What exactly is financial control?

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Business coaching in Brisbane

An important part of my business coaching in Brisbane is teaching financial control.  It is a fact that many small businesses fail because of poor financial management.

Financial control is about understanding the financial performance of your business and then taking steps to improve it.  To be effective, the control measures must provide financial information in real time. 

So what about your annual financial statements, are they of any use? 

Your accountant typically prepares an income statement and balance sheet several months after the close of the financial year.  The purpose is not financial control.  It is purely and simply compliance – the preparation of your business tax return.

Obtaining financial information via your tax accountant some 6-18 months after the event is useless for meaningful decision making .  Information that will truly aid your business decision making needs to be current.  That is, captured today, acted on tomorrow. 

There are a few key measures used by financial performance specialists that will reveal all about your business.  However, none of those can be calculated until you have a system that will capture current information about your business in a usable form.

So the first step is always to have a user friendly accounting system that is built to handle Australian accounting standards and protocols.  To make it work effectively though, you must set up the accounts properly in the first place.  This is the base upon which you will build your financial control system so it is important to seek professional help upfront.

Until next time!

Gary

#1 for business coaching in Brisbane

Call direct on 0408 756 531

Email gary@garyweigh.com

MLM business – go in with your eyes wide open

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For business coaching Brisbane call Gary direct 0408 756 531

Gary Weigh

Lesson #1 in my business coaching Brisbane practice is, “Go in with your eyes wide open!”  There are many things to think about if you are considering being a distributor in a Multi Level Marketing (MLM) organisation, including:

  1. Many people are going to cringe at the offer of an incredible ground floor business opportunity and relationships may be burned along the way.  However, if the products are good enough, customers should be asking you how to join as a distributor.
  2. Don’t be enticed by the perception of easy money.  Focus on the products and everything you do to satisfy and support your customers.  The product should be something of quality with high repeat demand.  It can’t merely be a cover for the flow of commission through a pyramid shaped network.
  3. Don’t be hooked by ‘the dream’ – the vision of wealth and lifestyle.  If you do, building a business may become a secondary consideration.  It is essential to set goals but keep your feet firmly on the ground and your head out of the clouds.
  4. There is a certainty (mathematically at least) that in time, your market area will become crowded with the very distributors you recruited; and by some you didn’t recruit.  There is no contractual protection of markets or territories.  It is survival of the fittest, so you must ensure that you and your business are the fittest.
  5. There must be a balance between selling product and recruiting distributors.  While many focus on recruiting only, someone somewhere along the line has to buy the product.  As in any business, your customers, together with quality products and quality service should be your primary areas of focus.

Understanding what you are dealing with is the first step in making your part of the MLM organisation a success.  Realise now that the majority of distributors will be unsuccessful.  Some will get caught up in the hype and will not focus on reality, while others will simply wither on the vine because they can’t sell product and / or can’t recruit distributors.

Those who start earlier or are nearer the top of the pyramid in their target geographical area are more likely to make money.  Those who start later and find themselves nearer the bottom of the pyramid in an area that is becoming distributor / product saturated are more likely to struggle.

So it will pay you to do some research in your target area before you commit.  Like any business, customer care and repeat sales are the keys.  They in turn depend on the quality of your communication and support, together with the strength of your relationships.

Note: I do not operate any form of MLM business, and I have no affiliations with MLM organisations.  I am an independent, professional specialising in business business coaching in Brisbane.  I am expressing my own views based on 25 years of coaching experience.  I have coached and advised clients who have participated in MLM business, and some who have sought advice before committing.   I have coached many more clients who have not participated in MLM business.  So if you would like an independent appraisal of any business opportunity, please contact me.

Business coaching Brisbane for MLM businesses

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Call Gary direct on 0408 756 531

A reputable, well-established Multi Level Marketing (MLM) company can be a great opportunity, particularly when it offers products that all but sell themselves. However, it takes ingenuity and hard work to build your own network sales organisation.  So consider my business coaching Brisbane practice!

