Business planning – buying a business with no financials available!!

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FOR BUSINESS PLANNING AUSTRALIA CALL GARY DIRECT ON 0408 756 531

If as a result of my business planning I was buying a business from someone who insisted that their business was a good buy but refused to hand over any financial statements or supporting information, I would run a mile.

It is always hard to know the reason for the reluctance but experience suggests it is either a rubbish business or else it could be this!  

It is easy for owners in cash-based businesses to take cash from the cash register and never bank it or record it.  Many owners confuse the concepts of revenue and profit.  They believe that all money that is generated from sales is theirs.

Uhmm … no … big mistake!

There is that small matter of paying suppliers and all business overheads.  What is then left over is available to be drawn by the owner and pocketed.

‘Living out of the cash register’ is a dangerous practice for the following reasons: 

  • It leads to cash flow problems because creditors can remain unpaid as a result of short-banked revenue
  • If the pocketed cash is not accounted for as sales revenue and then as owner’s wages / drawings, there is going to be some false statements made on a tax return.  Not declaring income taxable amounts to tax fraud.  This will bring the ATO down on the owners head like a ton of bricks.
  • When it comes to selling the business, the true value of the business can’t be substantiated because part of the sales revenue was pocketed instead of banked.  If a subsequent ‘bank reconciliation’ is to balance then the temptation arises not to record the sales either.  However, the cost of sales must still be paid and harder to hide.  Therefore the business looks like it has low sales, low margins and low profit- and its value becomes diminished. 
  • The practice often leads to keeping a two sets of books – one for the tax office (ATO) and one for a prospective buyer
  • If the business owes money to a bank manager or if a loan is being applied for, it is common that the bank wants to see regular financial statements (often monthly).  Problems will arise if the bank can’t reconcile true sales figures with actual short-banked receipts (which the bank can plainly see).  Lying to the bank can also have dire consequences including loan refusal or a demand for full and immediate repayment of an existing loan.
  • Even if two sets of books are secretly kept for a long period of time without discovery, there will come a day when the secret has to be revealed to a prospective buyer. 

So who wants to admit fraud to a perfect stranger?  It is easier to refuse to hand over the financials.  If you encounter this – walk away!   It is odds on that the owner is living out of the cash register and keeping two sets of books.

For more on business planning check out Famous Failures of the Most Successful People In The World at http://garyweigh.com/starting-up-your-own-business.html

Until next time!

Gary

gary@garyweigh.com

Business building – Is a cafe-takeaway a dream or a nightmare?

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Make no mistake!  Business building in a cafe-takeaway shop is hard work.  I’m not knocking hard work but it is often a 6-7 days a week commitment with early morning preparation; which means that you can have little or no life outside the business.  If you are not used to it, tiredness can turn you into a zombie.

It is usually very competitive!  Competition generally comes from similar independent businesses, coffee shops, franchise chains and mobile vans (particularly in industrial areas).  Competition keeps margins generally low which requires high volume of customers.

Customer flow is not evenly distributed.  There are chaotic rush hours which impact on staffing and preparation.  You may only need a casual for 2 hours at lunchtime but awards can stipulate minimum periods that can be longer.

Like most food service businesses a cafe-takeaway is labour intensive.  It can be difficult to find and retain good staff, particularly casuals.  Food costs, portions & wastage must to be closely controlled.  It can be the devil’s own job to train staff in correct portioning and minimal wastage.

It all gets worse when you are frantically busy.  It is extra frustrating when you run out of something and have to run to the nearest shop and pay retail price for it.

There are some heavy duty local authority food licensing conditions to meet, not the least of which is installing a grease trap.  Refrigeration, cooking and warming means some hefty power bills.

I am not meaning to be critical or pessimistic.  I’m just being realistic!  Know what you are getting into because I have seen passion for food repeatedly dampened in cafe-takeaway businesses.

Until next time

Gary

Want to learn more about business building?  Check out our business coaching and business planning services

Protect your business and your family’s future 

Business planning – Think before you leap!

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Gary Weigh

FOR BUSINESS PLANNING AUSTRALIA CALL GARY ON 0408 756 531

If you are business planning a great idea that you think will make you money; or if you simply want to turn your passion or vocation into a business, stop and think before you leap.

