Improve your Personal Cashflow

Simple Options to Improve your Personal Cashflow


It is very simple: To gain wealth, you must spend less than you earn.

Being fiscally astute is not rocket science.  Let's review simple options to help you turn your spending habits around and achieve a positive personal cash flow.

  • Settle bills by the due date unless there is an incentive to pay early. Your money is better placed to work for you in an interest-bearing account.
  • Pay off high-interest rate debt to free up money. This is your priority task.  Debt is not a given.  Break the cycle and pay off your debts.  Pay as much extra off the debt as you can.  This will ultimately reduce the amount of interest you are paying and save you money.  Short-term pain for long-term gain.
  • Use credit cards as a means of delaying cash payments to manipulate your cash flow to your advantage.
  • Be market savvy. Keep an eye on the interest rates you're paying on your debts and make sure they're competitive. If they're not, speak to your bank.
  • Evaluate your daily spending habits. Keep track of every item of expenditure for a month.  It is probable that you will be shocked.  Consider carpooling to work, making your own lunch and ditching the gym membership in favour of going for a walk with friends and family.  You will be surprised how much you can save!
  • Be Mean. Develop an attitude toward cutting costs, no matter how small. Turn lights out when you leave a room, sleep on purchasing decisions, never impulse buy, etc.

Making changes to your spending can feel hard. Persist. Being cost-conscious will have a far greater and positive impact on your life.

Hire for Culture

Hire For Culture, Train For Skills

 Cultural fit is a concept that can be hard to define but everyone knows when it is missing.

Simply put, cultural fit is the likelihood that a person will be able to effortlessly live your business core values and behaviors.

If you assess cultural fit throughout your recruitment process, you will ensure you hire people who will become fantastic in their new roles.  This will certainly help drive long-term growth and success for your business.

What this means is that when you hire on both job fit and cultural fit, you'll find that your new team members are:

  • Faster to start really becoming part of your team
  • Start contributing quicker than others
  • Are happier in their new role
  • Tend to stay longer with your business
  • Become brand ambassadors
  • Are likely to become 'star performers'

When you make recruiting decisions purely on skills and don't take into account the cultural fit of the candidate, you may find:

  • The candidate doesn't fit in with your existing team
  • They will quickly become dissatisfied with their role
  • Will not adhere to the values and behaviours expected of them
  • May end up leaving through resignation or termination


Top Tip:  Give applicants a chance to lead the conversation.

We've all been to interviews where the interviewer sticks to an approved list of 10 questions.  Instead, hand the interviewee the keys.  See how they communicate without prompts or guides. This can provide an opportunity for vibrant personalities to shine.  If the interviewee has difficulty conversing with you of their own accord, that can be a sign that their personality doesn't fit the role.


Do You Know What Your Core Values Are?

It's important as the leader to know yourself well enough to know what your true or core values are. If you discover that you actually value timeliness over creativity, that's your prerogative.  When you started your business, how did you want it to run?  What did you want to motivate people? Don't worry about being "wrong" when you answer these questions. The important thing is to answer them.

Perhaps, respect, open communication and on-time delivery of service are your core values.  For another business, it may be delivering your products at the lowest cost. Whatever your core values are – live them and be sure to communicate and promote them at every opportunity.


Growth through Systemisation

Grow Your Business With Efficient Systems


Many small businesses are so busy running the business and fending off daily emergencies that systems go completely ignored and chaos often prevails.


Efficient Systems Create a Better Experience for Customers and You

The business that leads in the race for customers is the business that has all its systems integrated and working smoothly together.  A business that has an infallible billing system, acceptable customer service but has too much inventory is not going to win the race.

Ideally, your systems create an experience for the customer that makes him or her want to come back for more.


