News


  • Merry Christmas 2018

    Announcements11/12/2018

    As the end of year fast approaches,
    the team at dVT Group would like to wish you
    well for the festive season and hope that you enjoy your break.  

    Our office will be closed from Friday, 21st December 2018
    until Monday, 7th January 2019.
     

     

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  • The Unique Value Proposition: The offer they can’t refuse!

    Business Strategy Articles News Articles20/11/2018

    Having a powerful UVP is crucial to provide clarity and assurance to customers that you have an irresistible offering, whilst giving direction and focus within a business.  

    When you market your products or services, it’s important that your target customers perceive them to be superior to similar products or services in the market. To make sure this happens, you must identify the competitive advantages of what you are offering. When these are clear to you, you can then communicate to customers what makes you different from your competitors, and what extra value your products or services provide.

    Basically, you’re making an offer your customers should find irresistible. It also means you can charge a higher price than if you were providing the same level of value as everyone else in the market.

    The best way to communicate this message to customers is through a Unique Value Proposition (UVP).  A UVP is a statement that outlines the reasons customers should buy your products or services. It is not a slogan, a motto or a catchphrase; rather it is a descriptive statement that aims to convince customers that your products or services will provide more benefits and value than those offered by your competitors.

    A UVP targets your ideal market

    Your target market is made up of potential customers who you believe will gain the most from using your products or services.

    Your UVP communicates the key reasons why your products or services are best suited to this market. It should answer four key questions:

    To whom are you selling?

    1. Which of their needs do your products or services satisfy?
    2. What unique value and benefits do you provide?
    3. What differentiates you from your competitors?

    A UVP aligns with your core business purposes

    An effective UVP permeates everything that you do.

    It attracts customers to your business:

    • Display it on your business website.
    • Include in marketing material and other touch points that are put in front of your target market.
    • Make sure its message is clear. Customers should be able to read the UVP and understand the value and benefits without the need for further explanation. If they find it hard to understand, they are more likely to purchase products and services from businesses that provide them with a clearer value proposition.

    It creates direction and clarity within your business:

    • Used internally, it crystallises the business’ fundamental activities.
    • Your UVP helps you define your ideal target market and identify and understand its core needs.
    • It also identifies the initiatives and features that have the greatest impact on meeting those needs.
    • A clear UVP avoids the waste of money, time and effort spent on products or services that are not attractive to your target market, and pointless attempts to sell to customers who won’t purchase from you. 

    Formulating your UVP

    The best method of discovering what is attractive and important to your target market is to ask. Speak directly with your customers. You can do this using a ‘Voice of the Customer’ (VOC) exercise. The feedback then forms the basis for your business’ value, vision and mission statements, which, in turn, help shape your UVP.

    The VOC also helps direct your marketing efforts, by focusing on those activities that will generate the best results. When you understand your customers and their core needs, you can concentrate on the marketing channels that are most relevant and will most effectively communicate the benefits and values of your products or services.

    One important thing to remember: you don’t sell products or services; you sell benefits and values. Therefore, a successful UVP will be easy to understand and will outline the genuine value and real results customers will experience when they use your products or services. The more value you provide, compared with what your competition offers, the higher the price you can charge.

    At dVT Strategy, we have dealt with a number of clients who are unclear about their UVP – or have never formulated one. In face-to-face workshops, we help them identify their differentiators, and create effective UVPs to form the basis for their sales, marketing and product development efforts.

    As a result, our clients see benefits such as:

    • Better quality and greater quantity of leads
    • Increases in lead conversion and growth in sales
    • Greater focus from staff
    • More consistency across the business, as everyone communicates the same message

    Your UVP works on many levels. It provides clarity and assurance to customers. Used internally, it also guides and focuses staff, and clearly embodies your businesses brand. A powerful UVP is one of the most important resources that you will develop, whether you are starting up or launching a new plan within an established business.

    If you are a business owner who is interested in identifying and developing your business’ unique value proposition in order to realise the benefits mentioned above, contact Brendan Ryan at dVT Strategy on 02 9633 333 or email brendan@dvtgroup.com.au.

     

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  • Who’s who in your business? The importance of clear status.

    News Articles Uncategorized

    Recent cases have alerted businesses to the importance of establishing, with absolute clarity, the status of the people they engage. Employees? Contractors? Directors? Read about how business owners and individuals concerned can be protected. 

    Whether people engaged by a business are employees, casuals or independent contractors has always been an important issue – for the business, and for the individuals concerned.

    The decision of the Full Federal Court (WorkPac Pty Ltd v Skene [2018] FCAFC131) has rejected the commonly applied position that an employee described as a casual under an award or enterprise agreement is a casual for all purposes (i.e. describing an employee as a casual and paying them a casual loading is not sufficient to make them a casual at law).   

    These outcomes have consequences, so employers need to make the important distinction between employees and contractors and ensure that they understand the different liabilities and responsibilities involved – for example, the consequent rights to annual leave for the employee, and the employer’s obligations with regard to tax, payroll tax, superannuation and workers compensation.

    In many cases, the distinction is clear. An electrician who is engaged by a property developer to rewire the office premises is not an employee. That situation might change if, for example, the electrician was taken on to provide the developer with in-house, ongoing services over a period of time, and on a consistent basis.

    The distinction is also important in the event that a business fails, and a liquidator is appointed to wind up the company. The Fair Entitlements Guarantee (FEG) and liquidators acting on its behalf must determine the status of any person engaged by the company at the time it failed. They must be able to distinguish between contractors, employees, and directors; this is essential for determining the allocation of funds and assets and what they are able to claim. In cases where it is not factually clear, the people concerned can attempt to substantiate their status within the business, which might have been unclear for some time.

    Under the Corporations Act, employee claims are given priority; but contractors have no priority.  In addition, under the FEG, the government pays financial assistance to employees where there are insufficient company assets remaining to meet their claims. The FEG does not provide any assistance to contractors.

    Example 1: Employee or contractor?

    There are instances where a person that was initially engaged on a contractual basis can, in effect, be deemed an employee over time with its attendant liabilities (eg annual leave, LSL). Recently, however, FEG rejected a person’s claim to be an employee, even though at the time the company failed, he had been engaged by the company for some time.  There was no written employment contract, no tax or superannuation had been paid, and there was no other sufficient evidence that he ever was an employee. His lodgement of tax returns, as evidence in support of his claim to be an employee, was rejected; he had only lodged them when the company’s problems became apparent, and his statement was found to be “self-serving”.  A tribunal review upheld FEG’s decision.

    Example 2: Manager, director or de facto director?

    Further complications can arise, particularly when an employee is also a director of the company. As illustrated in this recent article, FEG does not pay employees who are also directors of a company in liquidation.

    In the case mentioned in the above article, although the person was not formally appointed as a director, he was found to be a de facto director on the evidence that he commonly performed director-related tasks and “held himself out as a director”.

    He had started on a casual basis but, over time he managed the business’ cash flow and finances, and its staff and clients. He developed the business over time without supervision. It was relevant that he had signed numerous credit applications as a director, and he gave a director’s guarantee for credit given.

    Action Points to consider: 

    1. Employment status should be clearly documented, and its terms adhered to; any changes should be agreed and formally recorded. Companies need to be clear about working arrangements – e.g. casuals should be clearly employed as casuals, not as quasi-employees.
    2. Businesses should schedule regular reviews of their staffing situation, particularly for those staff whose status is not clear.
    3. It is, of course, necessary to ensure that all tax and superannuation payments are made on behalf of employees.
    4. It is vital that employees’ contracts reflect their situation; records should be kept up to date and checked to determine whether tax is being withheld.
    5. For all persons engaged by the company, there should be written contracts or evidence in support of their status.

    Attention to these points will provide a level of clarity in relation to what is a significant relationship and will protect both business owners and the individuals concerned. They also have important implications for the way in which businesses engage the people they need to carry on their enterprise.

    For businesses, individuals, and for business advisors, the key lesson here is that:
    if any contractor is deemed an employee, any employee payments made are deemed wages and are then grossed up for PAYG and superannuation.  So, if you pay a contractor $100 (depending on total payments and relevant tax rates), this payment could be grossed up to $220 to include PAYG and superannuation.  Further, the grossed-up totals would then be used to calculate payroll tax and workers compensation insurance liabilities.  In effect, extending the payment of $100 to a further liability of another $132 for the $100 paid.

    That person may also then have a claim for unpaid holiday and long service leave entitlements.  This needs to be considered where contractor payments are significant, as such latent liabilities can easily render a company insolvent.  This is especially a problem in such businesses using contracting labour such as security companies, cleaning companies, building companies and some labour companies.

    An example of this is a current decision made by the Fair Work Commission in regards to the high profile Foodora Australia Pty Ltd case.  We will be providing an update of the possible appeal for this case and will address it in a future article.

    Support is available: 

    Sandra Parker, newly appointed Fair Work Ombudsman (FWO), says her office will continue to help small businesses navigate their way through what can be a difficult area, via the FWO small business helpline and by sending teams into targeted areas to listen to their problems and provide assistance.  See this article for more information.

    Should you require assistance for your particular business, please contact Riad Tayeh from dVT Group on 02 9633 333 or email mail@dvtgroup.com.au.

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  • CP East Pty Limited (Administrators Appointed) ACN 603 493 536

    Creditor Reports12/11/2018

    On 20 August 2018, Riad Tayeh and Suelen McCallum were appointed Joint & Several Voluntary Administrators of CP East Pty Limited (ACN 603 493 536). The Administrators now provide a Supplementary Report to Creditors.

    By proceeding to view information about CP East Pty Limited, you are declaring that you are an investor, creditor or professional advisor for this matter and that you agree not to communicate any information to any person other than another investor or creditor of the Company, without the express written consent of de Vries Tayeh or unless otherwise compelled by law. 

    Creditors of the company can find a report to creditors available here  CREDITOR REPORT

    If you believe you are a creditor of the company or if you hold information which may assist the administrator in their investigations into the affairs of the company, please do not hesitate to contact Troy Graham of this office on +612 9633 3333 or at mail@dvtgroup.com.au.

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  • The Voice of the Customer: Are you Listening?

    Business Strategy Articles24/10/2018

    Customer satisfaction has always been crucial to the success of a business.  However, the key is to prioritise to ensure you are listening to the right customer and then quantify and use the feedback to help attract more customers like them.  

    Smart businesses owners know that the success, or even the survival, of a business depends on its ability to outperform its competitors in the world of customer relations.

    The key to your success lies in your capacity to listen to your customers, capture and analyse the data they provide and improve their experience of what you have to offer.

    What is VOC?

    VOC is the ‘voice of the customer’ – a process you can’t afford to ignore.  It involves listening to customer’s needs and wants, expectations and preferences with regard to the product or services your business offers.

    This data is captured through two types of feedback.

    Solicited VOC is the information you actively seek from customers; it is often more productive as you can ask for positive and negative feedback.

    Unsolicited VOC is feedback that customers provide without being prompted or asked; it tends to be geared more towards negative comments and complaints.

    Businesses must listen to both types. Each offers valuable insights into how various customers view the business and express their experience of it. It is important to maintain a record of customer feedback – both positive and negative – so as to identify trends and pinpoint key problem areas in need of attention.

    At dVT Strategy, we help clients with this important process as part of the overall business plan, by translating this information into meaningful objectives, which will close the gap between what customers expect and what your business delivers.

    Whose Voice Do You Hear?

    Businesses seeking to create new growth are faced with a dilemma. Which customers should they listen to?

    Many businesses hear their most vocal customers – usually because their listening is tuned in to the loudest voices. But are they listening to the right customers?

    Is it better to continue to hear the voices of those who are not being served well or even those who are not being served at all?  Or is it wiser to listen carefully to the best and most loyal customers?

    When you answer these questions, remember the well-established 80:20 rule. If 80% of your business revenue comes from the 20% of customers who regularly purchase your products or services, then they should have your attention. They are essential to your business success. Theirs are the voices you should be listening to.

    Selective Listening: Not All Voices Are Equal

    To help you prioritise your listening, use this simple method to classify your customers. Rank them as either A, B or C – based on the following criteria:

    A = High-value customers, who will most likely bring future business

    B = Mid-value customers, with some potential for future business

    C = Low-value customers, who are likely to be irregular or ‘one-off’  

     This differentiates your customers and guides you in terms of how you treat their feedback.  What you might hear from a C-class customer should not be regarded in the same way as feedback from an A-class customer. Your businesses should invest more time in your high ranking customers. They are more profitable, and they take up less time and effort to maintain. The voices of these customers should not merely be heard, but really listened to.

    Use VOC To Drive Your Business

    When you listen to the right customer voices, your business can benefit from their opinions and feedback. You can use this knowledge to:

    • Make alterations or improvements to your products or services
    • Make changes to your business and how it is conducted
    • Determine your position in the market
    • Understand the attitudes, interests and values of your target audience
    • Develop more relevant marketing content
    • Prepare a Business Value, Vision and Mission Statement that includes qualities your customers’ value
    • Identify your Unique Selling Proposition
    • Plan for the future

    At dVT Strategy, we take clients through VOC and customer classification exercises. As a result, they are equipped with data that helps them bridge any existing gaps between their current offerings and what their best customers expect from them.

    Listening to the needs of your customers and their experience is not an optional exercise. Listening to the customers is a valuable investment of your time. Their voices provide the real, instant and quantifiable feedback to help you attract more customers like them – the customers you really want.

