A husband and wife are trustees of a self-managed superannuation fund. Unbeknown to the wife, the husband illegally withdraws all the assets, some $3.4 million, and leaves the country.

The ATO assesses the fund as non-complying, and hits the wife with tax and penalties of $3 million. Although it acknowledged that she was not complicit in the fraud, the Administrative Affairs Tribunal confirmed the tax assessment.

This is a true story.

Lesson: a super fund trustee cannot dodge responsibility by leaving all decisions to the other trustee.

A. We could say that anytime is a fair time to develop a business, but only if you’re fit and ready. However it is interesting to note that many well known companies were started in recessionary conditions – General Electric, IBM, Hyatt, Apple, Fedex, Microsoft, Hewlett Packard, Twitter, Zynga, Groupon – to name just a few. There are logical reasons for this, here’s 7 -

• Good investors recognize (and any business operator is essentially an investor) the need to be counter intuitive in order to obtain an edge. They know that recessionary conditions can offer significant opportunities: assets are cheaper; cycles change and longer term planning carries increased rewards.
• When times are bad, large businesses usually react by cutting variable costs; leaving potential openings for more nimble players.
• Competition reduces and established businesses look for new suppliers.
• Purchasers tend to look for value (not necessarily price driven) and reliability during recessions.
• Service standards are better regarded. Good staff are easier to find.
• Suppliers tend to offer better credit terms once you have a record as a good payer.
• If the recession is partly based on structural grounds, opportunities are available in new industries.

You will need a smart business plan and definite sources of capital to avoid becoming a recession victim.

Q. How does  Investing In Your Own Business  help my business?

A. This ebook reviews the strategies and positioning needed in  order to develop and grow a successful business. It doesn’t offer a magic formula for guaranteed success (there are none) but does take readers through the major factors putting the odds of success in their favour.

Q. Is  Investing In Your Own Business  a business school style textbook, full of accounting and business jargon?

A. No – we have kept the jargon to the minimum. The ebook is as clear & concise as we can make it (in our opinion).

Q. What do you know anyway?

A. We have started, operated and managed several businesses in our time. For 15 years now we have operated Andersen Bowe, an accounting – business – tax consultancy. Over this time we have dealt with dozens of businesses and shared in their mistakes and successes. And also noticed the common threads with both.

Q. Why do you use the word ‘investing’?

A.  Developing a business successfully partly requires an ‘investment’ in capital, commitment, longer term planning and effective positioning.

Positive

• Capital investment continues to power along : mining + 60% last 12 months; manufacturing +29% last 12 months; other industries + 10% last 12 months. These figures are impressive and should lead to profit and productivity growth over the medium term (2-5 years).
• We’re gradually moving away from an unsustainable consumption and residential property boom to a more  sustainable production and export orientated economy.
• Debt levels of large companies have declined significantly; improving potential financial capacity in the medium term.

Negative

• Employment conditions look set to deteriorate over 2012; with unemployment passing 6% +.
• For whatever reason, people are feeling worse off than they really are. Maybe just a phase!
• In contrast to the big end of town, small and medium enterprises (as a group) haven’t reduced debt levels, increasing vulnerability should a severe domestic downturn develop.

Do not argue with an idiot. He will drag you down to his level and beat you with experience.

Knowledge is knowing a tomato is a fruit. Wisdom is not putting it in a fruit salad.

To steal ideas from one person is plagiarism. To steal from many is research.

I didn’t say it was your fault, I said I was blaming you.

Women will never be equal to men until they can walk down the street with a bald head and beergut and still think they are sexy.

You don’t need a parachute to skydive. You only need one to skydive twice.

Going to church doesn’t make you religious any more than standing in a garage makes you a car.

When tempted to fight fire with fire, remember that fire departments usually use water.

1. Excessive shop rents (with many smaller specialty retailers rent can reach15% – 20% of revenues) severely impacting the fixed component of doing business.
2. Inflexible wage structures unrelated to customer demand patterns – shop assistants (base rate $15ph) are hardly overpaid – however award conditions and loadings are in line with ancient retail habits, not the present era.

On the rental issue, interesting to read Mark McInnes (CEO Premier Investments) comment “we don’t come to work every day just to make money for the landlord”. Premier Investments own a number of high profile brands, including Just Jeans, Portmans, Dotti, Peter Alexander and Smiggle. They are extremely competent and experienced retailers.

In addition the investment bank Morgan Stanley recently released a major report on Australian retail, in part comparing local rent levels (big operators) with those in other parts of the world –

On average, Australian retail rents are significantly higher than comparable stores in other developed economies and we’re only talking about the big guys here – smaller independents are even worse placed.

The assumptions that landlords are entitled to annual rent increases of 4%+ regardless of commercial considerations are certain to come under pressure and signs of this are now apparent. For example Portmans recently negotiated a 30% decrease in rent for a store in Canberra.

If in a position to do so, smaller retailers must be prepared to take a firm, patient and thoroughly prepared stand when renegotiating leases – time is definitely on their side.
A final point is the chart in the Morgan Stanley report, comparing the rent to sales ratios of substantial Australian retailers (in blue) and purely online retailers such as Amazon and Ebay (in red). The online retailers have occupancy costs of less than 2% of sales – placing bricks & mortar landlords under similar pressure to some bricks & mortar retailers – ultimately they share the same boat.