(First published in Business First Magazine – December 16)
Christmas is almost upon us and business owners will be shifting their focus to planning for 2017. Let’s take a look at the highlights for 2016 and how they lead into key themes for 2017.
The budget of uncertainty
The Turnbull government’s May 2016 budget was widely flagged as a step in the right direction for small business. However, the proceeding lag time in policy implementation and uncertainty around superannuation policy has seen many SMEs simply “tune out” to how these changes affect them or their business.
Business owners should keep these in mind:
- Reduction to the small business company tax rate down to 27.5% from 1 July 2016 – applicable to business with up to $10M turnover.
- Other tax benefits opened to many businesses within the $2 and $10 million turnover band including simplified depreciation and trading stock rules
- Tax offset of up to $1,000 for individuals carrying on business via a trust, partnership or sole trading.
- No change to eligibility threshold for small business CGT concessions.
- Small business restructure tax concessions made available to family groups
The bad news for SMEs was to be at the personal retirement level with super flagged for retrospective policy, restricted thresholds and months of uncertainty in policy. While a backflip on the $500,000 retrospective lifetime non-concessional cap was announced in September the main superannuation policy announcements from the budget look set to become law from 1 July 2017, these include:
- $1.6 million transfer balance for super pensions
- Removal of the transition to retirement pension tax exemption
- Reduction in the concessional cap to $25,000 annually and non-concessional to $100,000 annually
- Lowering of the threshold for the additional 15% super contribution tax from $300,000 to $250,000
Business highlights as of November
The key 2016 highlights we hear from business owners on a day to day basis come from outside the tax sphere.
Low Interest Funding
Access to low interest business goodwill and asset funding has clearly been a key winner for business in 2016 –especially businesses that were able to capitalise on the low rates. We have seen many cases where the major banks have shown high degrees of flexibility on rates in order to retain and win new business – while this was not always on the first approach, it pays to be persistent.
New tools to monitor your business
We have also seen a shift in openness to technologies and new streamlined processes. Business owners now have access to apps and software that are affordable, giving them a comprehensive and real time view of their trading results and cash flow position. Business owners who previously preferred traditional methods are beginning to realise that they must adapt or be left behind.
Business operating in the innovation field fared well during 2016 with a range of policies and grants delivered to foster innovation. The commercialisation of innovative products and services continues to be an area of growth with ongoing rounds of funding and tax incentives. One of the most generous of the concessions is the Early Stage Innovation Company (ESIC) tax concession which provides investors with a rebate of 20% on their investment and the ability to disregard capital gains for assets sold within 10 year.
On the radar for 2017
The 2017 landscape for SMEs will continue to present challenges. SMEs will need to be focused and savvy when it comes to steering their business in a winning direction.
Business Planning is Key
The top concern keeping business owners awake at night in 2016 was business planning (or lack thereof). With research showing that 72% of business owners don’t have a business plan. Too many owners are concentrating on day to day operations and either don’t have the time, skills or support to focus on long term planning and growth.
Given the tools available to SMEs, 2017 will see in app based resources, there is no longer any excuse to shy away from strategic business planning and ongoing monitoring. Benchmarking, industry averages and real time comparative data is readily available and should be put to work.
People & processes – get these right and ease your stress
As engage with remote employees or “gig” workers, processes will need to be dynamic and streamlined. Focusing on new ways of working along with smarter processes will be a key theme of 2017 and can also help ease the stress levels for business owners.
Stress and Lifestyle concerns rose from #5 in the 2015 SME research report to #3 in 2016. The majority hold a belief that their business can’t operate without them. To avoid burnout and missing out on family time business owners should invest focus in this area. Cloud based tools that allow time away from the business without compromising connectivity can also be a useful planning tool for business owners.
Actively managing cash
The record low borrowing rates of 2016 can’t last indefinitely and cash should always be a key focus for business. Most businesses that fail still do so because of cash flow issues.
In 2017, we recommend using KPIs, benchmarks and cash flow planning apps to make cash management a priority for your business. Once you’ve harnessed your cash flow you can take advantage of business opportunities when they arise.