by Jodie | May 13, 2016 | In The Media
o you have a strategy for when things don’t go according to plan?
How fantastic would it be if life just rolled along in accordance with our Plan A and nothing ever went wrong?
Unfortunately, you’ve probably experienced the need for a Plan B at some stage in your life, or even wondered if all those other letters in the alphabet might get a run as well. As a business owner, what can you do when things don’t go quite according to plan?
You’ve likely heard of contingency planning, but most aren’t really sure what it is or how it could apply in their business.
What Is a Contingency Plan?
Basically, it’s a course of action designed to help you respond effectively to a future event or situation that might (or might not) occur – your very own Plan B. These risks can appear at any time and managing (and minimising) risk is an essential part of business planning.
This document will become your own personal ‘risk register’ to record potential problems, identify how serious they could be, what costs may be required, who will fix them and how.
How Do I Create the Plan?
- Develop the policy statement
- Conduct a business-impact analysis
- Identify pre-emptive measures
- Create alternate strategies
- Develop detailed guidance and procedures
- Ensure it will work
- Maintain the plan
The policy statement begins the formal process of planning. It provides the guidance needed throughout your plan. This will evaluate the true level of risk to your business so you are able to properly manage it.
Next, identify which systems are critical to supporting your business function. Is the risk of a major or minor impact, and is it preventable? As an example, it may be a simple as: if there’s a situation with no electricity, what can you do?
Then come up with measures to reduce the effect of disruptions and minimise the costs. Can you be in an area or building where power supply is regular and mostly guaranteed? Is a generator something that could assist with power outages? And if so, is it a financially sound investment?
What are some contingencies for when things go wrong? Basically, what will you do if the worst does happen? Come up with some thorough strategies to ensure you can recover quickly after a disturbance. Will you shut up shop and go home if there’s no power? Can you manually take payments to process later? Will you need additional security? What will work best for your business? Your plan needs to detail exact procedures for what needs to happen and guidance to minimise the impact of interruptions.
Testing the plan can highlight gaps and better prepare your business for recovery. Test the plan’s effectiveness and assist your organisation to be ready for any contingency.
Finally, ensure the plan is reviewed regularly to remain relevant and reflect changes as your business grows. This is a living, breathing document that needs to be frequently reviewed and updated.
Other considerations highlighted on the Australian government’s business website under risk management include:
- Interest rate changes
- Delays or shortages in inventory
- Workplace injuries
- Skilled staff leaving the business
- Natural disasters
- New competitors
- Your product becoming obsolete due to new technology
- Customers can switch to a competitor or lose interest in your products
When compiling your register, seek help from those who also have an interest in your business such as your professional business advisor, accountant or bookkeeper, financial advisor or solicitor. They likely have insights into situations you might not have considered, ideas to minimise risk via insurance strategies and helpful tips to include in your plan.
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by Jodie | May 13, 2016 | In The Media
Wouldn’t it be great if fairytales were true? A fairy godmother would wait in the wings for our big moment and then make all our startup dreams come true.
More often than not, when we finally have that light-bulb moment with a great idea that we just know will work, it becomes apparent that we’re not quite sure how to fund it.
Here are five ways entrepreneurs are able to fund startups:
- Self-funding
- Pitch to friends and family
- Venture capitalists
- Grants
- Crowdfunding
Self-funding
Self-funding is the most common method. We take a bet on ourselves and go from there. If you have a good credit history, you may be able to use the equity in your home via a bank loan, a line of credit or even a credit card to get the ball rolling.
If you do go down the self-funding path, it only affects you. This also means that if things go brilliantly, the profits are all yours! Remember, however, that you really have to believe in yourself and be willing to risk your assets and future earnings to cover costs.
Pitch to Friends and Family
If the phrase “beg, borrow or steal” is starting to haunt your dreams as you struggle to get your startup off the ground, friends and family may be your next port of call. Before you go to the professionals, it’s a good idea to seek out those who already believe in you.
But be warned: mixing friends, family and money can be a recipe for disaster! Be very clear about expectations on both sides, repayment time frames and any agreed-upon interest to be paid, as well as profit sharing. And get everything in writing.
Venture Capitalists
Soliciting venture capitalists is another way to help get your startup off the ground. These professional investors put up institutional money (or their own.) You will need a proven business model, a great plan and be ready to scale. They often look for big opportunities that need serious money. Ask around for a warm introduction to have this method work and be sure to do your homework before pitching.
