Kaleb Morhaus joined Collins Hume in February 2024 as an undergraduate accountant. Balancing his studies with gaining hands-on experience, Kaleb is quickly grasping his new role in accounting public practice.  Kaleb is from the picturesque town of Skennars Head. His initial venture into the business world was as the Venue Manager at White Bull in Armidale where he combined study with running a pub. During his time there, he took on a semi-bookkeeping role, which sparked his interest in accounting.  At Collins Hume, Kaleb's typical day involves preparing individual and partnership tax returns and Business Activity Statements (BAS) for Peter and Jamie’s team. His role is a blend of learning and applying accounting principles.  For Kaleb, Collins Hume offers a family-friendly environment that supports his academic journey providing study leave and other forms of support, allowing him to balance his education and professional responsibilities effectively. He appreciates the supportive atmosphere and the firm's understanding of the demands of being a student.  Outside of work, Kaleb is active in his community. He plays soccer for Lennox Head Football Club  and is an avid supporter of Liverpool FC. Apart from study commitments, his personal life is filled by spending time with his girlfriend and their puppy, enjoying our beautiful beaches and making a return to a coastal lifestyle.  At Collins Hume, Kaleb is not just building his career but also contributing to a supportive and dynamic workplace. We look forward to seeing Kaleb's continued growth and achievements in the field of accounting.  —  Kaleb is currently pursuing a Bachelor of Business at Southern Cross University (SCU) and has earned his certification as a Xero Certified Advisor. This certification underscores his proficiency with one of the leading accounting software platforms, already making him a valuable member of the team at Collins Hume.

Empowering Your Future Mentorship can be a critical component of any busin ess By fostering a culture of continuous learning and professional growth, mentorship programs enhance the skills and knowledge of talent, ensuring the long-term success of your business.  The Importance of Mentorship  Navigating the complexities of any industry requires a deep understanding of current standards, regulations and best practices. Mentorship bridges learning and/or experience gaps by providing guidance, support and practical insights not always covered by theory or acquired through work experience alone.  Accelerating Skill Development  Mentors help business owners develop essential technical skills relevant to their field. Through hands-on training and real-world applications, mentees gain a deeper understanding of key concepts, enabling them to apply their knowledge more effectively and efficiently.  Enhancing Soft Skills  In addition to technical skills, mentors also help develop crucial soft skills, such as communication, problem-solving, customer service and process management. These skills are vital for progression and success, as they enable business owners to work effectively in teams, manage stakeholder relationships and navigate complex projects.  Fostering Professional Growth  Mentorship provides a platform for business owners to set career goals, receive constructive feedback and build professional networks. Mentors offer valuable advice on career progression, industry trends and emerging opportunities, helping mentees make informed decisions about their business direction and develop a clear vision for the future.  Benefits for the Business  Mentoring programs are beneficial not only for business owners but also for the business itself. Those that invest in mentorship see numerous advantages, including:  1. Improved Employee Retention  Recruiting and retaining talent is a constant challenge. By providing mentorship, business owners can create a supportive and engaging work environment that encourages talent to stay and grow. This leads to increased employee loyalty and reduced turnover.  2. Enhanced Company Reputation  Businesses known for their strong mentorship programs often attract top talent. Professionals seek out companies that offer robust support systems and opportunities for growth. A reputation for excellent mentorship can give businesses a competitive edge in a tight talent market.  3. Development of Future Leaders  Mentorship helps identify and nurture future leaders within a business. By investing in their development, business owners can build a pipeline of skilled and motivated individuals prepared to take on leadership roles in the future.  Introducing Strategy360 for Business Owners  Working with Collins Hume as a mentor offers numerous benefits. We tailor our solutions to your precise needs, designed to improve business performance, minimise risks, boost business value, advance strategic initiatives and execute plans effectively. Our approach ensures that your business receives targeted support and guidance, ultimately leading to enhanced success and growth.  We take the complexities of business and simplify them. Customising and collaborating with business owners, we help focus on achieving meaningful outcomes aligned with their specific objectives.  We understand business. We have worked with hundreds of business owners covering all aspects of their business from set up to sale. We know that being a business owner can be difficult and often lonely. We offer helpful and holistic support for business owners and can be that sounding board you need to ensure you make informed decisions.  Mentoring business owners is a vital investment in the future of your business. By providing guidance, support, and opportunities for growth, mentorship programs help business owners develop the skills and confidence needed to succeed.  Elevate your business to new heights. Contact Nathan McGrath  on 02 6686 3000 for an obligation-free discussion on how Collins Hume can help you tailor a mentoring program to suit your specific requirements.

