Smart Budgeting Tips For Small Businesses to Start the New Year Right

January 19, 2021

New year, new beginning

Never has that maxim been more appropriate than right now, as we look forward to a better year on all fronts in 2021. So, it’s time to take care of your business and pave the way to a brighter future.

There’s no better way to take care of your business than by smart and accurate planning and budgeting. Here are a few practical strategies you can use to improve your financial security in 2021.

Define and understand your risks

Everyone is a little wiser now about the way in which a global event can impact even a small, local business. Prepare your business with a thorough risk analysis by assessing the likelihood, and the effect on your costs and revenue, of the following situations:

  • Pandemic. A second or third wave of coronavirus, or a new form of flu
  • Natural disasters. Storms, floods, drought, bushfires
  • Workplace accidents. Machinery mishaps, road accidents, chemical spills
  • Service interruptions. Power, water, telecommunications, transport
  • Technology failures. Outdated equipment, network failures, skill shortfall
  • Security. Theft, vandalism, fraud, cyberattack
  • New government regulations. Restrictions, taxes or levies around water usage, carbon emissions, quarantine
  • Legal liabilities. Disputes with customers or employees, problems with contracts, insurance or regulations
  • Financial developments. Interest rate increase, supplier price increases, slow-paying customers
  • Market changes. Increased competition, reduced demand
  • Ideally, set up a risk management plan, and insure against the most likely risks where possible.

Set your budget and regularly revisit it

Your business will benefit from a formal budget, rather than a vague list of likely sales and expenses. In its simplest form a budget includes projections of sales and other revenue, by year, quarter or month, as well as costs under the same detailed headings used in your profit and loss statement.

Having a budget will help you set goals and make better business decisions, and is a standard requirement when you apply for finance. There’s a useful government website offering guidance on budget preparation.

But budgets should never be set in concrete. Half-way through the financial year, your figures may already be out-of-date. You may need to revise your budget, or get a better idea of where your business is going via a flexible monthly forecasting system, including cash flow projections.

Overestimate your expenses

Now that you fully understand your risks, one of the worst things you can do is underestimate your business expenses (and its converse, overestimate your revenue). It’s much better to manage your expectations and avoid disappointment by being ruthlessly realistic about what your costs could be. Add some contingent wriggle room by adding 10-20% to your best estimates under each expense heading.

As long as your budget says you’re still breaking even, and you continue to rigorously monitor your actual expenses when they occur, you may be able to look forward to a pleasant surprise instead of a nasty shock.

Don’t underpay yourself

The fortunes of your business depend heavily on you. So, while paying yourself first, and paying yourself well, may sometimes seem like an unattainable goal, plan to put your own financial welfare at the top of the list.

Work out a reasonable salary, as paid by companies of similar size in your locality. Then, aim to pay yourself regularly and formally, preferably using accounting or payroll software. An owner who takes a reasonable salary can be another plus point when applying for business finance.

New year, new finance needs?

Contact one of our brokers to find out how we can help you with finance for your 2021 business goals.

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Enhanced Asset Write-Offs Announced in the Federal Budget 2020

October 16, 2020

The expanded asset write-off scheme announced in the budget is set to be a game changer in driving value from investing in plant and equipment.

The Benefits

When investing in equipment after the 6th of October and before the 30th of June 2022, eligible businesses will be able to:

  • Write off the full cost of new eligible depreciating assets of any value.
  • Claim the full cost of improvements to existing assets.
  • Instantly deduct the full cost of second-hand assets (must be purchased before 31st December 2020).
  • Deduct the balance of the simplified depreciation pool at the end of the income year.

How Linx Can Help You

Despite the benefits of investing, many businesses will have difficulty securing funding due to highly disrupted lenders.
We are proud to have helped our customers overcome COVID-19 disruption. Since April 2020, we have helped to invest more than $165 million for additional plant and equipment, including:

  • Assets ranging from IT equipment through to prime movers.
  • Assets aged from new through to as old as 30 years.
  • Working with businesses ranging from new start-ups to large corporates, operating across all industries.

At Linx, we have kept our full staff roster on, enabling us to continue delivering quickly and efficiently. We will continue to be here for our customers and get the job done.
Always talk to your accountant/tax advisor about what the enhanced allowances mean for you.

Stay up to date with updates and developments on the ATO website.
Find out more at https://budget.gov.au/2020-21/content/covid-19.htm#eleven

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Achieve Financial Sustainability During Ongoing Uncertainty

September 18, 2020

Recent developments in Australia – and even New Zealand – have demonstrated that COVID-19 is going to be with us for quite a while yet. The businesses who survive, and come out the other end ready to accelerate, will do so because they were financially sustainable. But just how do you achieve financial sustainability? Let’s […]

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Understanding the Details of the Instant Asset Write-Off Scheme

May 26, 2020

In last month’s instant asset write-off article, we outlined the instant asset write-off tax concession for businesses, with particular reference to the new provisions introduced by the Government in March 2020 in response to the economic impact of COVID-19. In simple terms, it means that businesses with an annual turnover of less than $500 million are able […]

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Join Our Team

May 19, 2020

At Linx Australia Group, we’re meeting the current economic challenges head on. As specialists in Asset Finance and Insurance for over 20 years, Linx has been here for our customers during the good times and the bad; and now is no different. We’re still fully operational and we’re here to help our customers secure the funding they need to make it through to the other side of the COVID-19 pandemic.