    If you or someone you know would like to have a chat about your business and how you can ensure you are capitalising on VOC, please contact Brendan Ryan at dVT Strategy on 02 9633 3333 or email Brendan@dvtgroup.com.au.

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  • A Culture of Accountability: Who’s Responsible?

    Business Strategy Articles09/10/2018

    Accountability is vital to the success of any business. Business leaders must take the initiative in creating, developing and sustaining a culture of accountability. Here are some strategies that will help.

    All business owners want their businesses to succeed. Success is only possible in an environment where people accept their responsibilities and deliver on their commitments – within a carefully nurtured culture of accountability.

    What is accountability?

    Accountability is more than just accepting responsibility when mistakes occur. It’s about actively taking on responsibility, following it through, and getting things done. It’s also about recognising that all employees, and departments, have responsibilities of their own, and are all inter-dependent.

    Accountability matters. Without it, no one can be held responsible. In a culture of accountability, people accept and value responsibility, and understand it involves a certain degree of autonomy. Accountability helps create an environment that enables individuals and the business as a whole to be proactive and seek ways for improvement.

    Accountability is catching

    They say culture is ‘caught not taught’. Accountability starts with the leaders of a business. If leadership is not accountable or tolerates a lack of accountability in others, the deficiency progressively affects the entire organisation. Left untreated, this situation undermines any sense of clarity about who is responsible for what. Employees who are not clear about their responsibilities, or not held accountable for outcomes will ultimately have a negative impact on the overall success of a business.

    5 steps to encourage accountability

    To prevent the deterioration of accountability in the workplace, we have found that business leaders should:

    1. Set clear expectations: It is imperative that leaders are clear about expectations and outcomes, about how people can go about achieving objectives, and how success will be measured. Setting goals, KPIs and deliverables that are in line with the business’s values, vision and mission, will motivate employees to achieve targets
    2. Provide resources: If employees are to be accountable, they must have the skills and resources necessary to do what is expected of them. Without them, they are likely to fail. Effective training plans and development programs can provide employees with the right support to help them meet expectations.
    3. Monitor progress: Employees need to work through a series of milestones – clear and measurable targets with an agreed timeline and budget to achieve them. If they fall behind or lose sight of a target, the problem should be addressed right away, and solutions found to make sure employees can get back on track.
    4. Give clear, honest feedback: Feedback from leaders is imperative. If there are clear expectations, capabilities and measurement tools, then feedback can be factual and evidence-based, and communication is made easier.
    5. Establish consequences: If from the start, there is a clear understanding about expectations, and all essential resources have been provided, leaders can be sure they have done what is needed to support their employees’ performance. They should recognise and reward the achievement of results and celebrate employees’ successes. If, on the other hand, employees do not perform as required, there might be gaps in understanding or perception about what was expected; this should be talked through. Employees who continue to fail might require performance management, or might eventually exit the organisation.

    All of these measures will help to improve the success of the business, but the leader’s own example is crucial.

    Accountability starts at the top

    Where leaders act without accountability, employees will follow. The leaders of a business are its foundation, so it is vital that they display the characteristics they desire from their employees. A business underpinned by strong values and a culture of accountability will flourish, and create an environment that performs well.

    Seek expert help

    Creating a culture of accountability is not easy to do. At dVT Strategy, we have helped several business owners to put accountability back into the business.

    We work with leaders and their employees to develop clear expectations and set achievable goals, through the development of KPIs and targets. We also provide leaders with tools for skills analysis, so they can ensure all staff have what they need to succeed in their roles.

    As a result, we have seen improved performances in our clients’ businesses as their employees take responsibility for outcomes and find solutions to address challenges. Due to improved performance, clients have also enjoyed increased financial returns.

    If you improve a leader’s accountability, you generate a small improvement in business. If through increased accountability, you can improve the performance of everyone in the organisation, you generate a significant improvement in business.

    If you are struggling with a lack of accountability in your business, or you know someone who is, there is expert help available. For assistance in creating a culture of accountability, contact Brendan Ryan at dVT Strategy on 02 9633 3333 or email brendan@dvtgroup.com.au.

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  • A Culture of Accountability: Who’s Responsible?

    News Articles

    Accountability is vital to the success of any business. Business leaders must take the initiative in creating, developing and sustaining a culture of accountability. Here are some strategies that will help.

    All business owners want their businesses to succeed. Success is only possible in an environment where people accept their responsibilities and deliver on their commitments – within a carefully nurtured culture of accountability.

    What is accountability?

    Accountability is more than just accepting responsibility when mistakes occur. It’s about actively taking on responsibility, following it through, and getting things done. It’s also about recognising that all employees, and departments, have responsibilities of their own, and are all inter-dependent.

    Accountability matters. Without it, no one can be held responsible. In a culture of accountability, people accept and value responsibility, and understand it involves a certain degree of autonomy. Accountability helps create an environment that enables individuals and the business as a whole to be proactive and seek ways for improvement.

    Accountability is catching

    They say culture is ‘caught not taught’. Accountability starts with the leaders of a business. If leadership is not accountable or tolerates a lack of accountability in others, the deficiency progressively affects the entire organisation. Left untreated, this situation undermines any sense of clarity about who is responsible for what. Employees who are not clear about their responsibilities, or not held accountable for outcomes will ultimately have a negative impact on the overall success of a business.

    5 steps to encourage accountability

    To prevent the deterioration of accountability in the workplace, we have found that business leaders should:

    1. Set clear expectations: It is imperative that leaders are clear about expectations and outcomes, about how people can go about achieving objectives, and how success will be measured. Setting goals, KPIs and deliverables that are in line with the business’s values, vision and mission, will motivate employees to achieve targets
    2. Provide resources: If employees are to be accountable, they must have the skills and resources necessary to do what is expected of them. Without them, they are likely to fail. Effective training plans and development programs can provide employees with the right support to help them meet expectations.
    3. Monitor progress: Employees need to work through a series of milestones – clear and measurable targets with an agreed timeline and budget to achieve them. If they fall behind or lose sight of a target, the problem should be addressed right away, and solutions found to make sure employees can get back on track.
    4. Give clear, honest feedback: Feedback from leaders is imperative. If there are clear expectations, capabilities and measurement tools, then feedback can be factual and evidence-based, and communication is made easier.
    5. Establish consequences: If from the start, there is a clear understanding about expectations, and all essential resources have been provided, leaders can be sure they have done what is needed to support their employees’ performance. They should recognise and reward the achievement of results and celebrate employees’ successes. If, on the other hand, employees do not perform as required, there might be gaps in understanding or perception about what was expected; this should be talked through. Employees who continue to fail might require performance management, or might eventually exit the organisation.

    All of these measures will help to improve the success of the business, but the leader’s own example is crucial.

    Accountability starts at the top

    Where leaders act without accountability, employees will follow. The leaders of a business are its foundation, so it is vital that they display the characteristics they desire from their employees. A business underpinned by strong values and a culture of accountability will flourish, and create an environment that performs well.

    Seek expert help

    Creating a culture of accountability is not easy to do. At dVT Strategy, we have helped several business owners to put accountability back into the business.

    We work with leaders and their employees to develop clear expectations and set achievable goals, through the development of KPIs and targets. We also provide leaders with tools for skills analysis, so they can ensure all staff have what they need to succeed in their roles.

    As a result, we have seen improved performances in our clients’ businesses as their employees take responsibility for outcomes and find solutions to address challenges. Due to improved performance, clients have also enjoyed increased financial returns.

    If you improve a leader’s accountability, you generate a small improvement in business. If through increased accountability, you can improve the performance of everyone in the organisation, you generate a significant improvement in business.

    If you are struggling with a lack of accountability in your business, or you know someone who is, there is expert help available. For assistance in creating a culture of accountability, contact Brendan Ryan at dVT Strategy on 02 9633 3333 or email brendan@dvtgroup.com.au.

    READ MORE
  • Complex CARBS: The Changing Dynamics of the Food Business

    News Articles

    The emergence of new technologies, online ordering and food delivery have been mixed blessings for cafes and restaurants. The industry is re-examining the ‘menu of services’ it offers to meet the demands of an unpredictable customer base. 

    Where would we be without CARBs? We’re talking about Café And Restaurant Businesses, of course.  They address a basic human need for sustenance – food.  And they also satisfy our higher order desires for social interaction and multi-sensory physical pleasure. 

    Not surprising, then, that according to the Australian Bureau of Statistics’ tracking data, CARB has been the fastest growing retail sector in Australia over the last 10 years. Equally unsurprising, given the required high standards, and the intense levels of competition, to please a fickle dining public, it can be a very difficult industry and one that requires great attention to detail and deft financial management.  

    Many CARBs are taking advantage of new technologies, to introduce a range of new offerings, such as online ordering and meal delivery, including third-party services like Menu Log and Uber Eats.  On the surface, these new enablers appear to provide opportunities and give the sector cause for optimism, but there’s a note of caution. How can CARBs exploit the advantages of adopting these technologies, while avoiding a number of unintended consequences for their core business?

    The CARB Business Model

    The traditional business model for CARBs is a high service model with labour accounting for the largest cost. Serving multiple course meals, add-ons and alcohol (provided the relevant licence is obtained) has allowed successful operators to cover the costs of doing business by maximising the docket and margins, and using pickups and takeaways as top-up revenue sources and an opportunity to convert sampling to visiting. Although alcohol licenses and requirements involve some costs, these are more than adequately covered by the high mark-ups in this model.

    The On-line Delivery Service Model

    The new technology that has enabled electronic meal ordering and home delivery services potentially provide restaurants and café operators with access to a new set of customers – those who want a variety of meal options with the convenience of straight-to-the-door delivery. This might result in a higher number of meals sold, resulting in greater volume moving through the capital-intense kitchen facilities and, therefore, higher gross revenue. 

    Adopting this model, however, has potential consequences that need to be considered:   

    • Additional costs and lower margins: This model attracts the additional cost of the home delivery service provider, which the CARB must often meet
    • Reduced average ticket: Customers of home delivery services often ‘cherry-pick’ a menu, usually preferring main courses, and choosing to consume their own wine, coffee, and perhaps desserts.
    • Price comparisons: The model allows easy menu comparisons, which leads to price competition. This often has a downward impact on margins or a negative impact on regular customers, who ‘price compare’ their favourite CARB with new options.
    • Customer attrition: Intense competition adds a further threat: loyal and frequent customers might be enticed away by the ease of responding to another restaurant, or a pop-up offering another cuisine. Competition might mean customers who were regular visitors at a higher average docket can now pay less for their order.
    • Complications for the business model: These services are usually demanded on a fast turnaround. This can add complications to the kitchen model and result in a reduction of food quality and overall experience for dine-in patrons, and for home delivery ‘samplers’.

    The Changing Dynamics of the Market 

    There’s evidence that commercial, economic and other pressures are being brought to bear on what is already a volatile market.

    • CARBs are beginning to question the benefits of some new technologies and delivery services and there has already been a movement away from the use of third-party providers – for commercial reasons, and because of community concerns about these providers’ business and staffing models.
    • When economic times are tough and there are pressures on household discretionary spending, dining out, and ordering in, are often the first expenses to be rationalised. Latest consumer spending reports indicate that this is now having an effect.
    • Some CARBs are taking extraordinary steps in a desperate attempt to survive. Measures to ‘cut corners’ include reducing the quality of their raw materials, delaying payments to suppliers, failing to pay taxes, and underpaying their employees.

    These factors might well be linked to the noticeable increase in retail and restaurant liquidations over the last 12-18 months.

    The Fair Work Ombudsman’s recent food precincts report found that many food enterprises in selected streets in Sydney and Melbourne had failed basic compliance standards in everything from OH&S, food preparation and hygiene, wages, superannuation, taxes and more. We also see this non-compliance in the case of CARBs that go into liquidation or administration, which must be reported to ASIC for further action. There is no excuse or justification for CARBs failing to comply with the law; it also creates a situation of unfair competition for those who comply fully.

    In summary, CARBs operate in a finely tuned, and constantly evolving world in which customer preferences are continually shifting, according to their individual cost-benefit evaluations. Although a pool of potential new customers, revealed by the technological advances in home delivery services, reflects bright new benefits, it has darker depths. Like any modifications to current business operational models, this change, if adopted, needs to be integrated carefully and exploited creatively if it is to meet business goals.

    Although many third-party providers argue that operators in the CARB sector must adopt new technology and new service options or be left behind by their competitors, such a decision is not straightforward and no outcome – positive or negative – can be guaranteed.

    CARBs should keep a level head. When considering available options, they must weigh up the benefits and disadvantages for their particular situation, and adjust them to meet the demands of what can often be an unpredictable customer base.

    If you have a CARB, or know someone who has, and you have reason for concern, it is important to be proactive and obtain help early. This is one of dVT Group’s specialty industries, and we will be happy to have a no-obligation discussion with you, to determine what options are available

    If you would like to speak with someone about your particular situation, please call Antony Resnick at the dVT Group on 02 9633 3333 or email us at mail@dvtgroup.com.au

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  • SEI Carbide Australia – Jeff Drury

    Business Strategy Testimonials17/09/2018

    As we are all witnessing, business is changing at a rapid pace and with this comes the need for adaptation, innovation and key strategic thinking to ensure your company stays at the pointy end of your industry.

