Advisers to Privately Owned Businesses
Within small businesses, there tends to be only one or two persons who will make all management choices with regards to accounting, finance, personnel, processing or servicing, selling and marketing. This is done without the aid of internal specialists and often with detailed knowledge in only one or two functional areas. The term “knowledge or expertise gap” is an important area which has long been the point of discussion.
Having a full time finance executive or director is not an option for many privately owned businesses. Most often we find that business owners cannot efficiently handle financial matters which results in this part of the business becoming a burden, this is where an external service can help alleviate these issues.
Our clients often feel more secured and confident when they know that their financial affairs are being handled by a professional.
Many businesses face one or more of the following issues:
- Rapid and uncontrolled growth resulting in cash flow shortages
- Lower than anticipated profits
- Lack of adequate finance
- Insufficient financial and management information on which to base important business decisions
- Lack of adequate management personnel and structure
- Inadequate short and long term planning
- Deciding whether to purchase another business or to expand
- Issues such as these can be resolved with the appropriate information and advice.
Our aspiration is to be able to assist with the growth and maintenance of our clients business.
Are you thinking about establishing an advisory board for your company? It is becoming increasingly popular nowadays for private companies to establish advisory boards similar to public companies, non-for-profit organisations and Government departments. They are a beneficial way of obtaining independent advice with regards to the development of the business and operational governance. Business owners value knowledgeable independent opinions when trying to understand and deal with the business life cycle. When there is more than one owner in the company it allows for a more unified running of the business as well. The composition of advisory boards will vary from formal to informal in structure. The level of involvement from the independent Director or non Director will change dependent on the needs of the owner/s and the size of the company.
At Lockwood & Ward we encourage business owners to set up advisory boards that will suit the individual needs of every company, with the overall objective of ensuring that business will remain sustainable for the long term.
The means in which you finance your business must be an important consideration. The three most popular ways of raising capital are through shareholders’ equity, reserves or borrowed funds.
If you decide to raise capital by borrowing money then you will need to determine what source and type of finance is most suitable for your needs.
The purpose for which the finance will be used must match the method of funding and term of the loan. You must be cautious when deciding upon your financing decisions as these choices will have a serious impact on your business cash flow and tax obligations.
Raising finance for a business ranks closely behind the sale of a business in its complexity. The problems facing small business owners in raising finance are well publicised, however most of these issues can be overcome with a well prepared finance application.
There are five stages in our finance application process:
- Determining and understanding the financial requirements of the business.
- Structuring the business and the borrowing entity.
- Identifying relevant sources of finance.
- Approaching the sources with a sound case for finance.
- Negotiating the terms of the finance contract.
Often external finance is not the only source of funds, we can help with other methods such as private equity funding, joint ventures, limited partnerships and government funding.
Business Strategy and Planning
A crucial part of any successful business is a well thought out and reliable plan. Lockwood and Ward understand the importance of good planning. Whether it is to maximize your profit, expand your business or just increase process efficiency, we are able to help you better understand and manage your business. Our staff will help you discover what your financial goals are and how to achieve them.
Private business owners at some stage will want to sell their business at the optimum price and in the most tax effective way. Owners have several options when considering the sale of the business including:
- Sale to family members
- Management buy-outs
- Third party sale
- Public float
- Close and sale of assets
Determining the best method is the process of succession planning. Business owners with heirs often believe that the disposal to their family is the option which fulfils all their desires. However, this method of sale can also result in many issues for the family to resolve. Choosing the family member who is best suited, resolving training and handover issues, and ensuring that the business continues are all important to the succession process.
Management buy-outs have the benefit of selling to those that know the business well. The issue most often faced with MBO's is the ability of employees to raise the funds necessary to meet the purchase price. Earn out arrangements are also not the most secure avenue for the vendor of a business to take. The third party sale is often seen as the simplest method of disposal; however this area also requires careful consideration to ensure that the business is sold for the best possible price.
Clearly the sale of the business itself becomes the most important sale of all, and consequently warrants planning. A common misconception is that this planning for sale can be started as little as six months before the required disposal date, this is not true. Preparing a business for sale and creating a market for the business cannot be achieved in a short time frame, in effect planning for the sale of the business in most cases should be an ongoing process, and should span several years.
At Lockwood & Ward, we do the following services for our clients:
- Onsite & Offsite Bookkeeping
- MYOB Ledger setup & data processing
- Bank & Credit Card account reconciliations
- Month End accounts & Year End review
- Inventory records maintenance
- Receivables & Payables Management
- Processing sales & receiving payments
- Complete invoicing service including statements
- Payables entry & payment scheduling
- Payroll, PAYG, & Superannuation
- Employee setup & maintenance
- Weekly or monthly payroll processing
- Payment Summaries
- PAYG & Superannuation
- Business Activity Statements
- BAS and IAS Preparation
- Electronic lodgement service
- FBT & PAYG instalments
- Management Reporting
- Job profitability
- Budgeting and Cash Flow
- Profit & Loss and Balance Sheet
- Customised reports to suit your needs