Tax Talk | Income tax treatment of accommodation provided to employees
Inland Revenue has released an operational statement in relation to employer-provided accommodation and...
Building a business and driving business growth takes a massive amount of commitment, sacrifice, self-belief and energy. Michelle Sinclair, Tax Consultant from Baker Tilly Staples Rodway Tauranga shares her key insights.
Time to read: 5 mins
My husband and I spent 16+ years building businesses together and during this time we have established and grown not one, but five businesses across New Zealand and Australia. It has been a long and life-changing journey with many ups and downs. We have learnt a lot of lessons along the way, and the following are six key lessons that we have consistently applied.
In business, ups and downs are as inevitable as they are unavoidable. A business owner needs to be able to effectively navigate them and a clear end-goal with a strong vision can help you do just that. A big, audacious goal is an ambitious, future orientated goal that goes beyond the current capabilities of the business. It will require significant effort to complete and will keep you focused and keep your business decisions and actions aligned. A big, audacious goal should promote big thinking beyond the current circumstances.
We had a very ambitious goal for our business in Australia and it was the pursuit of that goal that consistently propelled us forward through our own challenges in business. In May 2007 we moved our whole family to Australia to launch a well-planned, new IT business. Not long after we made the move, the Global Financial Crisis hit. A recession is not always the best time to launch a business, but we continued to move forward by adapting and realigning our business model to the economic climate. This business grew to become one of Australia's leading cloud 'Infrastructure as a Service' (IaaS) companies, receiving multiple industry awards along the way.
Like any tool, your business needs to operate predictably, effortlessly, and profitably. The key to doing that is building a system of standardised processes and procedures. Find out what works for your business and customers and build a system around it.
A system of standardised, automated processes and procedures facilitate and support business growth and provide the opportunity for continual improvement. They facilitate consistent value to all stakeholders, and predictable service to customers. You can use systems to automate manual tasks, and reduce reliance on other inefficient, unscalable systems that are prone to human error. Best of all, effective systems can be replicated across all business units, to ensure reliable results and support business growth.
Business is full of unexpected situations, and you won't be prepared for all of them. It is important to surround yourself with trusted experts and advisors who can help you navigate the challenging times.
Every business needs an accountant and the right accountant can be an extremely valuable asset. Their financial knowledge and business experience can complement the innovation and vision a business owner needs to drive business growth.
To make effective and timely business decisions, a business owner needs accurate, meaningful information at their fingertips. Gut instinct just isn't going to cut it. Business performance needs to be measured, monitored and acted on.
Traditionally, the focus has been on financial data to measure business performance using metrics such as Gross Profit Margin, EBITDA, and Return on Investment.
While these are all useful indicators of financial performance, they focus solely on finances and historical information (i.e. events that have already occurred). If there's a problem with profitability, these metrics can't tell you where or what the problem is.
There are many elements to business success, and profitability is driven by many factors. These factors include customer demand and satisfaction, retention of key employees, individual product margins, cost analysis, delivery times, supply chains and innovation.
To ensure the ongoing success of your business, both financial and non-financial data needs to be measured and monitored, and this needs to be "real time".
Entrepreneurs are visionaries by nature. They are blue sky thinkers and optimists, who can see accountants as dream-killers driven by facts, figures, and realities. As business partners, this is a tension my husband and I are familiar with.
It can be tough for an entrepreneur to hear the financial truth about their dream. They're excited about their new venture and the prospect of getting their product or service to market. They can't wait to turn their dream into a reality and want to get there at all costs. However, financial resources are often limited. This is the exact time a business owner needs financial visibility. It could be the difference between letting the financial truth catch you unawares or embracing it, planning for it and growing with it.
As part of the growth cycle, a business will inevitably become bigger than the person - or people - who created it. As a business grows it will become increasingly harder for a business owner to effectively oversee each area of the business as well as steer the business's strategic course.
A thriving business needs someone constantly reviewing, planning, and setting a clear strategic path. But too often business owners will keep getting drawn back into daily business operations. This will become detrimental to the ongoing success of the business.
As a business grows it will need to transition from an owner/manager model, where there is no separation between owners and management, to a model where governance is separate to the business's daily operations.
Building a business and driving business growth does take a massive amount of commitment, sacrifice, self-belief and energy but the journey can be made easier by sharing experiences with one another and imitating the successes. This is not a journey you have to take on your own, reach out to your trusted advisors, your mentors and discover their keys to success.
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