    SEI Carbide has been providing cutting tools and services in the manufacturing industry since 1973, which makes it a stable and reliable company in the industry. Even with this long term success, the business was starting to lose ground and needed a new path to ensure longevity and success in a demanding and shrinking market. At the beginning of 2013, the company went through a transitional change in management and the new management could see that without serious changes to the company’s short term and long term goals with a new vision and direction, they would continue to shrink in size.

    Management felt the most effective way to ensure these needs were implemented in the most efficient way was to seek external help and we did this in conjunction with dVT Strategy.

    From the onset, dVT Strategy was very professional, could understand our business and the industry we work in and from this appointed the most suitable person for our needs. Over the next 18 months, we worked through all levels of the business and then put these into a practical and logical strategy and then set about implementing this into the business.

    The result from this investment with dVT Strategy is that SEI Carbide has now seen 4 consecutive years of growth and from this we have been able to expand into other areas of the market. The one thing that we got the most out of dVT Strategy was their ability to understand the ideas and vision the new management had and be able to put this into a well laid out and effective plan.

     

    Jeff Drury
    SEI Carbide Australia

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  • CP East Pty Limited (Administrators Appointed) ACN 603 493 536

    Creditor Reports13/09/2018

    On 20 August 2018, Riad Tayeh and Suelen McCallum were appointed joint & several Voluntary Administrators of CP East Pty Limited (ACN 603 493 536).

    By proceeding to view information about CP East Pty Limited, you are declaring that you are an investor, creditor or professional advisor for this matter and that you agree not to communicate any information to any person other than another investor or creditor of the Company, without the express written consent of de Vries Tayeh or unless otherwise compelled by law. 

    Creditors of the company can find a report to creditors available here  Creditor Report 13092018

    If you believe you are a creditor of the company or if you hold information which may assist the administrator in their investigations into the affairs of the company, please do not hesitate to contact Troy Graham of this office on +612 9633 3333 or at mail@dvtgroup.com.au.

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  • Riad Tayeh

    Business Strategy Team11/09/2018

    Riad began his career at Coopers & Lybrand, moving to Ferrier Hodgson Sydney, and then Ferrier Hodgson Hong Kong. For ten years he specialised in insolvency, corporate restructure, financial investigation and turnaround strategy. In the Hong Kong market Riad restructured listed companies, managed major liquidations, undertook fraud investigations and provided litigation support.

    He has also assisted various companies in restructuring, obtaining equity, acquiring businesses and implementing exit strategies.

    Riad has over 30 years insolvency and accounting experience and enjoys a reputation as a tough-minded and astute practitioner, offering clients an energetic and practical approach to business solutions.


    He joined Antony de Vries in partnership in February 2002 bringing considerable commercial acumen and insolvency experience.

    Community Work:

    Riad has been involved in various fund raising events for charities, mainly around the intellectual disability space:

    • Fund raising events throughout Australia as President with TMA
    • Sportsmans lunch raising funds for the Special Olympics in NSW, VIC and QLD
    • Established Laugh Out Loud breakfast event with over 700 attendees annually for Special Olympics
    • Instrumental in establishing Get on Stage Lunch held at Riverside Theatre to raise funds for the intellectually disabled people to be able to participate in the Theatre
    • Volleyball Australia/Oceania Volleyball/Asian Volleyball Confederation

    Qualifications and Memberships:

    • Bachelor of Economics, Sydney University
    • Fellow of Chartered Accountant Australia & New Zealand
    • Member of the Australian Restructuring, Insolvency & Turnaround Association
    • Member and Former President of the Turnaround Management Association of Australia (TMA)
    • Registered Liquidator

    Areas of Expertise:

    • Corporate Restructure
    • Corporate & Personal Solvency
    • Bankruptcy
    • Consultancy
    • Strategic Planning
    • Turnaround Management
    • Succession Planning
    • Business Growth

     

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  • Brendan Ryan

    Business Strategy Team

    Brendan started his career as a research scientist in 1995 before moving into banking and finance whilst living and working in the UK. Upon returning to New Zealand, Brendan continued in banking joining the prestigious ANZ global leadership programme. Brendan then accepted a strategic role and was responsible for the implementation of one of his own projects. The runaway success of this project saw him implement the same project into the Australian market in 2002, again achieving considerable success.

    Brendan continued with ANZ in several roles including that of Manager of Operations for the Pacific Region. In 2011 Brendan undertook a career change and joined a large scientific consulting firm where he was responsible for restructuring the company. A year later he successfully established his own management consulting business.


    Brendan joined the dVT Group in 2014 as a consultant and in 2017 became Director of dVT Strategy helping business owners with strategies to improve and grow their business.

    Brendan’s hands on style sees him work with clients at their premises as and when it fits with the client’s schedule and budget.   He is easy to relate to and has the ability to speak your language.

    He places a major focus on the ability to deliver real outcomes.  This means the return on investment of a consulting engagement with Brendan can be substantial, as evidenced by results he has achieved for his existing client base.

    Brendan calls on his extensive network and out of the box thinking to provide real and tangible “value adds” usually well in excess of his fees.  His in depth knowledge of the available government services and grants are a perfect value adding approach with the majority of his client engagements being partially funded via government grants.

    Qualifications:

    • Master of Business Administration
    • Master of Science (Hons)
    • Diploma of Finance & Mortgage Broking

    Areas of Expertise:

    • Strategic Planning
    • Structuring and Asset Protection
    • Leadership and HR
    • Marketing and Business Development
    • Process Mapping/Process Improvement
    • Succession Planning
    • Mergers and Acquisitions
    • Funding
    • Government Grants
    • Business Sale
      – Trade Sale
      –  Management Buyout
      –  Roll-ups
    • Ongoing advisory and board positions
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  • Michael Hahn

    Business Strategy Team

    Michael is a highly accomplished business consultant with 30+ years experience providing consulting services to the pharmaceutical, mining, engineering, environmental services, FDI and education sectors.

    After holding senior sales and marketing roles, Michael established his own consulting firm in November 1999 focusing on delivering one off projects with PPR, one Australia’s leading public relations firms. In 2003 he established the North of England Inward Investment Agency representing UK RDAs in Australia and New Zealand. For almost a decade he helped Australian companies establish a UK presence which included several collaborations with universities in the north of England.

    As Project Manager, in 2011 Michael created a series of round-table events promoting bilateral trade in the mining & renewable sectors in several South American markets. In 2012 Michael was invited by the Australian Catholic University (ACU) to join a Sports Task-force that delivered recommendations to develop non-academic programs for ACU around sport, health and well-being.

    In recent years Michael has worked for several SMEs helping them review their business and develop strategies with respect to trade & investment, strategic planning, capital raising, marketing & business development projects that has led to significant growth and expansion.

    Michael joined dVT Strategy in 2017 as a consultant and combines his extensive industry experience with specialist skills in the areas of:

    • strategic planning
    • international business
    • business development
    • marketing
    • project management
    • investor relations
    • and communication activities to help our clients review and develop their business plans.

    Michael has strong connections with universities, industry associations and government. He has led multiple trade delegations for Australian and New Zealand government agencies and is well connected in Australia’s professional services network, entrepreneurial and venture capital communities.

     

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  • The Voice of the Customer: Are You Listening?

    News Articles17/08/2018

    Customer satisfaction has always been crucial to the success of a business.  However, the key is to prioritise to ensure you are listening to the right customer and then quantify and use the feedback to help attract more customers like them.  

    Smart businesses owners know that the success, or even the survival, of a business depends on its ability to outperform its competitors in the world of customer relations.

    The key to your success lies in your capacity to listen to your customers, capture and analyse the data they provide and improve their experience of what you have to offer.

    What is VOC?

    VOC is the ‘voice of the customer’ – a process you can’t afford to ignore.  It involves listening to customer’s needs and wants, expectations and preferences with regard to the product or services your business offers.

    This data is captured through two types of feedback.

    Solicited VOC is the information you actively seek from customers; it is often more productive as you can ask for positive and negative feedback.

    Unsolicited VOC is feedback that customers provide without being prompted or asked; it tends to be geared more towards negative comments and complaints.

    Businesses must listen to both types. Each offers valuable insights into how various customers view the business and express their experience of it. It is important to maintain a record of customer feedback – both positive and negative – so as to identify trends and pinpoint key problem areas in need of attention.

    At dVT Strategy, we help clients with this important process as part of the overall business plan, by translating this information into meaningful objectives, which will close the gap between what customers expect and what your business delivers.

    Whose Voice Do You Hear?

    Businesses seeking to create new growth are faced with a dilemma. Which customers should they listen to?

    Many businesses hear their most vocal customers – usually because their listening is tuned in to the loudest voices. But are they listening to the right customers?

    Is it better to continue to hear the voices of those who are not being served well or even those who are not being served at all?  Or is it wiser to listen carefully to the best and most loyal customers?

    When you answer these questions, remember the well-established 80:20 rule. If 80% of your business revenue comes from the 20% of customers who regularly purchase your products or services, then they should have your attention. They are essential to your business success. Theirs are the voices you should be listening to.

    Selective Listening: Not All Voices Are Equal

    To help you prioritise your listening, use this simple method to classify your customers. Rank them as either A, B or C – based on the following criteria:

    A = High-value customers, who will most likely bring future business

    B = Mid-value customers, with some potential for future business

    C = Low-value customers, who are likely to be irregular or ‘one-off’  

     This differentiates your customers and guides you in terms of how you treat their feedback.  What you might hear from a C-class customer should not be regarded in the same way as feedback from an A-class customer. Your businesses should invest more time in your high ranking customers. They are more profitable, and they take up less time and effort to maintain. The voices of these customers should not merely be heard, but really listened to.

    Use VOC To Drive Your Business

    When you listen to the right customer voices, your business can benefit from their opinions and feedback. You can use this knowledge to:

    • Make alterations or improvements to your products or services
    • Make changes to your business and how it is conducted
    • Determine your position in the market
    • Understand the attitudes, interests and values of your target audience
    • Develop more relevant marketing content
    • Prepare a Business Value, Vision and Mission Statement that includes qualities your customers’ value
    • Identify your Unique Selling Proposition
    • Plan for the future

    At dVT Strategy, we take clients through VOC and customer classification exercises. As a result, they are equipped with data that helps them bridge any existing gaps between their current offerings and what their best customers expect from them.

    Listening to the needs of your customers and their experience is not an optional exercise. Listening to the customers is a valuable investment of your time. Their voices provide the real, instant and quantifiable feedback to help you attract more customers like them – the customers you really want.

    If you or someone you know would like to have a chat about your business and how you can ensure you are capitalising on VOC, please contact Brendan Ryan at dVT Strategy on 02 9633 3333 or email Brendan@dvtgroup.com.au.

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  • Do Bankruptcy and Debt Outlive You?

    News Articles

    Have you ever stopped to consider what would happen if you died bankrupt?  Obtain a general understanding of the different situations and how you may avoid placing an unnecessary burden on family and friends. 

    Like most of us, at some point, you will give serious consideration to making end-of-life arrangements.

    When you prepare your Will, for instance, you will probably appoint an Executor to manage the affairs of your estate. The Executor’s job is to identify and value your assets and sell them (if required), pay the debts of the deceased person and the expenses incurred by the Executor, then make a distribution to your beneficiaries in accordance with your Will.

    Seems straightforward.   But have you ever stopped to consider what would happen if you died bankrupt, or before paying all your debts?

    Many people avoid the question; others come to us looking for answers. We believe it’s important you have a general understanding of the situation, as a starting point.

    Consider these scenarios:

    1. Bankruptcy

    If a bankrupt person dies before being discharged from bankruptcy, section 63 of the Bankruptcy Act 1966  (‘the Act’) provides that the administration of the bankrupt estate is to continue, so far as it is capable of being continued, as if the bankrupt person were still alive.

    If a bankrupt has been named as a beneficiary in the Will of a living person (the benefactor), and is still bankrupt when the benefactor dies, any property (e.g. house, money) that is part of the bankrupt’s interest in the deceased estate becomes an asset in the beneficiary’s bankrupt estate. If the bequest to the bankrupt is in the form of income (dividends on shares, interest on term deposits, etc.) then, for a certain time period, the amount received by the bankrupt beneficiary during the period of bankruptcy, is added to any normal income when the trustee assesses liability for income contributions.

    If the bankrupt is granted a ‘life tenancy’ of a property owned by the benefactor, the right to occupy the property is not an asset in the beneficiary’s bankrupt estate. The rental value of the property, however, is likewise added to any normal income when the trustee assesses liability for income contributions.

    A benefactor is able to add a provision to a Will, stating that if the beneficiary is an undischarged bankrupt at the time of the benefactor’s death, then the original beneficiary’s entitlement will go to another beneficiary.

    2. Insolvency and the Administration Order

    In this scenario, there are three possibilities:

    1. The Executor of a debtor’s deceased estate ascertains that the deceased estate is insolvent, which mean the debts owed by the deceased at the date of death are greater than the assets in the estate. The Executor can make an application to the Court that the deceased estate be administered by a trustee under Part X1 of the Act.
    2. A creditor is owed money by a deceased debtor. The creditor presents a Creditor’s Petition to the Court for an order that the deceased estate be administered by a trustee under Part X1 of the Act.
    3. A creditor is owed money by a debtor. The creditor presents a Creditor’s Petition to the Court, which is an application to have the debtor made bankrupt by way of a Sequestration Order. The debtor dies, before the Court makes a Sequestration Order, the Court can still proceed to make an order that the deceased estate be administered by a trustee under Part X1 of the Act.

