Firm Journal

Raising early stage capital in your business

Raising capital is a step that every startup faces. When a business is brand new, the question of how to get money must be addressed. If you intend to launch a business that needs significant capital expenditure, such as a retail business or a company that employs several other people, then you won’t get far without initial funding. Every investor has pro’s and con’s, and it is best to know what ways will work best for your business.

Friends or family investors:
Going to friends or family members can be the first point of contact to raise capital for your business. Investments from family and friends usually come in the form of loans, which you can arrange to pay back. It’s important to ensure that documents such as a formal business plan and legal agreements are drawn up professionally and to be transparent about expectations surrounding the investment.

Angel investors:
Angel investors refer to wealthy individuals who enjoy helping entrepreneurs in their business ventures. They can be important to a new startup, investing their money in exchange for small ownership of part of the business in an equity investment. However, they can also provide loan investments in the same way as family and friend investors.

Venture capitalists:
One of the most popular forms of startup funding is through venture capital, who are wealthy investors that support small businesses and startups by providing them with capital to grow and expand. Unlike family or friend investors, venture capitalists are generally equity investors with the expectation of a stake in the business.

Posted on 18 March '19, under business. No Comments.

Before selling your business

Deciding to move on from your business can impact a lot of different people. When selling your business, you will need to consider the effects on all areas of operation from the actual transfer of ownership to the impact on day to day operations. While it is easy to get caught up in the price of a sale, you should take the time to reflect on what selling will really mean.

If you have decided that selling is the way you want to go, make sure everything is in the best possible condition for sale. Having all policies, contracts, finances and other relevant information well documented can help to transfer the business a lot smoother and quicker. This will also be appealing to potential buyers as they can look into all business dealings easily and make informed decisions.

Next, you should get a valuation of your business once all the elements are in order. Having a valuation done will help you decide on the right selling price. Getting professional advice for this process will help you get the most accurate figure for all your assets and a detailed look into the market value.

After all this, it is time to put your business on the market. Advertising will greatly help your sale and attract different types of buyers. For this reason, you should be strategic with your marketing, appealing to the buyers you want to sell to. While you have a had your business valued, negotiations will still be a big part of a sale. Prepare yourself with what elements of the sale you are willing to change and what elements are definitive, this will help to determine what negotiations are worth your time. Involving a professional business broker, settlement agent or lawyer in the sale of your business can help prevent problems and make sure the sale is valid.

Posted on 8 March '19, under business. No Comments.

Succession planning for small businesses

Retirement is a big commitment and even more so for those who are self-employed or run their own business. All the factors that go into the decision to retire are magnified with a business to consider. Selling or closing are not the only paths if you choose to move on, this is why succession planning for your business is a great start for you to see where you want to go. For business owners, planning for your business’s future can be the key to its survival after you leave.

With the succession planning process, you will need to set ultimate goals, such as what you want to happen to your business, if you still want a role and what would it be, who should run the business in the future and when you want to leave. To make the best plan for you and your company, know all your assets and liabilities. This will help to value your business so you can calculate shares or a sale price. Having a timeframe and early planning will make it easier to leave comfortably when the time comes. Professional advice at various stages of your planning and exit will greatly help with your strategies as well as documenting your plans, having key decisions written down for advisors or successors to easily access.

Everyone’s retirement needs are different, with no official retirement age in New Zealand, super can start being collected from age 65 in conjunction with you continuing to work part-time or having a smaller role in your business. If moving on completely isn’t for you just yet, you could decide to keep a stake or shareholding to give you an income in retirement. Alternatively, you may decide to still offer advice in a director or consultant role. If this is the case, you and your successor will need to have a discussion about how this process will work. Whatever option you want to go with, seeking professional advice will help you make informed decisions.

Posted on 8 March '19, under super. No Comments.

Challenges your business can face

Owning and running a small business comes with positives and negatives that maintain a balance. When the negative elements start to outweigh the positives, you have a problem. Every business will face challenges along the way, the trick is knowing what they are and how to deal with them.

