Approximate Reading Time: 2 minutes
Background
We recently advised Tim a
business owner who had started a business providing specialised IT support to a
range of government agencies focused on managing climate control. Tim left a
lucrative job in the IT industry to fulfil his dream of becoming a small business
owner. Tim has been working long hours and has established a good reputation
with his customers by providing a quality service.
Tim wanted to know if he was earning more now than when he was employed and the
steps he needed to take to grow his business. To grow his business Tim
identified that he would need to employ specialist staff, purchase systems for
quality assurance and job costing and would require funding for new equipment
and working capital.
This case study highlights how small business owners need to examine the return
their business is generating and the step required to create a business with
easily identifiable value.
Client Issue
1. Staying
employed or become a business owner
How to
resolve in 3 easy steps
1. Calculate the Earnings
Tim
completed a comparison between the income his business is generating and his
previous earnings in a Full time job. This involved the following
calculation:
Business salary
$80,000
Business profit
$150,000
Total
earnings from the business (p.a.)
$230,000
Total
earnings per week (avge. 55hrs/week)
$80/hr.
Previous
contract hour rate
$50/hr.
Net gain
$30/hr.
Tim was
pleased. In addition, a benefit that he and his family appreciated was the fact that he was now in control of his work/life balance.
2. Prepare a Business Plan
Tim agreed
to complete a business plan to document his business growth objectives. Tim’s
main planning objectives included creating systems to control his anticipated
future growth, developing a plan for staff management with incentives and cash
flow projections to secure bank funding support.
3. Finance and Insurance
Tim
approached SJN Chartered Accountants to secure funding support. We were able to
assist by firstly preparing a comprehensive cash flow forecast and then
referring Tim to a finance broker who suggested that Tim would be able to use the
equity in his house to secure interest only funding support for the business.
We were also able to refer Tim to an insurance broker who also updated his
business insurance to include extra cover for the new debt. In addition, we were able to refer Tim to a financial planner to review all risk insurance needs for Tim and his family.
Client Process
The Business Life Planning
Program was used to document Tim’s business growth objectives. Once completed
new insurance policies were purchased for life, key person, sickness and
accident and trauma insurance. Tim’s Bank provided a drawdown facility for Tim
to manage his budgeted working capital requirements.
Background
We recently advised Tim a business owner who had started a business providing specialised IT support to a range of government agencies focused on managing climate control. Tim left a lucrative job in the IT industry to fulfil his dream of becoming a small business owner. Tim has been working long hours and has established a good reputation with his customers by providing a quality service.
Tim wanted to know if he was earning more now than when he was employed and the steps he needed to take to grow his business. To grow his business Tim identified that he would need to employ specialist staff, purchase systems for quality assurance and job costing and would require funding for new equipment and working capital.
This case study highlights how small business owners need to examine the return their business is generating and the step required to create a business with easily identifiable value.
Client Issue
1. Staying
employed or become a business owner
2. No plan
for growth
3. Finance
needed to support growth
How to
resolve in 3 easy steps
1. Calculate the Earnings
Tim
completed a comparison between the income his business is generating and his
previous earnings in a Full time job. This involved the following
calculation:
Business salary
|
$80,000
|
Business profit
|
$150,000
|
Total
earnings from the business (p.a.)
|
$230,000
|
Total
earnings per week (avge. 55hrs/week)
|
$80/hr.
|
Previous
contract hour rate
|
$50/hr.
|
Net gain
|
$30/hr.
|
Tim was
pleased. In addition, a benefit that he and his family appreciated was the fact that he was now in control of his work/life balance.
2. Prepare a Business Plan
Tim agreed
to complete a business plan to document his business growth objectives. Tim’s
main planning objectives included creating systems to control his anticipated
future growth, developing a plan for staff management with incentives and cash
flow projections to secure bank funding support.
3. Finance and Insurance
Tim
approached SJN Chartered Accountants to secure funding support. We were able to
assist by firstly preparing a comprehensive cash flow forecast and then
referring Tim to a finance broker who suggested that Tim would be able to use the
equity in his house to secure interest only funding support for the business.
We were also able to refer Tim to an insurance broker who also updated his
business insurance to include extra cover for the new debt. In addition, we were able to refer Tim to a financial planner to review all risk insurance needs for Tim and his family.
Client Process
The Business Life Planning
Program was used to document Tim’s business growth objectives. Once completed
new insurance policies were purchased for life, key person, sickness and
accident and trauma insurance. Tim’s Bank provided a drawdown facility for Tim
to manage his budgeted working capital requirements.
