In this issue...

  10 Steps Process To Maximizing The Value Of A Business On Exit 
There are ten steps that can be used to maximize the value of a business and these are outlined below. These steps can be grouped into three distinct phases:

Phase 1: Optimum Performance
Phase 2: Polishing the Business
Phase 3: Creation of the Sale

Phase 1 – Optimum Performance

Step 1 – Profit Improvement

Improve the profitability of the business by removing waste. There is no point to putting more business through an incapable business and a key measure of how efficiently a business converts its sales is the profit of the business. One of the most efficient industries globally is the automotive component manufacturing industry and the lessons on how they remove waste can be applied to any other industry.

Step 2 – Growth Plan

Grow the business. A positive trend line of the sales growth can provide confidence that the sales process in the business is working well.

At the end of this first phase the business performance should be optimized, cash is created to fund the next phase of the process, and the sales and profit trend lines show a continuous and predictable improvement. It is at this point that Phase 2 can be commenced.

Phase 2 – Polishing the Business

In this phase make sure that all the elements of a great business are in place. There are four distinct steps in this phase.

Step 3 – Lock in revenue (contracts)

Make sure that, wherever possible, the future revenue of the business is locked in, preferably with long-term contracts. A buyer of the business needs a degree of certainty of the five year revenue outlook so contracts with customers need to be robust.

Step 4 – Lock in management (no reliance on founder)

Establish a management infrastructure that removes reliance on the owner. The management skills and experience (and processes) to lead the business in the absence of the owner need to be in place.

Step 5 – Brand

Protect the brand of the business. Mechanisms for this include the web-presence, social media, patents, and other intellectual property protection.

Step 6 – Reduce Debt (clean up balance sheet)

Reduce the debt levels of the business in order to clean up the balance sheet. The cash created in Step 1 can be used to retire debt and remove loan accounts.
At the end of Phase 2 the business looks as good as it can and it is now that the sales process can formally begin.

Phase 3 – Creation of the Sale

The key success factor in maximizing the sales price is to find a buyer who "needs" to buy the business.

Step 7 – Find a buyer who 'needs' the business

Ideally several potential buyers have been identified at this point (through brokers or other industry contacts) and an analysis of why the business is essential for each potential buyer is carried out. This analysis often requires changes to the look and feel of the business. The information gained from the analysis enables a specific sale process for each potential buyer to be developed and implemented.

Step 8 – Negotiate well for the seller

Make sure that the negotiation process goes well. Often the business owner needs to be coached on their role in the sale. The psychology of the sale process must be clearly defined and followed. There is no point in having built a valuable business and then handling the negotiation of the sale badly.

Step 9 – Anticipate all objections and value reducing tactics

Anticipating all the likely objections that will be raised by the buyer and their value-reducing tactics in the sales process are just part of the sales process planning.

Step 10 – Manage all the risk

To manage the risk in the sales process we suggest using a Failure Mode and Effect Analysis (FMEA) process to control all identified risks.

If these ten steps are rigorously followed over a period of 2-4 years the probability of getting a high price for the business is maximized. Don't leave the opportunity to make these critical change too late, ask for assistance.

Contact your Harris Black team member to discuss how we can assist your business maximise its value.

  Creating An Agile Workplace 
In today's society, technological change is the norm - new opportunities are continually arising that change the way a business operates or improves products and processes. Businesses that are complacent can risk failing.

Creating a workplace which emphasises the need to meet changing demands is important. That is where agility fits in. An agile workplace is one that adapts quickly to the changing needs of the market, its customers, employees and other key stakeholders.

Agile workplaces respond faster to these trends and disruptions, are more efficient and encourage innovation.

Consider the following ways to promote a culture of agility in your workplace:

Staff training and development

Building up your team to deal with disruptions and contingencies is key. Cross-training and reskilling your staff is one way to meet the ever-changing demands of your business. This provides flexibility as roles can be rotated and a variety of tasks can be delegated. Having multidisciplinary teams also helps to create a smooth transition when a staff member leaves and another employee starts, meaning the team won't suffer too much from the departure of one staff member.

Use data to make decisions

Agile businesses determine the strategic direction of the business by evidence obtained from multiple sources of data and insights. By using data rather than relying on knowledge alone, businesses can gain a competitive advantage and respond to predicted forecasts and opportunities in a more timely manner. Data can also be utilised to reduce inefficiencies and manage risk more effectively.

Leverage technology

Technology is the ally of agility. To successfully thrive, technology must be at the forefront. Traditional business models are continually changing with technology providing new ways of doing business. Adopting new technologies and encouraging adaptation among staff can help to remain competitive and agile.

  Harris Black Digital Toolbox – "Squirrel Street"  
Digital technology provides great opportunities to amplify the impact of your business activities and practices.

Gone are the days where you need to do everything manually within your practice like ordering, logistics, payments and receipts, marketing, HR, motor vehicle log book and so many more.

Every month, Harris Black will showcase a digital tool that will improve awareness, knowledge management, communication, and productivity within your business practice.

In this month's issue, we give you Squirrel Street.

Want to stay organised this financial year?

Squirrel Street effortlessly and accurately captures, manages, and stores your financial documents, business records, invoices and receipts.

The Squirrel Street Process
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Squirrel Street is a simple and secure expense management app that will enable you to focus more on other important things in your business.