How to Improve Your Systems

Here are some tips to make sure your systems are up and running at a winning pace:

  1. System Reviews: Make sure you have a schedule for reviewing your systems and procedures.  Consider reviewing them:
    • Monthly to ensure procedures are being followed and required (not out of date)
    • Annually to check for potential efficiency gains. This check should include talking to relevant team members to gain their practical advice about things they think work well or should change.
  2. Lead the Pack. Do not follow.  Just because a system worked for one business does not mean it will work for yours.  Always consider your business and your customer needs when using other businesses as referees for model systems.
  3. Have a Backup Plan. Take care that your systems have a backup and do not rely on one person to make them work.  People get sick, make mistakes and have emergencies.
  4. Document Everything. Documenting how you do business safeguards your business in emergencies, alleviates confusion on the part of your team members and can ultimately protect you in potential legal matters.  Think how much more appealing your business would be to a potential investor, lender or buyer if you could present a how-we-do-it-here manual.
  5. Finally, Verify that Your Systems Align with Your Goals: This check is to verify that your systems have the capacity to help you achieve your business goals.  As an example, there is no point having a business goal to grow using an online store if your website is not set up to handle online purchases.


2017 Budget Summary

Federal Budget 2017-18 – What it means for you


-         Notwithstanding speculation to the contrary, the Temporary Budget Repair Levy (levied at two percent of taxable income in excess of $180,000) will cease on 30 June this year as planned.

-         The $20,000 immediate write-off for small businesses is being extended for one year, to 30 June 2018.

-         The Medicare levy is being increased from 2% to 2.5%, effective from the 2019-20 income year.

-         A number of measures have been announced to reduce the pressure on housing affordability, including:

-          an annual charge on foreign owners of underutilised residential property

-          various CGT changes for foreign investors, including denial of the main residence exemption

-          an option for individuals aged 65 or over to contribute the proceeds of downsizing their home to superannuation

-          denial of deductions for expenses related to inspecting, maintaining or collecting rent for a residential investment property

-          access to a higher CGT discount of 60% (as compared to the 50% available in other circumstances) for investments in qualifying affordable housing

-          the introduction of a first home super saving scheme


If you are an individual . . .

who pays tax

. . . you may not have to pay the Medicare levy this year.  From the 2016-17 income year (this year) the Government will increase the Medicare levy low-income threshold for singles to $21,655 (from $21,335), for families to $36,541 (from $36,001), for single seniors and pensioners to $34,244 (from $33,738) and for senior and pensioner families to $47,670 (from $46,966).  The additional amount of threshold for each dependent child or student will also be increased to $3,356 (from $3,306).  This means that you can earn more before triggering a liability to pay the Medicare levy.

. . . if you are required to pay the Medicare levy you will have to pay more from the 2019-20 tax year, as the Medicare levy is being increased from 2% to 2.5%

earning more than $180,000 per annum

. . . you will pay less tax next year.  Notwithstanding speculation to the contrary, the Temporary Budget Repair Levy (an additional two percent on taxable income in excess of $180,000) will cease on 30 June 2017 as planned.  It is not being extended.

who owns a home

. . . if you are aged 65 or over and have owned that home for at least 10 years, from 1 July 2018 you will be able to make a non-concessional (after tax) contribution of up to $300,000 from the proceeds of selling your home. You will be able to do this regardless of the existing age test, work test and soon to be introduced $1.6 million cap on after tax contributions.

. . . if you are a foreign or temporary resident you will not have access to the CGT main residence exemption from 7.30pm on Budget night (although existing properties held prior to this time will be grandfathered until 30 June 2019).

who wants to own a home

. . . you will be able to withdraw on or after 1 July 2018 voluntary superannuation contributions you make from 1 July 2017, along with associated deemed earnings, for a first house deposit.  You will be taxed at your marginal rate, less a 30 percent offset, on concessional (before-tax) contributions you withdraw. You will be able to contribute up $15,000 per year, and up to $30,000 in total.

who is studying

. . . repayments on your Higher Education Loan Programme (HELP) debts will be subject to revised income thresholds - a new minimum threshold of $42,000 will be established with a 1% repayment rate, and a maximum threshold of $119,882 with a 10 per cent repayment rate.

who has a SMSF

. . . the use of limited recourse borrowing arrangements by your fund will be included in your $1.6 million total superannuation balance and transfer balance cap, thereby reducing your scope to make non-concessional contributions from other sources.

. . . you can expect greater focus on the use of related party transactions on non-commercial terms to increase your superannuation savings.

