This morning the Queensland Government introduced a $260 million grant for small to medium businesses who have been affected by the two recent lockdowns.

Eligible businesses will receive $5,000 (excluding GST) to use for any business expenses and to support cash flow through the Covid Lockdown. Your business does not have to be located in South East Queensland to be eligible for the grant.

Eligibility

To be eligible for the grant, your business must have experienced a reduction in turnover of at least 30% as a result of the lockdown.

Small & Medium Businesses are defined as having:

• A turnover of more than $75,000 per annum
• An annual payroll in Queensland of up to $10 million

Applying for the Grant

You will need to apply online with supporting evidence. The funds will be paid into your bank account within 2 weeks of the application being processed and approved.

More specific information about the grant including opening date will be available within the coming days.

If you need assistance regarding your grant application, please do not hesitate to contact our Team.

The Queensland government has introduced a Business Boost grants program which is aimed at providing support to businesses to advance improvements in their efficiency and productivity with funding of up to $15,000 (excluding GST) on meeting the criteria.

This grant supports activities in 3 project areas:

1. 1. Future planning
   2. Specialised and automated software
   3. Staff management, development, and planning

Eligibility Criteria

To be eligible for the grant, the business must (at the time of applying):

• have fewer than 20 employees;
• have an active Australian Business Number (ABN) and registered for GST;
• have a Queensland headquarters;
• have a turnover of between $300,000 (minimum) and $600,000 (maximum) in the
  last financial year (2020-21);
• have a publicly reachable web presence to identify business operations (such as
  business website, social media pages); and
• have owners/directors that are not insolvent or undischarged bankrupt

Eligible Projects to Spend the Grant

1. Future planning

• Strategic business planning for innovation or growth
• Implementing a governance board to guide strategic
  planning
• Exporting opportunities and requirements
• Compliance with industry regulations and standards

2. Specialised and Automated Software

• Design and implementation of management systems,
  including
  • Data warehouses
  • Asset management
  • Customer Relationship Management systems
  • Quality & Compliance management
  • Risk management
  • Production systems
  • Project management systems
• Bespoke/Complex website design and build including
  e-commerce, software integration, booking systems
• Cybersecurity tools
• Innovative technology that improves or diversifies service
  offerings

3. Staff Management, development & planning

• Human resource management skills building
• Professional development and training
• Digital workplace plans and systems for a remote workforce

Available funding

Your business may be eligible to receive a grant payment of up to $15,000 (excluding GST) on completing your proposed project.

The successful applicants must co-contribute at least 30% of the total project costs.

Grant funding will be paid only after compliant acquittal documentation is received.

Grant funding is not eligible to projects with a total cost of less than $10,715 (excluding GST) and payments made before the approval date.

Application Process

Applications open at 9am on 30 July 2021. The application form will be available online after this date via the DTESB SmartyGrants portal.

https://dtesb.smartygrants.com.au/

This grant program is competitively assessed and not all applications will be funded.

Our team will be available to assist you to maximise your chance of receiving the grant.

What are the key factors to optimise business value?

Value optimisation is all about growing business value. Value optimisation factors are issues within the business that can be planned for and addressed prior to selling that will assist in a smooth sale transaction at the optimum price. The key value areas for your business are growth, performance and succession. By focusing on optimising these areas, your business value will improve.

The path to value optimisation

The following illustration demonstrates the path you can take to optimise the value of your business.

Confused? How do I address these factors in my business?
Take a look at the following table that provides an indication of some of the industry best practice strategies that can be implemented to address these key value factors.

By addressing all of the above value factors, you will improve profit, improve the value of your business, and maximise your position when it is time to sell.

Some of the barriers to improving the value of your business and achieving your desired sale price could include:

• Business being too principal reliant
• Not spending enough time working on your business
• Expenses out of control
• Lack of client segmentation
• Poor systems and processes
• Unrealistic expectations about the value of your business

If any of these barriers are relevant to your business, these should be addressed. Contact your MGI advisor should you require any business coaching or help with business planning.

Disclaimer: this information is of a general nature and should not be viewed as representing financial advice. Users of this information are encouraged to seek further advice if they are unclear as to the meaning of anything contained in this article. Bstar accepts no responsibility for any loss suffered as a result of any party using or relying on this article.