About 90% of home-based businesses in Australia are owned and run by females.  A MLM network business is a very popular home business choice because it involves a low start up cost and product distribution is often handled by the MLM head office.

Nevertheless, there are several issues to consider when building a MLM business from home:

  1. The majority of distributors have never been in business before
  2. Family commitments make work-life balance challenging for many
  3. Many regard MLM as a low commitment family income supplement only
  4. Building sales is not the same thing as building a business – it is only part of the story
  5. Your introducer is involved in the business and may give you basic training and guidance but is not a business coach
  6. You must be careful that in building a network organisation, you build it on a firm footing
  7. Many MLMs offer online planning and coaching tuition, but they are one size fits all and not all are tailored to the Australian business marketplace. 

 Knowing and doing are two different things.  If you are not experienced in Australian business it helps to have an Australian business coach.  It is even more important if you work from home.  It is essential that you stay committed and focused in the face of family and household distractions.

You can’t rely on your introducer forever.  You should start thinking like a business owner, not a sales rep.  You need your own business blueprint because your life and individual circumstances are unique.

Start your business coaching today and start building your business.

Until next time

Gary

More about our business coaching brisbane practice

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Business coaching Brisbane

Call Gary direct 0408 756 531

Gary Weigh in Brisbane

Hi, welcome to my blog!  I thought I would share some business coaching insights with you and tell you a little about the way we work, as well as the cost of coaching.  Coaching includes business planning and business building.  We work with you in the expectation that you, in turn will work on your business. 

Our role is three-fold:

  • To help you develop your own style as an effective business operator
  • To help you recognise ways to improve your business performance
  • To help keep you focused on achieving your life-balance & lifestyle goals

It’s important to point out here that business building in Australia requires a different skill set to the technical skills you currently dispense to your customers; and that’s the case in any business. 

Two common reasons for small business struggle & failure are loneliness and lack of control.  Loneliness forces you to do everything, be everything, and make decisions in a vacuum. 

Lack of control means that your business controls you!  In other words, you follow where ever it leads you – often to be all things to all people.  So in the marketplace and in the back office, you do everything, be everything and chase everyone with no regard to the cost of your valuable time.

Business coaching puts focus into your activities.  It empowers you to take control and ‘position yourself’ instead of ‘being positioned’.  Focus also means you do ‘what’s important’, not always ‘what’s easy’.  It is about working smarter, not harder; working to an action plan towards achieving your goals.

My ideal client on a demographic basis is a financial planner or risk insurance adviser.  On a desire-to-work-with basis, my ideal client is energetic & determined; open-minded and willing to learn; willing to adapt and change; and most of all, willing to invest in their own future.   

I offer 3 levels of coaching to suit all budgets – intensive, standard and light – in simple terms, weekly, fortnightly and monthly.  Prices including GST are:

  • Intensive $1,540 per month
  • Standard $770 per month
  • Light $770 first month, then $385 per month  

I offer you the chance to build the type of business that suits your needs; to grow the lifestyle-asset and succession-asset you desire; and the opportunity to realise your full potential as a business owner-operator.

 Check me out at http://www.garyweigh.com.  You can also read from almost 200 original business articles on this blog.  These cover all aspects of business including business planning and business building in Australia.

Until next time!

Gary

#1 Business building Australia

Call or email now! 0408 756 531 gary@garyweigh.com

 

 

Be a stand-out risk adviser!

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Business planning Australia for financial services 

Call Gary direct on 0408 756 531

The majority of advisers are generalists because they tend to write the next person who says yes to an appointment, whoever that may be.  For this reason, risk advisers by and large look the same to the average customer.  Often the winning difference is persistence, professionalism, knowledge or trust.

It is tough to operate as a ‘me-too’.  It is even tougher being a ‘me-too’ trying to be all things to all people.  In a market where clients are becoming more educated and aware, few advisers have the comprehensive technical and product knowledge to do it all and do it well.