The world is a constantly changing place and there are a few boxes to tick when you are planning a new business venture.  Here are 9 business planning must-haves to think about:

ONLINE!

No business will be able to survive in the future without an interactive online presence.

WOW FACTOR!

People (not computers) are gifted with creativity and insight; be an innovator not a ‘me-too’

GLOBAL!

The world market is only a click away, and so are the related international challenges to address.

INSTANT!

Time is the consumer’s scarcest resource, making convenience always in high demand.  Consumers won’t wait for you or abide by your inflexible structure.  They want products and services now.  Baby boomers were taught to wait but even they are changing their attitudes.

FREE!

The internet business community is developing as a “cheap or free” economy.  So you will have to be innovative in the way you generate revenue.

COLLABORATION!

New concepts are evolved by combining ideas; by building upon what’s gone before.  Similarly, concepts are implemented by sharing resources (i.e. human, intellectual and technological capital).

SOCIAL!

Instant communication, online social networking, information sharing and fan-base dynamics will play an ever increasing role in making and breaking businesses.

DIFFERENCES!

Businesses survive and grow on their differences, not their sameness.  Also look past your operating difference and your bottom line to making a social difference and an environmental difference.

CONNECTIVITY!

You are not a disconnected being; you are a descendant of about 300,000 years of human life, and a couple of billion years of evolving life form before that.  You are the latest product of the environment and the universe.  So make the most of your shelf life; be open to making positive connections with everything and everyone around you.  Don’t resist and do your best not to get in the way of natural connectivity.

For more on business planning in australia, check out First Rule of Planning at http://garyweigh.com/the-first-rule-of-planning.html

Until next time!

Gary

Don’t put your family at risk.  Your business is your future; your retirement; your jewel in the crown.  Protect it!

Learn how to build a powerful presence.  Visit my Aikido Secrets blog site

Team business building – can group decision-making work?

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Fortunately the MD is asleep!!

FOR BUSINESS BUILDING CALL GARY DIRECT ON 0408 756 531

Good teamwork applied to business building is about open communication and cooperation, not protecting territory and fragile egos.

Group decision making does have the potential for excellent business building outcomes.  And why shouldn’t it when such a diversity of knowledge and expertise is sitting around the same table.

However, this style of decision making should not be confused with management by meeting, often seen in Universities, where nothing can get done without a seemingly endless series of meetings.

Group decision making can work well provided that a few conditions are met:

  • Collaboration must be genuine in its intent
  • Divisional walls must be knocked down
  • Free exchange of ideas with no judgment or criticism
  • No hiding behind titles and egos
  • Recognition that the best ideas don’t always come from the highest paid
  • The group needs challengers and dissenters otherwise it’s a ‘yes’ group
  • Can’t be just a talk-fest group with no commitment to action
  • Someone must be responsible for prioritising ideas and implementing action

This is a big business concept that is not used very often as described above, because they can’t get past their door titles and egos.  Nevertheless, this concept can be easily adapted to small business decision making.

Participants can be friends, colleagues, mentor, coach or just about anyone who will do it for the price of a free lunch (or at least a coffee and a scone).  For $100-$200 you could walk away with a swag of great ideas and strategies for your business.

For more on business building check out http://garyweigh.com/starting-a-business-timing-is-everything.html

Learn how to build powerful business presence!

Until next time!

Gary

Business building – finding the leader and manager in you!

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"Lead and Manage!"

FOR BUSINESS BUILDING CALL GARY ON 0408 756 531

Every business building owner needs someone to inspire and enlist support as well as someone to ensure strategies are implemented and processes followed.  In other words, a leader and a manager are both needed!

The problem is that the traits of leader and manager do not always reside in the same person.  When they do, it is often difficult to change hats easily.

It is argued that the two require different mindsets.  A leader who attracts people may be good at strategic planning, original thinking and innovation but may not be so good at focusing short term, attending to administration, controlling the business or resolving conflict.

Nevertheless, when you start up a business, you generally have to perform both roles, and the reality is that both roles can be integrated just fine; if you are prepared to try.  It all comes down to having a good understanding of people both inside and outside your four walls.