PPPM spells happiness.  According to a recent course (University of Texas) ROI and Happiness:

Pleasure
Positivity
Purpose
Meaning

This all leads to happiness in the workplace.

An esoteric concept, no not at all, but one to easily diminish if you don’t care about your people.  Remember how you treat your people tells everything about you. We are not talking about avoiding negativity at all costs and pretending to be happy (note: high performing teams cannot carry passengers). Happiness leads to success not the other way around. It’s about being optimistic and resilient, employees are as responsible as employers to achieve workplace happiness.  Attitude becomes a more important attribute than skill.

So, what does the science say:

• Happier people are physically healthier so take less sick leave (16 days less).
• Retention improves dramatically.
• Happier people are also more collegial, so they are better team players.
• Happier people are more creative and make better or more objective decisions.
• Organizations with happier employees are more productive and profitable. (outperformed S&P top 500 14 times)

This is why investing in employee happiness is a very smart thing to do.

To start with it would be useful for organizations to gain an understanding of the five main determinants of employee happiness: basic needs, autonomy, mastery, belonging and abundance culture.  The issue is having balance, all are important and people perform best when they are in the ‘flow’, their competence is matched to their challenges.

Employees can do even more for their own happiness. In fact, the employee should be encouraged to take the lead.

The health of our relationships at work is more important than physical health in relation to happiness. The science shows, the more you genuinely care for your co-workers, the happier and more successful you are likely to be. Culture is an important determinant of happiness because culture is a feature of the environment and the environment wields a powerful influence over our behaviors.

Simple things the employer can do:

• Create equality among employees.
• Treat external stakeholders, particularly your suppliers well.
• Hire based on values.
• Make mastery part of performance review.
• Give $200 to your employees to personalise their workspace.
• Make employees take their leave.
• Reduce face time at work.
• Reduce too many rules.

Simple things the employee can do:

• Make the effort to stay well (healthy lifestyle).
• Express gratitude.
• Seek happiness outside of work.
• Don’t do work on leave.
• Use your most productive time to be creative.
• Maintain a desire for learning (mastery).

In conclusion, a word of caution, you will be happier at work and hence, more successful. This is good, but if you are not careful, the success can sabotage your happiness.  Wealth seems to be especially potent at relationship spoiling. Studies show that the wealthier we become, the less we prioritize our relationships over things like making money and being even more successful.

Shrinkage in the retail sector has a major impact on the profitability of supermarkets and other stores. Shrinkage is the result of theft by customers and staff, and is also caused by damage to goods as a result of poor ordering and handling practices. It can be equal to three per cent of sales at some independent supermarkets. The shrinkage problem tends to be worse in smaller stores with an average shrinkage factor of around five percent. If retailers want to improve profitability they first need to understand shrinkage.

A recent case study revealed a supermarket business turning over 10 million dollars per year while poor shrinkage control contributed to losses of 10 thousand dollars per week off its bottom line. It seems the smaller a supermarket is, the higher the shrinkage problem. As independent supermarkets increase their turnover, the shrinkage problem reduces to an average of around 1.75 percent. Better quality systems, and better management of the factors that drive shrinkage, contribute to the lower figure in larger supermarkets. Best practice operations are achieving shrinkage levels of less that 0.5 percent.

In reality, most supermarket operators do not know the true cost of shrinkage. Often this is the difference between success and failure of the business particularly when profit margins are so tight. An improvement in shrinkage management of just one per cent of sales can improve profitability by thirty-three percent. This type of saving can enable retailers to channel their resources into areas which will make a positive impact upon their cash flow.

Identifying Shrinkage

Shrinkage can be defined as the loss in margin due to poor stock management procedures, reporting practices and internal controls. It is measured by comparing the gross margin from the Point of Sale (POS) Report to the financial accounts or internal stock management reports.

Some of the factors that contribute to shrinkage include theft by customers and staff in the supermarket, inconsistent pricing practices, excessive and uncontrolled discounting, absence or infrequent stock taking, as well as damage to goods as a result of poor handling and ordering practices. For managers and owners, shrinkage is a very attractive area to address as the benefits flow straight to the bottom line. We advocate benchmarking the store to identify the gravity of the issue.

Some of the best practice operators have achieved low shrinkage levels by implementing stock management systems, which are compatible to existing POS systems, allowing for automatic re-ordering, regular rolling stock-takes on high-risk items, and stock management procedures. These systems are supported by staff training and job descriptions and assigning responsibility to selected staff, thus delivering tangible benefits to the supermarket owner.