Grants
The government has an allocation of funds set aside to support small businesses, often for new technologies and important causes. Check out the Australia Business Financing Centre to see if your idea is eligible. Grant money can be used to buy equipment, pay for training, fund advertising and more. Chances are they’ll offer unbiased advice to help eligible entrepreneurs in their funding pursuits.
Crowdfunding
Crowdfunding is the newest source of funding where anyone can participate. If you’d like to see how it works, visit Kickstarter. Anyone can make an online pledge to fund your startup during your campaign. They can pre-purchase your product, give donations or qualify for free rewards down the track, such as a t-shirt.
Whichever course you take – and it may be a combination of many – it requires hard work, dedication and commitment on your part. There is no fairy godmother or magic bullet in business. Whatever you decide is likely to be a trade-off between your immediate needs, long-term costs and paybacks, while still considering the levels of ownership and control you’d like.
With so many options out there, isn’t it time you started living the dream?
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by Jodie | May 10, 2016 | Budget, Budgeting, Finances, Savings, Wealth, Women
The average household spends more than $69,000 a year. Neal Vaughan explores the best ways to manage that.
Wondering why you spend almost everything you earn, living from payday to payday and hardly saving? It could be you’re too busy to keep track of your money.
Or you’re refusing the challenge of taking control: the 2014 ANZ Survey of Adult Financial Literacy in Australia, found women aged 28 to 59 years had lower scores than men on financial control, though they were better than men in keeping track of finances.
Women of this age were more likely to have missed a loan or credit card repayment and also more likely to have been unable to save money in most weeks. Greater discomfort with comparable levels of debt appeared to contribute to women’s lower scores on this index,” stated the survey.
In the same year, a study into women and money conducted by RMIT University’s Roslyn Russell and La Trobe University’s Amalia Di lorio found almost 50 per cent of women say they sometimes run out of money completely during the year.
That’s something that financial adviser Amanda Cassar has often seen in her career.
Cassar says “it is a fact that even very successful women generally end up with lower savings than their male counterparts, and with less than half the super savings” according to the 2013 Australian Bureau of Statistics’ gender indicators report of median super balances for women aged 45 to 55.
A financial health check-up with your adviser, and creating a monthly budget will help you save more when you’re earning well.
Get budgeting
So what is the best way to go about setting up your own budget? The first thing to do is to put some time aside to write down all your expenses and incomes.
You may find that with a little extra care you can trim back your outgoings and save more than you thought, so you can start putting your money to work for tomorrow, not just today.
Primary school teacher Sofija Egic considers herself reasonably careful with money. However, she was surprised how easily having a simple budget with set spending limits, plus a regular direct debit to a separate savings account, helped her put a sizeable amount aside each month.
She has just purchased her first investment property with her partner Sam.
“To be honest, we used to spend without thinking. When you’re both flat-out working, it all seems essential until you actually list it down. We spent a Sunday morning working out a formal budget – a set amount for groceries, a limit on what we spent going out, getting a bus instead of a cab home – that sort of thing.”
It may seem a bit dull, but if you go to the Australian Securities and Investments Commission’s MoneySmart budget calculator, you can liven things up by downloading the TrackMySpend app.
You can use this app to track your day-to-day spending, which can alert you when you overspend (based on your pre-set budget limits on certain types of purchases).
ANZ’s budget planner is a detailed helpful tool for you to figure out your income and expenses and in the long term what you can achieve with your savings.
ANZ’s MoneyMinded hub can take you through the budgeting process, using the MoneySmart tools, to help you feel less stressed about the future.
by Jodie | May 3, 2016 | Australian Economy, Budget, Debt Management, Economy, Retirement, Superannuation, Taxation
Treasurer Scott Morrison has handed down his first Federal Budget – the Coalition Government’s third. The winners are low and middle income earners, unemployed youth and small business, and there are significant changes to superannuation.
Note: These changes are proposals only and may or may not be made law.
Summary
- A lifetime cap on non-concessional (after-tax) superannuation contributions of $500,000 will apply from 7.30pm on 3 May 2016.
- The income tax threshold at which the 37% tax applies will increase to $87,000 pa on 1 July 2016, from the current $80,000 pa.
- The tax rate that applies to small business companies will reduce to 27.5% for businesses with a turnover up to $10 million in 2016/17. Further tax concessions will apply in future financial years.
A range of superannuation measures will also apply from 1 July 2017.
