Category: Business Insights

6 Things You Need To Do When Starting A Business

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Starting a business

Starting a business can be so exciting. You have a product or service that you want to get to work on and if done well, it could change your fortunes.

Working with start ups all the time, we have some insights into things you can do early to prepare for success. Read on for the things we think you need to do to get started.

Identify the need

First you need to do some research to find out if there is a need for what you want to offer. Get behind your computer and find out what comparable product or services there are. You will soon find out if it is a saturated market or if there is a niche there waiting for you.

Scope the competition

Now you need to understand what your competition are doing and how you plan on doing it differently. You need to have a clear point of difference and sing it from the rooftops. It is important that you are very clear about what you do and who you do it for, that way your ideal client or customer will find you easily.

Review the finances

Lastly, you want to know if you can make money with this idea. There will be a maximum amount your customer is willing to pay for what you offer, reverse engineer this to see what it will cost you to provide your offer and you will see if there is any money to be made.

Once you undertake those three things, you will then know if you have a business and then it’s the right time to talk about funding.

Three things you need to be successful for funding your start up

  1. You need to showcase the skills and experience that you will bring for the benefit of your new business. This may be qualifications, past employment, work experience etc. There will be a strong focus on you when the lender assesses you for a loan. The likelihood that you will make the business a success is gauged by your related experience, so don’t be shy. Dig through your CV and let us know all the strengths you have that will propel your business.
  2. You need to be able to cover your personal expenses as well as loan repayments while the business gets up and running. This is usually acceptable in the form of a spouse earning an income outside of the business. If your business has a contract for upcoming work, or sometimes franchises offer guaranteed minimum income, then that will help too.
  3. You need to have some skin in the game. Lenders are reluctant to give 100% funding to start a new project. It puts all the financial risk on them. Take the time to accumulate some money of your own that you can use toward your business goals. This shows strong character and lines you up as a desirable candidate for a loan.

 

If you want to discuss your personal situation in more detail, call one of our lending specialists on 0800 774 622 or apply today.

Changes to New Zealand’s Payroll Reporting System

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With the growing integration between Reckon, MYOB, and XERO comes changes to the way Inland Revenue Department (IRD) will be processing data in the future. Payday Filing is one significant change which impacts on employers and the way they file their employer reports.

 

What is Payday Filing?

It is an electronic payroll reporting system. Currently, employers file PAYE information and employee earnings to Inland Revenue on monthly basis, regardless of how frequently they pay their employees. Payday Filing is optional at the moment but it will become mandatory from 1 April 2019. You will still be making your PAYE payments the same way you do now to the IRD, but there will be a change of when you file the paperwork with them.

 

What Are the Changes?

The New Zealand Government has passed a bill to make Payday Filing mandatory from 1 April 2019. As mentioned above, employers currently report PAYE information about their employees each month no matter how frequently they pay their staff. With the new changes, Inland Revenue requires employers to send payroll information at each payday, rather than on monthly basis. Complying to this change is mandatory under the Employer Monthly Schedule (IR348). For example, if you pay your employees on weekly basis, then you will need to report PAYE information four times a month.

 

The change will be applied and become mandatory on 1 April 2019. However, you can choose this method of Payday Filing before that. You will need to contact Inland Revenue directly if you want to start Payday Filing earlier.

 

Why Are They Making the Change?

Inland Revenue’s processes and systems are being redeveloped to take advantage of modern digital technology. With these changes, the information will be received timely allowing IRD to work out entitlements and tax fast and accurately. As a result, it will provide more confidence to employers that they are paying the correct amounts throughout the year. Filing will become fully automated and a part of your normal payroll process, so you won’t need to remember to send returns in at the end of each month.

 

How Might This Affect You?

Employers with $50,000 or more of PAYE deductions a year are required to conform to these changes sometime between 1 April 2018 (voluntary opt-in date) and 1 April 2019 (mandatory compliance date). This means as an employer, you will need to upgrade to a Payday Reporting compliant payroll system. Furthermore, you will also need to review some of your payroll procedures.

 

The extent to which the Payday Filing changes might affect you depends on the size of your company and whether or not you use a payroll software. If you are not running a computerized payroll system, then it is recommended that you look to do so preferably earlier than 1 April 2019 so you get used to electronic filing. On the other hand, if you already have a computerized payroll system, then it is recommended that you make sure it is compliant.

