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    Lee Court

October 4, 2013

Business Strategic Succession Planning


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Business Strategic Succession Planning

This article was kindly provided by Craig West of Succession Plus

Business strategic succession planning was never heard of 10 years ago – however business owners now understand that succession is a significant aspect of the success of their business. Steven Covey’s habit number two is Begin with the End in Mind  – Covey says
if you want to have a successful enterprise, you clearly define what you’re trying to accomplish…. the extent to which you begin with the end in mind often determines whether or not you are able to create a successful enterprise.

What is Strategic Succession Planning?

Strategic succession planning covers all aspects of the business, but importantly focuses all attention on the end outcome –what are we actually trying to build within our business – is it something to fund our retirement? To list on a stock market? To raise further capital and grow? To pass on to other members of the family?

Strategic succession planning means we have a detailed and documented plan covering every aspect of our business that continually moves us closer to our ultimate exit outcome. Most business owners are so caught up in running the business at a day-to-day level they do not have time, effort and attention focused on the end outcome.

Why Strategic Succession Planning?

In Australia more than 50% of business exits are currently a failure i.e. bankruptcy, liquidation, death or serious illness, divorce or simply walking away and closing the doors – this is largely because no succession planning has been undertaken by the business owner.

A survey conducted by the Monash University Family and Private Business Research Unit revealed that over the ensuing decade 60 per cent of private business owners are approaching retirement (the first baby boomers actually turn 65 in 2011) and the ensuing transfer of ownership of assets and business equates to approximately $607 billion.

Approximately one third of Australian family businesses are expected to change CEOs over the next 3 to 4 years and whilst 53% are sure that the successor will be a family member, 83% do not have a succession plan. Most people go into business not only to earn income but also to build the value of their equity and to sell – the statistics tell us the majority do not get to that point.

When?

In my view, strategic planning is all about time – the simplest analogy is to ask whether you would consider approaching a real estate today with a view to selling your property this Saturday – most real estate agents could actually achieve this; though without any time to market, prepare the property and review their buyers database – the price they achieve will not be the real value of the property. Most of the businesses I work with require a minimum of five years to maximize the value and prepare themselves to extract that value successfully.

We often see stories in the business media of well-known wealthy entrepreneurs making substantial money “trading” in businesses – they invest, build or grow the business, reduce the risk and then exit profitably making substantial gains on the investment over a few years – this is the best illustration of getting the exit strategy right – it is the ultimate test of success for these investors – if they don’t exit correctly they make no money!

How?

Our 16 step process begins with simply reviewing the position today, by undertaking due diligence, benchmarking, structural review and valuation we can determine what exists in the business today and where there are opportunities and challenges which may affect the ultimate exit strategy. On most occasions, business owners do not have an exit strategy and are not aware of all the options and so our strategic planning process identifies which option/s is most suitable and what we need to do to maximise the opportunity. In many cases there are several areas within the business, both financial and non-financial that need to be addressed prior to any exit plan being implemented.

As a part of this review we can usually determine the most appropriate exit option for the business owner given the business, personal and financial goals we have outlined. Then our work is designed to continually move the business down the path towards exit:

We have had considerable success with implementing a management buy in – where key people within the business are retained and incentivised with a vehicle in place (Peak Performance Trust – a special kind of employee share plan) to purchase shares based on a profit share arrangement with those funds being reinvested into the equity of the business rather than taken at as cash payment.

This plan operates over an extended period and has the added benefit of attracting, retaining and motivating key staff within the business who now have a vested financial interest in maximizing the value (as does the owner).

This may not be suitable for all business owners but has had considerable success with some of our clients (see breakout box below). In any event just knowing which exit is the most suitable and what can be done to get a better result can focus business owners attention and efforts on making the business more efficient, profitable and less risky – all of which add to the value. In several cases we have worked with clients who subsequently decide not to sell the business as in its “new form” it is less stressful and better matches their lifestyle and retirement planning needs.

In all cases, business owners must be prepared to make every decision considering whether it brings them closer to or further away from the ultimate exit strategy – i.e. begin with the end in mind – investing the time to develop a strategic succession plan is one of the most important financial decisions business owner may ever make – without one the value in the business will retire when you do!