For a lot of advisers, the risk insurance appointments that aren’t referrals are the result of cold calling.  However, the anti-hawking provisions and the do-not-call telephone register now make it difficult to directly approach individual householders.  As a result, there has been a shift towards cold-calling business owners, mostly because they are still fair game.

The SME (small to medium enterprise) market segment has become increasingly popular but is still significantly underdone.   There is a tendency to separate the owner from his or her business and insure the individual only; thus ignoring the business itself.

The missed opportunity is not responding to the total needs of both owner and business as a combined unit.  This non-response is generally caused by a lack of knowledge, experience and confidence.  It also takes a little longer to get the job done and this is perceived as time better spent elsewhere.

It is for these reasons that the more complex business issues of equity protection, asset protection, key person protection, business succession and small business CGT rollover are overlooked.

It is the distracted effort to maintain a consistent flow of new business and monthly income that results in the more specific and more valuable market segments being missed by advisers.

Advisers who do specialise do it either by industry or and / or by product.  Over time, they emerge as very successful because they have deep knowledge in a narrow area.  As a result, they become known in an industry and are referred to more often.

Financial services business planning you can trust 

Call Gary direct on0408 756 531 or email gary@garyweigh.com

Risk advisers have every reason to plan

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Business planning consultancy Brisbane

Call Gary direct on 0408 756 531

In my last blog post I talked about the true value of risk insurance and the client-focused risk adviser.  However, this praise does not take away from the fact that the risk insurance advice business currently works on a slightly flawed business model.

The flaw is that the commission system has the potential to provide the adviser with a good income even if they don’t provide a good service.   As I have said previously, being paid by the product provider attaches the adviser to the product and a ‘client register’ but does not necessarily attach the adviser to the client over the long term. 

This creates cross subsidies among clients.  This means while all products pay the same, the adviser receives different levels of income depending on factors such as age and health risk.  Consequently, not all clients receive equal service from their adviser.

Healthy young people with low sums insured don’t produce much ongoing commission income and it would be difficult for an adviser to provide service if the same amount was received as a fee. 

It is the older unhealthy smokers with high sums insured that subsidise the service provided to the rest of the client portfolio.

The flip side of this is that the healthy young clients are the long term clients and the future of the advisory business.  The older unhealthy clients are currently profitable but are not long term prospects.

For this reason, every risk adviser and risk advisory business would benefit from some professional advice at my business planning consultancy in Brisbane. 

However, the cross subsidy issue is not the only reason to plan.  Business planning addresses a wide range of other issues as well. 

These include:

  • Building a business as opposed to building a ‘client register’
  • Distinguishing yourself from the legion of ‘look-alikes’ in the market place
  • Presenting yourself as others see you, not as you see yourself
  • Targeting particular groups of customers with specialist services
  • Developing hybrid (fee + commission) based packages
  • Devising and implementing long term client retention strategies
  • Building a valuable rollover or retirement asset for the future

For some advisers with large amorphous client bases, this may necessitate re-focusing and decreasing the client base over time rather than growing it.

#1 Business planning consultancy in Brisbane

Financial services advice you can trust !

Call Gary direct on 0408 756 531 or email gary@garyweigh.com

The true value of the specialist risk adviser

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For business planning Australia call Gary direct on 0408 756 531

Under the FoFA proposals to ban conflicted remuneration (i.e. product commissions) the specialist risk insurance adviser is looking as though it might emerge unscathed.

While financial planners appear to be headed for an ever deepening mire of ‘nanny-state’ paperwork, added to which will be the administrative task of generating and mailing invoices and / or opt-in renewal notices, it appears as if risk advisers might be left to get on with the job of advising.

With no requirement for holistic plans, doorstop sized SoAs, invoicing and debtors systems, it appears as if the solo risk adviser might continue to operate as they always have.

