When you’re buying a business, someone else is selling a business. Be sceptical about everything they present.

The seller will likely try to spin almost everything favourably. For instance, when it comes to the business valuation, it’s possible they’ll include some add backs to the net profit figure to make the business seem more profitable that it really is. Consider those add backs very carefully.

They will always invariably say that they are working less hours in/on the business as well. Don’t just take their word for things, verify them, ideally from unbiased sources.

When considering unbiased sources, consider whether you are an unbiased source.

How could you not be an unbiased source?

Well, sometimes our emotions can impede our judgment.

Buying a business can be exhilarating and when you find something you think is right, you may just become a little bit biased when looking at the facts. You may spin things in a favourable light.

If you’ve ever been in the market to buy a home, you’ve probably experienced something like this before.

Ultimately, we want you to approach buying your business with enthusiasm, but don’t forget to be sceptical. Don’t get caught making bad decisions, due to the Fear Of Missing Out.

There are many other things to consider when buying a business, and to help you avoid making costly mistakes, we are here to help.

Paying taxes is generally unavoidable and tax evasion is illegal. As a business owner with great ambitions, you can use proactive tax planning to legally pay no more than the bare minimum tax.

A couple of the main benefits of proactive tax planning are that you keep your money away from the ATO, legally, allowing you to reinvest into your business or enjoy personally, and you can better manage cash flow because you have a clear understanding of what taxes are going to be due at what time.

To ensure that you pay the bare minimum tax, you must be ‘proactive’.

It begins with selecting the right entity structure.

There are various business structures that are available:

• Sole Trader
• Partnership
• Company
• Fixed and Family Trusts

Believe it or not, there is no one-size-fits-all solution for this. As trusted advisors, our duty is to educate you and work together with you to decide on the best structure for you.

Here’s an example with regards setting up for future tax success, involving a family who first want to buy a business, and after many years, end up selling it.

When they are considering buying the business, we’d analyze their unique circumstances and, help them select a family trust structure with a company as trustee.

In this example, this is the desired structure because it would allow for income splitting across the family.

During annual tax planning, the proactive step to use a structure that enables income splitting, would then play a critical role in minimising taxes over many years.

Eventually, when the business is sold, thanks to proactive steps taken when choosing the structure, and for decisions made during yearly tax planning, this family is able to access the Small Business CGT Concessions; providing the wonderful benefit of zero capital gains tax.

So, if you are an aspiring business owner, don’t hesitate – reach out to us so that you can have a chat with a trusted advisor that truly cares about legally minimizing your taxes.

Understandably, many people are very excited when they come up with a great business idea and look to go into business with family, friends or someone they met at a networking event.

It’s important in these moments to appreciate that starting a business is not easy. Partnering with someone could make the process easier, but it could also make things more difficult.

We’ve seen family relationships, and friendships, forever ruined because of a business that didn’t go well or there were disagreements in running the business.

This is why you should consider the following key aspects before you go into business with others:

• Do you share the same vision, values and work ethic?
• Do you have clearly defined roles, responsibilities and expectations?
• Do you have a shareholder’s agreement in place? Is the agreement fair?
• Do you have a system to resolve conflicts or disagreements? Do you have a system to ensure that everything is agreed in writing?
• Do you have a plan if one of you want to, or need to, to exit the business?

These are some of the things that you need to consider – it is not an exhaustive list. These may be daunting, but please be assured that we are not here to tell you to only go into business by yourself.

You deserve to have the necessary information to maximise your chances of business success.

Let’s use an example to illustrate how we could protect your best interests.

Mr A approaches a business owner, let’s call him Mr B, to help turn Mr B’s business around. Mr B is a wealthy and successful business owner, but one of his businesses needs help. Mr B offers Mr A an ownership share in his business in exchange for Mr A’s help.

Having received this offer, Mr A asked us for advice. We look into the agreement.

In reviewing the agreement, we find that there was a clause which would enable Mr B to buy back the shares from Mr A, for free, within the defined period of time.

Given in this example, Mr A has sought our advice, the conditions of the agreement are not in our client’s best interests, so we advise Mr A accordingly.

Mr A takes on this advice, discusses it with Mr B, and depending on how you want this example to end, it either results in Mr A getting a fair outcome, or saves Mr A from a disappointing end to his hard work in restoring Mr B’s business back to glory.

We help clients to be wary of going into business with others, but always with the objective of helping them make it work for their interests, as the first priority, and then for all involved too.

If you’re thinking of going into business with others, please don’t hesitate to reach out and book a Get to Know Each Other meeting. We can then discuss how we can help you to ensure that you are protected, and not getting disadvantaged, when going into business with others.