Clients and customer service:
A business is nothing without its clients but that doesn’t mean they are necessarily easy to work with. In the digital age, everyone is heard, meaning good client relations are vital to having a positive business image. Growing your client base comes from well-planned marketing techniques and knowing what your audiences want from you. There needs to be a healthy balance between supporting your existing customers and sourcing new ones, you should not neglect either area.

Data/Technology:
With technology ever growing, some small businesses can find it hard to keep up. For a business to continue to thrive, it needs to be able to grow and adapt to the changing market. For this reason, many businesses hire younger workers to run their social media because they don’t understand it themselves and expect the younger generation does. While having a dedicated worker to look after areas you may not be familiar with, you should have a basic level of understanding about what this technology is actually doing to aid your business.

Posted on 1 March '19, under business. No Comments.

Invest in your investments

If you are in a position to invest, it can be a great venture to help grow your wealth as well as provide opportunities for others through your contributions.

Before investing though, you need to consider what is the best avenue as there are many aspects of an investment you will need to examine to determine if it is the right fit for you. On a personal level, you will need to make a financial plan, consider risks, establish a timeframe of when you can invest as well as decide how involved in the processes you would like to be. When deciding where to invest, you should consider the following:

Understand the business:
As an investor, you should understand the day to day workings of the business you are contributing to. This will help you when deciding if an investment is the right fit for you. Research not only the particular business or company you are investing in but the industry as a whole so you can properly assess suitability. Make sure there is a market and audience for your type of investment.

Company basics:
Investors are allowed to look at the aspects of businesses that not everyone else can. When your money is involved, you have a right to know many things such as how the company functions, what it earns and how they pay employees. You should also look into whether the company is growing, their tax rates, debts and any other expenses they might have.

Management:
The day to day operations is what will help your investment strive so the management of the company is something to look into. Management history is a good way to gauge consistency, effectiveness and overall satisfaction. There needs to be cohesion between shareholders and management. To ensure this, partner with a management team that you align with which will benefit everyone involved.

Posted on 1 March '19, under money. No Comments.

Payday filing

Payday filing is a new method of submitting and processing employment information to the IRD, meaning you will have to file more information and more frequently. This process will be implemented on 1 April. This system allows software providers to send employment information and changes to employees’ details to the IRD each pay cycle instead of monthly. The due dates for employer deductions filing and payment remains the same as the 20th of each month or if you file twice a month, the 5th and 20th. There are three ways to file online:

  • Direct from payroll software.
  • File upload to myIR.
  • Onscreen in myIR (if you have smaller pay runs).

With this new system, employers will need to file the pay details of employees and other relevant employment information every payday. It is also required to produce new and departing employees’ address information, contact details, etc. You will need to ensure your employees are aware that the information is now requested from the IRD. Filing will now be done electronically, from payday compatible software or through myIR, if your annual PAYE/ESCT is $50 000 or more.

Payday Filling is very straightforward, there are two methods to using the system. Employers can use myIR by going through the payroll returns account through file upload, where payday filing compatible software is required, or online data entry. Alternatively, you can go directly from your payday filing compatible software. With this option, employers will file directly from their software. It should be noted that paper filers can’t shift to Payday Filing before April 2019.

Posted on 1 March '19, under tax. No Comments.

What advertising avenue is best for you?

Without exposure, businesses would come and go very quickly. In this new digital age, there are even more options for how you want to advertise your business. There are a variety of resources, all priced differently so you can pay as much as you want or nothing at all. You will need to be aware of your target audience and what form of media would they consume the most.

Traditional Media:
Traditional media most commonly refers to print, radio or television advertising. Ads in magazines, newspapers, on the radio and the television, are how you would target an older audience. To optimise this advertising medium, have your ads displayed prominently or played at peak times.

New Media:
New media refers to the internet and the various avenues on which you can advertise. Like traditional media, you can by ad space to appear on Google or other pages. Again this is monetarily based. The audience on social media, in particular, is younger and many services, such as Facebook, Twitter and Instagram, offer free business models that highlight all your relevant information for public consumption.

Local Advertising:
On a smaller scale, physical advertising in your area can boost visibility. Flyers or business cards are a good way to get locals to be aware of your presence in the community and can be fairly inexpensive. This form of advertising lets you reach an array of people as well as helping to establish yourself in your local area. If you have more money to spend, consider renting a billboard or a bus stop space for larger scale advertising.