If you invest in residential property . . .

and are a foreign resident

. . . where the property is not occupied or genuinely available on the rental market for at least six months per year, you will be charged an annual 'penalty' of at least $5,000.  The new charge applies to applications to acquire property from 7:30pm Budget night.

. . . you may find yourself barred from buying into a new development, as the Government will introduce a 50% cap on foreign ownership in such developments.

and incur travel expenses related to inspecting, maintaining or collecting rent for the property

. . . from 1 July 2017 you will no longer be able to claim deductions for those expenses.  The cost of engaging a real estate agent for property management services will remain deductible.

that qualifies as 'affordable housing'

. . . on or after 1 January 2018 you will benefit from a higher CGT discount - 60% instead of 50%.  To qualify for the higher discount, housing must be provided to low to moderate income tenants, with rent charged at a discount below the private rental market rate. The affordable housing must be managed through a registered community housing provider and the investment held for a minimum period of three years.

. . . you will be able to access concessional tax treatment by investing in a Managed Investment Trust that itself invests in affordable housing, provided the affordable housing is available for rent for at least ten years.

that contains plant and equipment

. . . you will not be able to claim depreciation deductions for assets purchased after 9 May 2017 by a previous owner of the property. 

that is newly constructed or a new subdivision

. . . on or after 1 July 2018 you will be required to remit GST on the purchase  directly to the ATO as part of settlement, as opposed to the developer being required to remit the GST as is currently the case.

If you are a business . . .

planning to employ foreign workers

. . . from March 2018 you may be required to pay a levy. Businesses will be required to make an upfront payment of $1,200 (for businesses with turnover of less than $10 million) or $1,800 (for businesses with turnover of $10 million or more) per visa per year for each employee on a Temporary Skill Shortage visa, and make a one-off payment of $3,000 (for businesses with turnover of less than $10 million) or $5,000 (for businesses with turnover of $10 million or more) for each employee being sponsored for a permanent Employer Nomination Scheme (subclass 186) visa or a permanent Regional Sponsored Migration Scheme (subclass 187) visa.

planning to invest in a depreciating asset or two (or more)

. . . if you are a small business (which you are if your turnover less than $10 million for the year) you will be able to immediately deduct purchases of eligible assets costing less than $20,000 through to 30 June 2018 (initially planned to cease on 30 June 2017).  From 1 July 2018 the immediate deductibility threshold will revert back to $1,000.

in the courier or cleaning industry

. . . the taxable payments reporting system (TPRS) that operates in the building and construction industry will apply to you from 1 July 2018.  You will be required to report payments you make to contractors (individual and total for the year) to the ATO.

and you are intending to dispose of your business, or CGT assets used in your business

. . . your accountant may need to take a second look at whether the small business CGT concessions will be available to you, as the Government is planning to make changes to those rules from 1 July 2017 designed to restrict their availability.

Whoever you are . . .

if you operate in the black economy

. . . your affairs are more likely to be picked up by the ATO, as the Government will be extending the provision of additional funding for ATO audit and compliance programs to better target black economy activities, such as non lodgement, omission of income and non payment of employer obligations.

. . . the Government will act to prohibit the manufacture, distribution, possession, use or sale of electronic point of sale (POS) sales suppression technology and software, which apparently allows businesses to understate their incomes by untraceably deleting selected transactions from electronic records in POS equipment so that income earned from these transactions and tax owing from this income is not reported to the ATO..

Text Box: These materials are intended to be used as a guide only. They should not be relied upon as a substitute for professional advice regarding actual facts or circumstances.
Barbagallo & Allen Pty Ltd, its employees and agents do not accept any liability for any injury, loss or damage resulting from any person acting, or refraining to act, in reliance on all or part of these materials.

Stress Free or Stressful" Business Transition to New Owners – It's a Choice

 Blueberry Trailers was established by Jack Jones in 1970.  Since its humble beginnings as a husband-and-wife-based business, the company has grown to manage 30 team members across two factories and build approximately 50 custom trailers per year.

That said, along the way it has had its struggles.