BREAKOUT BOX – CLIENT CASE STUDY

In terms of real business benefits this client ( a real estate agent in Queensland ) focuses on the sales people who are now able to state that they are owners ( often vendors want to deal with the principal of the business not “just an employee” ) – there was a strongly positive response from our staff.  One of the great advantages to this scheme is the power that it gives to the employee in their negotiations.  They can represent themselves as having ownership in the business, which is something that most competitors cannot offer.  It’s like a trump card to a high performing sales consultant in their winning the listing in a competitive environment.

Interestingly, in this business, internal referrals between departments have also increased –
both financial services and property management referrals from employees participating in this scheme increased at a higher level than before. I put this down to their seeing value in contributing to the company’s bottom line because they will share in the profit.

Principal Brett Greensill, is a strong supporter and based on the improvements in business performance and valuation his view is that all business owners should be looking at a similar plan – the introduction of this scheme is entirely positive

Succession Plus has been advising businesses in management, taxation and accounting issues for over 15 years. They specialize in business structuring and succession planning and have had extensive experience working with clients to improve their financial performance – with proven results.

For more information visit www.successionplus.com.au or call Craig West on 1300 665 473

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BOSS, BACK OFFICE SHARED SERVICES PTY LTD.
Suite 2, 345 Pacific Highway,
LINDFIELD, NSW 2070
1800 889 232
www.boz.com.au
@2020 ALL RIGHTS RESERVED.
Liability Limited By a Scheme Approved

October 2, 2013

5 Tips to Supercharge Your Website!


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5 Tips to Supercharge Your Website!

Supercharge your website with worthwhile news, ideas and quick touch-ups in time for busy months. We have five helpful hints that tell you how.

It’s that moment of the year when your clients will definitely be searching your firm to recollect your address, talk about you to their partners and fish for some free help and advice.  If in case you don’t have a website, you can check out WordPress.com and put out a free, tidy and Google-friendly one.  If you do have a website already, now is the best time to bring it up to date.  First off, make sure that your website is free of typing and grammatical errors and that your contact number can be easily found.

Instant Update Solutions

  • Place Your Contact Information in Text and Not in an Image.
    Most of the time images get blocked on smartphones and for that reason a large number of your clients may possibly miss this important information. To check, go to your website on your smartphone and see if you can view it. How does it appear? Is there any “old-fashioned” flash page? If that’s the case, an iPhone will not really bring anything up. It’s smart to eliminate it.See to it your phone number and address are easy to find right on top. These days, smartphones can detect phone numbers and addresses and clicking them automatically directs the user by dialing the phone number or providing directions to your office through a map application. In case your contact information is an image and not text, it will not be clickable and may annoy your client. This is often easily fixed by typing your telephone number along with other contact details somewhere visible in your website. Perform the same for emails.
  • Provide Quick Checklists, Forms and Worksheets.
    “Where can I find that?” your client asks. “Oh, just go to our website and click ‘Forms and Worksheets.’ ” Wouldn’t that be nice? Update your website with the latest forms and worksheets and information that is of value to both your clients as well as prospective clients.
  • Give Your Website the Personal Touch.
    Your website is like your very own office. Have you got personal photos on your desk and a few diplomas on the wall? They must also be there in your website. Have your photo taken by a professional photographer. You can also add a few photos of yourself with key associates or partners having dinner or attending an industry tradeshow. It helps break the ice with prospective clients; they see a glimpse of the person behind the voice and may find common ground in your photos. Your clients will like the “human” side.
  • Arrange Consultations Using Your Website.
    When you update your website, think about incorporating practice management software that can help reduce costs and help you save as well as your office staff time by allowing your clients enter a meeting time that is mutually convenient. Today’s practice management software applications enable you to input your “busy” days and then blocks out those days so that your clients can see when you are available and choose a time to meet with you. You’re providing them with the power to decide on the time that suits them best. No inconveniences. Bear in mind, if you don’t make your services suitable and convenient to your clients, your competitors will.Online appointment setting is fairly simple to arrange and will have an instant positive effect on your clients. They can simply go to your website, pre-book a time and receive automated reminders by email or SMS, whichever works best for them. Today’s well-known practice management software applications smoothly sync up with Outlook, Google Calendar, among others. Getfriday.com is one software program that can help with setting appointments, answering your phone calls as well as serving as a full-time assistant.
  • Update Your FAQs.
    Do you find yourself replying to similar queries repeatedly? Put them in a list and include them to your website. Any time you hear more questions, respond to them and add them to your list. You’ll be on your way to making your blog before you realize it. It’s just that simple.What’s the importance of having a FAQ-oriented blog? It boosts your personal touch and conveys two very important points:
  1. That you are knowledgeable and can anticipate your clients’ queries and concerns; and
  2. You have a blog and not only just an outdated, dull and unexciting website any longer, getting you right up to date.