Yes it is true that the risk insurance commission system doesn’t always reflect the true value of risk advice over time but it does help ensure that at least the client focused adviser will there for the client in the event of a claim.  The proposed opt-in provisions are unlikely to achieve that.

On the plus side, it will certainly be a big help to solo risk advisers to have the life companies and licensees continue to shoulder some of the administrative burden by of commission remuneration.

On the minus side, the commission system has the potential to provide the adviser with a good income regardless of whether they provide a good service or not.   Being paid by the product provider attaches the adviser to the product but does not necessarily attach the adviser to the client over the long term.

Without risk advisers, Australians would be further underinsured and that increased financial burden will eventually transfer to the government welfare system.

The majority of Australians already dismiss the concept of risk insurance as a waste of premiums because they wrongly believe that “it won’t happen to me”.  It is only the life company claims people, medicos and risk advisers who know the reality and see the end result of human fragility.

It is not until you have delivered a cheque to a family torn by tragedy, and seen the expression of relief and gratitude, that you can ever understand the true value of risk insurance and the true value of the client-focused risk adviser.

#1 business planning in Australia

Financial services advice you can trust!

Call Gary direct on0408 756 531 or email gary@garyweigh.com

The future of commissions on risk insurance in super

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Your trusted business consultancy Australia

Hoorah!!  A moment of lucidity prevails.  The Assistant Treasurer and Minister for Financial Services and Superannuation, Bill Shorten has indicated that the Government may reconsider its original FoFA proposal to ban commissions on life insurance sold within superannuation.  This ban was originally due to come into force on 1 July 2013.

Shorten says he has been “listening very carefully, and while this is not a definitive statement finally, I am a little more persuaded of the case around risk insurance and the commission where there’s a bit of work actually gone into delivering a product to an individual”.

“I do not see the case for commission on insurance through default or group policies, but I’ve certainly been open and listening carefully to the propositions put around individually-advised risk products in super,” Shorten says.

Risk insurance has always required a lot of explaining in the right context as well as some persuasive argument on the part of an adviser.  These are not products that sell themselves or disappear off the shelves in a buying frenzy.  This is evidenced by the fact that the majority of the Australian population has no personal insurance and those who do are significantly underinsured.

Clients fall over themselves to sign up to wealth building products but it’s a different story when it comes to wealth protection.  Expect to hear the “she’ll be right mate” as a first response to a proposal for wealth protection in the form of risk insurance.  The average Aussie doesn’t hesitate to insure the beloved car but considers life insurance to be a waste of premiums.

This attitude prevails regardless of the form of remuneration.  Everyone dreams of building wealth but no one wants to consider their own premature mortality or morbidity.  The population is generally resistant to the concept of risk insurance.

Those who do sign up for life insurance in super often choose commissions to avoid writing a cheque.  It is not an issue of commission vs. fees.  It is the very practical matter of cash flow.

Clients would rather use money that they can’t touch for years than use their already stretched household budget.  To have commissions paid out of their super fund is one way to gain early access to their superannuation to pay a bill.  It is merely a bonus that there is a tax advantage as well.

If clients are forced to pay fees for their insurance, they are more likely to refuse or reduce an adviser’s risk insurance recommendation simply on the basis of affordability.  That is, no money available after the rising costs of the mortgage, home insurance, food, petrol, electricity, water and a plethora of other living expenses.

Furthermore, it is unlikely that clients will pay ongoing fees all the way through to claim time.  But if the adviser is not paid, he or she is unlikely to be there to help.  Whilst it can be argued that the commission remuneration model doesn’t reflect the true value of advice, it does ensure that the servicing adviser is there when needed at claim time.  The importance of this cannot be underestimated.  Only those who have suffered the tragedy of a death in the family or a life threatening health event can understand the immense value of a helpful and empathetic adviser.

