Peter Switzer

Mtge & Finance Brief 10/2008

Business needs to proactive about their obligations to close off 2008 and avoid any shortfalls in the new year.

As the end of the 2008 draws to a close, have you consider all your bases? SME’s need to plan ahead to close off the year and make sure they abide by all their obligations - the taxman - as well as keeping the business on a firm financial footing. This includes everything from cash flow over Christmas and the tax implications of employee gifts or Christmas bonuses, to things that can be easily overlooked, such as where your mail gets sents when you’re on holidays.

So Where to start?

A leading debt agency warns small business owners that Christmas is a time when cash crisis occurs, and that your better off being realistic than leaving your head in the sand and exposing yourself to a potential New Year Shortfall.

Roger Mendleson, CEO of Prushka, debt recovery experts, explains why Christmas can burn cash. “There is generally a heavy cash burden on small business, with Christmas pays, and reduced output amd billings/orders in the week leading up to Chjristmas’ says Mendelson. “Those businesses running tight before Xams are more likely to ‘fall over’ in February/March than in any other time of the year.”

The time left to head off a cash crunch before Christmas could be tight, but your New Years’s resolution has to be to get into cash & tax planning.

We’ve all been told that Christmas is the time to be merry, but it should also be the time to be well prepared. The Five Ps adage applies: perfect planning prevents poor performance.

Silly Season Strategies

The festive season comes upon us usally when we are dying for a break and a bit of lateral thinking makes smart business sense. The thinking should be applied to the all-important areas of customer service, staff management and supplier management.

The handling of this unsual buisiness experience should be easier if you have traded through or closed down over the holiday period before. However, that doesn’t mean you’ve done it right in the past.

You might not know if you lost business because the prospective client who rang on 2 January- when you took an extra day off because New Years fell on a Thursday- never ring back.

You never know who your ptoential clients are. Perhaps he was a customer worth $100,000 a year profit, and part of a network of past-past growth businesses. So he is out there referring business he finally went to, when you weren’t there!

The bottom line is that you have to plan for this period, of course, it means you need to have systems in place to handle not only the expected but also the un-expected.

Taking Care of business

Lets start with the closed down operation. It’s obvious this busines needs to tap into telecommunications options available. The reality is that anyone ringing up over the festive season is desparate for supplies or service. They could be in the biulding sector where supplies or services could be vital to honouring a contract.

It would be smart to consider emailing or mailing to current customers informaing them of the times you plan to close your business down. This is a courtesy call and its not only showing you are a caring supplier, but you are giving them an alert if they need to order more of your goods or services for Christmas.

Your Customers could be serviced by an’Out of Office’ automatic reply to emails, which remind customers and tells new ones when you are back on deck. A special answerng machine message should be planned to give dates for the break, emergency contact number if you really are into customer service, and you might even pay for a messages to be answered by a messaging service with real people.

Cover all the Bases

It wouldn’t hurt to pay a visit to a telecommunications expert to find out what options are available. Being time poor and being unwilling to talk to experts can make you poorer in money terms.

For those trading over the holiday period, assume nothing. Make sure crucial suppliers know what your expectations are and if need be get written undertakings that you’ll be recieving deliveries. This is the perfect time to make a list of the things that could go wrong and then ensure you have these vulnerable basis covered.

Planning Ahead

For staff, managing expectations is important. Many small firms have encountered problems with staff around festive period because of poor communication. It has also underlined the problem of not having a written contract between you and your staff.

Calling a meeting after informing everyone in writing about your Christmas trading plans is a good idea. Many employers & employees do not get their entitlements and responsiobilities. The mixture of public holidays, holiday leave loading and staff managing their families’ expectations means that you have inform your staff as early as possible about your trading plans. Addressing early give you plenty of time to arrange replacement if need be.

Failure to plan for this all important time might not only mean you lose customers, you could also loose staff! Wouldn’t that be a great start to the New Year?

If these recommendations have you thinking, well, think a little bit more. The difference between a good and bad business is often linked to the systems put into place to handle all sorts of situations.

An effective system developed to handle the holidays makes you and your business more proffessional and hopefully more profitable.

BHP and Rio agree, Steve Keen is wrong.

by Michael Pascoe

posted on Oct 23 09:24am

Michael Pascoe

Economists can occasionally be dangerous things when radical or simply wrong ideas fall on fertile ground. Karl Marx, for example, never personally hurt anyone that I know of, but some of his ideas eventually helped cause incredible suffering and death.