Freshen up on your online presence now!

Here’s Where You Should Be Focusing Your Website Efforts

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  • Tips to Market Your Business
  • How to Increase Your Profit
  • And More!

BOSS, BACK OFFICE SHARED SERVICES PTY LTD.
Suite 2, 345 Pacific Highway,
LINDFIELD, NSW 2070
1800 889 232
www.boz.com.au
@2020 ALL RIGHTS RESERVED.
Liability Limited By a Scheme Approved

July 7, 2010

Outsourcing – The Trump Card of the Growing SME for Those Who Do It Right


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Outsourcing – The Trump Card of the Growing SME for Those Who Do It Right

The trend of outsourcing by accounting firms is building more momentum and it offers significant benefits if done the right way.

I am going to launch into this with a few facts. According to “The World is Flat” by Thomas L. Friedman, in 2003 some 25,000 U.S tax returns were done in India. In 2004, the number was 100,000. In 2005, it was roughly 400,000. Thomas goes on to suggest that by 2014 an accounting practice will outsource the basic preparation of tax returns – if not more. In fact at present Ernst and Young alone prepare about 1 million U.S tax returns in India.

Many Australian accounting practices are embracing outsourcing to gain the many benefits it offers. PwC Australia, for example, outsources many accounting functions such as auditing functions to a team in Mumbai and there is a large tax team in Calcutta.

An enlightening PwC Report “Outsourcing Comes of Age” (published 23/3/09) was compiled from interviewing 226 company executives across the globe. In it Australia is cited as a “medium mature” outsourcing market. So clearly there are many who are taking advantage of this resource.

Of those surveyed in the report 71% of them outsource core functions. What is fascinating about this is that it’s just plain normal to do so for these firms and yet the SME accounting industry still seems to be slow on the up take. Why is this? If over a million tax returns are being completed offshore for U.S firms it is clearly readily attainable.

From interviewing Partners of SME firms I have found the main reasons for not outsourcing compliance or audit functions are because of concerns about the quality of work, tax knowledge, security and confidentiality. These are valid issues and without a doubt serious considerations. But consider this: an outsourcing company can give you much higher margins, enable you to focus on more high-fee value-add activities and enable growth or flexibility just not possible logistically if you have to hire in-house. You can achieve so much having effectively a high ROI human resource on tap.

The PwC report states of those firms they surveyed that use outsourcing, 87% of them say outsourcing delivers the benefits of the original business case. Top reasons for outsourcing include lowering costs, gaining access to talent and increase business model flexibility.

But the findings also reveal another clear trend amongst those firms reaping the benefits of outsourcing: collaboration. PwC’s findings were that executives see a direct link between a more collaborative arrangement with their outsourcing partners and improved performance – “Successful customers of outsourcing show good collaboration with service providers, and good collaborators tend to be effective outsourcers. Collaboration yields best practices in the capabilities and processes of outsourcing itself.”

Not all outsourcing is created equal. In essence two main business models are:

  1. A transactional service whereby the client jobs are sent externally to a service provider and the work is completed by an anonymous person or persons.
  2. A collaborative service where the client engages an employee of the service provider on a full or part-time basis. The client can choose the individual that works for them. That person is then dedicated to the client effectively becoming one of their staff (although the individual doesn’t work actually in the clients’ office). This arrangement gives the client the same benefits of hiring their own in-house staff without the draw backs.

