Running a business

1. Running a business Business Operations

2. Syllabus – Business operation • Meeting regulations • Local • State • Federal • Selling products • Maintaining records • Revenue statement • Balance sheet • Cash flow • Taxation records

3. Syllabus – Business operation continued • Risk management • Planning for the future • Aspects of key issues relating to running a business • Operating a business

4. Regulations • The operations of businesses are regulated by three levels of government. • Federal government • State government • Local government

5. Federal government • All businesses should have an Australian business number (ABN) or Australian company number (ACN) • ABN is available from the Australian Business Register (ABR) www.abr.gov.au • ACN is available from the Australian Securities and Investments Commission (ASIC) • These numbers identify the business/company for tax purposes and dealing with government agencies. • When doing business with other businesses the ABN/CAN needs to be on all invoices.

6. Federal government continued • Taxes administered by the federal government: • Income tax • Goods and services tax (GST) • Fringe benefits tax • Sales tax • Customs and excise duty • Federal governments laws include: • The Workplace Relations Act 1996 (Cwlth) • Anti-discrimination legislation • Superannuation legislation • Occupational health and safety (OHS) legislation

7. State government • Workcover • The regulatory authority in NSW to achieve safe workplaces by administering: • The Workers Compensation Act 1987 (NSW) – compulsory for employers to take out insurance to cover employees for work related injuries. • The Occupational Health and Safety (OHS) Act – describes how businesses should generally keep a safe and healthy workplace.

8. Workcover - Activity • Access www.workcover.nsw.gov.au • Complete the following: • Write a paragraph outlining the role of WorkCover • List WorkCover’s objectives • List the Acts of Parliament that are administered by WorkCover. • Access the frequently asked questions section of the website. Outline the OHS responsibilities of businesses. List the types of workplace hazards businesses need to focus on.

9. State government continued • ASIC • Sole Traders and Partnerships need to register their business names unless they are operating under their surnames. • Companies register a business name if the name it operates under is different from its company name. • Companies need to submit annual returns including financial statements.

10. ASIC - Activity • The Australian Securities and Investments Commission • Access the website www.asic.gov.au • Write a report outlining the role and history of ASIC

11. State government continued • NSW Fair Trading Legislation • Aims to protect consumers from businesses behaving unjustly. • Laws govern warranties, misleading advertising, and safety standards. • Licences • Required by businesses like hair salons, real estate agents, builders, solicitors • Obtained from relevant licensing authority

12. NSW Office of Fair Trading - Activity Access www.fairtrading.nsw.gov.au Outline the role of the Office of Fair Trading as it relates to consumers, business and trader services, associations and cooperatives.

13. Local government • Businesses need to comply with town planning laws: • Fire regulations • Regulations concerning building structures • Parking • Health • Local government inspectors visit business premises to ensure relevant laws and regulations are being complied with.

14. Local government continued • Zoning determines the use of property • No permission for commercial activity in an area zoned residential. • Issue licences • Cafes need a licence: • To have tables and chairs on a footpath • For billboards

15. Selling products • Marketing strategies are needed to sell goods and services produced. • Marketing objectives must be defined: • To sell more of the same product • To offer a new or improved product • To target a new range of customers • The four Ps of marketing: • Product • Price • Promotion • Place

16. Four P’s of Marketing • Product – • What products to sell • What products look like or consist of • What packaging the product should be in • What extras are included or offered with the product • Price – • Minimum price to be equal • to the cost of creating the product • Needs to be competitive • Higher quality products tend to be a higher price

17. Four P’s of Marketing continued • Promotion – • Advertising – consider where, when and to whom to advertise • Signs in a shop window • Television campaign • Newspaper and radio advertisements • Catalogues • Brochures • Billboards • Freebies like product samples • Public relations – involvement with charities and sponsoring local community groups • Attending trade shows

18. Promotion - Activity • Select a product popular with people of your age group: • How is the product promoted? • Consider: • Packaging • Imagery / personalities used in the advertising campaigns • Type of advertising used

19. Four P’s of Marketing • Place – • Starts at the business premises • Important considerations: • Parking • Visibility • Signage • Opening hours • Delivery options • Store layout • Lighting

20. Four P’s of Marketing - Activity • Select a product • Develop a marketing plan using the four Ps as a guide. • Product • Price • Promotion • Place

21. Maintaining records • Revenue Statement (Profit and Loss Statement) • Revenue – expenses = profit or loss • Completed for a financial year for external reporting purposes including the Australian Taxation Office • Completed monthly to monitor how the business is performing • Balance Sheet • Lists all the assets (items owned), liabilities (items owed) and capital (money or assets contributed by owners) of the business • Assets = liabilities + capital • A financial snapshot of the business taken at any point in time

22. Maintaining records continued • Cash flow statement • Shows the movement of cash into and out of the business. • The business can see if there is enough cash to cover payments when they are due or whether more borrowing is required. • Shows cash coming in (receipts) and cash going out (payments). Total left is cash available at the end of the time period.

23. Taxes Business activity statement to report GST A revenue statement and balance sheet for income tax purposes Wage records to deduct tax from employees’ pay Fringe benefits tax Customs duty (tax on goods bought from other countries) Payroll tax Land tax Stamp duty Council rates Activity: Develop a table to define each of the taxes listed.

24. Risk management – Planning for the future • Definition of risk management – the processes involved in identifying, controlling and minimising the impact of uncertain events. • Common events that cause disruption to businesses include: • Fire • Flood • Technological failures

25. Risk Management • Insurance is the most common method businesses use to protect themselves. • Legislation requires: • Workers compensation • Insurance for employees • Compulsory third party insurance for motor vehicles • Other recommendations: • Building insurance • Contents insurance • Comprehensive insurance for motor vehicles • Public liability insurance Activity Develop a table with two columns to summarise the 7 types of insurance important for businesses to minimise risks.

26. Looking to the future – Bankruptcy or Insolvency • Bankruptcy – Occurs when a business can no longer pay its creditors. It may be voluntary or be ordered by the court. Sometimes referred to as insolvency. • Occurs when the business can no longer pay its debts. • Once declared bankrupt by a court the business assets are sold. • Money received from asset sales allow payments to debtors.

27. Activity – Bankruptcy / insolvency Develop a mind map summarising the strategies a small business could use to minimise the risks of insolvency and bankruptcy.

28. Looking to the future continued • Considerations to avoid bankruptcy: • Maintain good records • Careful expansion to avoid over extending • Budget for replacement of ageing equipment • Budget for changing appearance of the business as fashion changes (Consider products and shop layout) • Have good stock management so stock is available to meet demand but not too much and unable to be sold

29. Key aspects of running a business Customers are the number one concern Keep a close eye on competitors Ensure cash flows Look after employees Keep costs down and sales moving Manage risks where possible Entrepreneur needs to be organised, efficient and continually planning ahead. Comply with legislation Continually consider new ways to improve such as technology Activity Make a collage in word art to summarise key aspects to consider when running a business.