A Fresh Start to the New Financial Year  As we usher in the new financial year, it's an opportune time to reflect on evolving workplace dynamics.   The hustle culture of the early 2000s has gradually given way to a focus on flexibility, mental well-being and maintaining a healthy work-life balance. These changes are not just trends; they are essential strategies to optimise staff performance and align with the priorities of future generations.  Integrating Flexibility into Your Business Plan  In today's work environment, many employees value flexibility over additional financial compensation. To attract and retain top talent, it's crucial to incorporate flexibility into your business plan. This might involve offering flexible working hours, where employees can start and finish their day according to what suits them best. Such practices instil trust and boost morale, as employees feel empowered and respected.  Hybrid and Remote Working Models  The adoption of hybrid working models has become widespread, allowing staff to split their time between the office and home. This approach, which gained momentum during the pandemic lockdown, continues to provide comfort and satisfaction to many workers.   Businesses have successfully transitioned to digital collaboration tools like Zoom, Slack and Teams, making remote work not only feasible but often preferable. Some are even embracing a "Work From Anywhere" (WFA) policy, enabling employees to work from any location, be it during a holiday or an overseas trip.  Prioritising Mental Well-Being  Mental well-being is paramount for any thriving business. Addressing burnout and stress through supportive measures can significantly benefit both the business and its employees.   Offering personal leave for mental health days, providing access to prepaid psychologists and mental health apps like Headspace, and incorporating mental well-being activities such as group yoga or hiking into team bonding sessions are all effective strategies.  Navigating the Challenges of High-Density Workloads  Certain industries (accounting is one) face unique challenges due to regulatory deadlines and client demands. However, the shift towards flexible and remote working is often easier in these sectors due to their digital nature.   Allowing employees to work from home or adopt a hybrid model can help mitigate stress and maintain productivity. Surveys by FlexJobs indicate that 66% of workers prefer remote work post-pandemic, and 75% recognise that work-related stress impacts their mental health. By fostering a better work-life balance, businesses can address these concerns effectively.  Supporting Employees During Peak Seasons  During peak seasons, workload and stress levels can soar. It's crucial to apply the flexibility and mental health strategies above to support your employees. Providing a reprieve during high-density periods can maintain morale and productivity, ensuring that your staff remain motivated and your business continues to thrive.  As we navigate the new financial year, prioritising flexibility and mental well-being is not just beneficial but necessary for modern businesses. By embracing these principles, you can enhance employee satisfaction, boost morale and create a resilient, productive workplace. Investing in your team's well-being will yield dividends in the form of loyalty, motivation and overall business success.

A game-changing Virtual Event with B1G1's Paul Dunn If you missed out, you can still experience something seriously game-changing. And it impacts every single area of your business in the most positive of ways. The title of the event says it well: “ The Impact Event: How to Transform Your Business — for good. ” And there’s never been a better time than now for that to happen. Experience 55-magical minutes of insights and actions with global business leader and TEDx presenter, Paul Dunn. Paul takes you on a fast-paced and exhilarating journey to new simple-to-attain peaks of performance across 4 crucial areas of your business: To move from standard to standout To exit the Sea of Sameness once and for all How to achieve extraordinary things in your business by applying what Paul calls ‘the HUGE Power of Small — tiny, tiny things you’ve most likely been missing make a massive difference How to ‘connect’ in brand new ways and the very specific impact this has on everyone (including you) who interacts in any way with your business. To learn more about how Collins Hume is a purposeful business, please visit https://www.collinshume.com/legacy . If you're interested in being a giving business, give us a call on 02 6686 3000. Watch The Impact Event

Mandatory Income Reporting for Sharing Economy Earners ATO Tightens Oversight with New Reporting Requirements for Platforms Like Airbnb and Uber. It’s essential that any income earned from sharing economy platforms such as Airbnb, Stayz, Uber, etc. is declared in your tax return. Since 1 July 2023, the platforms delivering ride-sourcing, taxi travel, and short-term accommodation (under 90 days), have been required to report transactions made through their platform to the ATO under the sharing economy reporting regime. 2023-24 is the first year that the ATO will have the income tax returns of taxpayers to match to this data. All other sharing economy platforms will be required to start reporting from 1 July 2024. This reporting regime, combined with the ATO’s data matching programs, mean that if income is not declared, it’s likely you will receive a “please explain” request from the regulator. Call the Collins Hume team in Ballina on 02 6686 3000 if you have any queries about sharing economy income.