    In these cases, the Federal Court or Federal Circuit Court can make an order, under Part XI of the Act, that the debtor’s deceased estate be administered by either a Registered Trustee or the Official Trustee, instead of by the Executor. This is generally known as an ‘Administration Order’.

    ‘Claw-back’ provisions, with certain modifications, apply to Part XI administrations. These enable the trustee to recover preference payments, under-value transfers of property, and transfers of property to defeat creditors carried out by the debtor prior to the death.

    The Trustee’s Role

    The trustee’s administration of the deceased estate generally involves the following tasks:

    • Investigating the financial affairs of the deceased debtor
    • Obtaining a Grant of Probate, if applicable
    • Identifying the assets that can be sold for the benefit of creditors
    • Selling those assets
    • Taking recovery action in respect of preference payments, under-value transfers and property transfers to defeat creditors (if applicable)
    • Determining the claims of creditors
    • Paying a dividend to the proven creditors

    Paying of surplus funds to the Executor for distribution to the named beneficiaries in the Will of the deceased debtor. Clearly, the beneficiaries do not receive anything until such time as the creditors and the trustee’s remuneration and expenses have been paid in full.

    What Happens to an Estate under an Administration Order?

    The administration of the deceased estate by the trustee is similar to the administration of a bankrupt’s estate, but there are some obvious differences:

    • The income contribution regime does not apply; neither are ‘household property’ and a ‘necessary means of transport’ exempt from property divisible amongst creditors.

    For example, if the Will made provision for a specific bequest to a beneficiary of a house or a motor vehicle, the beneficiary would not receive them. The trustee would sell them to obtain                   funds to pay the creditors of the deceased estate.

    • If the deceased debtor had life insurance policy and/or superannuation, the payments from the insurer and/or superannuation fund would not normally be paid to the trustee. This is because the insurance policy would include a provision that, on the death of the insured, the payment would be made to a named beneficiary, such as a spouse, partner or relative. Superannuation includes similar provisions.

    And so the questions are answered. Bankruptcy continues beyond the grave, and debt doesn’t die when you do.

    You can prevent these problems with careful preparation. Structure separate accounts, and make provision for payment of debt. Stay in control of your financial obligations wherever possible and seek advice when you need it. In that way, you will avoid placing an unnecessary burden on family and friends and leave them the legacy you would wish.

    If you would like to speak to someone regarding your particular situation, please call dVT Group on 02 9633 3333 or email mail@dvtgroup.com.au.

     

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  • When a business starts to fail – the new law affecting companies, suppliers and advisors!

    News Articles

    A long overdue reform on the operation of IPSO Facto Clauses to increase the chances of companies facing difficulty to either return to successful future operations or to improve returns for all involved in the event of an insolvency event!

    Running a business is hard at the best of times, what with keeping customers happy and staff and suppliers paid. Keeping a business running when it enters a dangerous financial stage – insolvency – is harder still!  Skilled administrators are often needed to assess the business and try to keep it going and maintain its goodwill. This is often for two purposes – either to turn the fortunes of the business around and restore its profitability, or if that is not possible, to sell the business for a reasonable price as a ‘going-concern’.

    What often occurs in that precarious insolvency scenario is that suppliers opt out of their supply contracts, either because they are fearful they won’t be paid, or because they want to get out of the contract anyway.  Up until now, they could rely on what are called ‘ipso facto’ clauses found in most contracts – meaning the contact can be ended ‘for the reason only’ that the company enters insolvency.

    What is it?

    In the insolvency context, an ipso facto clause is a clause in a contract that allows one party to terminate or modify the operation of the contract upon if the other party enters insolvency, for example, liquidation or voluntary administration. These clauses are used to provide some risk protection for a party against an insolvent customer.  The flip side to this is that it can create difficulty for that customer in trying to turn around its fortunes, if the underlying agreement on which its business is based is terminated.  This can result in irreparable damage to the value of a business which may require key contracts to continue to operate, and can also undermine the ability to restructure, turn around or sell (as a going concern) a business within a formal insolvency process.

    Despite the efforts of a voluntary administrator, there may be not much left at all resulting in creditors getting nothing and what might have been a potentially successful line of new business, is lost to the economy.

    New Law Reform:

    Law reforms that commenced on 1 July 2018 now assist administrators in these scenarios. If directors act early enough to call in a voluntary administrator to their company, the law prevents suppliers from relying on ipso facto clauses to end their supply contracts.  Of course, the suppliers must continue to be paid, through the administrator, and it can often be in their interests to do so.  The company’s business might be restored by the administrator, or sold to another operator, and suppliers retaining that client, despite its difficulties, may prove to be worthwhile in the longer term.

    Who does it affect?

    The changes are relevant to any company going through voluntary administration, scheme of arrangement, deed of company arrangement or receivership, that is dependent on contractual agreements for its livelihood, and where those contracts have ipso facto clauses.  These clauses are often found in contracts of service-based businesses whose values are based more on their various contracts than on their physical assets.

    The changes apply to all new contracts, agreements and arrangements between parties entered into after 1 July 2018, so the law is not retrospective. This is one serious impediment for an administrator and at the same time a bonus for those who have such clauses in their pre-existing and on-going contracts.

    The triggers for the new law:

    The protection for a struggling business extends beyond the appointment of an insolvency administrator. Ipso rights are now unenforceable against the counterparty if they arise for the reason of:

    • a change in the credit rating of the counterparty;
    • a breach of financial covenants such as net tangible assets or debt to equity ratios;
    • a change of control or material adverse effect based on the counterparty’s financial position; or
    • subject to court order, termination for convenience based on the counterparty’s financial position.

    Otherwise, the stay against enforcing rights of termination will not affect most of the other rights being enforced, in particular, those based upon a failure to meet payment obligations, provided that they are not prevented in some other way under the particular terms of the new law.

    Exceptions:

    There are many and legitimate exceptions to the stay being imposed; for example, a lender does not have to continue providing a loan facility. Other exceptions are focused on particular industries such as certain maritime contracts and defence and security related services. Others are more broad-ranging and include:

    • Arrangements for the sale of a business;
    • Supply of goods or services relating to hospitals or public health services; and
    • Government licences or permits.

    The suppliers’ perspective:

    As for the suppliers, their position is protected because the administrator must have funds to be able to continue to pay the supplier, otherwise, the supplier may still terminate the contract for non-payment.  Involuntary administration, suppliers also have some protection in the form of the statutory personal liability of the administrators.

    At a practical level, it should be noted that there are cases where a supplier does not wish to rely on its ipso facto rights, upon an assurance from the administrator that the supplier will continue to be paid; and there are also those cases where the administrator decides that the supplies are not in fact necessary for the business and accepts the ending of the supply contract.

    Summary:

    This reform is long overdue for companies that are genuinely needing to go through a restructuring process which may trigger an ipso facto clause.  At the same time, the law tries to balance that with the rights of suppliers, whose on-going rights to payment are preserved. Given the limits and exception to the new law, it is important for both parties to a contract to understand the new law so as to avoid unnecessary disputes.

    From an administrator’s (and the company’s) perspective, the ability to continue contracts, properly monitored, will likely result in improved returns for creditors and improved likelihood of success in the future operations of the business. At the very least, it should allow the administrator some breathing space to be able to assess the viability of any contract and determine whether it is in the best interests of all parties to continue with it.  Indeed, there may even be a heightened perception that the administrator has more of a position of authority in regard to the contracts now that the legislation has come into force, and that may affect the outcome of negotiations.

    Either way, the impact of the legislation will be dependent on the ability of each party to successfully and commercially negotiate the arrangements under the contract.

    If you or someone you know would like assistance in relation to any of the above, please call dVT Group on 02 9633 3333 or email mail@dvtgroup.com.au.

     

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  • Goodbye to trading names from ABN Lookup!

    News Articles

    Read about the changes when using ABN Lookup and how best to register business names after 1 November 2018.

    ABN Lookup is the public view of the Australian Business Register (ABR). It provides access to publicly available information supplied by businesses when they register for an
    Australian Business Number (ABN).

    Presently, ABN Lookup displays all trading names associated with an ABN. However, work is currently in progress to retire trading names from the ABN Lookup.

    From 1 November 2018, ABN Lookup will stop displaying trading names and will only display the registered business names.

    If a business wishes to continue operating under a different name to their legal name, they will need to register their business name with the Australian Securities and Investments Commission (ASIC).

    What is the impact?

    If professional advisors continue to use an enterprise that uses a trading name, the companies that we do business with, or could potentially do business with, will no longer be able to use the ABN Lookup functionality to verify your identity or GST registration status.

    They will only see an entity’s legal name or business name registered with ASIC.

    What can be done?

    1. You will need to consider registering your trading name as a business name with ASIC.  Once a business name has been successfully registered with ASIC, it will then display on the ABN Lookup;
    2. You should also advise your clients, being companies who use a trading name rather than a legal name, to register for a business name with the ASIC.

    This link can be used:   http://asic.gov.au/for-business/registering-a-business-name/

    What are the costs?

    The costs associated with registering a business name are:

    $35 for one year;
    $82 for three years.

     

    We, dVT Group, believe that it is good practice to register a business name, since it provides evidence of ownership of that business name.

     If you would like help or advice regarding your business, please call dVT Group on 02 9633 3333 for a no-obligation discussion.    

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  • Allocating equity between siblings: entitlement vs reward!

    News Articles

    How do family companies allocate equity between siblings considering the work done in the company and their entitlement to a “hereditary” share of the company?

    At dVT Strategy, we have been working with several family companies around setting up their businesses for generational change. This has resulted in some very interesting family dynamics being highlighted.  The most interesting one being that of “entitlement versus reward”.

    Those working in the company rightfully want to be acknowledged and rewarded for sacrifices made and the skill they bring in having developed the business. Those siblings that may have been too young to contribute or were out working to help contribute to the family’s income whilst the company was being established may also be entitled to a valid claim.

    The younger ones would have endured times where their parents and siblings were simply not around.  Whilst those working and helping prop up the family finances would also feel a sense of loss of opportunity. How do you balance this against the siblings who worked on and in the business putting in extraordinary hours for little pay to build on a dream?

    Unfortunately, there is no hard and fast rule for resolving these issues.  They are very much emotional issues that need to be aired and properly handled through open and constructive discussions.

    Too often such discussions become toxic and lead to ill feeling between family members.  This is because internally the family is often unable to resolve all the issues confronting them as there is a feeling of bias and a hesitancy to openly discuss all the issues with other family members.

    One strategy that can help in these situations is for the family to use an experienced and trusted advisor to guide them through this delicate process.

    We, at dVT Strategy, have found that workshopping these issues with the ability to have breakout sessions for one on one discussions has proven to be a very effective way to reach a workable resolution.

    Further, to be successful, we have found it imperative that the partners and spouses of siblings are included in these workshops.  This avoids the frustration of spending time reaching an outcome that is accepted by all present, only to then have it undone when one of the participants talks to his partner or spouse and wants to restart the process.  This could result in much animosity and could make the process even more difficult to conclude satisfactorily.

    Once an agreement has been reached, it is imperative that a shareholders/participant agreement is drafted and executed by those involved.  This formalises the process and allows the emotions to be parked and all the participants can then get on with their respective roles in the knowledge that their position has been clarified and rules have been set.

    In completing the process, the need for ensuring “entitlement versus reward” is extremely important.  As if it is skewed one way or the other, it could seriously impinge on the continued operation of the enterprise.  So, the agreement becomes a way forward as much as a reflection of the past.

    If you would like help or advice, give Riad Tayeh from dVT Strategy a call on 02 9633 3333 to have a chat about your family business. 

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  • Business Mentors: a secret weapon behind thriving businesses!

    News Articles

    We are all aware of the numerous challenges business owners face when running a business.  These challenges can be grouped into three key areas being:

    1. Having the skills and experience needed across every aspect of the business:
      Most businesses are started by people that have an idea, skill or passion for a particular product or service. Whilst they are often very good in their area, very few also understand or are highly proficient at HR, Operations, Finance and Sales & Marketing, which are basic requirements for every business owner to run a successful business.They often learn this knowledge and experience from first-hand situations, but this can be both costly and demanding for a business owner. Larger businesses will employ a large team of specialist managers who have the required skills in each of these specific areas, but for a smaller business who is yet to generate the profits to afford the large management team, this responsibility falls back onto the owner.
    1. Managing the business whilst dealing with personal conflicts, culture, and history;
      The second key challenge for a small business owner is that at some stage they are likely to need to make a choice between a sound business decision or maintaining a personal connection, which often occurs in small businesses who work with, employ, buy from or sell to family or friends.  Many times these personal relationships have been built up over many years and often a business owner continues with them despite knowing it is no longer the best outcome for their business. A perfect example of this is having a staff member in your business who has been there since the business started, however, they are not performing, are difficult to deal with or are causing issues, yet the owner continues to employ them through a sense of loyalty.
    1. Having the time to step out of the business and work on the business:
      The third key challenge for business owners relates to the old adage of “working on the business vs working in the business”. The daily pressures of getting work done, meeting deadlines and managing everything can take a toll on the efficiency of the business. It also means that there is not the time to identify the issues, (Refer the boiling frog syndrome) let alone focus on what can be done to improve performance.

    This all means that a business owner needs to work smarter, not harder and that they need to ensure they have the right support.  Having a business mentor and a network of trusted experts can help business owners with the advice and support to address the challenges in these three key areas.

    There is sometimes the perception that having a mentor means that a business is struggling and is looking to get back on track.  In reality, many thriving businesses use mentors as their secret weapon.

