The Australian Small Business Blog

Tuesday, April 25, 2006

Search Engine Optimisation Revisited

Last month, I wrote an article on the Myth of Search Engine Optimisation. In it I referred to the danger of overoptimising your site to be search robot friendly vs human friendly. I also mentioned that In a competitive category, SEO will not do you much good.

I still firmly believe this, but an excellent article in The Age tells the other side (although my points are mentioned in passing). I particularly liked the story about BMW and Google:

Even the biggest companies can fall foul of "black hat" work. In February, Google temporarily removed results for the German language websites of car maker BMW when it used so-called "doorway pages" - text-heavy pages liberally sprinkled with key words that attract the attention of Google's indexing system. BMW said it did not intend to deceive Google.

I am unsure why BMW felt they had to do this. Their English language site has a Page Rank of 7 because of 400,000 links to their site- not because of their use of keywords. Apparently their German site had its Page Rank wound back to O! And if they are prepared to do it to BMW for transgressing- they won't think twice about you.

So make sure you get good advice before you embark on SEO. There is a cost to it (even if it is just your time), and opinions differ. There is no single answer. It depends very much on what you are promoting.

Dr Greg Chapman is the Director of Empower Business Solutions

The Australian Small Business Blog

Thursday, April 20, 2006

Tax Minimisation

by Paul Jenkin

As most business owners are aware the amount of tax we pay to the government each year is getting out of control. Sometimes it seems that not only are we working for ourselves we are also working for the government.

There are however some simple things that we can do each year to legally minimise the amount of tax we pay.

1. Have the Correct Business Structure.

Having the ability to split your income is without doubt the best way to minimise tax. By working a family trust into your structure you have the ability to split income as long as you are earning genuine business or investment income. A family trust gives you the ability to have tax paid at the tax rates of the beneficiaries of your trust. Normally the beneficiaries of a trust would be a husband and wife as well as their children, although certain other family members can also be beneficiaries. The benefit is that the profit can be directed to those beneficiaries with the lowest income. This can save thousands of dollars in payments to the tax man each year.

For example, a business owner earning 150k per year as a sole trader would pay tax of about 56k per year. If he/she had a spouse and two children over 18 not earning any income, this figure could be reduced to 30k per year.

Many business owners choose to have a company as part of their structure. The benefit of a company is that if you would normally be in a higher tax bracket you can pay tax at a maximum rate of 30%. It should be noted however that this only applies as long as you are leaving those profits in the company and not personally drawing down on them.

2. Superannuation.

With the abolition of the superannuation surcharge as of this financial year, salary sacrificing money into superannuation is now one of the most popular ways to reduce tax, particularly for those in the top tax bracket. If you are in the top tax bracket and put money into superannuation you will be able to claim a tax deduction at 48.5 cents in the dollar, whilst the money you put into superannuation is taxed at 15 cents in the dollar. Remember when you do take money out of superannuation it will be taxed. In general though it will be taxed at concessional rates. Overall, contributing extra money into superannuation can be a tax effective strategy, but should always be done after seeking the appropriate financial planning advice.

3. Overtime Meal Allowance.

Many business owners are unaware that when they are paying themselves a wage they may be entitled to receive an overtime meal allowance (depending on the award they are covered by) of $21.10 per day. In effect this means that for every day a tax payer works overtime you can receive up to $21.10 tax free.

4. Timing of Income & Dividends.

With the tax brackets creeping out each year, (in particular the top tax bracket) delaying the derivation of income can provide a small tax saving strategy. For instance, delaying the payment of dividends to yourself or invoices issued to clients from late June to early July could be the difference between paying tax in a higher bracket one year compared to a lower bracket the next year.

5. Negative Gearing.

With the introduction of the 50% capital gains discount some years ago, negative gearing has become an effective way to minimise taxation with the most popular negatively geared investments being rental properties or shares. Negative gearing occurs when the expenses associated with an investment (normally interest) are more than the income generated. The resulting loss is tax deductible, thus reducing tax payable. Investments should never be viewed as just a tax saving as there is no point spending a dollar to get fifty cents back. The main focus of these investments should be for the capital growth as the tax saving comes when only 50% of the capital gain is taxable, whilst 100% of the losses are deductible.