- The annual cap on concessional (pre-tax) super contributions will reduce to $25,000, regardless of age.
- Concessional super contributions may exceed the annual cap if certain conditions are met.
- Those aged between 65 and 74 will be able to make super contributions regardless of whether they work or not.
- Tax deductions will be able to be claimed for personal contributions regardless of employment status.
- A lifetime limit of $1.6m will be placed on the amount of superannuation that can be transferred to start pensions.
- Earnings on investments held in ‘transition to retirement’ pensions will be taxed at 15% (currently 0%).
If you’d like to read more, click here: FPA Budget Wrap 2016
by Jodie | May 3, 2016 | Australian Economy, Economy, Finances, Investments
Australians have long been attracted to property as an investment. But we also tend to have a blind spot when it comes to the costs of owning it.
Property holds a special place in the hearts and minds of Australians. But do we let our love for property cloud its true value as an investment?
A strong property market, low interest rates and generous tax breaks have all been magnets for property investors in recent years. The challenge for property investors is making sure you’re weighing up the performance of your investment against what it’s really costing you to own it.
So what are the costs of owning an investment property?
1. Upfront costs
If you’re looking to borrow to fund your property investment, the starting point with many lenders is a 20% deposit. On a $600,000 property, that’s $120,000. If your deposit is less than 20%, you may need to pay Lenders Mortgage Insurance – which can be a significant one-off cost.
Typically the biggest cost when buying a property is stamp duty, which varies from state to state but is close to $23,000 on a $600,000 property in NSW[1].
Add to this legal fees ($1,500-$3,000), building and pest inspections ($300-$500) – potentially for multiple properties – bank valuations ($300-400) and loan establishment costs ($500-600).
Add them up, and these costs could potentially add around 5% to the cost of your investment.
2. Ongoing costs
Once the property is yours, you can obviously start using it to generate an income from tenants. The downside is the ongoing costs.
Loan repayments are usually the biggest cost. For example, a $480,000 home loan with a 30-year term and a 6% p.a. interest rate will generate loan repayments of $2,878 per month. And remember that only the interest portion of these repayments is tax-deductible.
Other ongoing costs include council and water rates, strata levies (if applicable) and home and landlord insurance. You may also have to pay land tax for larger or higher-value properties.
3. Exit costs
At some stage you may want to sell your investment to realise the capital growth you have hopefully earned. The major costs here are likely to be real estate agent fees (typically around 2% of the sale price) and capital gains tax (CGT), which is payable at your marginal tax rate.
You may be eligible for a 50% CGT discount if you hold your property for more than 12 months, but CGT can still be a significant expense – particularly for higher income earners.
For example, if you bought an investment property for $600,000 and sold it for $750,000 three years later, 50% of the total capital gain (i.e. $75,000) would generally be subject to capital gains tax. If you’re in the highest marginal tax bracket, that tax bill could be as high as $36,750 (including the Medicare Levy and Temporary Budget Repair Levy).
Property investing for the long term
There’s no doubt astute investors can make good money from investing in property, particularly in favourable market conditions. But it’s essential to weigh up all of the costs associated with buying, owning and selling an investment property.
Generally speaking, property should be looked at as a long-term investment for 5-10 years – giving you time to achieve the capital growth and income you need to average out the costs and make it a successful investment.
[1] http://stampduty.calculatorsaustralia.com.au/stamp-duty-nsw
by Jodie | Apr 28, 2016 | Australian Economy, Budget, Economy
Despite much talk, the Federal Government announced over the weekend they won’t be making any changes to negative gearing in the upcoming budget.
The news of course, was met with familiar cries that the tax concession distorts property prices and encourages speculative investing. According to our sources at BlueWealth Property, some of the most vocal criticism came from the Grattan Institute who released a paper titled ‘Hot property: negative gearing and capital gains tax.’
In a break from tradition, the Prime Minister responded to criticism of the announcement in writing, saying that ‘the [Grattan Institute’s] paper is littered with factually incorrect statements, claims that are unsupported by evidence and direct contradictions. And its economic analysis in many places leaves a lot to be desired.’
Mr Turnbull further builds the case for negative gearing by noting the effect of its removal on the rental market and income equality..
It seems most likely that the Liberal, (or Labor government as the case may be) will maintain negative gearing in its current form.