Owning a business is a journey filled with opportunities and challenges. One of the most critical aspects of navigating this journey successfully is effective planning. Whether you're a seasoned entrepreneur or just starting, planning can significantly impact your business's profitability, cash flow, and overall lifestyle. Here’s why planning is indispensable for business owners.   Knowing the Results of a Financial Decision Before You Make It Financial decisions can make or break your business. Before committing to any significant financial move, it's crucial to understand its potential impact. This involves:   Forecasting: Use financial models to predict the outcomes of your decisions — this helps you anticipate cash flow needs, profitability, and potential risks Scenario Analysis: Evaluate different scenarios to see how changes in variables (like sales volume or costs) affect your business to prepare you for various outcomes and helps you make informed decisions Budgeting: Create detailed budgets to track your income and expenses to ensure you have a clear picture of your financial health and can make adjustments as needed.   By knowing the results of a financial decision beforehand, you can avoid costly mistakes and ensure your business remains on a stable financial footing.   The Importance of Having a Business Mentor A business mentor can be an invaluable asset. Here’s why:   Experience and Expertise: Mentors bring a wealth of experience and knowledge — they can provide insights that you might not have considered and help you avoid common pitfalls Objective Feedback: A mentor offers an external perspective, providing honest and constructive feedback, which can help you refine your ideas and strategies Networking Opportunities: Mentors often have extensive networks so they can often introduce you to potential partners, clients or investors, opening doors that might otherwise remain closed.   Having a mentor to bounce ideas off can accelerate your business growth and help you navigate complex challenges more effectively.   Knowing the Value of Your Business for Succession Planning Understanding the value of your business is crucial, especially if a succession event is on the horizon. Here’s why:   Accurate Valuation: Knowing your business's worth ensures you get a fair price if you decide to sell or transfer ownership Succession Planning: A clear valuation helps in planning for succession, whether passing the business to a family member or selling it to an external party and ensures a smooth transition and continuity Financial Planning: Understanding your business's value aids in personal financial planning, helping you secure your financial future post-succession.   Regularly valuing your business keeps you prepared for any eventuality and ensures you can make informed decisions about its future.   How Business Planning Can Improve Profit, Cash Flow and Lifestyle Effective business planning can lead to significant improvements in profit, cash flow, and overall lifestyle. Here’s how:   Profitability: Planning helps you identify profitable opportunities and streamline operations by setting clear financial goals and strategies that can focus you on activities that drive profit Cash Flow Management: Good planning involves monitoring and managing cash flow, and ensures you have enough liquidity to meet your obligations and invest in growth opportunities Work-Life Balance: A well-thought-out business plan can improve your lifestyle by reducing stress and workload. By delegating tasks, automating processes, and setting boundaries, you can achieve a better work-life balance.   Planning is a cornerstone of successful business ownership. It enables you to make informed financial decisions, leverage the expertise of mentors, prepare for succession events, and improve profitability, cash flow and lifestyle. By prioritising planning, you set your business on a path to sustained success and personal fulfilment.   Elevate your business to new heights. Contact Nathan McGrath  on 02 6686 3000 for an obligation-free discussion on how Collins Hume can help you achieve a better performing business and lifestyle.

