Talbots Chartered Accountants, Audit, Business Advisory, Sydney

Our first client satisfaction survey results.

As you may know we have recently conducted our first client survey and we are very grateful to everyone who has responded. We are thrilled to announce that we have received 21% of all surveys back, which will allow us the chance to take into account your feedback. Talbots has always been committed to deliver good service values to you or your business and continue to service you.

Opening more connection channels for our clients

At Talbots we are proud to position ourselves as a service that speaks your language and is easily accessible to all our clients. Therefore, we are very excited to announce additional communication channels that you could give your insight on our current news as well as help you reach us faster. We have comenced a page on Facebook, which you could join here and LinkedIn page which you can view here. We would be happy to hear your comments and feedback and to ensure we provide services you want and require to the best industry trends.

Complimentary service provider

Following an overwhelming response from our February e-newsletter, we would like to introduce our trusted and highly experienced provider within insurance industry. Having a variety of the options available for personal and business use, one may want to consider the following options:

·        Income Protection

·        Critical illness (trauma) insurance

·        Life insurance

·        Asset insurance

·        ‘Key Man’ Insurance

·        Other Business Insurance eg Public Liability, Professional Indemnity etc

If you are in the process of considering any of the following options or would like a review of your existing insurance with regard to appropriateness and cost, please contact us so that we assist you further.

Selling Your Business Requires Preparation

A large number of “baby boomers” are getting ready to sell their businesses.  If you are in this category, or you would like to sell your business in any case, taking your time to do some planning should enable you to attract a higher price for the business than what you would get if the decision to sell is not planned or is rushed.

The first thing “baby boomers” need to consider is whether they are hopeful of passing their business on to their children (or one of their children). 

Succession planning needs to be planned and some basic questions answered including:

• Do your children want to take over the business?
• Are they happy to do so?
• Will you get enough money out of the deal to retire with dignity?

If you do decide to have a family succession, it is desirable to implement a training program so the next generation understands how the business is run.
 
The problem with trying to sell a business at present is that, with the “baby boomers” approaching retirement age (or what is generally accepted as being retirement age); there will be a significant rise in the number of businesses on the market.  If you are going to maximize the sale value of your business, businesses need to be prepared.  You need to get the business in the best possible state to enhance the sales value.  Normally this process will take 1-2 years and in this time you should ensure that appropriate robust systems and controls are in place (if not already). 

A business plan should be prepared outlining how you envisage the business would operate for the next 3 years, system manuals should be updated, the business should appear to be stable and confident in its future operations and be able to accommodate a new operator. 

You may need to hire a mentor/consultant to assist you in the sale of the business/succession planning (especially if you are undertaking family succession).  The expert could look at key activities and identify any gaps that may exist so that work can be undertaken to improve the business’ performance in these areas. 
Items to be checked include:

• systems control;
• best practice implementation relative to key performance indicators;
• business operational issues;
• human resources systems;
• financial account preparation and interpretation;
• debtors’ aged analysis;
• inventory level; and
• physical fitness of buildings, plant, motor vehicles etc.

The key thing is to identify where any gaps exist and use the 1-2 years to fix the problems so that the business can exhibit adherence to best practice.  Unfortunately, if you do not have these items fixed, in most cases you will be offered a much lower sale price than what you expect to receive.  In some instances this is driven purely by the large number of businesses that are already on the market and ones that are expected to be placed on the market over the next decade.  The key thing is to understand where the gaps are between the present state of the business and best practice, and then fix these gaps so that the business will stand out from others being offered for sale.  Our key advice is to dress the business up now so as to maximize the price.

If you would like assistance on a due diligence review of the readiness of your business for sale, please do not hesitate to contact us.

What's It Mean?

Debtors’ Days Outstanding

Debtors’ days outstanding is one of the most important key performance indicators available to a business manager.  The calculation should be prepared on a monthly basis and the resulting figure compared to budget estimates.  Debtors’ days outstanding is calculated as follows:

Credit Sales (divided by) 365 = average daily sales
The actual debtors’ balance is divided by the average daily sales to give debtors’ days outstanding. 

Example:

If your business is trading on 30 days payment terms, this means you are making available to your customers an extra $131,173 worth of credit.

If you would like to have a discussion on how to reduce the amount of money owed to you by your customers, so you are no longer acting as the banker, or a copy of a debtors’ days outstanding chart, please contact us.

Business Plans - Questions To Consider

Budgets and Cashflow Forecasts

• Do you prepare budgets on a monthly basis to cover the next 12 months?
• If you are in a manufacturing type business, do you prepare production budgets?
• Do you prepare sales budgets?
• Do you calculate the required investment in stock at the end of each month?
• Do you prepare a wages budget analysing every aspect of the business including production, sales, distribution, marketing, administration management?  
• Expense budget - has each expense item been examined to determine the likely cost for the next 12 months?
• Are all of the expenses necessary in the business?
• Are individual expenses subject to review, quotations etc, in an attempt to reduce the costs of that particular expense item?
• Have you prepared a debtors’ budget based on the sales forecast?
• Have you reviewed the projected debtors’ days outstanding to compare to previous debtors’ days outstanding achieved?
• Have you analysed the projected stockturn to see whether this would be satisfactory?
• Have you prepared a cashflow forecast which incorporates the items from the various budgets and then incorporates other key information,  such as loan payments, lease payments, taxation payments etc.?  The cashflow forecast can be significantly affected by changes in debtors’ days outstanding, stockturn rates, creditors’ day outstanding etc.