The big picture–small picture / right brain-left brain distinction between leader and manager can be morphed quite easily into the single character of ‘owner’! 

After all, when you left your job to start your own business, isn’t this the bureaucratic rubbish that you wanted to get away from?

Everyone has left and right brain hemispheres!  It is just that most have instinctive preferences one way or the other.  It’s not that we can’t do both; it is just that we don’t want to if we don’t have to.

(Oh, the luxuries of being employed!  There is always someone else to turn to.) 

However, the reality of owning a business is that there is plenty that you have to do yourself that you may not want to.

If you understand people and understand what motivates and drives individuals, then you can work out how to treat them in order to bring out their best, or to get the most favourable response.

At no time in the last several thousand years has business ever changed from being all about people.  If you put your mind to it, leadership and management can be regarded as two sides of the same coin. 

Coming to grips with it and gaining the technical ability and people skills you need are all part of the building of the new you – the successful business owner!

For more reading on business building, read Recession is a blessing in disguise   

Until next time!

Gary

Business building – make your own luck

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Make your own luck!

FOR BUSINESS BUILDING CALL GARY DIRECT ON 0408 756 531

Luck is really nothing more than chance!   It is a random event!  In business building it is better to be a lot more deliberate and purposeful.

Would you like to leave the success or failure of your business building to chance or random events?  I don’t think so!

We are talking about the future money machine that you are building for you and your family; the one that you have already invested valuable time and money into; the one that you hope will finance the rest of your life.

You make your own luck in business!   Feeling lucky is about feeling in control.  It is about ‘knowing your business’ well enough to know what works and what doesn’t.

It can be a mistake to blindly follow others.  It is often the case that other people’s strategies don’t work so well in your business.  But don’t worry, everyone takes these wrong turns.  Don’t be despondent!  It is a matter of finding the right path for you.

As you find your own way, leave your mind open to the great impact that your own presence, personality and imagination can have on your business.  It is probably far more than you ever thought.

That is what I mean when I have said in previous posts, that when business building, don’t miss the opportunity to paint your business the colour of you!

Business is still about people!  A smiling, positive and attractive YOU will create personal connections that can’t be easily duplicated by others.  It will also save you a fortune on 3rd party marketing.

For more reading on business building, go to Business building – a dream income stream

More on business building next time!

Gary

Business building – Cash is King

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Gary Weigh

It might sound old fashioned but when you are business building, living within your means is not such a bad idea.  Knowing how much is in your bank account on any day, and knowing that the balance is in the black, ensures survival in any economy.

When you look around and see business owners driving around in flashy cars and installing reception areas more expensive than there house, be suspicious.  All is not what it seems.  In my experience as a consultant and coach, most are living on borrowed money.

Leveraging is a fancy business school term for borrowing money.  For some it is squandered on trimmings and toys to give the illusion of success.  For others, it is spent unwisely on ‘throw money at it’ strategies that simply don’t work. 

I am nor saying that you can’t grow your business using borrowed money.  What I am saying is that you must be aware that the economic landscape can change in a heartbeat.  In an environment of slow sales and falling asset values, a significant core debt is the last thing you need.

No one ever thinks that a recession will always follow a boom, even though it has been a regular 7-8 year cycle for the past 100 years.  The bottom line is that when things get tough, borrowed money still has to be repaid.

Recession is the time when ill-advised business financing strategies are found out.  It is always the over-borrowed businesses that go under.  It is much safer to grow your business slowly and steadily from the profits of your business. 

That means that for a while at least, you will have to engage in that other old fashion concept of long hours and hard work to bring in sales revenue.

Email me at gary@garyweigh.com for your FREE Business Finance Fact Sheet.

More business building next time!

Gary

Business planning – build your own financial fortress

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Business planning is part of life planning.  Running a business is one choice of how you earn your income.  Employment is the other choice.  Getting a job may appear less risky in the short term but ultimately comes with less control.  So which is better?

I am not being a profit of doom here, but experience tells me that life changes and on occasions, quite dramatically.  It is not a linear experience from start to finish.  Life, including business, is an adventure with many highs and lows, interspersed with comfortable periods of coasting along in neutral.