The main residence exemption exempts your family home from capital gains tax (CGT) when you dispose of it. But, like all things involving tax, it’s never that simple. As the character of Darryl Kerrigan in The Castle said, “it’s not a house. It’s a home,” and the Australian Taxation Office’s (ATO) interpretation of a main residence is not fundamentally different. A home is generally considered to be your main residence if: It's where you and your family live Your personal belongings have been moved into the dwelling It is where your mail is delivered It’s your address on the electoral roll You have connected services such as telephone, gas and electricity (in your name); and It is your intention for the home to be your main residence. The length of time you have lived in the home is important, but there are no hard and fast rules. Your intention takes precedence over time spent as every situation is different. When does the main residence exemption apply? In general, CGT applies to the sale of your home unless you have an exemption, partial exemption, or you can offset the tax against a capital loss. If you are an Australian resident for tax purposes, you can access the full main residence exemption when you sell your home if: Your home was your main residence for the whole time you owned it (see Can the main residence apply if you move out?) and You did not use your home to produce any income (see Partial exemption below) and The land your home is on is 2 hectares or less. If your home is on more than 2 hectares, for example on farmland, the exemption can apply to the home and up to 2 hectares of adjacent land. Partial exemption If you have used your home to produce income, you won’t normally be able to claim the full main residence exemption, but you might be able to claim a partial exemption. Common scenarios impacting your main residence exemption include: Running a business from home (working from home is ok), and Renting the home or part of the home. In these scenarios, from the time you started to use the home to generate income, that part of the home is likely to be subject to CGT. And, a word of caution here, as of 1 July 2023, platforms such as Airbnb must report all transactions to the ATO every 6 months. This data will be used to match against the income reported on income tax returns. Foreign residents and changing residency Foreign residents cannot access the main residence exemption even if they were a resident for part of the time they owned the property. If you are a non-resident at the time you enter into the contract to sell the property, you are unlikely to be able to access the main residence exemption. Conversely, if you are a resident at the time of the sale, and you meet the other eligibility criteria, the rules should apply as normal even if you were a non-resident for some of the ownership period. For example, an expat who maintains their main residence in Australia could return to Australia, become a resident for tax purposes again, then sell the property and if eligible, access the main residence exemption. It’s important to recognise that the residency test is your tax residency, not your visa status. Australia’s tax residency rules can be complex. If you are uncertain, please contact us and we will work through the rules with you. Can the main residence apply if you move out? You might have heard about the ‘absence rule’. This rule allows you to continue to treat your home as your main residence for tax purposes: For up to 6 years if the home is used to produce income, for example you rent it out while you are away; or Indefinitely if it is not used to produce income. When you apply the absence rule to your home, this normally prevents you from applying the main residence exemption to any other property you own over the same period. Apart from limited exceptions, the other property is exposed to CGT. Let’s say you moved overseas in 2020 and rented out your home while you were away. Then, you came back to Australia in 2023 and moved back into your house. Then in early 2024, you decided it is not your forever home and sold it. You elected to apply the absence rule to your home and didn’t treat any other property as your main residence during that same period. In this case, you should be able to access the full main residence exemption assuming you are a resident for tax purposes at the time of sale. The 6 year period also resets if you re-establish the property as your main residence again, but later stop living there. So, if the time the home was income producing is limited to six years for each absence, it is likely the full main residence exemption will be available if the other eligibility criteria are met. Timing Your home normally qualifies as your main residence from the point you move in and start living there. However, if you move in as soon as practicable after the settlement date of the contract, that home is considered your main residence from the time you acquired it. If you buy a new home but haven’t yet sold your old home, you can treat both properties as your main residence for up to six months without impacting your eligibility to the main residence exemption. This applies if the old home was your main residence for a continuous period of 3 months in the 12 months before you disposed of it and you did not use your old home to produce income in any part of that 12 months when it was not your main residence. If the sale takes more than six months and if eligible, the main residence exemption could apply to both homes only for the last six months prior to selling the old home. For any period before this it might be possible to choose which home is treated as your main residence (the other becomes subject to CGT). If your new home is being rented to someone