To know more about Squirrel Street, contact your Harris Black team member today.

  New Financial Year Changes 
A reminder of legislative and compliance changes that have come into effect from 1 July 2018.

Minimum wage increases

A new minimum wage is now in effect starting from the first pay period on or after 1 July 2018. The new hourly minimum wage is $18.93 per hour, up from $18.29 - a 3.5 per cent increase. The base rates of pay in modern awards will also increase. Employers must ensure that they check the new wage rates that apply to their business and take action immediately.

High income threshold

The high income threshold in unfair dismissal cases will increase to $145,400 per annum. The previous threshold was $142,000 per annum for dismissals that took place on or after 30 June 2017. The compensation limit will be $72,700 for dismissals occurring on or after 1 July 2018.

Changes to penalty rates for some awards

From 1 July 2018, Sunday penalty rates for workers in the Fast Food, Hospitality, Pharmacy and Retail awards changed, following a Fair Work Commission decision made last year. The rate cuts are between 10 to 15 per cent, depending on the award.


Online retailers are now required to register for GST on sales of low-value imports of physical goods imported by consumers. Businesses that meet the $75,000 registration threshold will need to take action now to review their business systems to ensure that they comply. They will need to:
  • register for GST;
  • charge GST on sales of low value imported goods (unless they are GST-free); and
  • lodge returns to the ATO.
These businesses may be merchants who sell goods, electronic distribution platform operators or re-deliverers.

Also, the 32.5 per cent income tax rate increased to $90,000 from $87,000 as of 1 July 2018.

If you have any questions about these changes, contact your Harris Black team member today.

  Harris Black 2018 Staff Day 
On Friday 10 August 2018 all at Harris Black attended the firm's annual "Staff Day". This is a day where we collectively review the past 12 months at Harris Black, reaffirm our core values and further develop strategies that will improve our service and better help our clients achieve their goals.

Guest appearances were made by Jack Perlinksi, from Dais marketing consultants and Troy Schoenfisch from Beyond Blue. The former invited us to embrace and promote our firm's identity as an organisation that is focused on helping our clients achieve their goals whilst the latter promoted the need to provide support and understanding when a workmate is struggling. Both were well received.

Last year's Staff Day saw all at Harris Black identifying ways to actively develop a strong Growth Mindset (one that embraces challenges and learning experiences in a positive manner). The Growth Mindset concept is now a huge part of how we operate as a team and with our clients. With the introduction on Staff Day of the "5 Second Rule" concept we've now extended this even further... "The 5 Second Rule" encourages us to move forward on those things we are avoiding. The initial move we're required to make is often the hardest and that which stops us getting started on a difficult or challenging task. The key idea behind "The 5 Second Rule" is that when needing to start one of those difficult tasks, we should count backwards from 5 and at the count of 1, make a physical action towards the task, even if it is something that ongoing requires largely mental application. Our reference for "The 5 Second Rule" was a book of the same name by Mel Robbins. A lot of great pointers in this one for those interested in self-improvement both from a personal and business perspective.

As usual we made sure there was plenty of fun and laughter tied up our Staff Day learning activities… Blind-folded challenges, a baby photo competition and the creation of promotional video's "off-the-cuff" were interspersed across the day and all were both extending and entertaining (hopefully the latter will look a little more polished before they hit our website!).

The Harris Black Staff Day was as entertaining and productive as always and ended with the entire team heading out to enjoy a belated EOFY celebration at 1889 Enoteca. As is generally the case with any Harris Black Staff Event, an exceptional night was had by all!

  Charity – "One Year On Our Bike" 
Harris Black is proud to be supporting "One Year on our Bike".

One Year on Our Bike (Wolters Family) is inspired by the work of Motor Neurone Disease Association Queensland (MNDAQ) and wanted to support them by raising money and awareness.

Diana and Josef Wolters together with their daughter (Chloe, 14) and son (Jack, 12) are in the middle of a tough and fun adventures riding solely their push bikes while raising money for MNDAQ.

Wolters Family are doing a full round trip of Australia and have to carry everything with them in two tailor made trailers that they made themselves. They started their journey in Bundaberg on Australia Day and are currently in Karratha in outback Western Australia.

In the next 4 months, the team at Harris Black will raise funds through various activities to be organised by Bjorn Kirberg, brother of Diana Wolters, to help One Year on our Bike raise funds for MNDAQ.

To know more about One Year On Our Bike, visit their Facebook page Here.

  Important Tax Dates 
21 September 2018
  • Lodge and pay August 2018 monthly business activity statement.
30 September 2018
  • Lodge PAYG withholding payment summary annual report if prepared by a BAS agent or tax agent.
  • Lodge Annual TFN withholding report 2018 if a trustee of a closely held trust has been required to withhold amounts from payments to beneficiaries.
21 October 2018
  • Pay annual PAYG instalment notice.
  • Lodge and pay September 2018 monthly business activity statement. 
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This newsletter is for guidance only, any professional advice should be obtained before acting on any information contained herein. Neither the publisher nor the distributors can accept any responsibility for loss occasioned to any person as a result of action taken or refrained from in consequence of the contents of this newsletter. We recommend that you contact your Harris Black team member before making any decision to discuss your particular requirements or circumstances.  

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Since 1994, Harris Black has been providing accounting and advisory services to our valued clients to help them achieve their business and personal wealth goals.


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