Over time, people grow, change and want different things.  People leave and others enter.  Children are born, parents die.  Fortune and misfortune are sprinkled throughout.

Whilst you can’t control what happens around you, it is possible to take control of your own attitude and responses to the inevitability of change.  You can build a solid financial base which can become your personal (financial and emotional) fortress in tough times. 

How do you achieve this?  The first step is to take control over the generation and protection of your income!  Don’t leave it to chance. 

Look at it this way!  While ever you work for someone else you are not in control of your own income.  Your income could cease next week.  Sickness, accident, premature death, theft, fire and natural disasters are just some of the commonplace risks in life.

Whilst ever you fail to take the initiative and put protection in place to guard against life’s more obvious risks, you are leaving your future to chance.

Similarly, whilst ever you rely on a spouse or partner for your food shelter and lifestyle, you are not in control of your life and you future will be determined by someone else.  To survive in the long term in this world, you must have your own money and protective measures in place.

The deceptively warm feeling of your present comfort zone does not necessarily equate to your own solid self-built financial fortress.

To many people, business planning for a new enterprise sounds a lot more risky than the security of a good job but, in the long term, it is that self-made, steady income falling into your bank account come rain hail or shine that is the real security.

Email me at gary@garyweigh.com for your Financial Fortress Fact Sheet.

Until next time!

Gary 

For more reading about Business Planning read The Borrowing Trap

How much do you enjoy work?

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If you are thing about quitting your job and managing a start up business, this is worth a look!  This cleverly presented slideshow sums up beautifully what a lot of people put up with at work.  It is kindly shared by a UK based organisation http://www.enjoywork.org.   Watch this below!

 

Misery. Why people hate work.

And here is my comment … There are some really kind and considerate employers out there but tend to be in the minority.  At the same time, rude, inconsiderate and sometimes creepy co-workers seem to be in the majority; all competing to advance their own agenda.  So if you have moved around a bit in your industry and still not happy, it may be time for a permanent lifestyle change.  If you have lost the enjoyment of working for someone else and you deep down harbour a desire to march to the beat of your own drum, then it might be time to think about managing start up business for your self.

You can be the boss you always wanted to have; and you can regain the enjoyment of work by building your own workplace culture the way you would like it to be.  It is well known that the culture of a workplace, whether good or bad, whether by design or by default,  comes from the top.   Gather knowledge, get advice and get some good people on your side and it can be an enjoyable journey!

Email me at gary@garyweigh.com for my popular fact sheet, “Managing a start up business in Australia”. IT’S FREE!

Until next time!

Gary

Business planning – the way of harmony

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Wooden prayer tablets

The basics of business planning are relatively easy.  It is the values you hold and how you treat and interact with others that will ultimately define your business.

After practicing the non-aggressive and non-competitive art of Aikido for many years, I can share with confidence the benefits of my own experiences.  Within the development of the non-fighting mind lays a great mental foundation for achievement.

It is not restricted to achievement in business.  It extends to all aspects of life.  The benefits of a martial mind are not skill specific.  They can be applied to achievement of what ever you want.

The non-fighting mind has infinitely wide application!

Of course, this is not the first time that martial principles have been applied to the conduct of business.  Remember Sun Tzu’s The Art of War?  That book became a worldwide sensation; and a reference for aggressive corporate decision making in Western society for many years.

The difference here is that Aikido is the art of peace, not war.  Instead of applying principles of war, the principles of peace are applied to the conduct of business.   It requires a different mindset but they are vastly more powerful.

It takes a long time to become proficient in the art of peace; just as it takes a long time for those with a fighting mind to choose peace over intimidation and aggression.

The Art of war found application in large companies who had or wanted dominating and intimidating market force.  Even though the central theme of this ancient classic was to win without fighting, a thinly veiled threat to unleash half a million blood thirsty warriors still amounts to intimidation.

The Art of Peace is for smaller business; those who would otherwise be defenseless against the intimidating behavior of corporate predators whose power lies in size and strength.  So bear in mind that your business planning can build a small but very powerful presence based on the Principles of Peace.

Visit my Aikido Secrets blog site http://www.aikido-secrets-to-calm-success.com for more information on Aiki Principles of harmony and their application in everyday life.

Until next time!

Gary