more memory, more disk drives, and even additional processors. Thus you might consider your future needs up to 3-4 years and if you believe you will need to add capacity. After this time you will need to consider buying a new one to ensure reliability.
Drives. Disk drives store your data and come in different sizes and speeds. Speed relates to how fast you can read and write to the disk. Size relates to the amount of data/files you can store on the disk. The physical size will be no different.
Rack or tower. Servers come in a tower configuration that looks like a large PC box or rack which is like a big pizza box that can slide into a standard rack enclosure. A rack enclosure will also host other computing infrastructure like network switches.
Operating System. This is like windows but in the case of a server you have the choice of either a windows server operating system or a Linux based one. If you do not understand this talk to an IT specialist.
Application Server. This is a box that is pre-built and configured to do a job and can be switched on and running in minutes. An example would be a file sharing solution that by connecting to your network allows everyone in the office to share the same files.

HINT

Unless you are super confident it is best to discuss your needs with IT specialists who can help you on your journey. Be sure to read our essential guide on IT Support.

SUMMARY – Server effort vs benefit A server is a big undertaking for small businesses and must be managed and maintained well. It does however give you control over your solution including the security of your data and is the most cost-effective solution in the long run