I often wonder when talking to business people what their plan is on how to exit the business in future.
And generally when asked the answer is a shrug of the shoulders and the iconic Aussie response “Dunno”.
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It's almost Christmas again, and with the ensuing busyness we might forget to properly wind down.
For years I was guilty of not taking proper holidays. I'd always figured that with the business closing for about 2 weeks over Christmas and New Year, then 6 other public holidays during the year, that was enough.
But is it really? And what about not really getting away but being in constant contact with "the office"?
It's pretty much a standard understanding that you don't get taxed on the sale of your family home; the "main residence exemption" takes care of that.
Recent cases and ATO activity might call that into question though.
So how sure are you that you'll withstand a review by the ATO?
I've just finished reading Killing Fairfax (review here). A very interesting chronicle of the demise of Fairfax; especially so for someone who grew up and got his professional start in print media, with a bit of ink still running in his veins.
And it has some excellent lessons for businesses that face pressures due to change.
Examining and restructuring your costs will ensure your business not only survives but thrives when sales slow down.
Consider these 3 simple cost saving strategies.1. Income > expenses
Do you know your business' break even point? Break Even Analysis identifies the minimum sales you require to cover your "necessary" business expenses. It requires you to calculate your total fixed costs (ie. rent, interest etc), gross profit margin and then you 'sensitise' your sales to produce a break even result ($0 profit).
Once you have determined your break even point, be realistic in assessing your likely sales and recalculate your result as your gross profit margin fluctuates.2. Reduce your fixed costs
Successful businesses have their cost structure weighted to variable costs (ie. low fixed costs). Activity Based Costing is a process that enables you to analyse and change your cost structure. For example, using contractors to provide non-core services to your business or outsourcing the distribution of your products (ie. freight) are examples of variable cost strategies.