Posted on 21 February '19, under business. No Comments.

Payday loan apps and websites; the pros and cons

Personal loans have become a fast-growing financing option for consumers, with payday apps and websites gaining popularity. For aid between paychecks, payday loans can be very helpful for the pay cycle lull. Taking out a loan is not something to enter into lightly though, there are many variables that should go into your decision-making process. Here are a few pros and cons you should consider before taking out a payday loan

Pros:
Payday loans are named as such because they are basically instant. Once applied, your loan is usually processed and paid out on the same day. This is very helpful if you are in need of money urgently between pay, like a fine or surprise bill for example. For this reason, the loan amounts can often be quite high. Like any other loan provider, the quicker you pay the amount back, the more likely you are to receive a higher loan the next time around. These services track your repayments and can increase funds based on your credit history. Application for payday loans is extremely easy as they are based online. The process is very quick and many payday loan services have app options so you can apply on the go.

Cons:
Any loan you take out will affect your credit rating so it is important to really think about why you need the loan before applying. Frivolous loans can greatly harm your credit score which could make life difficult down the track. With the loan process on these sites, if you are unable to make a full repayment by the agreed deadline, further fees may be charged to you but will not be revealed until you are required to pay. These payday loans often have a high-interest rate due to their instant nature and repayment period.

Posted on 14 February '19, under money. No Comments.

Creating a positive business culture

Business culture is a reflection of what your company stands for, it’s your voice. Employee relations are what establishes this voice and can always be improved. A work environment that everyone enjoys can help to improve performance and productivity. Here are some ways you can help better the culture of your business

Vision:
For a business culture to be established, as the employer you must first decide what that voice will be. Having a clear direction for your business practices is common but for community in the office, a vision for your business culture will help the process. It is your job to help guide your company toward your vision in every aspect of the business.

Lead by example:
Often business owners can be separated from the general culture of the workplace. It is important to show you adopt the values and productivity levels you are expecting of your employees. Integration on this level helps to establish what you expect out of the business and its everyday processes.

Communication:
One of the most obvious points is communication, it is essential in running a business. Good communication is not only needed for basic tasks and management but also key to creating your business culture. If your vision for the business is not effectively communicated then the culture will reflect that.

Feedback:
If you foster an environment that encourages feedback, you get an everyday look into how the culture of your business is or has formed. Feedback to employees is important for their personal growth in the company and practices but when there is a mutual level of communication and trust, their feedback to you can help better your own idea of your business culture.

Posted on 14 February '19, under business. No Comments.

What we can learn from ‘introverted’ people

Most of us fall somewhere in between the introvert-extrovert spectrum but our concept of a great leader often looks to someone who exudes characteristics we often associate with ‘extroverts’ – including being charismatic, confident, and courageous. While these traits are indeed admirable and can be essential to motivate and drive your team, recent research surprisingly suggests ‘introverts’ tend to be better CEOs. In light of this research, we look at some often overlooked traits to expand your concept of great business leadership.

Taking the time to be introspective:
Ensure you don’t underestimate the value of taking the time to self-reflect on certain issues, looking inward for inspiration and judiciously asking in-depth questions to better understand your organisation.

Forming and maintaining deeper connections:
In the age of Linkedin and the increase of networking events, growing your professional network is often a focus of many business professionals. When taking into consideration the notion that humans can only maintain about 150 stable relationships at any given time (Dunbar’s Number), you can consider the value of holding more small-scale events or arranging more one-on-one engagements to better utilise your professional network.

Identifying and accommodating for ‘introverted’ behaviour in the workplace:
While it often ‘takes one to know one’, it doesn’t take much effort to recognise and accommodate introverted behaviour. An effective leader takes advice from all people in the room – not just the ones who happen to speak out. For example, it doesn’t hurt to give a little heads up on issues that are going to be addressed at a meeting. This is so all employees, including ‘introverts’, have the time to process their thinking and prepare talking points.

Posted on 7 February '19, under business. No Comments.