business owners take time to reflect
Some things to ponder over your Christmas break
AFTA @ Work - December Newsletter
David Sharp - DFK ANZ
We are all heading towards a very well earned Christmas break. While we try not to think about work as a business owner, with some time a space, your thoughts inevitably turn to what can I do better next year. In that spirit I have provided some thoughts to prime the thought process.
Should I give myself a pay rise?
The short answer is yes, if you deserve it. It is important the owner takes a commercial market salary from the business for the work the owner does. If you are not sure what that is consider what you would be prepared to pay someone to do your job. After taking into account this salary what is left over is the true profit.Next process is to look at that true profit from the perspective of an investor/owner of the business. Does the profit reflect a good return on your investment? What should the profit be, are you under or over performing, what is the next step to build that profit further.
Often business owners confuse profits and salary, the salary is for the work you do, the profit is the return on your investment. If there is no profit after paying yourself a market salary your business is most likely underperforming. Time to make some changes!
Should I incentivise my staff with bonuses? The short answer is that bonuses nearly always come with negative consequences. Employees will work towards a bonus and may neglect those areas that are not affected by the bonus. Another likely outcome is that employees start to assume the bonus is part of their salary package and can become upset if the bonus is not paid.
One solution is to pay bonuses purely on a discretionary basis. A bonus may take into account extraordinary commitment to the company or reflect a strong financial result for the company for the year. If a bonus is not expected or taken for granted it becomes a very powerful way of saying thank you and acknowledging an employee’s performance.
A final thought to ponder, how can my business improve my life this year? Certainly as accountants we are asked this question by business owners all the time. Based on may years in our own businesses we believe there are 2 main ways, firstly how can I spend more time doing the business things I enjoy the most?, and secondly how can I have more time to spend with my family?
The answer is may be easy, the implementation is always the real challenge. Identify tasks/processes in the business you must be on top of and the tasks/processes you enjoy. Work out how to delegate the critical tasks/processes to employees you trust and then supervise and review these closely and frequently. You do not need to do the tasks/processes but you must make sure they are being done correctly and on time. This should create discretionary time to spend doing the things you love whether at work or at home.
One word of caution, you will have to pay an employee to do the work you are not doing so, as per above you may need to adjust your salary accordingly!
As DFK ANZ Partners we talk to many different business owners every day. In helping our clients solve their business challenges we have the insights necessary to help you navigate the challenges your business presents to you. For an obligation free discussion on ways to free up your time and build a better business please call DFK ANZ on 1300 998 558 - we are experts in providing solutions.
David Sharp - Sydney
David has spent over 20 years advising SME businesses on taxation, accounting and providing general common sense business advice. In particular he has worked closely with many travel agents to assist them with not only compliance, but also with respect to their reporting to the TCF. David was involved with set up of travel.com and brings to the table a wealth of both practical and technical skills and experience to assist travel agents to achieve their goals. Matters such as tax effective financial structures, asset protection, succession planning and wealth creation are all part of the process to grow and maintain a successful travel agency.