Just some of these benefits include improved cash flow from reduced stock levels, as a result of ordering of stock consistent with sales demand, reduced theft by making high risk items more visible to staff, and providing an early detection of pilferage through instant stock management reporting.

This type of improvement enables the retailer to then direct their resources into other areas, such as improving their supermarket layout and design. Shrinkage efficient supermarkets are most likely to survive and thrive in a competitive market. To improve profitability allows retailers access to funding for supermarket refurbishments, which is an essential part of competing for market share against national chains.

Shrinkage Reduction Planning

Financial benefits show as soon as a supermarket addresses its shrinkage problem. The best way to begin this process is for the retailer to talk to a professional adviser, or seek advice from industry specialists to develop an action plan to implement better operational practices.

Most retailers are time-poor and work long hours so the most effective way to develop a shrinkage plan is to identify your immediate goals, determine what resources are required (money, people, and time) and allocate tasks to responsible persons. One of the biggest shrinkage issues is that supermarket owners do not compare their management account gross profit (GP) percentage with what comes out from their POS system. This is a big mistake. We found most retailers were unable to produce accurate management accounts on a timely basis and most often conduct stock-takes once a year for tax purposes.

Shrinkage loss really hits home when retailers compare their GP in the financial accounts provided by their Accountant to POS reports. The key is to develop a stock management system that allows for timely and accurate management reporting. Our industry manager recently saw supermarket figures showing a nine percent difference between the POS GP percentage and accounting GP percentage.

For example, regular weekly stock-takes of high wastage and theft items (e.g. meat and fruit/vegetables and tobacco) and cyclic stock-takes on other items will allow for effective monitoring of GP variances.

Adopting a standardised chart of account and journals will improve management reporting of shrinkage as scanning systems ignore the issue. Some supermarket chains have front-end systems that record all customer returns and place the reason for the return and reports at the back office each day and for the week. Further ‘reduced to clear items’ are also all managed via the front end.

Some chains also ensure its cleaners to place floor waste into a separate bin. This separate bin is then checked to see what products the cleaners have swept up and if these products can be reclaimed. It is important that staff take the time to monitor stock, even if it does mean checking the dairy fridge more frequently. You can use technology to keep track of perishables within the supermarket.

“I can’t work any harder and I don’t know how my business is travelling.”

“I don’t feel like I understand my business.”

“I made $300k last year, was it a good year?”

“Numbers give me headaches”.

“My accountant tells me I have to $50k in tax as I made a profit last year. But WHERE IS THE CASH?”

These are some of the most common refrains we hear from clients. These are all heart-felt cries for help for no-nonsense, simple ways to understand their businesses, how it operates, its financial performance and its ability to provide for a lifestyle.

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How To Run Your Business More Efficiently

After having worked with numerous businesses from many industries, we found that the following process works the best in helping our clients:

• Having regular meetings with them to help to spend time working on their business, not just in it;
• Providing them with easy-to-understand and yet at the same time, sophisticated reporting on the key metrics for the business; and
• Providing them with a sounding board to make decisions.

The centrepiece in our process is our ability to provide easy-to-understand reports focusing on the key metrics for the business. These provide our clients with the “hard numbers” from which they can come up with options and make decisions.

For example, it is no secret that the hospitality industry has had a tough time lately due to the lockdowns. It is now even more critical for the owners of restaurants and cafes to keep a close eye on their numbers. Here are some of the screenshots from reports prepared for a restaurant client. Accounting and Management reports like these have proven to be extremely helpful in helping the client in making the right decisions to thrive and not just survive in the current downtown.

Here is another example from a what-if analysis we did for manufacturing client, whose business received a bump in sales as they supplied products which were in high demand due to the lockdowns. In this case, they asked us if they can afford to invest in a particular piece of machinery to keep up with the increased demand, and we were able to answer their question on the spot with an instant profit and cash forecast which our purpose-built software is capable of.

The Fair Work Ombudsman has published a new Fair Work Information Statement that incorporates the recent law changes to casual employment.

The attached is the new version which should be given to all new employees.

Please contact your HR team to understand what this means for your business. Feel free to contact your MGI Adviser should you need a referral to an HR expert.