New Year’s Resolutions for Your Business

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As a business owner, the beginning of a new year is the best time to assess the state of your operations and determine what you can do to make your business even stronger moving forward.

Following are some new year’s resolutions to consider for your business:

1. Growth

Growth is probably the number one goal of every business. You need to be able to consistently increase sales if you want your business to grow. Take some time to review and understand how your business has changed since the end of the last year. Get professional advice from an accountant. They can help with financial planning to keep you on the right track.

  • Marketing

Expanding your customer base is the key to your business growth. Implement various marketing strategies to create consistent promotion throughout 2019. Start the new year by updating your website and making it SEO friendly. If you don’t have a marketing expert on staff, 2019 may be the year to start looking for one.

  • Cashflow Management

Many businesses fail each year and running out of cash is usually one of the primary reasons. If your financial records are not up to date or if you don’t work with cashflow forecasts, then it will be really difficult for you to address cashflow problems. It is recommended that you create reliable cashflow forecasts so you can identify periods when your business risks running out of cash. Proper cashflow management will also allow you to avert a cashflow crisis before it’s too late.

  • Upgrade Your Technology and Workflows

You can’t expect your employees to reach their full potential if your firm is relying on legacy technology. Embracing new technologies such as collaboration platforms, cloud computing, etc. will allow you to streamline most of your business processes. It will also result in increased productivity as your employees will be able to access their critical documents and get their work done from any connected device.

2. Succession Plan

Now might be a good time to review, evaluate, and update your business plan to make sure it remains consistent with your business goals for both short-term and long-term future. It is highly recommended that you have a succession plan in place and operate the business to create value for the new leaders in your staff.

  • Training Staff

Make sure your staff is well-trained as it will lead to increased employee satisfaction and productivity. Take on apprentices and support employees to gain qualifications while working. When your employees have confidence in their ability, it’s a massive benefit to your company as a whole. Obviously, if your employees struggle to perform important tasks, they will be less productive. Therefore, employee training is very important.

3. Reviewing Health & Safety Policies

Health and safety in the workplace should always come first. If you act on improving the health and safety in the workplace, it will make the environment safe and ideal for your employees and will also ensure personal safety. It is recommended that you review your company’s health and safety policies, rules, and regulations. Know the rights of your employees and find out if your company is providing sufficient information on keeping employees safe in the workplace.

As an employer, it is your legal obligation to provide a safe working environment to your employees. Implementing the proper health and safety policies is a good start. Visit our health and safety blog to learn about New Zealand health and safety legislation and how you can implement the policies in your business.

4. Modernize Working Arrangements for Staff

Last but not least, annual reviews of employees should be a part of your business policy. Have open discussions with your staff. It will lead to clarification of expectations as well as better working relationships. Reviewing your role in employee relationships is also a good idea. Consider flexible working arrangements e.g. flexible hours, job sharing, working from home, etc. as a way to modernize working arrangements for your staff.

Final Word

Simply making new year’s resolutions and hoping they come true is not enough. In fact, only a small percentage of people actually keep their new year’s resolutions. The good news is, you are in control of your actions, so you have the ability to follow through on the new year’s resolutions for your business. Stick to the above-mentioned resolutions and your company will be in an even stronger position when next year rolls around.

 

Spinach are your specialist business brokerage. Give our friendly staff a call on 0800 774 622 today for advice on how we can help your business grow.

Important Things to Know About Your Credit Profile

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Credit score is something a lot of people tend to ignore. But knowing about it is very important because it is one of those things that eventually sneaks into your life and ruins all the fun. If you want a future with certain assets in it to make you comfortable and happy, such as a house, a car, money for your children to go to college, etc., you have to get a loan or invest in the fundamentals of your finances.

Knowing about your credit score is very important as it can be used to assess whether you can repay your loans, which you can then utilize to significantly improve your financial situation. All in all, your credit score may mean the difference between getting a loan or not.

What is a Credit Score?

Your credit score is an important piece of information that helps lenders when they are assessing creditworthiness for any kind of lending. It takes into consideration whether you are likely to repay the loan in full or pay your bills on time.

How Credit Score is Determined?

Credit-reporting agencies calculate and maintain your credit score. Higher credit score means better credit profile. Better credit profile has several benefits including lower interest rates charged by your money lender or creditor.