In 2012, Jack suffered a non-fatal heart attack and it suddenly became his children's responsibility to keep the business alive while their father recovered in the hospital.  The transition in management wasn't easy.  Dave and Peter were forced to step into their roles at a young age.  They had no training or knowledge of their father's role.  Jack had set up a great business but it was 'a handshake type of business'; nothing was documented properly.  Processes, procedures and analysing business performance was almost non-existent.

This is a problem that commonly occurs in the family-run business space.

 Accountant's Role – Trusted External Advisor

Davy and Peter agreed the best strategy was to seek help and to work with an external trusted advisor. They chose their accountant who had a good knowledge of the business and who knew their father.  Bringing in an external party allowed their family to hear a well-educated objective opinion and kept everyone's egos out of the way.  With the Accountant's guidance, they 'flipped the business on its head'.  It took about two years of financial struggle and hard work but the business started to change and it has been for the better.  The company has continued to thrive ever since.

 The Result

With their Accountant's help, Dave and Peter implemented new strategies in their family business.  They successfully took over from their father and now have 30 team members across two factories.

Dave says, 'Dad was really apprehensive. Although they say you can't teach an old dog new tricks, Peter and I insisted we could prove that we could get the job done and we did.  And we enjoy having our weekends off.'

Imagine how much easier this process would have been if Jack had committed to succession planning.  The issues would have been identified earlier and corrected.  His sons, his team and his business would have been prepared for the event.  Succession Planning would most certainly have made the unplanned leadership transition a stress free, organised event.  Instead it was 2 years of struggle albeit with a happy ending.


Effective Low Cost Business Marketing

Traditional Effective Low-Cost Small Business Marketing

 This case study demonstrates how Hair Salon owners worked with their Accountant to create an effective low-cost marketing campaign which targeted lapsed and new customers to increase sales.  The campaign was traditional but effective.

 About The Client

A Client runs a small funky hair salon in New York.  They decided it was time to move to larger premises with more passing foot traffic, but they knew they had to grow their existing strong and loyal client base first.


To achieve this goal, a project was completed with the following objectives:

  • Analyse the Hair Salon's strengths, weaknesses, opportunities and threats (SWOT).
  • Use the analysis to identify traditional low cost small business marketing ideas
  • Use the marketing campaign to re-connect with lapsed customers, gain new customers, revitalise sales and customer retention

This was successful and helped get them on their way.

 Accountant's Role

The Accountant reviewed the business operations and based on the outcome of a SWOT analysis, the Accountant recommend that the Client:

  • Review their contact database and identify customers who hadn't visited the salon for over six months.
  • Create an email campaign offering these customers an incentive (a free hair treatment) to make an appointment.
  • Publish a Facebook promotion offering this incentive to new customers.

 Benefits for Client

The emails resulted in numerous new appointments from lapsed customers and a number of new customers were acquired.

This campaign also created an opportunity to introduce these lapsed customers to a new senior hairdresser on the team.

 Might similar strategies work in your business?


Marketing Avoid Changing Horses in Midstream

It's rare that Accountants are spoken of as examples of great marketing. So please indulge us as we share with you a wonderful campaign run by the Institute of Chartered Accountants in England and Wales back in 1995.

 So proud were the Institute of their campaign that they bought serious billboard space in London. On the billboard was written in huge writing:

"It's easier to sleep with a Chartered Accountant."

 Talk about impact. The number of letters this campaign generated to the national press in England was amazing. It probably even turned up in comedians' lines, news bulletins and so on.

And then, six months later they changed it.

What to? Well, we can't tell you. Because we haven't noticed any of their campaigns since - nor have there been reports of any letters appearing in the Times!

So, the question to ask is obvious. Why change it? Or more particularly, why change something that was working brilliantly?

They changed (like most other people) because they figured it was "time to change."

In doing that, they fell into the trap into which many businesses fall - change for change's sake. It's wrong!

 Many companies indiscriminately change campaigns in midstream. In the process of that change, they:

  1. Don't allow the cumulative effect of a winning concept to work for them.
  2. Don't allow the dynamics of testing to work for them.
  3. Make a patchwork quilt of their company's image and position.

