Maximising Your Efficiency In light of our increasingly uncertain economy and ever more industry competition, we have included some information on ways to measure and improve your business� efficiency.
Also mentioned are ATO�s plans for tightening the regulation for self-managed superannuation funds. As many of you are trustees of your own self-managed funds, it is important that you are aware of these changes. We hope that this newsletter provides you with useful information going forward into the most prosperous time of the business year and we would greatly appreciate your opinion or insight into any aspect of this publication!
Please note that our office will be closed from 19th December to 5th January. Skeleton staff will be operational from 5th January for administration purposes. Full staff (including accountants and management) will resume work on 12th January.
We wish all our clients and their families a Merry Christmas and look forward to working with you in the New Year.
If you require more information on these articles or on anything else, please don’t hesitate to contact our office.
Sheriff Iskander and the team at Alexanders.
Maximising Your Business Efficiency
Many small and medium enterprises (SMEs) suffer from low efficiency levels due to a number of factors. Some of these include a high friends and family client and supplier bases and concentration on menial tasks that have limited productive value. Fortunately, there are a few simple tricks that can increase your business productivity so that your time is allocated more efficiently and profit is ultimately maximised.
It is common for small and medium business owners to find themselves working out of office hours and at the weekend in order to catch up on uncompleted tasks. Many of you may be wondering where your working day goes and exactly what tasks are completed during this time.
Due to the more personal nature of SMEs, many clientele and supplier bases comprise mainly of family and friends. This can be quite difficult for business owners with clients and suppliers expecting ‘mates rates’ and demanding large quantities of valuable work time. This forces owners and employees to work harder in order to compensate for the revenue forfeited by the ‘mates rates’ and overall, decreases the productivity of the business.
Other sources of lost efficiency include concentration on menial, unproductive tasks that have large opportunity costs and perhaps, most importantly, poor time management. Fortunately, there are a number of simple, easy steps to improving your work productivity and increasing profits.
When conducting business relationships with friends and family, it is important to show your appreciation for their business whilst maintaining a professional distance. This can be difficult but is achievable if personal and business relationships are separated and compartmentalised. It may also be of use to learn some tactful techniques to halt prolonged and unrelated conversations, thereby freeing up valuable time for more productive tasks.
Other steps to increasing productivity include time management and the outsourcing or computerisation of some tasks. Time management can be easily achieved through the maintenance of a diary and making sure you comply with the times and dates you set for yourself. If you attend a lot or meetings and seminars that take you away from the home or office, a personal digital assistant (PDA) may be very handy, granting you access to the Internet, address books, word processing and GPS systems.
It may also be useful to outsource some time consuming, such as bookkeeping, to firms who specialise in such responsibilities and possess a competitive advantage in these areas. Other option could be hiring a junior who is able to do more menial tasks such as banking and filing. This frees up your time and allows you to concentrate on more important and productive work.
If you require more information about how Alexanders can help you maximise efficiency of your business, please do not hesitate to contact our office on (02) 9438 3233 or send us an email.
Number Crunching — Helpful Accounting Ratios
As a small to medium business owner, the numbers displayed on your balance sheets at the end of the accounting period may seem daunting and complicated. In reality, those figures are extremely important and give you access to an abundance of vital business indicators such as profitability and liquidity.
These markers of business success are ascertained by forming ratios using the balance sheet figures. Some of the more important categories of ratios include those relating to profitability, solvency and liquidity. Listed below are explanations of two profitability ratios.
Profitability Ratios
Net Profit Margin
This ratio allows you to see how much profit is generated for each dollar received in business revenue. Profit margins vary with each industry but, in general, the higher a business’ profit margin is in comparison to its competitors, the more successful it will be.
Net Profit Margin = |
Net income after tax |
Revenue |
Return on Assets
Return on Assets (ROA) tells stakeholders how much profit the business generated for each dollar held in assets. Again, the norms for this ratio vary with each industry with some being quite asset intense (for example car manufacturers) and others being asset light (for example advertising agencies). This ratio is quite important because as a small/medium business owner, it is an indication of how much return you receive for all your investments.
Return on Assets = |
Net income |
Average Assets for the Period |
To obtain further information about your balance sheet, contact our office on (02) 9438 3233 or send us an email.
Tightened Regulation for Self Managed Superannuation Funds
With more than 47,000 self-managed superannuation funds (SMSFs) having been opened in the past year alone, the ATO has cracked down on its supervision and regulation of these funds. The ATO is focusing its attention on newly registered SMSFs and more specifically, trustees’ knowledge of running these funds.
With around $300 billion of Australia’s assets existing in SMSFs, it is clear why the ATO has increased its attentions on trustees’ and their ability to manage these funds efficiently and correctly. It has become evident that 15% of trustees do not have an investment strategy in place and a large majority do not even understand the sole purpose of these specific funds.
In response to the growing popularity of the SMSF, the taxation office has released a new publication, describing the regulation of these funds and explaining how the tax commissioner operates with trustees and professionals to regulate the superannuation industry.
If you have any questions about how new regulations may affect your self-managed superfund, contact our office on (02) 9438 3233 or send us an email.
Prosperity is not without many fears and distastes, and adversity is not without comforts and hopes.
-- Francis Bacon
Disclaimer: The information contained in this newsletter is not advice but is information of a general nature only. This is not a comprehensive coverage of any of the matters raised and we therefore recommend that before acting on any of the matters raised in this general newsletter, that you should discus the matter with us. This newsletter is provided to clients of Alexanders Accountants as a helpful guide and for their private usage only. We accept no responsibility to any other person acting on any of the information in this newsletter. We will not be responsible for any action taken by our clients who choose to act without seeking our prior consultation.