Your credit score is divided into several categories such as payment history, length of credit history, amount owed, new credit, types of credit debt used, etc. Different companies take different factors into consideration. Credit bureaus operating in New Zealand collect information to determine your credit score. They then provide this information to lenders that request it.

Bad Score? Bad News

You may already know that bad credit score can affect your ability to get more credit. What you may not know is that it can affect various other aspects of your life as well. For example, it may encourage a potential employer to inspect your past business habits more carefully and reassess hiring you. This is because bad credit score reflects poor reliability on your part as an employee.

Risk Indicators

There are some certain aspects of your lending behavior or credit history that may affect your credit score negatively. When your credit score is negatively affected, your credit risk to the lending company is increased, hence ultimately increasing your interest rates.

Following are some common risk indicators;

  • Not paying your installments and bills on time
  • Opening lots of new credit accounts in a very short time
  • Short-lived accounts
  • Defaulting on payments
  • A short credit history

How Do You Improve Your Credit Score?

If you have a bad credit score, don’t lose heart because there are some things you can do to improve your credit score over time. The first thing you should do is sort out your debts. If you are experiencing problems in meeting the requirements of loan repayment, find ways to get back into a regular payment cycle. By showing a clear record of repayment over a period of time, you can demonstrate (via repayment history) that you have reformed your credit behavior. Over time, your past credit problems will become less relevant and your recent payment patterns will become more relevant to your credit score.

It is important to remember that banks aren’t the only credit providers. Utility or telecommunication companies are also credit providers. This means you have to make sure that all of your bills are paid on time.

Tips and Facts

Following are some useful tips and facts regarding credit score:

  • If you are thinking about making a big purchase (house, car, etc.) for which you have to apply for loan, then it is recommended that you ask the lender for the type of credit score they use. By doing this, you will be able to determine how your credit score will affect this purchase as well as your future loans or purchases.
  • Different financial institutions and companies use different indicators to determine whether or not you will receive a loan. Some of the factors that may be taken into account include your age, income, lending history, net worth, employment history, etc. These factors are weighted differently in different companies.
  • If you are planning on getting married, then it is recommended that you look at each other’s credit scores so you can work out what you will both collectively owe, how to pay it off, as well as how your credit score will be factored into your budget.
  • If you have a feeling that your credit score may not be so great, keep in mind that you can always make a comeback. The first step is to evaluate your situation and find ways to get your finances in order.

At Spinach we want to help our clients get the best possible outcome for their loan applications and for their goals alike. If you would like to discuss this topic further and get an indication of where you would stand with our lenders, please do call us on 0800 SPINACH (0800 774622) or email [email protected]

5 Key Points For Preparing a Winning Business Plan

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Preparing a Business Plan

Your business plan is your ultimate decision-making tool. Without it, you are more likely to struggle to achieve your goals. A clear and concise business plan is your way to show your staff, your investors, and your bank that you know what you are doing. Anyone you approach for money will expect to see your business plan and without it, you won’t be getting any money because everyone knows that investing in a rudderless business is simply too risky. That’s why you must take certain things into consideration to make sure your business plan is effective.

Following are some tips that will help you when preparing a business plan:

1. Be Clear on What You Want to Achieve

Ask yourself what you want to achieve and what your company stands for. Think of everything you would want a potential employee, customer, partner, or investor to know about it. This include the following:

  • Vision Statement: Create a short and aspirational vision statement. It should be realistic. You should take your time to get it right.
  • Unique Selling Proposition: This includes the reasons why you believe that the customers will come to you instead of your competitors.
  • Target Market Identification: Although you would want to expand your customer base as much as possible, it pays to have a clear picture of the target market as it will make it easier for you to communicate with them.
  • Explanation of Products/Services: Make sure the explanation is in line with your Unique Selling Proposition and meets the needs of your target market.
  • Goals: List your goals. They should be measurable, realistic, and consistent with your financial plan.