We are seeking like-minded, established brokers who share our passion and drive in helping our customers to succeed and grow. If you are looking to join a stable and long-standing organisation that is supported by a hardworking operations team, then we would like to hear from you.

To introduce yourself and start the conversation, send us an email with you background and the subject “Equipment Finance/Insurance Brokers EOI” to careers@linxaustraliagroup.com.au. In the first instance send us an email and we’ll be in touch.

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How SMBs Can Plan For Riding Out The COVID-19 Pandemic

May 4, 2020

Australian business owners have a triple whammy to deal with as a result of coronavirus: they need to consider their personal health and well-being, the health and safety of their employees, and ensure that their business survives the economic upheaval caused by coronavirus. As usual, one of the best ways to overcome business problems is […]

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Coronavirus Stimulus Package

March 29, 2020
Coronavirus Stimulus Package

Over the past few weeks, the COVID-19 Pandemic has created major disruption to our wellbeing, businesses and ways of life.  To help Australians get through the impacts of COVID-19, the Government has put a range of measures in place. Here is a summary of the key measures and how they could help: The Instant Asset […]

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COVID-19 Update – Business as Usual

March 25, 2020

We’re open for business and we’re here to help. In these unprecedented times, it’s more important than ever that you get the support you need and we’re here to make sure you get the best possible financial support and the best possible outcome for your business.

In support of the Government recommendations, we are restricting face-to-face contact until further notice, but as always we’re available to talk 24/7 to help you keep your business running.

Please contact your broker directly for any assistance you may need. You can find their details on our People page.

For information regarding Government Stimulus Packages, please refer to our blog post.

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Insurance premium funding is a winner for SMEs

March 4, 2020
Insurance Premium Funding is a winner for SMEs

Australian consumers are regularly offered the option to manage their payments on a monthly basis – for utility bills, vehicle registration, installment plans on major purchases, health insurance and even their life insurance premiums. This takes some of the pain out of personal budgeting.

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Get help from a Finance Broker

January 14, 2020
Get help from a Finance Broker

The Australian lending market is flooded with many different types of loan products, and this poses several questions for hopeful small business borrowers, especially those who are time poor (and who isn’t?):

  • What kind of loan product do I need?
  • How much can I afford to borrow and repay?
  • Where can I get the best interest rate and other conditions?
  • How can I compare the available loans?
  • What does all the technical jargon mean?

This is where the finance broker comes in. A finance broker is an intermediary between the lender and borrower, arranging a loan in return for a fee.

How finance brokers can help small businesses

Capable finance brokers:

  • Have a detailed knowledge of the loan market
  • Are independent and not tied to any particular lender
  • Can assess your financial situation and needs and find suitable loan products with competitive interest rates
  • Explain any financial and legal terms in the documentation in simple language
  • Assist you throughout the loan application and settlement process, and beyond

Finance broker fees

Finance brokers act for the borrower, not the lender, but in the vast majority of cases it is the lending financial institution, not the borrower, who pays the broker’s commission fees.

Preparing to meet your broker

To get the best results, it’s a good idea to do some preparation before your first meeting with your broker. Plan to explain clearly what your business does, how it is structured, and who your main competitors are. Think about your business goals and targets, opportunities and risks, so that you can communicate these clearly. Be prepared to outline the purpose of the funds you hope to borrow – that is, provide details of how you will use the cash to help your business proper.

You should also take the following documents along to the meeting.

  • Latest financial statements: Your balance sheet and Profit & Loss statement, your cash flow statement, any management accounts, your budget or forecast for the coming year.
  • Business tax returns: The last two years’ returns.
  • Business Activity Statement: Take a year’s worth of BAS – the last annual statement, or the last four quarters.

Questions you should ask your broker

Your finance broker will certainly be asking you many questions, but there are also lots of questions you need to ask in return, including:

  • Would a line of credit, or a term loan, or lease finance, or some other form of finance, suit my particular needs best?
  • If you think a term loan is best, what term do you recommend?
  • How much do you think my business can afford to borrow and repay?
  • Will I need to offer property as security for the loan? Will it need to be my home or commercial property?
  • Should I be looking for a fixed or variable interest rate?
  • How many lenders do you work with?
  • Do you have testimonials from previous customers?
  • How much is your commission, and who will pay it, me or the lender?

While your broker may not be able to answer all of these questions at the first meeting, you should expect full responses before you commit to the recommended finance.

Talk to us now

We’re here to help you find the best finance solution to help your business grow.

Call us on 1300 732 201 or email us at info@linxaustraliagroup.com.au

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