Are we paddling in the same direction at the same speed (scope, budget and schedule) and not up S##t Creek? How do you build team engagement and what makes an effective team?

Team is a common term that is not practiced well.  Some of us have had the good fortune to have been in high performing teams and the memories and relationships are still important to us. Our memories connect us to doing a good job, exceeding expectations, learning, celebrating and having a sense of meaning and belonging.  Teams just don’t happen, are often less effective than a group of individuals and can be terribly inefficient.

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Basics first, what are the attributes of a team:

• Complimentary skills
• Common purpose
• Shared performance goals
• Mutual accountability

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What makes an effective team?

• Purpose
• Clear goals
• Complimentary perspectives and skills
• Process and timings are clear
• Reflective learning and celebration

Problem solving: trust and communication

Tactical: clarity/ directive style

Creative: Freedom/ autonomy

Questions to ask your team regularly:

• How did you feel?
• What did you learn?
• How were you affected?
• What inter-discipline issues should you consider?

A leaders willingness to discuss learnings and openness to constructive criticism will over time, develop team engagement.  This social exchange develops trust and a reciprocation of benefits.  In the eye of the beholder, perception of mutual obligation develops and how an individual interprets cues and signals from their leader.  No cues and signals, no teamwork, failure to deliver on cues and signals is worse than having no cues and signals at all.

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In summary, our personal reflections on actions for team-work and what makes an effective team (Bold=Bang for Buck):

• Equal recognition for contribution
• Goals should be measurable and defined for those responsible for achieving them
• Achievement, however big or small, should be recognized and celebrated
• Deal with issues face to face
• Commit fully to goals set
• Act emphatically all the time, but don’t carry passengers
• Reduce the documentation you need to justify delivery
• Simplify language
• Reduce the time it takes to get something approved
• Set expectations around quality, time and cost, then trust your team to find the best way to do the work.
• For long-term growth, focus on new ways of behaving, not new ways of working.

These are not new principles.  Check out the biography on Napoleon Bonaparte and one of his quotes was:

‘morale is to physical as three is to one.’

Team engagement and alignment is one of the elements to improve overall performance & offers practical and effective solutions.

You might also be interested in our recent blog on performance based rewards.

You can now register for the JobMaker scheme as announced in the Federal Budget back in October.

(Please note that the following are based on draft Rules as announced by the Treasurer)

Please note that according to the draft Rules, if you would like to claim JobMaker for the first period (7 October 2020 – 6 January 2021), you must register on or before 6 January 2021.

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What is JobMaker?

JobMaker is a new scheme aimed at supporting employers to employ additional people in their businesses, specifically those aged between 16 and 35 years of age. Employers will get reimbursed for each new employee they hire over the period of 7 October 2020 until 6 October 2021. The hiring credit is then available for another 12 months for each of those new jobs (meaning the scheme is set to come to an end on October 6, 2022).

Employers will receive:

• $200 per week for each eligible employee aged between 16 and 29 years of age
• $100 per week for each eligible employee between 30 and 35 years of age

The credit will be capped at the value of the increase in the total payroll for the JobMaker Period over and above the baseline payroll amount (more on this later).

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Am I Eligible?

As an employer, you are eligible to claim the JobMaker you can answer YES to all of the following:

• You are registered for ABN and PAYG Withholding during the relevant JobMaker Period (more on the JobMaker Periods later).
• You are not entitled to receive any JobKeeper payments for the employee during the relevant JobMaker Period.
• You are not a major bank, government agency or entity in liquidation/bankruptcy.
• As at each claim date, your tax and BAS lodgements are up to date.
• You have employed at least one additional employee on or after 7 October 2020, and the additional employee is aged between 16 and 35 years of age on the date of commencing employment. Also, for a period of 28 consecutive days within the 84 days immediately before the commencement of employment with you, the additional employee received either:
  • Parenting Payment;
  • Youth Allowance; or
  • Jobseeker Payment.
• Each additional employee must give you a completed JobMaker Hiring Credit Employee Notice, confirming eligibility.
• You had an increase in employee headcount, meaning the number of employees employed by you at the end of each JobMaker Period is higher than the number of employees in your baseline headcount. Your baseline headcount is your headcount on 30 September 2020 for the first year of JobMaker. All employees are included in the headcount, including full-time, part-time, casual, fixed-term and non-fixed-term employees. However, it excludes contractors.
• The additional employee’s average hours of work (including paid absences) across the JobMaker Period is equal to or greater than 20 per week.
• The additional employee is not a related party (e.g. a trustee, beneficiary, shareholder or director of the employing entity, or a relative of these parties).
• In the six months immediately before 6 October 2020, the additional employee was not engaged otherwise by you to perform substantially similar duties (e.g. as an independent contractor).
• Please note that eligibility for each JobMaker Period is assessed independently. This means you can become eligible at any point during the program.