#1 Business consultancy in Australia

Business planning programs from $385 / month

Call Gary direct on 0408 756 531 or email gary@garyweigh.com

FoFA – the bottom line for commission-based financial planners

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Gary Weigh Managing Director

Business consultancy Australia

If you are a financial planner wondering what all the fuss is about with a change from commissions to fees, here’s what it will mean for you.

At present, you are receiving commission income from super and non-super investments that you wrote some time in the past.  Yes you do pride yourself on reviewing clients and providing a service, but will clients continue to buy it at your new fee-based price?

If you have been in the industry for some time you will have accumulated a lot of clients.  Some you already give a lot of service to and others you give little of no service.  To many, you are only there if they need you.

Under the FoFA proposals, from 1 July 2012 it has been indicated that you will retain your book of commission based business, but you will not be able to add to your commission income, except if you write risk insurance.  Therefore over time, your commission-based book of business form investments and super will gradually diminish. 

That will occur for many reasons – people die, divorce, retire or they may change their servicing adviser to someone who provides better fee-based value for money.  One way or another there will be some attrition.

Meanwhile you will build your post 1 July 2012 income base from client fees.  All products recommended to new clients and new products recommended to existing clients will be subject to the new remuneration rules.  That means you will either invoice a fee directly to the client or ask the client to authorise a deduction from their investment / super fund. 

The former will require and invoicing and debtors system.  The latter will invoke the opt-in provisions where the client must actively renew your deduction authorisation every two years and must receive a disclosure notice from you every other year.

Welcome to the world of administration and financial management!  As if you don’t have enough compliance and paperwork!

But there is more!!  If you have a lot of clients, you are unlikely to have sufficient hours in a day to provide a fee-based level of service to them all at a price that would match your current level of commission income.  Many clients simply will not pay what they are paying now.

On the one hand, you could provide a very low level of service at a low price to all of your clients or, on the other hand, you could provide a lot of service to your very best clients and do something else with the rest. 

So this brings you back to the core issues that strike at the very heart of your business.  They are, developing your new service package, costing it and pricing it appropriately.  And it may be more than one service package.

Commissions to fees will be no simple changeover.  That is why you need to stop and do some real business planning, sooner rather than later!!    

Your trusted financial services business consultancy  Australia 

Call Gary direct on 0408 756 531 or email gary@garyweigh.com

Scaled advice opportunities

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Business consultancy Australia

Are you an adviser facing the Future of Financial Advice with uncertainty? 

Call Gary direct on 0408 756 531 for trusted advice.

Scaled advice means providing piece-by-piece simple advice rather than a complete financial plan.  It is advice about one area of a client’s needs, such as insurance, or about a limited range of issues. This contrasts to so-called “holistic advice” which is the traditional advice model offered by many financial advisers.

The Government’s move towards scaled advice will open up the financial advice market beyond financial planners to e.g. superannuation trustees and accountants.  It is still a matter of consultation how far superannuation trustee advice will be permitted to go.

The Government indicates that it will amend the existing ‘reasonable basis for advice’ obligation in the Corporations Act to make it clear that this obligation is commensurate and scalable to the client’s needs when providing advice.

This change heralds some new opportunities for financial planners.  A few of these include:

  • The opportunity to present a fixed fee menu of simple services
  • The chance to specialise in particular areas
  • The opportunity for regular client contact
  • The chance to network around a client’s family doing ‘simple’ or ‘specialist’ tasks
  • The opportunity to focus on targeted clients with the ‘particular need’

Whilst the concept of limited advice is not new, the fact that the Government is codifying scaleable advice indicates the market need for more easily accessible and advice that addresses specic needs and is easier to understand. 

The challenge for advisers will be to set out the blueprint for the future and to manage the change from the current mode of operation.  It will involve some astute business planning; in particular, an overhaul of the product offering, and pricing the new services appropriately.

Your trusted financial services business consultancy  in Australia

Call Gary direct on 0408 756 531 or email gary@garyweigh.com