The above list is not comprehensive and whether some or all of the above can be used for you will depend on your individual circumstances. Before implementing any of the above strategies or any other strategies you should ensure that you seek appropriate advice from a tax professional.

Paul Jenkin is a Partner at Adresen-McCarthy

Tuesday, April 18, 2006

How To Define Your Brand- Part 2

This is the first step in the process of developing your brand strategy. By defining who/what your brand is you create the foundation for all other components to build on. Your brand definition will serve as your measuring stick in evaluating any and all marketing materials and strategies. Ask yourself these questions about your business.

1. What products and/or services do you offer? Define the qualities of these services and/or products.
2. What are the core values of your products and services? What are the core values of your organisation?
3. What is the mission of your organisation?
4. What does your organisation specializes in?
5. Who is the target market? Who do your products and services attract?
6. What is the slogan of your organisation? What message does your slogan send to your prospects?
7. Using the information from the previous steps create a “personality” or for your organisation that represents your products or services. What is the character like? What qualities stand out? Is the personality of your organisation innovative, creative, energetic, or sophisticated?
8. Use the personality that you created in the previous step and build a relationship with your target market that you defined in Step 5. How does that personality react to target audience? What characteristics stand out? Which characteristics and qualities get the attention of your prospects.
9. Review the answers to the questions above and create a profile of your brand. Describe the personality or character with words just as if you were writing a biography or personal ad. Be creative, always.

Always be honest with your answers, answer each question thoroughly.
Focus on your target audience when answering each question.
Compile each answer specifically designated to the Brand Development of your organisation.

"It's not the will to win, but the will to prepare to win that makes the difference."
Bear Bryant1913-1983, Football Coach

Richard Gill is a Director of The Banner Lady

Wednesday, April 12, 2006

What to do when the media ask questions

By Stuart Evans

It's not uncommon for a business to have a crisis. Internal situations can spiral out of the control and before you know it, the media are asking questions.

Think of a crisis and small to medium sized businesses may not automatically believe that they have to prepare for such an emergency. But what if something goes wrong and your company receives some bad publicity? The importance of a good communication plan can mean success or failure.

A communication plan should feature a section on crisis communication and the steps to take if such a situation should arise. These steps will include a brief script to recite to the media if, and when, a journalist calls. No longer is it acceptable to mumble “no comment” and hope the situation disappears.

The best advice is to take the journalist’s details, ask them their deadline, and then promise to call them back within an hour. Your next step must be to look at what the company response will be.

The basic rules for handling the media involve the following:

· Never lie or embellish the facts. You will be found out.

· Decide the company position and brief all staff on the procedures to be followed, should they be contacted by the media.

· Ensure the company spokesperson is a high-ranking member of staff. The media will not be satisfied if statements are issued by PA’s or Assistant Managers. This also ensures that the public see that the company head is responding to the situation.

· Appreciate the journalist’s deadline and ensure you have given them your response by this time.

· Ensure your statement to the media gives them as many accurate facts as possible. Obviously, you will not want to give them every single detail, but ensure that whatever information you pass on is accurate and relevant.

· If your company is doing something to rectify a negative situation, be sure to explain it.

· When the problem is fixed, alert the media. Don’t assume the media will automatically pick up on the fact that the problem is solved. Remember, the media love sensationalism, and as such you may have to factor into the PR/Marketing budget a ‘relaunch’ advertising campaign.
· Ensure steps are undertaken to make sure the issue does not arise again.

Hopefully your company never finds itself needing this advice, but by having an awareness of the ‘what if’’ situation means that you can be a little more prepared should the unthinkable occur.

Stuart Evans is the Director of Vibe Communications

Monday, April 10, 2006

Benefits of Financing Business Assets rather than Paying Cash

With interest rates so cheap these days, most small – medium sized businesses are choosing to finance their business assets rather than paying cash. These assets include cars, trucks, plant and machinery.
These assets are increasingly being turned over every 4 – 5 years as technology improves, general wear and tear increases from demanding work loads and the taxation life of assets shortens.

So why not just pay cash!! It’s been a great year in business, we have plenty of cash and we may as well just pay for the asset outright.
Well this might be true, but what happens next year if sales slow and funds are not there to cover business overheads and expenses. This is where financing becomes a valuable part of any business and following are many of the benefits associated with doing so.