    So what is a mentor?

    A mentor is an experienced individual who employs their own knowledge and skills to help coach business owners through the challenges of running and growing a business.  They can provide experienced, challenging and non-biased advice that help make informed decisions for the business.  A mentor can also act in a similar way as an advisory board but at a one to one level that has the ability to be flexible in its approach.

    How can a mentor help?

    A mentor can make valuable contributions in these areas:

    • Identify issues within the business that may be impacting on overall performance
    • Provide direct assistance in solutions to remedy issues
    • Act as a sounding board for ideas and concerns & give thoughts on major business decisions
    • Coach the owner on how to achieve their own personal goals within the business environment and gain some sort of work-life balance
    • Setting goals, introducing new strategies and tracking process to ensure you understand how the business is tracking.
    • Assist with compiling a business plan
    • Drive performance and delivery of the business plan
    • Improve business sales and help you to find new opportunities
    • Provide linkages to other experts to assist in remedying issues

    The benefits of having a mentor will vary from business to business and will range from utilising their business knowledge and experience right through to evolving both professionally and individually. Success for your business cannot be accomplished without both you and the business performing effectively.

    Business mentors do come at a cost, but the cost to the business is only a fraction of employing a management team and represents a strong investment when you consider the financial return they can bring.  Business owners that get the most out of engaging with a mentor are ready for change and are committed to achieving strong results.  They also understand the effect that wasted time, money and valuable resources on ideas that may not be effective has on the business.

    At dVT Strategy, we act as mentors to all of our clients and coach them through any issues that they may encounter. We ensure that our clients are kept accountable to their goals and are regularly challenged on their progress. As a result, we have seen a number of our clients achieve goals they originally deemed unobtainable and as a result, have received and enjoyed increases in their financial return.

    If you or someone you know is worried about their business or would like to receive an objective view of how a business is performing; or are ready to take the business to the next level, contact Brendan Ryan at dVT Strategy on 02 9633 3333 or email brendan@dvtgroup.com.au.

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  • Disrupting Bankruptcy? Change from three to one year period.

    News Articles

    The period of time during which a person remains bankrupt is being reduced from three years to one. But while most of the restrictions of being bankrupt will be removed after one year, some will remain; in particular the obligation to continue to pay contributions from income for the full three years. 

    The changes to the Bankruptcy Act[1] itself are quite minimal, with the main change being that Section 149 will refer to one year rather than three as being the minimum period of bankruptcy.

    Apart from the obligation to continue to pay contributions for the full three years, for practical reasons, after one year a person will no longer be in bankruptcy. Restrictions on overseas travel, on obtaining credit, on being a company director and on certain professional and other licenses will all be lifted.

    This change will most certainly happen and the aim of this information is to help advise and prepare clients for any implications.

    We should start by acknowledging that this change can be viewed as having some positives, such as:

    • Leaving a person in the constraints of bankruptcy for a full three-year period is out of kilter with modern approaches to unpaid debt;
    • Regulations of bankrupt persons, over a three-year period, involves a considerable cost to creditors and to the community. There are economic benefits in having them discharged after a shorter period, and allowing them to participate fully in economic life;
    • There is an undue stigma attached to bankruptcy, especially when seen in the context of unpaid debt in the corporate sphere, where directors are generally protected by their limited liability.

    Cause for concern?

    The proposed change has also raised concerns on two points connected with the reduction of the bankruptcy period:

    • If a bankrupt inherits property during their bankruptcy, it belongs to the Trustee. If the inheritance occurs after bankruptcy, the former bankrupt can keep it. With bankruptcy now only lasting one year, there may well be such windfalls in the second and third years that the creditors will miss out on.
    • Under the current law, bankrupts are required to pay contributions from their income for the full three years, if it is above a certain threshold (currently a minimum of around $56,674.80 for bankrupts without any dependants). Under the new law, despite that person’s bankruptcy ending after one year, they will still be required to pay those contributions for the remaining two years. The concern is that once a person is out of their bankruptcy, the Trustee will have less authority to enforce income contribution compliance over the following two years.  For example by way of various powers to enforce compliance, including to extend the period of bankruptcy by way of an ‘objection to discharge’.

    There are some additional provisions in the law to assist Trustees in enforcing payment:

    • A stronger requirement for discharged bankrupts to keep in touch with their Trustees by way of notifying any change in contact details. Any breach of that requirement involves a serious penalty;
    • The continuation of the supervised bank account regime, which can be used by Trustees to collect outstanding payments, even after discharge;
    • The requirement for former bankrupts to keep and provide, for the full three years, details recording their income, employment, financial transactions and other dealings.

    Accounting and tax advisers with clients who have been through bankruptcy should be particularly aware of this last requirement.

    The bankrupt estate

    The ‘bankrupt estate’ which the Trustee administers, is considered separately from the bankrupt person. It is important to point out that a Trustee has always been able to carry out investigations, asset recovery proceedings and the sale of assets after a bankrupt’s discharge within certain time frames. In the proposed amendments there is no change to the law in terms of the period of time by which an estate must be administered and finalised.

    How will the transition be made?

    The default one-year bankruptcy period will commence on a nominated day, which has yet to be announced. If we assume that it is 1 September 2018, on that day all bankruptcies then on foot for over one year, except those subject to an objection to discharge, will be discharged. Remaining bankruptcies will be discharged after one year.

    For this reason, there would be no point in delaying bankruptcy until the new law comes into effect. Whenever bankruptcy occurs, under the new law, it will be limited to a period of one year.

    In the future

    The changes in bankruptcy law will most certainly happen; Trustees and creditors must accept that. In the longer term, we consider that further changes will be necessary.  One possible change is to reduce the time period during which a debtor and/or bankrupt will be listed on credit rating agencies’ databases. The current period is generally five years, we suggest it should be reduced to three years.

    This change would assist the anticipated positive effects of one year bankruptcy to flow into the economy.

    Anyone being pursued by creditors, or contemplating bankruptcy should know that bankruptcy is not the only option. There are other avenues available under the law; including debt agreements under Part IX of the Bankruptcy Act, which is also subject to Government reform.

    In any case, the decision to declare bankruptcy is one that should never be made before seeking advice.

    If you would like advice or if you would just like to discuss any of the above, please call the dVT Group on 02 9633 3333.  

    [1] The Bill is before Parliament; this article is written on the assumption that it will become law.

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  • Business Valuations: putting the “value” in “valuations”

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    There are a number of reasons why business valuations are done – maybe it’s the sale of a business or developing employee share option schemes.  It could be to resolve shareholder disputes or maybe to determine an appropriate market value for taxation purposes.

    Providing quality business valuations is a growing part of the services we provide at dVT Group and we have found that from time to time clients ask us “how can we use valuations to improve our business and the value of our business?”

    Our reply?  It’s all about the risk.  A key part of any valuation is assessing the risk of that business, and that impacts directly on the multiple that we use to crunch the final valuation numbers.  If a business is considered to have a number of risks, the multiple decreases, and this follows to impact on and decreases the business value.

    So the answer to improving business value is to decrease the overall risk of a business.  There are a number of ways in which business owners can make changes to achieve this, many of these should and do work hand in hand with each other.

    7 key factors that can help decrease the overall risk of a business are: 

    1. Consistency – by that we mean doing the business well and in the best manner at all times. You may not always be selling the same products or the same services, but you should always strive to conduct the business in the best manner at all times.  This in turn reduces the risk and uncertainty.
    2. Diversification – the highest risk is in a business that only does one thing or only has one major customer. That’s not to say that you have to be all things to all people and spread yourself too far.  The best way is to determine which customers and services provide you with the best profit margins and then concentrate your efforts on those.
    3. Processes and procedures – if you were selling your business, the purchaser would expect to be able to walk in the door on the first day, without you there, and take over the running of that business because you had all the systems, processes, customers etc, documented and able to be picked up by the new owners. That again decreases the risk because it demonstrates that all the knowledge about the business is not locked in the owner’s head!
    4. Planning and Reporting – this sort of goes with consistency; you should always have a current business plan that includes your marketing, products, staffing, financial and other goals and objectives and you should be using those plans on a regular basis. In other words, every month or quarter, reporting or summarising your results against expectations and understanding why those expectations were achieved or not.  This also just makes good business sense apart from increasing value, the quicker you know what is going on with the business, the quicker you can use that knowledge to leverage the good stuff and minimise or prevent the bad stuff!
    5. Innovation – there is, of course, a level of risk associated with innovation, so it’s a balancing act. A business that is always looking for new products or services to sell and is able to provide those with minimal disruption and loss of other business, is always more attractive than a business who keeps doing the same thing.
    6. Business structure – make sure the legal structure of your business is one that maximises protection of assets, including goodwill and any intellectual property, as well as plant and equipment.
    7. And always be ready for sale – even if you don’t intend to sell the business, run it like you are going to sign a sale agreement the next day. This means that the business needs to be clean, up to date, with a clear picture of where it has been, what it is doing and where it intends to be in the future.

    There are many ways in which we can help reduce risk and maximise the value of your business.  If you would like help or advice in this area, give Suelen McCallum from dVT Group a call on 02 9633 3333. 

     

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  • Avoiding the slippery and winding path of phoenix activity!

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    The ATO and ASIC have again been in the headlines recently in relation to phoenix* activity and whilst this makes for good reading, it presents a sound reminder to all of us about the consequences of heading down the slippery and winding path of phoenix activity.

    This activity may be tempting for many due to the hollow promises, but as the old saying goes “if it sounds too good to be true, it generally is.”  There is good reason why this old saying still has currency today!

    This has brought into sharper focus the actions of pre-insolvency advisors and the regulators from ASIC & ATO have been reenergized.

    A special task force drawn from these regulators and the Fair Work Ombudsman are collaborating and sharing sensitive financial and other information to reduce this type of activity on the promoters and perpetrators of the incidence of phoenix and other questionable practices.

    Here are some examples of ASIC initiatives to combat illegal phoenix activity:

    1. Enforcement Action: ASIC takes enforcement action against those who facilitate or aid and abet illegal phoenix activity, including directors who breach their duties;
    2. Disqualifying Directors: ASIC can disqualify directors from managing corporations where they have been involved in 2 or more companies placed into liquidation in the past seven years;
    3. Liquidator Assistance Programme: ASIC can assist liquidators to obtain books and records and prosecute the directors;
    4. Education & Engagement: ASIC periodically educates the market of their legal obligations and meet with industry representatives to raise awareness of illegal phoenix activity.  They also work closely with ATO, Fair Work Ombudsman and the Department of Employment to exchange intelligence and information;
    5. and other initiatives such as Director Identity Numbers, Reporting of Tax Debts (see our article Anticipating change-government-law-reforms).

    These initiative are concerned with protecting our economy, employees (through non-payment of wages and superannuation) and not giving those that partake in phoenix activity an unfair competitive advantage.

    But unfortunately, in times of financial stress, business operators tend to grab onto whatever solution that is presented to them, not giving proper regard to the actual solidness of that solution.  It is like they grab onto the first rope that is thrown to them to resolve the immediate issue, only to find out it is not tethered and secure at the other end, possibly resulting in extreme personal loss.

    We can all assist by not letting our clients be victims and fall for these easy but false solutions, peddled by this emerging sector of the market.

    So what can we all do?

    1. Be aware of the characteristics indicating phoenix activity, see Indicators
    2. Be wary of your client receiving unsolicited correspondence, particularly after a court action by a creditor or receiving advice from a source where they have not been prepared to put it in writing
    3. Check and verify companies that you deal with by using ASIC Business Checks to see if they are registered, credit history etc.
    4. If you are concerned or suspect possible phoenix activity, report phoenix activity
    5. Encourage your clients to seek advice from trusted and qualified professionals who hold registered liquidators or registered trustee in bankruptcy qualifications. These are very difficult to attain and are the only qualifications recognized by ATO, ASIC and the Courts

    If you are ever in doubt and would like a fair and unbiased opinion on any situation, call to speak to one of our experts at the dVT Group cost-free on 02 9633 3333 or visit our website dvtgroup.com.au.

     *Phoenix activity is when a new company is created to continue the business of a company that has been deliberately liquidated to avoid paying its debts, including taxes, creditors and employee entitlements.

    Source:  (from ASIC.gov.au website – how to complain/illegal phoenix activity)

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  • Anticipate, Adapt, Apply: Dealing with change in Government Law Reforms.

    News Articles

    You’re probably aware of the proposed reform of laws relating to tax, wages and super.  Disruption ahead?  Maybe.  But it’s not bad news for businesses that are doing the right thing.  You just need to know what they are and keep on top of the changes.

    A wise man once said, “There is nothing permanent except change”. He was the Greek philosopher, Heraclitus, who lived over 2,500 years ago. As it turned out, he was right.

    The speed of change today might have made him dizzy, but would probably come as no surprise. We already have drones delivering dinner and refrigerators restocking themselves and just ahead are cars that will take over driving.

    Change, both positive and negative, comes at us rapidly and inevitably, and it will have an impact.

    Technological change continuously places demands on businesses to be more efficient and for their provisions of goods and services to be less costly. It is vital for operators in all fields to anticipate the disruptions of advancing technology, and then to be able to adapt and apply them as the means to their own business growth.

    But disruptions are not only technological. They also come as a result of changes in the law, and it’s important for businesses to understand, prepare for, and respond to them. Specifically, we’re referring to a number of law reform initiatives that focus on providing for more ready tax collection, more oversight, and greater protection of employees and consumers. Some reforms are in train, some are before Parliament, and others are being actively discussed.