A transactional service can get the work done but clearly expert outsourcers have found that there are many limitations to that business model.

So how do you capitalise on the significant outsourcing resources? It’s easier than you think just choose carefully and do your research. A few guidelines are:

  • Choose a specialist in the field of Australian accounting
  • Opt for a collaborative partnership to get the best results
  • Talk to existing clients of the service provider to learn about their experiences using the provider
  • Get organised – setting up for outsourcing is easy but if you’re disorganised it will fail
  • If you are not getting the service you expected you may not be with a high-calibre provider

Outsourcing is being done successfully everywhere, so much so international investment consultancy firm McKinsey & Company predicts that the demand for outsourcing services will reach $180 billion in 2010. There is no doubt that outsourcing is growing and that can only mean one thing – it works.

Since 2004 BOSS has been providing a unique form of specialist accounting outsourcing services to Australian firms based on a collaborative approach. We call it IN-Resourcing and it is just like having your own dedicated staff member, they are just working in a separate office.

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  • Tips to Market Your Business
  • How to Increase Your Profit
  • And More!

BOSS, BACK OFFICE SHARED SERVICES PTY LTD.
Suite 2, 345 Pacific Highway,
LINDFIELD, NSW 2070
1800 889 232
www.boz.com.au
@2020 ALL RIGHTS RESERVED.
Liability Limited By a Scheme Approved

June 3, 2010

IN-Resourcing – A Much Improved Version of Outsourcing


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Call 1800 889 232

IN-Resourcing – A Much Improved Version of Outsourcing

IN-Resourcing™ provides the best advantages of outsourcing plus gives you even more where outsourcing falls short!

Ann Turner of Cordner Wilson & Ludeke Pty Ltd had this to say about her BOSS Accountant:

“He learned very quickly, he’s very talented and we’re confident to give him any level of work.”

With IN-resourcing you can:

  • ➨ Hire an experienced accountant that does high quality work
  • ➨ Reduce your salary costs by over 50%
  • ➨ Increase your profits by as much as 54%
  • ➨ Free up your time so you can focus on your business and clients
  • ➨ Hire an accountant that solely works for your company

What you are being offered is completely different to what has been available until now – a totally unique solution to your staffing and workload problems.

BOSS Pty Ltd (Back Office Shared Services) has taken the best of outsourcing and enhanced where outsourcing fails, into what’s called IN-resourcing™!  A model that is very unique from an outsourcing model.

With IN-resourcing™, you have complete control over the BOSS accountant and the work they provide, as the accountant is solely employed by your company (as compared with outsourcing, where you give up your control of the accounting process to a service provider).

The restructured outsourcing model into In-resourcing™ thoroughly addresses marketplace concerns about control and security of data, and at the same time providing high caliber CA qualified accountants at a salary that suits the BOSS accountants ensuring much higher retention rates and high caliber accountants, but at the same time offering you the cheapest prices on the market today!

BOSS (Back Office Shared Services Pty Ltd) is Australia’s premium outsourcing provider supplying well-trained high-quality virtual accountants, outsourced accountants & bookkeepers. To discuss your needs and how we can help, Book a Consultation NOW!

  • ➨ You are supplied with experienced accountants
  • ➨ Accountants are fully trained by us
  • ➨ They work in our office not yours. Unlike outsourcing they work YOUR way using YOUR procedures, this ensures the quality of work is very high and completed exactly how you need it done

You maintain complete control as if they were your staff in the next room!

Subscribe to BOSS - Receive monthly articles and special white papers

Sign up to receive monthly articles and special white papers and learn:

  • Tips to Market Your Business
  • How to Increase Your Profit
  • And More!

BOSS, BACK OFFICE SHARED SERVICES PTY LTD.
Suite 2, 345 Pacific Highway,
LINDFIELD, NSW 2070
1800 889 232
www.boz.com.au
@2020 ALL RIGHTS RESERVED.
Liability Limited By a Scheme Approved