1. Lock in a fixed interest rate for up to 5 years depending on the asset being financed. These rates vary but at present are approximately 7.5% fixed depending on what asset is being financed and term of loan

2. Use a particular finance product such as Chattel Mortgage, Hire Purchase, or Finance Lease. With a Chattel Mortgage – customer owns the asset from the day one, can claim GST up front and interest / depreciation over the term of loan. Hire Purchase – Hire it now with an option to own later. Claim interest / depreciation over the term of loan. Finance Lease – Finance company purchases the asset; you enjoy full benefit of asset for regular repayments, with finance company disposing of asset at end of term. (always check these which product best suites with your accountant)

3. Structure your repayments to preserve cash flow in business. This is achieved by electing 1 – 5 year terms with or without balloon / residual payments. These final payments must fit within ATO guidelines and are available to the products as mentioned above.

4. Stay ahead of your competitors with the latest technology by upgrading your asset more frequently. This would be an enormous drain on your cash if you were drawing upon your cash reserves.

5. Establish excellent credit ratings with financiers that allow further lending in the future to grow and accelerate your business above other competitors

These are just some of the common benefits of financing rather than paying cash. As each business differs some of these may not relate to your business, but overall these points are certainly worth considering when acquiring your new business asset.

James Peters is the Director of 180 Financial Services

Saturday, April 08, 2006

Become a Business Brain Surgeon

Are you working longer and taking home less than your staff? Are you working all hours of the day and night and still barely managing to keep your customers happy? Are you unable to delegate or outsource work to give you more time to work on your business? If the answer to any of these questions is yes, maybe its time you learnt what Brain Surgeons do.

Most business owners we talk to believe almost everything they do in their business, only they can do. They have learnt from experience if they give work to someone else, they mess it up. And then they spend twice as long fixing things. But this is not what Brain Surgeons do. When they operate on a patient, they are not in charge of the theatre- the theatre nurse is. They don’t open up the patient, or close. They leave that to a junior surgeon. Everything is prepared for them, and someone else mops up the blood later. All they do is the brain surgery. And some marketing before hand (client needs), and afterwards (client satisfaction).

How is this possible?

Hospitals have very sophisticated systems, and everyone is highly trained in their use. There are checks and counter-checks. Nothing is left to chance. And the very expensive surgeon, the most highly trained person in the theatre, only does what he or she has been trained to do. They don’t waste their time doing jobs others can do. In other words they don’t spend dollar time on penny jobs. So the brain surgeon only does the brain surgery, and a bit of marketing.

This is, of course, a rather simplistic description of a brain surgeon’s job. And I hasten to add an apology to any brain surgeons reading this if they feel insulted (after all, you never know I might need their services in the future- some might argue my need is immediate!) The point of this for business owners is to understand where the real brain surgery is in their business. The part of their job that is most valuable to the business. The part only they can do, which for most business owners, is only a very small part of their time.

Examples of brain surgery are: the marketing of your business, the relationships with your key customers, or if you are a consultant, the analysis of the problem you have been asked to solve. Not data entry, or possibly even data collection. And not the bookkeeping. So the challenge for business owners is to identify what part of their role is brain surgery. Theoretically, everything else can and should be delegated or outsourced. So you can spend more time on what generates your business income.

A great theory, but how can you make this happen in the real world?

Business Systems. When you delegate or outsource, you need to document what the person who is doing the work will receive and what they will return to you, complete with standards and the form in which they will provide it to you. Then all involved need training in the system. This takes some work, but for a small investment in your time, the dividends are huge.

The theatre nurse does not know how to do brain surgery, but they know before the operation, what equipment the surgeon will need, and when they will need it. They will also know how the theatre and patient are to be prepared. Detailed procedures will have been developed so everyone in the theatre will know their role, and the brain surgeon will have optimised his or her time doing what they have been specifically trained to do.

When you know where the brain surgery is in your business, you will be able to leverage your time. You will spend more time with your customers, and more time working on your business, rather than in it. Ultimately, you will have a business that runs without you.

