2 Syllabus – Business operation Meeting regulationsLocalStateFederalSelling productsMaintaining recordsRevenue statementBalance sheetCash flowTaxation records
3 Syllabus – Business operation continued Risk managementPlanning for the futureAspects of key issues relating to running a businessOperating a business
4 RegulationsThe operations of businesses are regulated by three levels of government.Federal governmentState governmentLocal government
5 Federal governmentAll businesses should have an Australian business number (ABN) or Australian company number (ACN)ABN is available from the Australian Business Register (ABR)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.
6 Federal government continued Taxes administered by the federal government:Income taxGoods and services tax (GST)Fringe benefits taxSales taxCustoms and excise dutyFederal governments laws include:The Workplace Relations Act 1996 (Cwlth)Anti-discrimination legislationSuperannuation legislationOccupational health and safety (OHS) legislation
7 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.
8 Workcover - Activity Access www.workcover.nsw.gov.au Complete the following:Write a paragraph outlining the role of WorkCoverList WorkCover’s objectivesList 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.
9 State government continued ASICSole 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.
10 ASIC - Activity The Australian Securities and Investments Commission Access the websiteWrite a report outlining the role and history of ASIC
11 State government continued NSW Fair Trading LegislationAims to protect consumers from businesses behaving unjustly.Laws govern warranties, misleading advertising, and safety standards.LicencesRequired by businesses like hair salons, real estate agents, builders, solicitorsObtained from relevant licensing authority
12 NSW Office of Fair Trading - Activity AccessOutline the role of the Office of Fair Trading as it relates to consumers, business and trader services, associations and cooperatives.
13 Local government Businesses need to comply with town planning laws: Fire regulationsRegulations concerning building structuresParkingHealthLocal government inspectors visit business premises to ensure relevant laws and regulations are being complied with.
14 Local government continued Zoning determines the use of propertyNo permission for commercial activity in an area zoned residential.Issue licencesCafes need a licence:To have tables and chairs on a footpathFor billboards
15 Selling productsMarketing strategies are needed to sell goods and services produced.Marketing objectives must be defined:To sell more of the same productTo offer a new or improved productTo target a new range of customersThe four Ps of marketing:ProductPricePromotionPlace
16 Four P’s of Marketing Product – Price – What products to sell What products look like or consist ofWhat packaging the product should be inWhat extras are included or offeredwith the productPrice –Minimum price to be equalto the cost of creating the productNeeds to be competitiveHigher quality products tend to be a higher price
17 Four P’s of Marketing continued Promotion –Advertising – consider where, when and to whom to advertiseSigns in a shop windowTelevision campaignNewspaper and radio advertisementsCataloguesBrochuresBillboardsFreebies like product samplesPublic relations – involvement with charities and sponsoring local community groupsAttending trade shows
18 Promotion - ActivitySelect a product popular with people of your age group:How is the product promoted?Consider:PackagingImagery / personalities used in the advertising campaignsType of advertising used
19 Four P’s of Marketing Place – Starts at the business premises Important considerations:ParkingVisibilitySignageOpening hoursDelivery optionsStore layoutLighting
20 Four P’s of Marketing - Activity Select a productDevelop a marketing plan using the four Ps as a guide.ProductPricePromotionPlace
21 Maintaining records Revenue Statement (Profit and Loss Statement) Revenue – expenses = profit or lossCompleted for a financial year for external reporting purposes including the Australian Taxation OfficeCompleted monthly to monitor how the business is performingBalance SheetLists all the assets (items owned), liabilities (items owed) and capital (money or assets contributed by owners) of the businessAssets = liabilities + capitalA financial snapshot of the business taken at any point in time
22 Maintaining records continued Cash flow statementShows 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.
23 Develop a table to define each of the taxes listed. Business activity statement to report GSTA revenue statement and balance sheet for income tax purposesWage records to deduct tax from employees’ payFringe benefits taxCustoms duty (tax on goods bought from other countries)Payroll taxLand taxStamp dutyCouncil ratesActivity:Develop a table to define each of the taxes listed.
24 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:FireFloodTechnological failures
25 Risk ManagementInsurance is the most common method businesses use to protect themselves.Legislation requires:Workers compensationInsurance for employeesCompulsory third party insurance for motor vehiclesOther recommendations:Building insuranceContents insuranceComprehensive insurance for motor vehiclesPublic liability insuranceActivityDevelop a table with two columns to summarise the 7 types of insurance important for businesses to minimise risks.
26 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.
27 Activity – Bankruptcy / insolvency Develop a mind map summarising the strategies a small business could use to minimise the risks of insolvency and bankruptcy.
28 Looking to the future continued Considerations to avoid bankruptcy:Maintain good recordsCareful expansion to avoid over extendingBudget for replacement of ageing equipmentBudget 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
29 Key aspects of running a business Customers are the number one concernKeep a close eye on competitorsEnsure cash flowsLook after employeesKeep costs down and sales movingManage risks where possibleEntrepreneur needs to be organised, efficient and continually planning ahead.Comply with legislationContinually consider new ways to improve such as technologyActivityMake a collage in word art to summarise key aspects to consider when running a business.