    Change usually arises out of need. In this case, the proposed law changes centre on the need to anticipate problems associated with insolvent companies that collapse, leaving large tax liabilities and unpaid wages and super contributions. The ATO is often unaware of the deficiencies, employees have no knowledge of their unpaid super, and directors might have used or transferred company assets, which are hard to trace.

    To address these problems, the government is making, or contemplating, various changes:

    • Introduction of Single Touch Payroll:
      Businesses with 20 or more employees will be required to report salaries and wages, PAYG withholding, and super information directly to the ATO at the same time they pay their employees.  This new law commences on 1 July 2018.  To find out more … Single-Touch-Payroll Why? Because too many employers either delay or fail to pay their employees’ super. And when businesses go into liquidation, employees and the government are the losers.
    • Reporting of Tax Debts:
      The government has released draft legislation to allow the ATO to disclose businesses’ tax debt information to registered credit reporting bureaus, which will then be able to provide that information to their subscribers, including banks.  To find out more …  Reporting of Tax Debts Why? Who would lend funds or extend credit to a business that had excessive unpaid PAYG?
    • Targeting of the Black Economy:
      The age-old problem of the ‘cash economy’ is now the subject of increased government attention.  The government is considering a range of measures suggested by its Black Economy Taskforce, focusing on the application of emerging technologies, better use of data and a whole‑of‑government focus. High risk industries are identified for particular attention, including the courier and cleaning sectors.  To find out more …  Targeting of the Black Economy.
    • Penalty Notices:
      The ATO’s director penalty notices are at the moment confined to PAYG and super deductions, making a company director personally liable for amounts owing.  It would seem that the next step could be that the government may be considering whether to add GST as a liability!The government is also planning to supplement these measures with more severe penalties and stricter oversight.

    The Good News:

    The message might sound harsh but, in fact, many of these reforms are beneficial. They will throw some much-needed light on unsavoury conduct in the business world, where unscrupulous operators compete unfairly with compliant businesses.

    Changes are being made in response to what continues to be a serious loss of revenue. The reforms will target the phoenix activity of operators who dispose of a company’s liabilities, but quietly keep its assets. They will focus on businesses that keep their prices down by unlawfully using their workers’ taxes to fund their cash flow, and on directors who use a variety of names and aliases, and apparently healthy credit risks to hide large unpaid taxes.

    Current law reform has all these shady practices firmly in its sights.

    In summary:

    Disruption is not necessarily a bad thing. Whether it’s about rapid technological change or law reform, any initial pain is relieved by more efficient business processes, and a more even playing field for all.  Honest operators need not be concerned but they, and their advisers, should make sure they are informed and equipped to get on top of what’s happening.

    After all, as another wise man, Stephen Hawking, said, “Intelligence is the ability to adapt to change”.

    If you would like help or if you would like to discuss any of the above, please call the dVT Group on 02 9633 3333 or visit our website dvtgroup.com.au.

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  • SMEs should know what grant funding options they may be eligible for!

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    Following our article last month on the “Power of Business Reviews for SMEs”, we have received numerous enquiries asking what type of grants are available.  This article covers some of the grants the Australian Government offer to help SMEs for activities such as growth, innovation and commercialisation to help develop these businesses. 

    Operating a small or medium enterprise (SME) can be one of the most demanding, challenging and often rewarding things for a business owner.  This role has become even more difficult over the years as business owners struggle with having to know and understand everything there is about running a business.  With the endless strains on their time and resources, it is no wonder business owners can become overwhelmed and important things overlooked.

    The Australian Government recognises that for SMEs sometimes great ideas for products or services need a helping hand to be developed.  For this reason, in addition to the Business Evaluation Programme covered last month, (https://www.dvtgroup.com.au/power-business-reviews-grants-smes-australian-economy) they also offer the following range of grant funding and services:

    Growth Assistance Grants

    Businesses that wish to take advantage of growth opportunities are able to access grant funding and assistance that is aimed at identifying and capitalising on growth opportunities more rapidly and competently with a reduced level of risk. A growth opportunity refers to an investment in a project that has the potential to grow significantly, therefore reaching more ideal customers or addressing any current trends that are impacting on the industry the business is operating in.

    This grant provides access to experienced advisors who will work with them to develop a unique growth plan. They will guide businesses throughout the entire process from implementing the plan to providing access to knowledge, research and other assistance needed and also helping to maintain growth rates through regular meetings and follow-ups for up to a two year period.

    Eligible businesses will be reimbursed 50% of the costs up to $20,000 for activities directly related to the implementation of recommendations identified in the growth plan.

    Innovation Assistance Grants

    SMEs also have access to innovation assistance and funding which assists businesses to access knowledge, engage with researchers and innovate. This program is a free, no obligation service that connects businesses with an expert innovation facilitator to assess knowledge gaps within the business and provide specialised support tailored to the business. There are two types of services available:

    • Information Technology – assesses a business’s information and technology needs and provides suitable solutions to address these needs. This can help to identify new knowledge, technology and expertise relevant to the business operations.

    A report will be prepared specific to the business current IT infrastructure and business operational needs going forward and outline the IT needs and opportunities of the business and identify some of the solution options available.

    • Research & Development – helps businesses to identify strategic research and developmental needs and identifies pathways to engage with the research sector to enable the business to fast track their research and development. This can involve working alongside any of the Australian Universities or CSIRO.

    This programme includes potential grant funding of up to $130,000 and please note this support and grant is completely separate from the ATO’s R&D tax-incentive. https://www.ato.gov.au/Business/Research-and-development-tax-incentive/

    This ATO programme is another excellent government initiative and if you are not utilising either the R&D tax incentive or the R&D grant, please ask if you are eligible for both or either.

    Commercialisation Assistance Grants

    Developed as a way to help Australian SMEs, researchers and entrepreneurs address the challenges associated with commercialising novel intellectual property (IP) in the form of novel products, services and processes.  This program offers both cash grants and guidance from industry experts.

    The expert advisors assigned to the business assist in finding the right commercialisation solutions that may include matched grant funding to support commercialisation activities of up to $1 million dollars. These industry advisors have extensive experience in commercialising novel products, services and processes and provide businesses with the necessary strategic advice and feedback in order to get novel ideas into the market effectively.

    The objectives of this program are focused around:

    • Accelerating the commercialisation of novel products, services and processes;
    • Creating new business based on novel IP with high potential for growth;
    • Encouraging greater commercial and economic return from research and development to drive business growth and competitiveness.

    Summary

    Over the years, dVT Strategy has successfully helped a large number of businesses gain access into these programmes, with our clients recording positive results and financial uplifts. We work closely with businesses and government advisors to prepare applications for entry into these programmes to ensure they are successfully approved.

    No matter what stage of business development a business is in, it is worth checking what assistance you could potentially be eligible for.

    If you have a business or know someone that may potentially benefit from access to one of these programmes, dVT Strategy are happy to conduct a free no obligation, initial discussion to see how this programme can assist.    Contact Brendan Ryan on 02 9633 3333 or email brendan@dvtgroup.com.au

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  • A handy reference guide – Data Breach reporting and how it may affect you!

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    Leading up to the introduction of the data breach laws, we gathered information that we found useful and have shared it with you as it may also be useful for you or someone you know.  Read more about what it is, who it affects and how to report data breaches. 

    What it is?
    On 11 February 2018, new data breach laws came into place (via the Privacy Act 1998)  which compel organisations to report data breaches to the Office of the Australian Information Commissioner (“OAIC”).

    A data breach is when personal information which can lead to serious harm is disclosed or accessible to another party and cannot be prevented by remedial action. While this may seem like it is designed for unauthorised data access, the same laws also apply when information that could be used for identity theft is accidentally sent to a wrong address, so please bear in mind the medium of information is not the issue at hand.

    For more: https:// www.oaic.gov.au/privacy-law/privacy-act/notifiable-data-breaches-scheme/identifying-eligible-data-breaches#eligible-data-breach

    Who it affects?
    If your organisation has an annual turnover of more than $3 million, or is a private sector health service provider, credit reporting body, credit provider, an entity that trades in personal information or tax file number recipients you must report data breaches. Between the wide scope of the entities listed and best commercial practice, it may be prudent to develop a reporting system for yourself in case of a data breach.

    For more: https://www.oaic.gov.au/privacy-law/privacy-act/notifiable-data-breaches-scheme/entities-covered-by-the-ndb-scheme

    There are some exceptions, but they are unlikely to apply to data breaches from a commercial entity outside the health sector (which has a separate reporting scheme).

    Where breaches are suffered by more than one entity, they need only be reported once. As a general rule, OAIC suggests that the disclosure be made by the party dealing directly with the party affected by the data breach.

    For more: https:// www.oaic.gov.au/agencies-and-organisations/guides/data-breach-preparation-and-response#data-breaches-involving-more-than-one-entity

    How to report?
    To report a data breach, you must notify the affected party and lodge a notify the OAIC. The OAIC has an online form for this purpose.

    For more: https:// www.oaic.gov.au/agencies-and-organisations/guides/data-breach-preparation-and-response#what-to-include-in-an-eligible-data-breach-statement

    These laws are designed around breaches of security of personal information, such as dates of birth and TFNs and so do not apply to business information. Also, the OAIC recommends you attempt to remedy the data breach wherever possible and require data breaches to be reported within 30 days of discovering the data breach.

    As a matter of good practice, you may wish to consider advising about breaches of business information as well as personal information. The OAIC also recommends that breaches are reported before the 30 day limit. Most accounting firms will be affected by this reporting regime as they are TFN recipients, however small law firms may not be affected. Overseas bodies operating in Australia are also covered by the reporting regime.

    Some further resources that may also be helpful or interesting:

    ACORN – https://www.acorn.gov.au/ – Australian Cybercrime Online Reporting Network

    IDCARE – https://www.idcare.org/ – A charity that assist individuals with identity and cyber security. Supported by the Australian government and increasingly insurers.

     

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  • Keeping your superannuation protected when bankruptcy strikes!

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    In the challenging event of bankruptcy, your super funds could be off limits to creditors and may even be used to fund asset purchases. The Bankruptcy Act states that, if a person becomes bankrupt, funds held in a person’s regulated super fund are protected and unavailable to creditors.

    In addition, a bankrupt person can withdraw money from their super funds and spend these amounts as they wish. If they acquire an asset such as a house and the major portion of the acquisition cost comes from their super funds, the house is also protected from creditors.

    However, there is one major caveat.
    If a person, prior to becoming bankrupt, makes large, ‘out of character’ contributions to their super funds with money that could be paid to creditors, these payments could be taken back. In certain circumstances, the Bankruptcy Act empowers the trustee to claw back such payments into the bankrupt estate.

    The importance of timing:
    The key point is this: The protection afforded by the Bankruptcy Act to funds held in super funds only commences when the person becomes bankrupt.

    Consider this example. An individual, prior to declaring bankruptcy, withdraws money from a super fund and purchases an asset. These funds are not protected and can be taken by the trustee for the benefit of creditors.

     A curious case:
    In discussing this issue, let’s examine a recent case from the Australian Financial Security Authority (AFSA) which has some intriguing facts. The case deals with Ms Kim Britton, aged 60, from Queensland.

    According to the AFSA report, here are the facts of the case:

    • On 12 March 2014, Ms Britton was served a Bankruptcy Notice relating to an unpaid Family Court judgment of $45,000
    • On 17 March 2014, Ms Britton requested her two superannuation providers to withdraw amounts from her funds.
    • On 20 March 2014 and 27 March 2014 Ms Britton duly received $25,401.96 and $33,399.06 which she deposited into her bank accounts
    • On 21 March 2014 and 28 March 2014, Ms Britton made eight cash withdrawals totalling $58,000
    • On 20 April 2014, Ms Britton became bankrupt on her own petition. She subsequently informed the trustee of her bankrupt estate she had spent the $58,000 on living expenses.

    Ms Britton was convicted on two counts of removing property prior to bankruptcy and sentenced to six months imprisonment. However, she was released immediately on a $3,000 good behaviour bond for three years. In passing sentence, the Magistrate took into account the seriousness of the offence and noted the need for deterrence.

    In exploring the facts of the case, it seems that, had Ms Britton left the moneys in her two super funds until she became bankrupt, she could have escaped prosecution. This is because the funds would have been protected by the provisions of the Bankruptcy Act. So, once she had become bankrupt, she could have withdrawn the funds and spent them without the threat of punishment.

    Given that creditors were not disadvantaged, it is curious why AFSA felt the need to take action against Ms Britton.

    We also note the nature of the debt on which the Bankruptcy Notice was based, related to Family Law Act proceedings possibly involving her former spouse/partner. Ms Britton may have been fearful that she would lose the moneys in her super funds when she became bankrupt and that her former spouse/partner, acting as a creditor, would receive some of these funds. To avoid this event, she withdrew and spent the funds in the three weeks prior to becoming bankrupt.

    From our perspective, it seems that when contemplating bankruptcy, Ms Britton either did not seek professional advice concerning the status of her super funds or she received advice from someone who had little or no understanding of the interaction between super and bankruptcy.

    Getting help when bankruptcy looms:
    This somewhat sad tale demonstrates the need to obtain quality professional advice in the event of someone facing or contemplating bankruptcy. dVT Group’s Personal Insolvency team has extensive experience and knowledge on all the facets of the Bankruptcy Act and the potential impact of bankruptcy on a debtor and their creditors.

