BUSINESS OPERATIONS

Running a business

Syllabus – Business operation

Meeting regulations Local State Federal

Selling products

Maintaining records Revenue statement Balance sheet Cash flow Taxation records

Syllabus – Business operation continued

Risk management Planning for the future

Aspects of key issues relating to running a business

Operating a business

Regulations

The operations of businesses are regulated by three levels of government.

Federal government

State government

Local government

Federal government

All businesses should have an Australian business number (ABN) or Australian company number (ACN)

ABN is available from the Australian Business Register (ABR) www.abr.gov.au

ACN is available from the Australian Securities and Investments Commission (ASIC)

These numbers identify the business/company for tax purposes and dealing with government agencies.

When doing business with other businesses the ABN/CAN needs to be on all invoices.

Federal government continued

Taxes administered by the federal government: Income tax Goods and services tax (GST) Fringe benefits tax Sales tax Customs and excise duty

Federal governments laws include: The Workplace Relations Act 1996 (Cwlth) Anti-discrimination legislation Superannuation legislation Occupational health and safety (OHS) legislation

State government

Workcover

The regulatory authority in NSW to achieve safe workplaces by administering:

The Workers Compensation Act 1987 (NSW) – compulsory for employers to take out insurance to cover employees for work related injuries.

The Occupational Health and Safety (OHS) Act – describes how businesses should generally keep a safe and healthy workplace.

Workcover - Activity

Access www.workcover.nsw.gov.au

Complete the following: Write a paragraph outlining the role of WorkCover

List WorkCover’s objectives

List the Acts of Parliament that are administered by WorkCover.

Access the frequently asked questions section of the website. Outline the OHS responsibilities of businesses. List the types of workplace hazards businesses need to focus on.

State government continued

ASIC

Sole Traders and Partnerships need to register their business names unless they are operating under their surnames.

Companies register a business name if the name it operates under is different from its company name.

Companies need to submit annual returns including financial statements.

ASIC - Activity

The Australian Securities and Investments Commission

Access the website www.asic.gov.au

Write a report outlining the role and history of ASIC

State government continued

NSW Fair Trading Legislation Aims to protect consumers from businesses behaving

unjustly. Laws govern warranties, misleading advertising, and

safety standards.

Licences Required by businesses like hair salons, real estate

agents, builders, solicitors Obtained from relevant licensing authority

NSW Office of Fair Trading - Activity

Access www.fairtrading.nsw.gov.au

Outline the role of the Office of Fair Trading as it relates to consumers, business and trader services, associations and cooperatives.

Local government

Businesses need to comply with town planning laws: Fire regulations Regulations concerning building structures Parking Health

Local government inspectors visit business premises to ensure relevant laws and regulations are being complied with.

Local government continued

Zoning determines the use of property No permission for commercial activity in an area

zoned residential.

Issue licences Cafes need a licence:

To have tables and chairs on a footpath For billboards

Selling products

Marketing strategies are needed to sell goods and services produced.

Marketing objectives must be defined: To sell more of the same product To offer a new or improved product To target a new range of customers

The four Ps of marketing: Product Price Promotion Place

Four P’s of Marketing

Product – What products to sell What products look like or consist of What packaging the product should be in What extras are included or offered with the product

Price – Minimum price to be equal to the cost of creating the product Needs to be competitive Higher quality products tend to be a higher price

Four P’s of Marketing continued

Promotion –

Advertising – consider where, when and to whom to advertise Signs in a shop window Television campaign Newspaper and radio advertisements Catalogues Brochures Billboards Freebies like product samples

Public relations – involvement with charities and sponsoring local community groups

Attending trade shows

Promotion - Activity

Select a product popular with people of your age group:

How is the product promoted?

Consider: Packaging Imagery / personalities used in the advertising

campaigns Type of advertising used

Four P’s of Marketing

Place – Starts at the business premises

Important considerations: Parking Visibility Signage Opening hours Delivery options Store layout Lighting

Four P’s of Marketing - Activity

Select a product

Develop a marketing plan using the four Ps as a guide.

Product Price Promotion Place

Maintaining records

Revenue Statement (Profit and Loss Statement) Revenue – expenses = profit or loss Completed for a financial year for external reporting purposes

including the Australian Taxation Office Completed monthly to monitor how the business is

performing

Balance Sheet Lists all the assets (items owned), liabilities (items owed) and

capital (money or assets contributed by owners) of the business

Assets = liabilities + capital A financial snapshot of the business taken at any point in time

Maintaining records continued

Cash flow statement Shows the movement of cash into and out of the

business.

The business can see if there is enough cash to cover payments when they are due or whether more borrowing is required.

Shows cash coming in (receipts) and cash going out (payments). Total left is cash available at the end of the time period.

Taxes

Business activity statement to report GST

A revenue statement and balance sheet for income tax purposes

Wage records to deduct tax from employees’ pay

Fringe benefits tax

Customs duty (tax on goods bought from other countries)

Payroll tax

Land tax

Stamp duty

Council rates

Activity:

Develop a table to

define each of the taxes

listed.

Risk management – Planning for the future

Definition of risk management – the processes involved in identifying, controlling and minimising the impact of uncertain events.

Common events that cause disruption to businesses include: Fire Flood Technological failures

Risk Management

Insurance is the most common method businesses use to protect themselves.

Legislation requires: Workers compensation Insurance for employees Compulsory third party insurance for motor vehicles

Other recommendations: Building insurance Contents insurance Comprehensive insurance for motor vehicles Public liability insurance

Activity

Develop a table with

two columns to summarise the 7 types

of insurance important

for businesses to minimise

risks.

Looking to the future – Bankruptcy or Insolvency

Bankruptcy – Occurs when a business can no longer pay its creditors. It may be voluntary or be ordered by the court. Sometimes referred to as insolvency.

Occurs when the business can no longer pay its debts.

Once declared bankrupt by a court the business assets are sold.

Money received from asset sales allow payments to debtors.

Activity – Bankruptcy / insolvency

Develop a mind map summarising the strategies a small business could use to minimise the risks of insolvency and bankruptcy.

Looking to the future continued

Considerations to avoid bankruptcy: Maintain good records

Careful expansion to avoid over extending

Budget for replacement of ageing equipment

Budget for changing appearance of the business as fashion changes (Consider products and shop layout)

Have good stock management so stock is available to meet demand but not too much and unable to be sold

Key aspects of running a business

Customers are the number one concern

Keep a close eye on competitors

Ensure cash flows

Look after employees

Keep costs down and sales moving

Manage risks where possible

Entrepreneur needs to be organised, efficient and continually planning ahead.

Comply with legislation

Continually consider new ways to improve such as technology

Activity

Make a collage in word art to summarise key aspects

to consider when running a business.