else when you purchase it and you cannot move in, the home is not your main residence until you move in. If you cannot move in for some unforeseen reason, for example you end up in hospital or are posted overseas for a few months for work, then you still might be able to access the main residence exemption from the time you acquired the home if you move in as soon as practicable once the issue has been resolved. Inconvenience is not a valid reason and you will need to ensure that you have documentation to support your position. Can a couple have a main residence each? Let’s say you and your spouse each own homes that you have separately established as your main residences. The rules don’t allow you to claim the full CGT exemption on both homes. Instead, you can: Choose one of the dwellings as the main residence for both of you during the period; or Nominate different dwellings as your main residence for the period. If you and your spouse nominate different dwellings, the exemption is split between you: If you own 50% or less of the residence chosen as your main residence, the dwelling is taken to be your main residence for that period and you will qualify for the main residence exemption for your ownership interest; If you own greater than 50% of the residence chosen as your main residence, the dwelling is taken to be your main residence for half of the period that you and your spouse had different homes. The same rule applies to your spouse. The rule applies to each home that the spouses own regardless of how the homes are held legally, i.e., sole ownership, tenants in common or joint tenants. What happens in a divorce? Assuming the home is transferred to one of the spouses (and not to or from a trust or company), both individuals used the home solely as their main residence over their ownership period, and the other eligibility conditions are met, then a full main residence exemption should be available when the property is eventually sold. If the home qualified for the main residence exemption for only part of the ownership period for either individual, then a partial exemption might be available. That is, the spouse receiving the property may need to pay CGT on the gain on their share of the property received as part of the property settlement when they eventually sell the property. The main residence exemption looks simple enough but it can become complex quickly. You will need more than a ‘vibe’ to work with the exemption. In the words of the character of Dennis Denuto in The Castle, “it’s the vibe of it. It’s the constitution. It’s Mabo. It’s justice. It’s law. It’s the vibe and ah, no that’s it. It’s the vibe. I rest my case.”

As the new financial year gets underway, it's crucial for business owners to focus on strategies that ensure continued growth and stability. Here are five critical areas to concentrate on for businesses facing the challenges of inflation. 1. Embrace Adaptation Staying competitive requires a willingness to adapt to changing market conditions and customer needs. Inflation presents ongoing challenges, but by being flexible and open to change, business owners can navigate these hurdles effectively. 2. Cost Management Inflation often leads to increased costs for goods and services. To counteract this, scrutinise your expenses and identify areas where you can cut costs without compromising quality. Implementing cost-saving measures can help maintain your profit margins. Watch related video » 3. Pricing Strategies Revisit your pricing strategy to ensure it reflects the current economic environment. Consider incremental price adjustments to balance rising costs while remaining competitive. Transparent communication with customers about the reasons behind price changes can help maintain trust. 4. Strengthen Customer Relationships Customer loyalty becomes even more vital during inflationary periods. Focus on delivering exceptional value and service to your customers. Engaging with them regularly and understanding their evolving needs can foster stronger relationships and repeat business. 5. Invest in Technology Leveraging technology can enhance operational efficiency and reduce costs. Automating routine tasks, utilising data analytics for better decision-making, and exploring e-commerce platforms can streamline your business processes and improve overall productivity. Inflation is a reality that we all must contend with, but by adopting these strategies, businesses can not only survive but thrive. Embrace change, manage costs wisely, adjust pricing strategies, build strong customer relationships and invest in technology to position your business for success in the new financial year. Elevate your business to new heights. Contact Nathan McGrath  on 02 6686 3000 for an obligation-free discussion on how Collins Hume can help you achieve a better performing business and lifestyle.

Superannuation Guarantee Charge reminder   Have you paid some or all the super contributions late, or haven’t paid the right amount by the due dates?   If you fall into any of these categories, the Tax Office will reach out to you directly, by phone or letter, to advise that you need to lodge superannuation guarantee charge (SGC) statements for the relevant periods.   Even if you’ve since paid the late or underpaid SG contributions to your employee’s fund, the Tax Office will still require you to lodge an SGC statement and pay the SGC to the Tax Office.   The Tax Office will also notify your tax agent, as a courtesy, when their client has been identified as not meeting their obligations and will provide a copy of the letter sent to you for their reference.   It is your responsibility to address this issue with the ATO, so please contact us for advice if you have questions or concerns on 02 6686 3000.

