Reflecting on 2017

The end of the year is a natural time to reflect on what has occurred personally and professionally during the past 12 months. I encourage all business owners to spend time this week reflecting holistically on your business' performance this year. In what ways was your business successful? How is the market changing and evolving within your industry? What do customers seem to want? How might your business continue to improve and evolve?
Most importantly, what do you want your business to look like at the end of 2018? 

Have a Very Merry Christmas

The team at C.T. Harris & Company wish you and your family a very Merry Christmas.

After another big year, we hope that this festive season provides time for you to catch up with family and friends and relax. For those travelling, we hope you have a great journey.
We look forward to catching up with you in the new year.

C.T. Harris and Company would like to congratulate Will & Sasha Treloar from Boothulla Queensland who were awarded this year's Harris Award at the Executive Link meeting of RCS in Rockhampton. This award is for outstanding business achievement in agribusiness and this year's winners were able to improve their profitability, generate new income streams and commence the process of succession planning.

We started presenting this award fourteen years ago. It is our way of acknowledging outstanding achievement in agribusiness and we would like to thank Terry, Pam, David and the RCS team for allowing us to be involved in presenting this award.

This award is close to our hearts because although my family are often associated with our accounting business, we have also been heavily involved in agribusiness for many years and enjoy using this first-hand experience to help our rural clients grow their businesses. My parents Paul and Clare started their cattle business from scratch and it has now grown into a significant Wagyu operation. One of Paul's greatest sayings is that 'If you are doing the same as you have always done, you'll always get the same results you've always got'. By taking a risk to invest in genetics and change the composition of our herd, we currently cannot produce enough cattle to meet demand. We have been involved with RCS for many years and have attended grazing for profit, graduate link and executive link programs. Through our own businesses, we have learned about the importance of working hard, listening to and acting on expert advice, and showing perseverance in the face of adversity.  These are the qualities we looked for when deciding on the winner of the award for this year and we'd like to congratulate the winners and all nominees for their contributions to the agribusiness industry and their examples for others to follow.

For most rental property owners, their property or portfolio of properties is part of a long-term investment strategy. As a Chartered Accountant, financial planner, real estate developer, and rental property owner, I have learned many strategies for how to successfully invest in property and maximise your return. Over the coming weeks I will be sharing some of my tips on getting the most out of your rental property and how to strategically invest in property.

While long term gains may be the primary focus of owning an investment property, it is important not to miss out on potential tax savings along the way. Income from your rental property is relatively easily to record.  While most expenses relating to a rental property will be deductible, saving you income tax, not everything is deductible, nor can everything be deducted straight away. Before you spend money on your rental property, identify which category the spending falls into so you understand the tax implications of your decision:

  • Outlays which are deductible in the year they are incurred
    Examples of these types of outlays include council rates, water rates, insurance, interest on investment property loans, management fees, advertising for tenants, or minor repairs like fixing a broken tap.

  • Outlays which are deductible over a number of years
    Generally these outlays will provide a benefit for more than one year. Examples are building a new deck, putting on a new roof, or significant renovations of a bathroom or kitchen.

  • Outlays which are not deductible
    As of May, 2017 when the federal budget was announced, owner travel expenses to their residential rental property are no longer deductible. Also, investors who purchase an established property as an investment on or after 10 May 2017 can no longer claim a deduction for depreciation of plant and equipment items acquired through the purchase. 

Top tip
– Make sure you retain records of all income and outlays so that when your income tax return is prepared at the end of the financial year, you can substantiate all deductions you are claiming and do not miss out on deductions by forgetting to claim them.

One of the major threats to any business is the rise of competitors within the market. Some customers may want to try the 'new' option in town. As an established business owner, it is vital that you are aware of new competition in your area and come up with a plan to remind customers of the strengths of your products and services as compared to the emerging competition before and during the time when they enter the market. How are you better than the competition? Why is your customer going to be better off staying with you? These messages need to be continuously sent. We have seen many industries where new competitors have entered the marketplace, disrupted established businesses and then failed leaving a trail of grief in their wake. Sometimes new competitors' business models and offerings are not sustainable so you need to ensure that what you offer, how you deliver and how you operate is sustainable over the long term.