 The truth is that you get tired of your own campaign long before it's done its work out there in the marketplace.

Don't arbitrarily abandon it. Only replace an approach when you've verified and validated a more successful and profitable successor. Again, that requires measurement, management and testing. And, as you'd understand, as Accountants we're well-placed to help you with implementing those measurement systems. Please reach out if you'd like to discuss how we might do that.



Beware of Scams

 Protect Your Business from False Billing Scams

Small business owners should constantly be alert for scams involving false billings. Small businesses are a particular soft target as scammers recognise they are busy and have fewer resources than larger businesses.

False billing scams include attempting to trick busy businesses into paying for unwanted or unauthorised listings or advertisements in magazines, journals or business directories. Common scam tactics are to send a business a subscription form disguised as an outstanding invoice to get the business to sign up for unwanted ongoing advertising services. Scammers also falsely claim that the directory or publication is well known or has a high readership.

Another common scam approach is sending invoices for the renewal of a business's current domain name registration – however the domain name will be slightly different, for example ".com" instead of "". Scammers will also do anything to get businesses to sign up to a scheme, including claiming a charitable connection. Scammers can also easily copy or modify letterheads, making them look real to create phoney websites.

Businesses should always be aware of such schemes. However, businesses should be more vigilant during the end of financial year. This being a prime time to settle accounts, businesses should to take a moment and check if the invoices are legitimate.

The Australian Competition and Consumer Commission (ACCC) is aware of the rise in billing scams. To help businesses avoid being a victim of scammers, the ACCC has provided the following tips for small businesses:

Make sure the business you are dealing with is the real deal – if you receive a form or tax invoice out of the blue, verify the source by contacting the company directly using contact details you sourced independently through a phone book or online search.

  • Make your business "fraud-free" – effective management procedures can go a long way towards preventing scams. Have a clearly defined process for verifying and paying accounts and invoices. Try to avoid giving too many staff members the authorisation to make orders or pay invoices.
  • Don't be intimidated – do not let anyone pressure you into making decisions involving payments or contracts. If you are unsure, always seek independent financial or legal advice.
  • Update your IT security software regularly, and make sure you use and offer secure online payment methods.

While scammers are professionals at evading the law, the ACCC said it does take enforcement action where appropriate to deter and discourage scammers targeting Australians.

The ACCC has prepared an information sheet that sets out details of the most common scams targeting small businesses. The publication, What you need to know about: Small business scams, is available on the ACCC website at:

What a Business Plan Can Do For You

What a business plan can do for you and how to use it


Running a business without a business plan is like rock climbing blindfolded. Your chances of making it successfully to the top are slim. And the process will surely be a death-defying one.

Contrary to popular practice, a business plan is not a means to securing financing. Instead it is a step-by-step guide to running your business and creating the product or service that will make it in the marketplace. And like any other map, your plan will have to be adjusted according to your vision for the company, conditions and opportunities in the marketplace and your business' current condition.

Whether it's formal or informal, every business has a plan. The local hair salon may not have formally written down the plan, but before setting up shop, a smart owner would have assessed the need for a shop in that area of town, the ability to attract clients there, the appropriate amount of chairs, whether to hire someone to do the shampooing and sweeping, the cost of utilities, the parking availability for clients. The owner who waits to figure these things out using trial and mostly error will be lucky to be left with his/her wits, much less any customers. A business plan helps to minimizes those pitfalls.


To many people, the concept of writing a business plan for their own business is a daunting one. Perhaps it would appear less daunting to view the process as simply writing the answer to three questions, namely:

  1. Where are you now?
  2. Where do you want to be at a future date?
  3. How will you get there?


THE FIRST QUESTION – 'Where are you now?' – must be your starting point. This question seeks to provide a planning base. It looks at your business to establish such things as: ?

  • your business idea ?
  • your current level of sales ?
  • your customer groups ?
  • your products and services ?
  • your pricing policy ?
  • your distribution policy ?
  • your promotional activity ?
  • your overall operation ?
  • your team members ?
  • your finances

Answering the question, "Where are you now?" is often a major stumbling block because most people don't know where to start. However, the answer is surprisingly simple if you divide your business planning into four key areas: Operational, Marketing, Employees and Finance. Such a division allows you to analyze your business (or assumed business) to create a solid planning base.