Dr Greg Chapman, MBA is the Director of Empower Business Solutions

Wednesday, April 05, 2006

Would you want to work for your partner’s spouse?

by Ian Spencer

It appears that most Australian small business owners would love to test the relation-ship boundaries that they have with their business partner’s significant other, as they have no plan in place to handle an involuntary exit of their business partner. The [1]1997 Monash University survey found 70% of SME owners thought succession was important but only 12% had a documented plan. The [2]2003 RMIT survey found that 27% of family business owners were relying on the continued ownership of the business to fund their retirement

Probability Of At Least One Owner, Where All Owners Are Aged 35, Dying Or Becoming Totally And Permantently Disabled Before Reaching Age 65-

2 43 in 100 31 in 100
3 57 in 100 – 57% 42 in 100 - 42%
4 68 in 100 52 in 100
5 76 in 100 60 in 100
6 82 in 100 67 in 100
Source Australian Life tables. 1995- 1997. MLC Class 1 Occupation TPD experience


If you have a male business partner then there is a 43 % change of them dying or becoming Totally & Permanently Disabled. If you have 2 partners, that’s a 57% chance for men and 42% chance for women. Many of you reading this will spend your advertising dollars on direct mail, which has a 2- 5 % average success rate; so shouldn’t you look to cover the much more likely situation of your partner not being able to work the business????

I still see business owners ignoring this possibility as-

Ø IT WILL NEVER HAPPEN TO ME, [an often quoted reason, which doesn’t change the statistics in the table above.]
Ø It’s too hard to solve, “what's the business & your share worth”...
Ø It gets bogged down in the process between the accountant’s valuation, the lawyer’s agreement, the financial planner’s insurance cover, etc...
Ø The tax implications and asset protection issues of how any cover is held, is to hard...
Ø This is still an ongoing newer ‘specialist’ area and where can you find a specialist that can solve all of this??
Ø I’m a sole trader so what about me... Be aware that Every working Australian has a 1 in 3 chance of becoming disabled for more than 3 months before turning age 65.

Information should be used as a general guide only. Professional advice should be sought before making any investment decisions to secure the future of your business.

Ian Spencer is a member of the Taylor Financial Group

Sunday, April 02, 2006

Don’t Advertise Your Business- Market It!

Too many business owners believe that marketing their business means just paying for a few ads. What few understand is that Advertising is not the same as Marketing. Too many clients have come to us only after they have wasted large sums of money by copying their competitors with “me too” advertising. And the media and advertising agencies love it. When you approach an advertising agency, their mission will be to convince you to spend your entire marketing budget with them, not to help you devise a marketing strategy for your business which will look at all available marketing options, not just advertising.

When developing a marketing strategy for your business, you must consider a number of aspects of your marketplace, before even thinking of your business. You need to answer the following questions:
Ø Who are your competitors?
Ø Who are your customers?
Ø Can you segment your marketplace?
Ø How do your customers make a buying decision?
Ø Who else has customers who could be your customers?

Once you understand your marketplace you should then consider your business. At this point of the marketing process you would ask the following questions:
Ø What is the ultimate benefit of my products and services for my customers?
Ø Why should people buy from me?
Ø What is my offer? (Product / Service / Price / Support / Guarantee etc.)
Ø How do I define My Marketplace? (Who / What / Where / When and How)
And only once you have answered these questions, ask the one that most businesses ask first rather than last:
Ø How will I promote my business?
When answering this question, consider all the promotional options, not just advertising. Some of the marketing options available to you are:
Networking, newsletters, cold calls, special offers, public relations, referrals, joint ventures, trade shows, seminars, workshops, website, sponsorship, media advertising, yellow pages, direct mail and brochures.

All of these methods are, in one form or another, lead generation strategies. You are buying customers, and the bottom line for everyone of them is the cost per qualified lead. And that’s how you decide how to spend your promotional dollar. When you approach an advertising agency, you must already know how much want to spend on that marketing channel. While they may give you good advice on how to spend your money in their channel, they will not consider alternatives which may be better for your business. It is also essential to consider whether the selected channel is capable of generating qualified leads at a reasonable price. For example, if your product is upmarket, generating leads from the budget market is of no value to you. And there is also false economy in choosing low rating media which often generate no leads at all!

Whichever marketing channel you choose, it is absolutely essential you measure the results from each promotion. Over a period of time, you will learn which ones work best for you. However, this can be a lengthy experience. Using a marketing consultant can greatly reduce the painful and often costly learning curve, and can save you many thousands of dollars in your marketing costs, and even more importantly, in the opportunity cost of lost time.

Dr Greg Chapman is the Director of Empower Business Solutions


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