Most business owners know that bookkeeping and maintaining accurate financial records are very important… and yet, some business owners unfortunately tend to neglect their paperwork…. or, they may not realise that they are essentially neglecting their paperwork by not realising the mistakes they are making with their books.

For many people, it may be tempting to setup your own accounting system in the beginning. However, please be wary that setting up an inaccurate accounting system can be very costly.

How can this be? Let me explain with an example.

A professional in their field sets up a new business. They setup their bookkeeping themselves, connected it with their industry’s professional software, and think that the bookkeeping software will just run smoothly and handle it all.

However, what follows is an absolute mess of records which require substantial amounts of precious time and accounting fees to fix things. Time and money which could have been better spent focusing on growing their business.

If you are a business owner seeking to earn $1 million plus in revenue, invariably there are many things in your accounting records that you need to maintain, consistently well. This could be:

• payroll matters
• debtor collections
• creditor obligations
• GST obligations

…and many more.

The bigger your business, the greater the compliance burden. This makes the requisite skillset for bookkeeping more and more amplified.

Furthermore, as a business grows, the task of bookkeeping should be delegated, and to achieve success in delegating, one of the key things to do is to have a thoroughly working bookkeeping system.

As accountants and trusted business advisors, we are passionate about helping our business clients get to where they want to be. This includes helping you setup accurate accounting from the beginning, so you can save a lot of valuable time and money in the long run.

Talk to us today to find out how Munro’s can assist with your accounting and bookkeeping requirements.

Managers are often domain experts in what the business makes; but they often lack the skills to lead the business to sustained success.

This is partly because little time is devoted to training and coaching leaders in the necessary business skills. Here’s why this should not be the case.

If you watch enough of our videos you’ll notice on several occasions us quoting Ayman Al-Abdullah, now business coach and former CEO of App Sumo – a business Ayman grew from $3million to $80million in revenue. This is because he is incredibly good at distilling down important business leadership insights. So, here’s a social media post by Ayman:

He begins with quoting JFK: “Leadership and learning are indispensable to each other”.

Ayman follows up with:

“Leadership and learning are indispensable to each other.” -JFK

Too many leaders think that achieving a leadership position means they have all the answers and don’t need to learn anymore

But in reality, it’s the exact opposite

— Ayman Al-Abdullah 🧱 (@aymanalabdul) July 6, 2023

Whether or not too many leaders think they have all the answers and don’t need to learn anymore is debatable. But, we certainly agree with the sentiment that learning commonly becomes a lower priority.

So, Ayman continues and this is where he starts to make a very powerful point:

As leaders, we should seek to learn more

We don’t have all the answers

And improving our knowledge just slightly could lead to huge changes across the organizations we lead

— Ayman Al-Abdullah 🧱 (@aymanalabdul) July 6, 2023

That’s a very powerful thought. The fact that even incremental learning by leaders can influence profoundly upside improvement for a business because of leveraging that acquired knowledge and skills.

If you’re in agreement that business owners, leaders and managers should be continuously improving their capabilities, then the key consideration is how.

Three key challenges for building and honing capabilities are generally:

1. When and how much time to dedicate to it.
2. What should one learn.
3. How should that learning and capability building take place.

We’re an evidence-led firm and prefer to follow the rigorous science on this. However, for the moment at least, we’re not aware of definitive evidence heavily directing us to a certain approach. Given this, we let science direct us as best it can and we continue to evolve learning best practices over time – just the same as with how we should learn all our business skills.

So, with regards to when and how much time to dedicate, it depends on what is being taught, what are the current capabilities, what is the urgency to acquire the capabilities, what is the capacity to learn, especially given other time demands, and how to mitigate the forgetting curve. The more new and novel the learning, the more likely it is that learners need to regularly commit time to learn.

What should one learn, should be directed by your strategy, current capabilities and critical business areas that science has shown to have the greatest influence on business success.

How should the learning and capability building take place, is similarly influenced by the afore-mentioned factors. There are a mixture of learning options available, such as impactful sprints involving face-to-face and online material, online courses, group meetings for rising stars and personalised coaching for business owners and CEOs.

If you take only two things away from this video, then make them these:

1. Improving leaders’ capabilities can have a profoundly positive multiplier effect due to leadership leverage; and
2. Learning is about building and improving capabilities. It has to produce results, not knowledge that’ll soon be forgotten.

We offer impactful learning programmes tailored specifically for our business clients, and also host leadership improvement programmes through Munro’s Business Academy. So please do take advantage of this if enhancing your team’s performance is of interest to you.