2. Set Out the Details

The next step is to see how your vision will work. Specify what your business structure is and who will help you bring your vision to life. Following are some others things you should include:

  • Structure and History: Outlines the background of your business and introduce key people like managers, employees, investors, and partners.
  • Analysis of Competitors: Do a complete analysis of the competitive landscape, including information on the characteristics and size of the target market, industry, as well as your competitors’ strengths and weaknesses.
  • Business Assets: Identify what you have as well as what you need, including plant and equipment, premises, intellectual property, information systems, insurance and licenses.
  • SWOT Analysis: Identify the strengths and weaknesses of your idea along with potential opportunities and threats.
  • Goals and Milestones: Set out your key business goals for the period covered by the plan along with different milestones you want to reach. Make sure your goals are realistic and measurable.
  • Financial Forecasts: List your capital requirements and start-up costs as well as your projected cash flow, loss and profit, break-even analysis, and balance sheet forecasts.
  • Business Strategies: These should include sales, marketing, and customer retention strategies.

We recommend that you use Stats NZ’s Data for Business website in order to find useful business statistics and tools.

3. Keep it Short and Easy to Understand

When writing a business plan, make sure to keep it realistic, short, and easy to understand. It is important to consider that someone reading your business plan in the future might not be familiar with jargon or more technical terms. That’s why we recommend you write the business plan in plain English. It is also recommended that you do your research and provide evidence to support your conclusions (if possible) and include an action plan.

4. Review and Make Necessary Changes

After the above steps, you are finally ready to review your work and finalize the summary. Carefully review the business plan and make sure it presents a compelling and cohesive picture of your business in a professional format. After that, take the most important component of each section and use them to create an engaging executive summary. Your goal here is to create the summary that draws the reader into the rest of your business plan.

5. Put the Plan to Work

Once your business plan is ready, treat it as a guide to running your business. Keep in mind that business plans are dynamic documents which means that you should adjust your business plan as your business develops. If the circumstances and goals change, update the plan. The Stats NZ website has some great tools and information to get your business started.

 

As always, Spinach believe in business, and we are inspired by goals of growth. We want to be part of your success. To get us on board, please call us on 0800 SPINACH (0800 774 622) or email us [email protected]

The Process of Gaining Patent Protection in NZ

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If you are serious about an idea or basic product and want to transform it into an invention, it is very important that you get patent protection. Without patent protection, it is unwise to promote or advertise the idea, as it can be easily stolen. More than that, your idea will not be taken seriously by businesses you approach because without the patent protection, your idea is just that – an idea.

Patenting in New Zealand offers protection within the country. If you want to get patent protection in a foreign country, you will need to apply for a patent in that country or in a region that includes that certain country.

Before we get into the details of what to expect, it is important to note, that this process should be walked through with a Patent Attorney who specialises in this type of work. Our explanation has simplified what to expect, but is in no way being offered in place of solid legal advice!

Procedure for Obtaining a Patent

The process of patenting a new idea or product is not simple, in fact, it can be quite complex. Here is the procedure in a nutshell:

1. Search Existing Patents

The first step is to search in order to see whether your idea or product has already been patented. You may be out of luck if your basic idea or product has already been patented. If it isn’t, then you can proceed to complete your patent application. It may sound easy, but in truth, it’s not. Patent searches are likely to reveal a similar idea or product that has already been patented. If that is the case, then you might need to alter your idea/product to make it less similar.

2. Apply for a Patent

The next step is to apply for a patent. You will need to complete an application and submit it to IPONZ and also pay a $100 fee (provisional). You can either file a new application for a provisional specification or a complete specification. Keep in mind that the application for a patent is not similar to completing an employment application. It is a hectic procedure and must be done correctly so that your idea or product as well as your future rights to it are protected. Any mistakes may result in a quick denial from IPONZ.

3. Pending Application

Once you have submitted your application, it will become a pending application. The procedure after that depends on the route you have chosen for patent filing. In some jurisdictions, a patentability search will be carried out within 6 months of filing the application.

4. Publication

Patent applications are generally published on the IPONZ website approximately 18 months after they are first filed. From that date, anyone can access the contents of your patent application. It is also possible for you to see copies of correspondence with IPONZ as the application is examined.

5. Examination

Once your patent application is published, the next step is to request examination of the application. You can usually do this within 6 months of publication and you can expect to receive the first examination report within the 12 months period of requesting examination. You must also file a response to the examination report, generally within 3-6 months of receiving the examination report. In some cases, multiple examination reports will be issued. If successful, your patent will be granted within 6 months of filing a successful response to your examination report.