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JobMaker Periods & Claim Periods

The program has eight quarterly JobMaker Periods, each with a corresponding Claim Period. The Claim Period is the time within which you must submit a form to the ATO through its online services (e.g. the Business Portal or the Tax Agent Portal) in order to receive the JobMaker for the relevant period.

The JobMaker Periods and related Claim Periods are as follows:

How do I register?

Before you can make a claim for JobMaker, you must first register your intent to claim with the ATO through the ATO’s online services (e.g. the Business Portal or the Tax Agent Portal). This registration must be completed before the end of your first applicable Claim Period. This means if you intend to claim JobMaker for the first JobMaker Period (7 October 2020 – 6 January 2021), you must register on or before 6 January 2021.

In the registration, you will need to declare:

• The total number of employees employed as at 30 September 2020 (the “baseline headcount”);
• The total payroll for the quarter up to 6 October 2020 (the “baseline payroll amount”).

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How do I claim?

For each JobMaker Period, an online form needs to be lodged with the ATO before the end of the corresponding Claim Period.

As part of this form, the following information will need to be declared:

• The baseline payroll amount, if it changes from the amount declared as part of the initial registration;
• The total payroll amount for the relevant JobMaker Period;
• The total number of employees employed at the end of the JobMaker period.

The online form will rely upon information submitted to the ATO via Single Touch Payroll (STP), including the dates on which eligible employees commenced and/or ceased employment. It is therefore important that you ensure that your outstanding STP filings are lodged with the ATO at least 3 days before the end of each Claim Period, as it can take up to 3 days for these to be processed.

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What happens after this?

Once the online form is submitted, the ATO will calculate and pay JobMaker to you. The amount of the credit depends on the number of additional employees throughout the relevant JobMaker Period compared to the baseline headcount, along with the ages of the additional employees ($200 per week for employees aged 16-29 year and $100 per week for employees aged 30-35). However, the credit will be capped at the value of the increase in the total payroll for the JobMaker Period over and above the baseline payroll amount. Please contact us if you would like to know how this cap may affect your claim.

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What Do I Do Next?

The first step is to assess your eligibility to claim JobMaker in the first JobMaker Period.

The team at MGI South Queensland is available to assist you to assess your eligibility and navigate the complexity of the scheme. We are also able to assist you with lodgement of the registration form and quarterly claims.

If you need assistance understanding or actioning this new program, do not hesitate to contact us.

The Queensland State Government has recently announced a potentially significant stamp duty exemption for small business restructures.

Often, people going into business for the first time may set up as a sole trader, partnership or family trust. As the business grows this structure may no longer be the best option, particularly with small business company tax rates reducing to 25% from next financial year. In the past, it has been a potentially costly and complicated process to transfer business assets out of these structures and into a company.

The above concessions significantly simplify this process and remove the potentially costly stamp duty impost. Here is a summary of the new concessions:

Eligibility

• The business assets being transferred must have a value of less than $10m.
• The transferring entity must have a turnover of less than $5m.
• The concession applies to all business asset including commercial property, but not residential property.
• The transferee entity must be a company that has not traded before (i.e. a newly incorporated company).
• Underlying ownership of the recipient company immediately after the transfer must be the same as the previous ownership.

The above concessions now provide significant flexibility for businesses currently operating as a sole trader, partnership or trust structure to “rollover” into a company structure. This can have a number of benefits including:

• Potentially lower tax rate.
• Enabling outside investor shareholders.
• Ability to retain profits in order to fund growth.
• Provide asset protection.
• Simplify the business structure.

It is important to note that the legislation to implement these changes have not yet been passed by the Queensland Parliament, however will have retrospective effect from 7th September 2020. It is possible that there may be some minor changes to the above eligibility requirements so we recommend that you contact us before proceeding with any restructure.

Further Information

Please contact the team at MGI South Queensland if you wish to discuss your personal circumstances.