    They can assist creditors and/or their legal representatives who are considering whether or not to take bankruptcy action against a debtor. dVT Group can also help ascertain the steps and costs involved in the process in making the debtor bankrupt and what happens after the debtor is made bankrupt and a trustee is appointed to administer their bankrupt estate.

    Special thanks to Bob Cruickshanks for his technical expertise and valuable perspective on this subject.   If you would like to know further in relation to a specific situation, please call the dVT Group on 02 9633 3333 or visit our website dvtgroup.com.au.

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  • The power of business reviews and grants for SMEs and the Australian economy.

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    Government business reviews and grants have become secret tools for small medium enterprises (SMEs) to obtain affordable help to grow their business, while assisting growth in the Australian economy. Find out how you can benefit from a network of support and advice to improve your business capabilities and competitiveness.

    According to the Australian Bureau of Statistics (ABS), as of June 2016 there were nearly 2 million SMEs trading in Australia. The ABS defines SMEs as any business employing less than 200 people with an annual turnover between $100,000 – $25 million.

    Because the importance of this integral business segment is overlooked, the Australian Federal Government is providing a free initiative to support growth to help increase the productivity of these SMEs.

    Unfortunately, this initiative is not well known outside government circles, so it is often overlooked by many typical advisors to the SME market. dVT Strategy (part of the dVT Group) is one of the few advisors that have recognised the value of this programme and have already assisted over 100 SMEs gain access to the programme and benefit from the outcomes.

    In order to be eligible for the programme a business must satisfy three key areas:
    • Be operating for more than three years
    • Have a turnover between $1.5 million and $100 million
    • Be operating in any of the following areas: advanced manufacturing; food and agribusiness; medical technologies and pharmaceuticals; mining equipment, technology and services; oil and energy resources; or providing enabling technologies/services to one of those previously mentioned. These areas have been identified as growth sectors within Australia.   (NB: the category of enabling technologies/services can be very broad and many business types can fall into this category. Ask us if your business fits).

    dVT Strategy take the time to firstly pre-qualify businesses to ensure they are suitable for entry into the programme. Understanding how busy business owners can be and how involved the exercise can be, dVT takes a hands-on approach to drive the application process and work alongside their network of businesses advisors to ensure the application is successfully approved. dVT Strategy are happy to say that to date, they have achieved a 100% strike rate for their clients.

    Taking part in this programme provides businesses with a skilled and experienced government employed business advisor who will visit the business premises to review business operations, including business direction and strategy. The business advisor will also undertake further research and analysis of information offsite. The review conducted by the advisor equates to approx$10,000 – $15,000 worth of consulting, at no cost to the business.

    The outcome from this review is a holistic business assessment, ratio analysis, global benchmarking, industry reports, connections to a variety of grants and a tailored business evaluation report outlining recommendations that a business can adopt to become more competitive, improve and grow within the industry. Results from an ABS study into the performance of businesses who have participated in this business evaluation programme, showed that their performance significantly increased more than similar businesses that did not participate.

    After the review, knowing what to do and how to implement the recommendations identified in the report can prove to be overwhelming and time consuming for the business owners to undertake alone. That’s why as part of the programme, the business is then eligible to access a grant of up to $20,000 to spend on an external consultant to help deliver on the key recommendations.

    Engaging an external consultant, such as dVT Strategy, to assist in the delivery of the recommendations identified can add a significant return on investment. dVT Strategy have successfully helped a large number of businesses over the years to implement these recommendations, seeing positive results and a financial uplift. They have also helped these clients access a number of additional, and often larger grants, to support their new found growth opportunities.

    The ABS identified that those businesses that received further support through access to grants went on to further increase their performance by more than 80% above those that received a business evaluation but did not access the programme funding. Results showed an uplift of $300,000 – $400,000 for those businesses that received the evaluation and $600,000-$800,000 for those that utilised the grant.

    Here are examples of businesses we have helped with this programme, in the industries of:  

    dVT Strategy thrive on seeing SMEs grow and realise their potential. If you have a business, or know someone who may be interested in accessing this programme, dVT Strategy are happy to conduct a free no obligation, initial discussion to see how this programme can assist.  Contact Brendan Ryan on 02 9633 3333 or email brendan@dvtgroup.com.au.

    (ABS Study on Enterprise Connect Business Review and Tailored Advisory Service Client Performance)

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  • Inspiration from the Special Olympics at our yearly fundraising breakfast!

    Community

           

    dVT Group have been working with Special Olympics Australia since 2005 across various events.  Suelen McCallum, partner at the dVT Group, is always keen to give back to the community and has been the chair of the Inspirational Women’s Breakfast committee since it’s inception in 2012.

    This year we had another successful Special Olympics Inspirational Women’s Breakfast held on 7 March 2018 at the QVB Tea Rooms, which was sold out early.  It was truly inspiring as we heard from our guest speakers Kate McClymont (Investigative Journalist, SMH), Mary Coustas (Writer/Performer well known as Effie), Ming Long (Business woman, Property Pioneer & Advocate for Male Champions of Change and Board Diversity).

    One of the highlights was when Mel, one of the Special Olympic athletes, asked us all to verbalise out loud the Special Olympics pledge….. “Let me win. But if I cannot win, let me be brave in the attempt.”

    Our special thanks goes to everyone who supports Special Olympics and we are happy to have raised over $27,000 for the athletes from this breakfast.

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  • New Emerald Coal Pty Ltd (Administrator Appointed) (Receivers Appointed) A.C.N. 148 891 865

    Creditor Reports

    On 21 May 2018, Riad Tayeh was appointed Voluntary Administrator of New Emerald Coal Pty Ltd  (A.C.N. 148 891 865).

    By proceeding to view information about New Emerald Coal Pty Ltd, you are declaring that you are an investor, creditor or professional advisor for this matter and that you agree not to communicate any information to any person other than another investor or creditor of the Company, without the express written consent of de Vries Tayeh or unless otherwise compelled by law. 

    Creditors of the company can find a report to creditors available here Report to Creditors 18.6.18

    Creditors of the company can find a supplementary report to creditors available here Supplementary Report to Creditors 10th August 2018

    If you believe you are a creditor of the company or if you hold information which may assist the administrator in their investigations into the affairs of the company, please do not hesitate to contact Troy Graham or Jenny Stojanoska of this office on +612 9633 3333 or at mail@dvtgroup.com.au.

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  • Nicholas Wong

    Business Strategy Team09/08/2018

     


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  • Erin Garlick

    Business Strategy Team

     

     

     

     

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  • Our Process

    Business Strategy Process

    Our clients rely on us to deliver practical and achievable outcomes.

    We do this by using our proven process listed below together with our willingness to go the extra step and to roll up our sleeves to work with you to ensure we surpass your expectations:

    • We initially meet with all our clients to determine their needs and objectives and will design a specific consulting programme that suits their specific needs and situation.
    • As part of this initial meeting, we will assess if there are any grants that can be utilised to assist this process.  N.B.  there are no cost obligations at this stage.
    • We will formalise an engagement to agree the scope, timelines and costs before we start any work.
    • The works programme will commence usually involving face to face meetings at your place of work or via teleconference.
    • Where possible, once a solution has been developed, we will work with you to implement and deliver the change to your business.  N.B. this part may be a separate engagement.

    See our detailed flow chart below:

    Strategy Process Map

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  • How to extract the maximum value from your business when selling!

    Business Strategy Articles07/08/2018

    here comes a day when a business owner decides it’s time to sell all or part of their business.  It may be for one of many reasons including bringing in investors, providing a buy in mechanism for management, selling to purchase a new business or for retirement purposes.  It is often disappointing for business owners to discover that failing to plan ahead often results in a reduction of the value of the asset that is their business or that they find it very difficult to sell at all.

    This is where preparing for the transaction can increase the enterprise asset value and maximise the return to the business owner.  All business owners will need to do this at some stage when they ultimately decide to step down from the business, so why not start early and ensure that the maximum value is extracted from the business.

    Having a succession plan can also give you more options and this will allow you to select the option that is in the best interest for you and your business.

    Different options:

    There are a number of ways that a business sale can be structured with different risks and considerations associated with each of them:

    Trade Sale – selling a business on the open market is the most common exit option. The list of potential buyers could include investors, competitors as well as suppliers and other aligned businesses wishing to expand their operations. The sale of the business to an external party can also be an excellent way of allowing an owner to completely separate themselves from their operations in the cleanest and quickest way possible.

    The key challenges that are associated with a trade sale is that there is a high risk placed on the purchaser around the reliance of the business on the current owner for both the day to day tasks as well as customer and supplier relationships.  This risk can influence their decision as to whether or not to purchase the business. Often a purchaser may want to minimise this reliance risk by contracting the current owner into the business as an employee for a period as well as structuring the sale so that a portion is paid immediately and a second portion is paid out at a later date and is subject to the ongoing performance of the business.

    Family or internal succession – keeping the business within the family is a source of pride for some owners. As part of this succession option, the owner gets to leave a legacy behind by handing over an asset that continues in their name, as well as providing jobs, income and opportunities for generations to come.

    However, when succession planning and family relationships intersect, tension can emerge. While you might want your family members to take over, is the next generation interested? If they feel that they are obligated to take over the business, they may not have what it takes to ensure its continuing success.

    Determining whether family members are interested in taking over the business early on is important in being able to properly plan for what will happen to the business when the owner is ready to move on. Another key consideration is that the younger generation will rarely have the funds to purchase the business outright or the personal assets to secure a loan to payout the original owners. The way this is usually circumvented is by the old owner providing vendor finance to the related party which places a lot of risk back on the original owner. If the business doesn’t perform and they lose control, they may never get paid for the sale, which is then an issue particularly if the sale proceeds are needed to fund their retirement.

    Management buy-out – it may not just be family members that are keen to take control of your operations. Your management, employees or a mixture of both may be eager to take over the reins. In this case, your business may be sold to a group of individuals within the business.

    In this option, the purchasers of the business are largely known to the owner. They have spent time watching the business grow, working together to overcome challenges and have an extensive knowledge of the product, market and customer. This can be a useful factor in ensuring business continuity during the sale or transaction process.

    This option however may be a lengthier process as there are multiple stages before the business is sold and the owner can step away. It requires additional legal documentation such as shareholder agreements and/or buy sell agreements and potentially vendor finance.

    The ability of the purchasers to fund the transaction can again be an issue with a reliance on vendor financing. Having multiple purchasers also adds to the complexity of ownership and management during any transition period.

    It should be noted that this method can be made safer for the owners if staged over a longer period of time and by using a structure whereby bonuses are used to gradually (and at least partially) fund the purchase over a period of time.  This ensures the purchaser can afford the transaction and the owners can extract the value from the business whilst maintaining a level of control.

    Do nothing – many owners may not consciously choose this option, but if there is no plan for succession in place, owners are in fact doing nothing and unfortunately this is all too common. By the time the owner is no longer able or willing to run the business, the only option available may be to shut the business down if no one is interested in buying.

    As can be seen, there are a number of different ways a business can be sold  Choosing the best option involves the consideration of a number of factors. It is also essential to be flexible and have an open mind about your preferred succession options, as potential purchasers’ circumstances may change and having a plan B is always advised. For example don’t hold out for your children to buy you out, as more often than not, they won’t be interested!

    The ability to sell your business will become increasingly important for small and medium enterprises as there are still a large number of business owners from the baby boomer generation, which may mean a glut of business for sale and a shortage of like for like potential new owners to replace them.  Unfortunately this may see many businesses either being shut down or rolled up into a larger competitor.

    Key considerations when preparing  your business for sale:

    1. Separating the owner from the business i.e. can the business operate without the owner? A good litmus test for this is …. can the owner take an extended holiday without receiving any calls from the business? If the answer is no, then the investor will be reluctant to buy your business as they will likely need to replace your skills with expensive management which reduces their return on investment. This leaves the owner with internal succession or having to find a like for like owner with the right skills set willing to step in and take over the business.
    2. Preparing the business accounts to show maximum profits whereas a business will typically present the accounts to minimise tax. The more profit you show the more you can ask for the sale and the more a purchaser will be willing to pay or a bank be willing to fund a new purchaser.
    3. Being able to emotionally let go and/or step back allowing someone else to take over or step up to the role. Many business owners underestimate the emotional connection they have with their business especially if they founded the business.
    4. Finding other things to do, especially if retiring. Stopping work altogether may not always be a good option as it may cause business owners to become bored and this may lead to both physical and mental health issues.

    Life gets busy when you are running a business and planning for a business’s future, particularly one that may seem quite distant, can sometimes be neglected. Good strategic planning should incorporate preparing a business for the eventual business sale to improve the return generated and to increase the chance of selling it in the first place.

    At dVT Group we have successfully assisted and prepared succession plans for our clients and are happy to initiate discussions to help you prepare for the future.

    If you would like to discuss the best succession options for you and your business, speak to Brendan Ryan at dVT Group today on 02 9633 3333.

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  • The power of business reviews and grants for SMEs and the Australian economy.

    Business Strategy Articles

    Government business reviews and grants have become secret tools for small medium enterprises (SMEs) to obtain affordable help to grow their business, while assisting growth in the Australian economy. Find out how you can benefit from a network of support and advice to improve your business capabilities and competitiveness.

    According to the Australian Bureau of Statistics (ABS), as of June 2016 there were nearly 2 million SMEs trading in Australia. The ABS defines SMEs as any business employing less than 200 people with an annual turnover between $100,000 – $25 million.