6. Acceptance

If there are no objections from the examination, your patent will be accepted and the accepted form of your application will be published in the IPONZ Journal. Once the patent is accepted and your application has been allowed, you will need to pay some form of official fee associated with the issue or grant procedure. Once granted, you will need to pay annual government renewal fees that are usually due each year up to and including the 20th year so that your patent is kept in force.

7. Renewal Fees

Annual renewal fees are payable in most countries, even on pending applications. They are generally paid from the third year onwards. In New Zealand, you are required to pay renewal fees in the 4th, 7th, 10th and 13th years after the date the application was first filed. The term of a patent is 20 years from the date of filing the complete specification.

Your patent is your most valuable asset and it lasts for 20 years. Most people who have gone through the process say that getting patent protection is a bit like buying a house. The procedure can be frustrating and overwhelming, but undeniably worthwhile once completed. To take that next step, contact a reputable and experienced attorney to discuss your idea.

We can recommend people if you need advice on where to go too, so give us a call if this applies to you.

The Importance of Hiring a Great Accountant

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Many business owners, particularly those who manage small businesses, ignore to see the importance of hiring an accountant. They only realize their importance in the following situations:

  • Renewal of business permits and licenses
  • Filing of audited financial statements and income tax returns, and
  • Government agencies audit

Oftentimes, they hire an accountant when its already too late. Hiring a great accountant has many benefits. Small business owners usually find it costly to maintain a retainer to do the tax preparation and bookkeeping for their business. But what they don’t usually know is that there are many monetary as well as non-monetary advantages of maintaining one. This article reviews the importance of hiring a great accountant in business, no matter how small it is. Following are some of the key benefits of hiring an accountant:

Organized Record of Financial Data

Most business owners want to focus their energy and time operating and growing their business. As such, often times their personal and business financial documents are mixed up. Having unorganized financial documents creates headaches and stress to business owners as they don’t know if they are profiting or losing. This is where the help of an accountant proves to be invaluable. A great accountant can help you maintain an organized record of filing of your business’ day to day financial records. This is generally known as bookkeeping. When the business has an organized and systemized record keeping of transactions, it saves the business owners time worrying about whether they are profiting or losing. Furthermore, they don’t have to worry about how to organize all the receipts they need to file and record.

Financial Analysis

A business accountant analyzes the input and output of the business, including operation costs, revenue, and invested capital and then comes up with executable strategies to make sure that the business remains profitable. He/she also advises proprietors on the business’ feasibility as well as further trends.

Reporting

An accountant prepares financial reports for the business within the required time. They complete accurate financial reports. These reports play an important role in decision making about the business’ various operations. Apart from this, the reports also serve an interactive purpose for internal as well as external audits.

Supervisory and Managerial Role

The role of accountants in every business is extremely important as they utilize their knowledge, skills, and expertise to keep the organization staffed by working on mechanisms of suitable hiring and management of staff. On the monitoring and supervisory aspect, accountants come up with systems capable of monitoring inputs as well as financial reports handling in the business.

Businesses that hire the services of a great accountant generally enjoy the following benefits:

  • Well-kept and organized information.
  • Rapid growth due to enhanced financial credibility, management, and strategies.
  • A lot of free time to invest further.
  • No disputes with employees as payments and terms are duly served.

Save Time to Focus on Business Growth

It can be quite time consuming to keep track of your business financial data, recording, as well as filling it, particularly if you are not used to it. With the help of an accountant, you can save a lot of your time to focus on the growth of your business rather than worrying about keeping an organized accounting record and tax deadlines.

Save Money

The possibility of future penalties is high if you don’t have an accountant. There is also the risk of interest on government reports that are incorrectly filed. With the help of an experienced accountant, you can save cost on these future charges and penalties of correcting your tax returns and accounting books on time.

Peace of Mind

The last but not least benefit of hiring a great accountant is that you will have peace of mind.  When you have a skilled accountant who efficiently does the tax compliance and record keeping, you don’t need to worry about someone coming to your business to do Audit. With the help of an accountant, you can be confident that you have the records to show that you are complying with all of the accounting and government reportorial requirements.

Final Word

Accounting is a very important aspect of any business, no matter whether it is a small business or a large enterprise. As a business owner, your top priority is to keep your accounting in proper order. If you have trouble maintaining the accounts yourself, then it is highly recommended that you hire an account to handle the accounting aspects of your business. Not only will this give you peace of mind, but you will also have more time to perform other tasks to run your business efficiently.