Read the Prime Ministers full response here
For more on the impact of Labour’s policy, click here.
by Jodie | Mar 14, 2016 | Advisers, Business
Well, they say that the only thing constant is change and that’s certainly true, especially for the Team at Wealth Planning Partners in 2016.
Not so long ago, we had five advisers on the team, and this is now down to three.
Chad Enstrom has decided to leave the financial services industry and move on to follow his dreams, and Russell Sheasby has started his own company with a new Dealer.
That leaves Leanne Brazel, Richard LeComte and Amanda Cassar at Wealth Planning Partners, continuing to take care of your financial needs.
Amanda has recently completed her SMSF Specialist Adviser Accreditation with the SMSF Association and attended their annual conference in Adelaide, jam packed with technical data and learnings. If a Self Managed Super Fund is something you’ve been thinking about, she’s the one to ask!
Richard continues to specialise in Insurance Risk strategies for his clients and without Leanne, the office just wouldn’t run as it should.
We’re quite proud that Leanne was recently nominated for Practice Manager of the Year at the FSP iLearn conference in Melbourne and we’re pleased to announce she was a finalist in her category.
An Award that took the Team by surprise was Amanda winning the Casey Kinnaird Memorial Award for Outstanding Contribution to the Community for the work done over the past 12 months with The Hunger Project.
It’s also now heading close to the end of financial year, so if you’ve been thinking about topping up your super, salary sacrifice or making the most of some tax deductions, now’s the time to get in and get the ball rolling. Don’t hesitate to give us a call if you’d like to discuss any strategies that are relevant to your situation.
by Jodie | Mar 14, 2016 | Advisers, Finances, Money, Wealth
We all have good intentions when it comes to our wealth. We want to save more, pay down debt, invest well and do better financially… and yet, most of us never meet our wealth or financial goals.
Other things easily get in the way of our resolutions and we get to another January 1st and give it our best shot for a couple of weeks before petering out yet again.
One of the best things you can do for yourself is to find someone to be accountable to. Who is a friend, colleague, family member or professional who is not going to let you give up, who will check up on you, get you to raise your standards and meet those goals you’ve decided you want to achieve?
People who get their goals, quite often set up consequences for themselves, should they not achieve what they set out to do.
As an example, if you don’t pay $1000 of the credit card by a certain date, tell a friend you will donate some money to a charity and make it painful! $500 not $20. Or you’ll give up one of your favourite things for a month, or something else that’s designed to keep you in line. What’ll hurt enough to keep you motivated?
What is a goal in the area of your personal wealth that you’ve wanted to achieve for years and kept putting off?
Who is the best person that comes to mind who you can ask for help from? Send them an email or call them today! Make things start happening for you!
by Jodie | Dec 17, 2015 | Economy, Interest Rates, US Economy
Well, after much speculation and talk, it’s finally happened, the US have raised interest rates.
Here’s a few fast facts for you:
The US Federal Reserve (Fed) lifted the funds rate at its December meeting by 25 basis points to a target range of 0.25-0.50 per cent.
It is the first rate rise since 2006 and follows solid US economic growth in recent years.
The rate rise was well-flagged by the Fed and marks the first in a series of expected gradual increases in coming years.
While rate rises often signal short-term share market weakness and volatility, long-term returns historically have remained solid amid a stronger economy.
If you’d like to read more and find out what’s happened, what if means for the economy and your investments and where to from here, please click here to read on:
Keeping_in_Touch_US_Fed_Rate_Rise_Dec_2015
by Jodie | Nov 9, 2015 | In The Media
Amanda Cassar has been in financial services since 1991 and is waging a war against the under-insurance issue Australia faces.
Amanda is the Director of Wealth Planning Partners. She holds a masters degree in financial planning and is an AFP® member of the Financial Planning Association, participating in their ‘Ask an Expert’ program. She is the Gold Coast Chapter Chair of the Association of Financial Advisers and a member of the SMSF Association of Australia, and the Million Dollar Round Table.
Amanda believes having a financial plan puts you ahead of the rest, but if it isn’t underpinned by an amazing protection strategy, it can be for nothing. Using “The WPP Way” to help clients ‘secure’ against the unexpected is important, and only then can you safely ‘build’ a great Investment Strategy to ensure future ‘success.’
Amanda Cassar is actively involved with The Hunger Project and their bid to support those suffering from chronic, persistent hunger with a hand-up, rather than a handout. A trip to Uganda highlighted the amazing achievements that can come from having a vision, commitment and an action plan, and she incorporates these strategies into her own life.