Domestically, an associate professor at the University of Western Sydney, Steve Keen, is currently scaring the easily-frightened with especially dire forecasts about the Australian economy. Keen’s predictions aren’t taken very seriously by most economists, but he’s still enjoyed plenty of media attention, much of it unquestioning. Some of my media colleagues are happy to search out the most extreme and alarmist views - they make bigger headlines.

Keen is predicting the economic equivalent of the earth splitting open, spewing forth fire, toads and serpents, the seas turning to blood, the Four Riders of the Apocalypse loping off random heads and limbs and so on. He represents a tiny minority of economic opinion.

(Part of Keen’s appeal to populist media is that he has put his unit on the market, claiming housing prices are going to crash. As Rory Robertson, Macquarie Bank’s respected interest rate strategist, observed, Keen would have more credibility as a housing forecaster if he had sold his unit last year.)

Journalists can be as dangerous as economists too when they needlessly scare their audiences and perhaps provoke them into doing the wrong thing. I’m writing this on a flight to Perth and have just watched the Channel 9 Inflight News with a couple of prime examples.

There was doom and gloom story that treated the rash of redemption freezes by mortgage funds as if it news - it’s been going on for months. And the report used the sorry house of Citi Pacific as its main case study. Citi Pacific blamed Kevin Rudd - I think the over-geared Gold Coast outfit should look much, much closer to home for the root of its problems. Quite frankly, Citi Pacific was on the nose with the stock market before the sub-prime crisis hit.

More importantly, a serious young English reporter (well, young compared with me) filed a cliché-riddled yarn from Shanghai that gave the impression China might be grinding to a halt and that it would take the rest of the world down with it.

What rubbish.

China is slowing, but slowing from an unsustainably high growth rate to what remains strong growth in anyone’s language. The 9 per cent growth it recorded in the September quarter would of course be the envy of any other country - down from more than double-digit growth last year.

If you want to know what China is doing, turn to the experts, the two companies that are intimately entwined with the China story: BHP and Rio.

Last week Rio released its quarterly production numbers and included the comment that the expected re-bound in Chinese demand from the Olympics close-down looks like being delayed from the December quarter and was more likely early next year. That caused a sharp sell down of Rio and other resources shares.

It’s perhaps not accidental then that Rio’s chief economist, Vivek Tulpule, turns up in an interview in today’s Sydney Morning Herald putting a bit more perspective on those China remarks. As the SMH reports:

“He said the downturn in metals demand in China during the second half of this year had taken the market by surprise.

But he said China could next year surprise the market in a different way - once its economy rebounded, its metals requirements would be larger than most analysts were forecasting.”

This morning BHP released its quarterly production numbers. I’ve been keenly awaiting BHP’s China comments as I rate them the best source of intelligence on the China economy. The Biggest Australian didn’t disappoint:

“Consistent with the outlook statement given at our interim and preliminary results, China has not been immune to the global slowdown. Macroeconomic indicators show that Chinese growth has softened during the quarter, albeit from very high levels. We expect volatility and uncertainty to continue in the short term. Notwithstanding this short term uncertainty, we remain confident that the ongoing industrialization and urbanization of China and other developing economies will continue to drive strong longer term demand for our products.”

And that’s a key part of the reason why I think Steve Keen’s dark forecast is fundamentally wrong. There are other reasons, but that’s the bedrock - the China story is not dead, BHP and Rio agree on that.

So what does this mean for you?

Means that first home buyers in QLD do not now have to find the extra money associated with covering the costs of Stamp Duty or Mortgage Duty. So therefore, the amount a first home buyer may need to contribute towards a deposit is even less! Making buying your first home easier than ever!

For further information, read this article posted on www.heraldsun.com.au

Mortgage duty will be abolished from July 1, the first-home buyer transfer duty exemption threshold will be increased and the transfer duty rate schedule revised.

The move is expected to save up to $9500 for an average first-home buyer, but those buying more expensive properties will have to pay more.

“It’s a tough Budget if you own a coal company, it’s a tough Budget if you’re trying to buy a $2 million house, but it’s a pretty great Budget if you’re trying to buy your first house,” Mr Fraser said.

Housing Industry Association Queensland executive director Warwick Temby said the move would make housing more affordable following a series of interest rate rises.

By Gabrielle Dunlevy and Jessica Marszalek

June 03, 2008 05:44pm http://www.news.com.au/heraldsun/story/0,21985,23804828-5005961,00.html

Thinking of buying your first home? You are eligible if you have never owned property before to a First Home Buyers Grant (FHOG) – it’s a good start. Generally you will need some deposit in order to cover the standard statutory charges such as stamp duty.  At Finance Know How we have access to lenders that offer 100% loans, which means your contribution may be minimal. Ask us for our Know How Guide to Buying your First Home.