The ATO has warned that it is looking closely at how trusts distribute income and to whom. The way in which trusts distribute income has come under intense scrutiny in recent years. Trust distribution arrangements need to be carefully considered by trustees before taking steps to appoint or distribute income to beneficiaries. What does your trust deed say? An area of concern is that trustees are not considering the trust deed before income is appointed. The answer to what the trust can do, and who it can allocate income to and how, is normally in the trust deed. This should be your first point of call. Review your deed Conduct a review of the trust deed and any amendments to ensure trustees are making decisions consistent with the terms of the deed Check the trust vesting date. The trust deed will specify what happens when the trust vests. If the trust vests, the trustees might be directed to distribute the income and property of the trust to particular beneficiaries. The trustee may no longer have the discretion to decide who to appoint income or capital to Check who the intended beneficiaries are, and also keep in mind that some beneficiaries might have different entitlements to income and capital under the trust deed Timing and requirements for resolutions - Check the deed for any conditions and requirements for trustee resolutions, including the need to have the resolution in writing and the timing of when it’s required to be made. For example, the deed might require trustees to take certain actions before 30 June If you are looking to stream capital gains or franked distributions to certain beneficiaries, check the trust deed doesn’t prevent this and the streaming requirements have been met. Family trust and interposed entity elections A family trust election helps wrap the workings of the trust around a specific individual’s family group. These elections can help protect trust losses, company losses, and franking credits but can also cause significant tax problems if they are used incorrectly. An interposed entity election makes an entity a member of the family group of an individual. Where these elections are in place, it is essential that trustees understand the implications before making any decisions on distributions. Distributions of trust income outside the specified individual’s family group will trigger family trust distribution tax at penalty rates. Who receives the benefit? The ATO is also on the lookout for arrangements where amounts are allocated or appointed to beneficiaries, but they don’t receive the real financial benefit of the distribution. If the arrangement has the effect of reducing the overall tax paid on the income of the trust, then this will normally increase the level of risk involved and attract the ATO’s attention. Increased reporting on tax returns Changes have been made to capture more information on the tax return about how trusts distribute income. These include: Trust tax return – four new capital gains tax labels have been added. This information should be provided to beneficiaries to match what is reported in their returns. Beneficiaries – all beneficiaries of trust income will be required to lodge a new trust income schedule. This schedule should align to your distributions as set out in the trust’s statement of distribution. Trusts can be an excellent vehicle for many reasons including the flexibility to determine how income is distributed. The cost of that flexibility is strong controls and compliance. The ATO is increasingly strident about how trusts are distributing income, and the tax impact of those distributions. It’s important for trustees to get it right because if trust distributions are found to be invalid, the tax ramifications can be significant. How to contact us We’re available to assist you with trust distributions. Contact  Collins Hume Accountants & Business Advisers in Ballina on 02 6686 3000 (Byron Bay by appointment). Collins Hume clients can book here »

Do your kids really want to take over your business? Generational succession - handing your business across to your kids or family - sounds simple enough but, many families end up in a dispute right at the point when the parents, business, and children are most vulnerable. It’s important that generational succession is managed as closely and diligently as if you were selling your business to a stranger to avoid misunderstandings and disputes. If you are looking to hand your business to your children or relatives, there are a few key issues to think about: Capability and willingness of the next generation – do your kids really want the business? There needs to be a realistic assessment of whether or not the business can continue successfully after the transition. In some cases, the exiting generation will pursue generational succession either as a means of keeping the business in the family, perpetuating their legacy, or to provide a stable business future for the next generation. All of these are reasonable objectives, however, they only work where there is capability and willingness. The alternative scenario can also exist where generational succession is pursued by the younger generation. In some cases, it’s seen as their birth right. In these cases, the willingness will exist but this does not automatically translate to capability. Capital transfer – how much money needs to be taken out of the business during the transition? What level of capital do the current business owners, generally the parents exiting the business, need to extract from business at the time of the transition? The higher the level of capital needed, the greater the pressure that will be placed on the business and the equity stakeholders. In most cases, the incoming generation will not have sufficient capital to buy out the exiting generation. This will require the vendors to maintain a continuing investment in the business or for the business to take on an increased level of debt. In many cases, the exiting generation will want to maintain a level of equity investment. This might be a means of retaining an interest in the business or alternatively staging their transition. In either case, it is important to map the capital transition both from a business and shareholder perspective. This needs to be documented and signed off firstly from the business’s perspective and then by both generational groups. No generational transition should be undertaken without a clear and agreed capital program. Income needs – ensuring remuneration is on commercial terms In many SMEs, the owners arrange their remuneration from the business to meet their needs rather than being reasonable compensation for the roles undertaken. This can result in the business either paying too much or too little. Under a generational succession, there should be an increased level of formality around compensation to directors and shareholders. Compensation should be matched to roles and where performance incentives exist these should be clearly structured. Operating and management control Once the capability and capital assessments have been completed, it is important to look at the transition of control. This can be a very sensitive area. It’s essential to establish and agree in advance how operating and management control will be maintained and transitioned. The plan for operating and management control should be documented and signed off by all parties with either timelines for time driven succession or milestones for event-focussed transitions. Transition timeframes and expectations Generational succession is often a process rather than an event and achieved over an extended period of time. The critical issue is to identify and ensure that all parties have a common understanding and acceptance of the time period over which the transition will take place. This should be included in the documented succession plan. The need for greater formality and management structure Generational succession often requires a greater level of formality in the management and decision making process. This formality should achieve a separation of function between management, the Board, and shareholders. Often in an SME business, these roles merge and there are no clear dividing lines or boundaries. Roles, responsibilities, and clear key performance indicators (KPIs) for management should be agreed and documented. Planning for the future? Unsure how to sell your business or even what it might be worth? Trust Collins Hume for seamless business values and succession. Speak with our Strategy360 team on 02 6686 3000 for expert advice on maximising your sale value.