Who wants to be an Entrepreneur?

It was great to have Mark Sowerby who currently holds the position of Queensland Chief Entrepreneur in our office for a boardroom briefing this morning. 

There was a great deal of discussion about startups and angel investing and Mark shared some great stories and insights about how to develop a viable startup ecosystem in Central Queensland.

One key part of this is a network of Angel Investors who are interested in supporting and growing small businesses into larger enterprises. If you are interested in growing your business or if you are interested in investing then make contact with us so we can continue this discussion.

Credit must be given to the Queensland Government and their Advance Queensland program, along with Rockhampton Regional Council and the Smart Hub. Also Startup Capricorn and Capricornia Chamber of Commerce were able to run some events where Mark outlined his journey and shared some of his extensive and interesting experiences. 

Every enterprise needs a clear vision of where it is heading and what it is trying to achieve.
Do you have a crystal clear vision of what your business will look like in three to five years?

For those who do want to be an Entrepreneur we wish you well.

For some businesses, their biggest threats may come from changing government funding or regulations. It is vital to keep your finger on the pulse of what is happening within your industry and take active steps to plan for these so they have the smallest impact possible on your business. For example, in agriculture, adjustments in water allocations/availability or new rules about land clearing can be game changers. Changes in minimum wage or penalty rates can have major implications for a business' bottom line.
Changing political climates may also mean some businesses may want to reconsider their business model. For example, we were recently talking to a friend in the United States who works for a major environmental consulting firm. She was telling us that several years ago, the company she works for identified that almost 100% of their contracts were coming from government sources and they realised that this was a major threat to their business. They then started more actively pursuing work in the private sector. Given the Trump administration's major cuts in funding for environmental projects, they are glad that at the moment they only rely on such contracts for about half of their revenue as if they were still working almost entirely for government clients, they would likely be closing their doors in the near future.

While we would all like to assume that people will keep supporting our businesses, there are always market threats out there which businesses must be aware of and make provisions for if they want to continue to grow and thrive. Many businesses will see changes to their customer base over the life of the business. For some businesses there may be demographic changes to your customer base. For example, imagine your business provides parts to tradespeople. If you realise that the majority of your best customers are older, primarily sole-operators that are likely to retire in the next five years, it is urgent to start today to recruit additional younger customers who will fill this void as others retire. If you have good relationships with your existing customers, they may even be able to help you by referring others, but you may have to invite them to talk about your business to their friends and colleagues.
Alternatively, you may provide goods or services which are only relevant to your customers for a particular period of their lives (e.g., baby goods, children's sporting activities). It is critical that you have a thorough understanding of who your customers are, how you are best to engage with them, how long they may need your products or services and what events
or situations would cause them to no longer be your customers.

Learn why your customers come to you

Once you have identified who your customers are, the next step is to figure out why they come to you as opposed to other competing businesses.
Do they come to you out of habit or loyalty?
Is it because you have the cheapest prices?
Do you offer a superior level of customer service and care?
Do you offer something that nobody else in your local area provides?
Identifying why your customers come to you will help you find the strengths of your current business model so that they can be built upon in the new financial year. If you are unsure, you can always start asking them to get a better understanding of what your business may be doing well.

Learn who your customers are

While it is easy to get caught up with the day to day running of your business, it is vital that you never forget that it is the customer who is keeping your business alive and well. Hence, at the beginning of the financial year, one of the first things to review is who your customers actually are.
How many customers do you have?
Are they generally one-off purchasers or repeat customers?
What are their demographic characteristics?
Identifying your customers' traits and preferences is the first step to figuring out how you can service them better.