THE SECOND QUESTION – "Where do you want to be at a future date?" is simply asking you to visualize your business operation at a set date in the future. This visualization process is almost identical to the exercise of setting personal objectives. The difference, however, is that the focus here is on business objectives.


THE THIRD QUESTION – "How will you get there?" asks about the steps you need to take in order to achieve the business objectives you have set. These steps, or strategies, can be identified, written down and programmed. Additional things a business plan should consider:

  1. What is a reasonable expectation of profitability and when?
  2. How will the business pay you and any team members?
  3. What are estimated expenses?
  4. What is the pricing strategy?
  5. What is the need for what you are offering and what profit margins can you expect?

While much of this may have occurred to you informally, it is very import to write it down. If you ever need to approach a bank or investors, you will need it. Writing it down will reinforce your vision, give you a reference point for checking your business' progress and will most likely bring up factors you did not consider when creating the plan in your head.


Writing your business plan down:

  1. Helps you determine and coordinate all aspects of business operations
  2. Gives you a means to analyze and determine what might be the best change to boost your business out of a stagnant situation
  3. Assists you in determining the risks and benefits associated with any changes
  4. Decreases your chances of making a mistake or not considering important factors in your business, and most importantly,
  5. Dramatically increases your chances of success.

Business plans are not only for those just setting out their journey in the marketplace. They are useful when acquiring a new business, forecasting growth, introducing a new product or service, entering a new market, responding to changes in the market or changing a significant aspect of your business.




Creating a Promotions Strategy

How to create a promotions strategy that works


You may have the greatest product ever but if you don't tell the world, it will sit on the shelves collecting dust until you finally have to close your business. Remember, you know what is great about your business because you created it. The rest of the world is not thinking about you and what you have to offer. So you have to tell them and you have to tell them in a way that makes them want what you have to offer.

Many small businesses shy away from promotions thinking they can't compete with the advertising, public relations and promotions budgets of their large competitors. But good promotions do not have to be expensive. And if you stay focused and create a clear plan, they don't have to be time-consuming either.

First develop a plan. This should be included in your business plan. Here are the steps to developing a strong promotional plan:

 Identify your target buyer

Consider what kind of customer you want to do business with and to whom your product or service is most likely to appeal. Take into account demographic (i.e. age, gender, location, marital status), lifestyle (i.e. athletes, club goers, outdoor enthusiasts) and psychographics (i.e. personality traits and emotions that affect buying decisions) information.

 Make Them Want What You Have to Offer

Distinguish your product or service from all the rest. This has to be meaningful and accurate, otherwise you will lose credibility with your consumers. First you will need to know what features, benefits and brand attributes your target buyers consider when making a purchase. For example, if you are a local nursery, your target buyers might take into account return policies on plants that don't survive, quality of plants in store and availability of informed people who can assist them with plant choices and directions for caring for the plants.

 Create a strategy and make it clear

Write down who your target buyers are, what your competitive environment is and what your meaningful differences are. This is called your positioning strategy statement. You must develop a consistent message and look and feel in all of your promotional campaigns.

Think about the personality of your business in relationship to your target buyers. Is it a young, hip, friendly, casual environment? Or is it a more reserved, traditional and slightly more conservative environment? These characteristics will inform the look, feel and tone of your business, as well as promotions.

 Create a clear, concise and memorable message that impacts your target buyers

This can be a challenge but doesn't have to be. Think about your business value proposition (BVP). If you have clearly identified the unique features and benefits of your product/service that truly matter to your target buyers, you will be well on your way. Take this information and brainstorm potential slogans, keywords in all marketing messages and visual images that correspond to your BVP.

 Consider your budget

When promoting your products, services and business there may never seem to be enough money. However, not all promotion costs money. Creating a mix between word-of-mouth, customer referral programs, public relations and advertising will save you a lot of money. Imagination and relationship building are the keys.   


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