Defining and achieving your ‘budget goals’ As businesses are currently setting their budgets (or should be soon) this is an excellent time to put some basic business budgeting theory into practice. Whether you’re planning your budget for the next six months or full financial year, the specific framework remains the same. Instead of focusing on revenue targets, start with a straightforward approach that aligns your budgeting process with your ultimate goals. This simple yet effective framework will set you on the path to achieving your financial objectives. As we kick off another financial year, there are two main principles for your budgeting that will help you meet your profit goals. Principle 1: Focus on the bottom line The first principle is to determine what you want your bottom line to be at the end of the year. Don’t get bogged down with sales targets, staffing, or marketing details just yet. Ask yourself, "What is the profit I must achieve over the next 12 months?" Set a specific profit target: Whether it’s $100,000, $500,000 or $2 million, having a clear, specific target is essential Work backwards from the target: Once you’ve set your profit goal, plan everything else around achieving this number. For example, if you aim for a $500,000 profit, identify all your overhead expenses for the year. Let’s say your overheads amount to $1.5 million. This means you need a gross profit of $2 million to cover your overheads and achieve your profit target. Principle 2: Set a gross profit target Gross profit, defined as revenue minus direct costs, is the second critical element. Determine how you can generate the required gross profit given your current resources and market conditions. Assess overhead expenses: Calculate all overheads you’ll need to invest in for the year. In our example, this is $1.5 million Target gross profit: To achieve a $500,000 profit with $1.5 million in overheads, you need a gross profit of $2 million. Optimise Resource Utilisation With a clear gross profit target, evaluate how you can generate the necessary revenue using your existing resources. Consider: Product offerings: What products or services can you offer to maximise gross profit? Selective clientele: Determine who your ideal customers are and be willing to say 'no' to any who don’t fit this profile. High demand can lead to unrealistic expectations, making it essential to maintain a strong business positioning. For example, not everyone can afford a Louis Vuitton product, which is positioned at a premium price point. Similarly, your business needs to be selective about who you serve to maintain high gross profit levels. Balance Capacity and Demand Be strategic about your capacity and the demand you’re meeting. Saying ‘yes’ to every customer may keep your team busy, but it can compromise your profitability and distract you from your financial goals. Maintain high GP levels: Ensure your offerings provide the highest possible gross profit Capacity management: Balance your team's capacity with demand to maximise gross profit without overextending your resources. Being selective and focusing on high-value customers ensures you can achieve the necessary gross profit to cover overheads and reach your profit goals. By setting a clear bottom line and focusing on gross profit targets, you can strategically plan for the 2025 financial year. Remember to: Set a specific profit target and plan backwards from it Determine the required gross profit and optimise your resources to achieve it Be selective about customers and maintain high gross profit levels Balance capacity and demand to maximise profitability. Implement these principles to ensure a successful and profitable financial year. Elevate your business to new heights. Contact Nathan McGrath on 02 6686 3000 for an obligation-free discussion on how Collins Hume can help you achieve a better performing business and lifestyle.