    Because the importance of this integral business segment is overlooked, the Australian Federal Government is providing a free initiative to support growth to help increase the productivity of these SMEs.

    Unfortunately, this initiative is not well known outside government circles, so it is often overlooked by many typical advisors to the SME market. dVT Strategy (part of the dVT Group) is one of the few advisors that have recognised the value of this programme and have already assisted over 100 SMEs gain access to the programme and benefit from the outcomes.

    In order to be eligible for the programme a business must satisfy three key areas:
    • Be operating for more than three years
    • Have a turnover between $1.5 million and $100 million
    • Be operating in any of the following areas: advanced manufacturing; food and agribusiness; medical technologies and pharmaceuticals; mining equipment, technology and services; oil and energy resources; or providing enabling technologies/services to one of those previously mentioned. These areas have been identified as growth sectors within Australia.   (NB: the category of enabling technologies/services can be very broad and many business types can fall into this category. Ask us if your business fits).

    dVT Strategy take the time to firstly pre-qualify businesses to ensure they are suitable for entry into the programme. Understanding how busy business owners can be and how involved the exercise can be, dVT takes a hands-on approach to drive the application process and work alongside their network of businesses advisors to ensure the application is successfully approved. dVT Strategy are happy to say that to date, they have achieved a 100% strike rate for their clients.

    Taking part in this programme provides businesses with a skilled and experienced government employed business advisor who will visit the business premises to review business operations, including business direction and strategy. The business advisor will also undertake further research and analysis of information offsite. The review conducted by the advisor equates to approx$10,000 – $15,000 worth of consulting, at no cost to the business.

    The outcome from this review is a holistic business assessment, ratio analysis, global benchmarking, industry reports, connections to a variety of grants and a tailored business evaluation report outlining recommendations that a business can adopt to become more competitive, improve and grow within the industry. Results from an ABS study into the performance of businesses who have participated in this business evaluation programme, showed that their performance significantly increased more than similar businesses that did not participate.

    After the review, knowing what to do and how to implement the recommendations identified in the report can prove to be overwhelming and time consuming for the business owners to undertake alone. That’s why as part of the programme, the business is then eligible to access a grant of up to $20,000 to spend on an external consultant to help deliver on the key recommendations.

    Engaging an external consultant, such as dVT Strategy, to assist in the delivery of the recommendations identified can add a significant return on investment. dVT Strategy have successfully helped a large number of businesses over the years to implement these recommendations, seeing positive results and a financial uplift. They have also helped these clients access a number of additional, and often larger grants, to support their new found growth opportunities.

    The ABS identified that those businesses that received further support through access to grants went on to further increase their performance by more than 80% above those that received a business evaluation but did not access the programme funding. Results showed an uplift of $300,000 – $400,000 for those businesses that received the evaluation and $600,000-$800,000 for those that utilised the grant.

    Here are examples of businesses we have helped with this programme, in the industries of:  

    dVT Strategy thrive on seeing SMEs grow and realise their potential. If you have a business, or know someone who may be interested in accessing this programme, dVT Strategy are happy to conduct a free no obligation, initial discussion to see how this programme can assist.  Contact Brendan Ryan on 02 9633 3333 or email brendan@dvtgroup.com.au.

    (ABS Study on Enterprise Connect Business Review and Tailored Advisory Service Client Performance)

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  • Managing ownership disputes before it’s too late.

    Business Strategy Articles

    The best solution to ownership disputes is prevention, but in the event of disputes find out how to best manage them to avoid it becoming a serious threat to business.  

    In small/medium enterprises with more than one owner, it is inevitable that partners will occasionally disagree on how the business should be run.  Where an environment of mutual respect embodies the partnership, disputes are able to be quickly and simply resolved. But what happens if partners find themselves in far deeper disputes?

    Many businesses are founded by friends/family who share a vision or idea they hope can be turned into a successful venture. More often than not these ventures are started on trust and goodwill, but  with very little or ineffective documentation of the intended relationships of the parties involved. Too often the stresses connected with managing a growing business, or one that isn’t making money, or dealing with changing personal circumstances, can lead to tensions between owners. If these tensions are not resolved, they can lead to significant damage to a business. The simplest form of disruption is the “distraction factor”.  It takes the owners’ focus off the business and reduces the levels of motivation and effort. This seem relatively inconsequential in the short term but can become significant over time to the point where it impacts on the profitability and/or cash flow and the enterprise value of the business and therefore acts to reduce the value of an owner’s asset.

    As conflict grows, the disruptions spread to other stakeholders including employees and family and it then becomes more and more difficult for the dispute to be resolved.

    The best solution to ownership disputes is prevention.  If two or more people are to work together, it is important to establish at the beginning the respective roles within the business and who will be in charge. This may seem very one sided but that is what is intended as most partnerships still require a “Managing Partner”. This must be a documented process.

    If you are determined to have a business ownership structure where there is equal ownership and decision making control, it is essential to agree to some basic rules which include a “dispute resolution process” and this should be agreed and set out in writing while the business partners are still in the stage of enthusiasm and a working friendship.

    These rules are best documented in a partnership or shareholder agreement, which should allow the owners to quickly resolve any disputes.  If these mechanisms have not been established and a dispute has led to a point of impasse between the concerned parties, then external help should be sought to resolve the position as quickly as possible to minimise damage to the business.

    A simple shareholder agreement can be prepared along these lines by an experienced commercial lawyer and there are many articles available to give guidance on the preparation of the content such as CPA Australia’s Factors to Consider in a Partnership or Shareholder Agreement’ (2016)’.

    If a business finds itself in a position where there is no clear agreement in place and the commercial relationship has begun to degrade to the point where it is negatively impacting, or has the potential to negatively impact, not just the personal relationship but the business itself, it is time to seek external assistance.

    When it comes down to it, there is no ONE way to resolve dispute however the quicker a dispute can be resolved, the less damage that will occur and the sooner the business can look to recover any lost ground. A protracted dispute will not benefit either party and it may mean all parties need to accept a trade-off to reach an outcome. Often business disputes are similar in emotive strain to divorces, they can wreak as much havoc emotionally and financially and be difficult to resolve unemotionally.

    Having an independent party acting in the interest of the outcome rather than the interest of any individual party can greatly increase the likelihood of a mutually beneficial outcome and in a timely manner which will ultimately save the business money and work to preserve the business value.

    Over the last two decades dVT Group have acted in over 100 of these types of scenarios, where we have carefully navigated management disputes to achieve the best possible outcome and often to everyone’s benefit.

    To learn more about ownership disputes, call Brendan Ryan at the dVT Group on 02 9633 3333 or via email brendan@dvtgroup.com.au.

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  • Achieving Business Growth and ensuring it translates into Profit Growth

    Business Strategy Articles

    Growth is a common objective for most business owners, however it is not always easy to achieve, and even if achieved but not managed well, it can cause a business to fail.  

    Growth usually requires a business to make some proactive changes and undertake specific activities designed to achieve the growth. It may also require the business to make investment into resources (in the form of both time and money) to achieve result. The old adage rings true, if you fail to plan you plan to fail.

    If you are looking to grow or are presented with an opportunity for growth that you would like to take advantage of, there are two key elements of growth management that all businesses should employ.   It is the development of a strategic plan, which includes sales and marketing, as well as having and practising good quality forecasting that provides visibility on the business cash flow.

    Strategic Plan

    A strategic plan will outline the best way for the business to deliver the growth.  It will also determine the who, the how and the when of what actions are required to deliver the growth.  The plan should also provide the mechanisms to track and monitor the growth and provide levels of accountability on those responsible for delivering the growth.  As well as the sales and marketing requirements, an effective strategic plan also considers the business operations, HR and finance needed to achieve the growth and to then effectively manage the growth.

    Once sales growth is achieved, in either a planned or unplanned fashion, a number of issues can arise with the three most common ones being as follows:

    • An increase in sales does not always equal an increase in profit and or cash available to the business. For example the increase in turnover may be achieved by taking on a larger client but in order to secure the client, margins are reduced and payment terms extended. This action whilst increasing turnover, can deplete cash reserves. Increased sales also means increased cash outflow, however if there is also a reduced GP margin and longer terms given it means a slowdown in cash inflows.
    • Growth can also result in increased company overheads, such as the need for new equipment, a new system, larger premises or additional staff, all these further erodes the net profit margin. Overhead costs tend to increase in steps rather than via a gradual linear line and growth can trigger a large jump in costs that may outstrip the turnover increase which cut into the net profit margins.
    • The growth of the business can also mean it becomes too large for the founder/manager to be across every aspect of the business, which challenges both the management capabilities and the culture of an organisation. As a result, the business can lose its competitive advantage or unique value proposition that allowed the business to grow in the first place.
    • Management information systems are imperative as a business grows, but often one of the last investment to be made.

    Forecasting

    Strategic plans accompanied with forecasts that consider the current business model including the current operational and management capacity can then incorporate both the Capex and Opex costs required to deliver the growth plans. This will provide a business with several significant advantages.

    The aim is for there to be no surprises.  This forecasting provides real clarity as to how the growth will impact your GP and NP margins and allow the business to plan accordingly. If for example the business has visibility on the cash requirements, it can plan for the additional debt or equity required to fund the growth at the right times.  If that additional cash needs to come from debt, the likelihood a lender will provide additional working capital facilities is greatly increased if the business has good visibility and plans are in place to manage the growth.  The strategic plan and the forecasting become tools that enable the lenders to provide the required funding.

    Sometimes having visibility means a business can make the hard but ultimately wise decision on when not to grow. This should be the case when additional resources such as cash or management skills are not actually available. This hard decision can in certain circumstances ultimately save a business from failure and protect the existing business.

    In summary, growth is not easy to achieve and is not always the remedy for all business problems. For a business to achieve it, it will need to make certain investments upfront and be prepared to make changes in the business. The first investment should be into the creation of a solid strategic plan and the subsequent preparation of detailed forecasting. These two actions will not only greatly increase the chances of achieving the business growth goals but also de-risk the growth so that the revenue growth can be translated into profit growth.

    If you would like advice on how to start planning for your own business growth, please call Brendan Ryan at the dVT Group on 02 9633 3333 or via email brendan@dvtgroup.com.au  for a FREE consultation. 

     

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  • SMEs should know what grant funding options they may be eligible for!

    Business Strategy Articles

    Following our article last month on the “Power of Business Reviews for SMEs”, we have received numerous enquiries asking what type of grants are available.  This article covers some of the grants the Australian Government offer to help SMEs for activities such as growth, innovation and commercialisation to help develop these businesses. 

    Operating a small or medium enterprise (SME) can be one of the most demanding, challenging and often rewarding things for a business owner.  This role has become even more difficult over the years as business owners struggle with having to know and understand everything there is about running a business.  With the endless strains on their time and resources, it is no wonder business owners can become overwhelmed and important things overlooked.

    The Australian Government recognises that for SMEs sometimes great ideas for products or services need a helping hand to be developed.  For this reason, in addition to the Business Evaluation Programme covered last month, (https://www.dvtgroup.com.au/power-business-reviews-grants-smes-australian-economy) they also offer the following range of grant funding and services:

    Growth Assistance Grants

    Businesses that wish to take advantage of growth opportunities are able to access grant funding and assistance that is aimed at identifying and capitalising on growth opportunities more rapidly and competently with a reduced level of risk. A growth opportunity refers to an investment in a project that has the potential to grow significantly, therefore reaching more ideal customers or addressing any current trends that are impacting on the industry the business is operating in.

    This grant provides access to experienced advisors who will work with them to develop a unique growth plan. They will guide businesses throughout the entire process from implementing the plan to providing access to knowledge, research and other assistance needed and also helping to maintain growth rates through regular meetings and follow-ups for up to a two year period.

    Eligible businesses will be reimbursed 50% of the costs up to $20,000 for activities directly related to the implementation of recommendations identified in the growth plan.

    Innovation Assistance Grants

    SMEs also have access to innovation assistance and funding which assists businesses to access knowledge, engage with researchers and innovate. This program is a free, no obligation service that connects businesses with an expert innovation facilitator to assess knowledge gaps within the business and provide specialised support tailored to the business. There are two types of services available:

    • Information Technology – assesses a business’s information and technology needs and provides suitable solutions to address these needs. This can help to identify new knowledge, technology and expertise relevant to the business operations.

    A report will be prepared specific to the business current IT infrastructure and business operational needs going forward and outline the IT needs and opportunities of the business and identify some of the solution options available.

    • Research & Development – helps businesses to identify strategic research and developmental needs and identifies pathways to engage with the research sector to enable the business to fast track their research and development. This can involve working alongside any of the Australian Universities or CSIRO.

    This programme includes potential grant funding of up to $130,000 and please note this support and grant is completely separate from the ATO’s R&D tax-incentive. https://www.ato.gov.au/Business/Research-and-development-tax-incentive/

    This ATO programme is another excellent government initiative and if you are not utilising either the R&D tax incentive or the R&D grant, please ask if you are eligible for both or either.

    Commercialisation Assistance Grants

    Developed as a way to help Australian SMEs, researchers and entrepreneurs address the challenges associated with commercialising novel intellectual property (IP) in the form of novel products, services and processes.  This program offers both cash grants and guidance from industry experts.

    The expert advisors assigned to the business assist in finding the right commercialisation solutions that may include matched grant funding to support commercialisation activities of up to $1 million dollars. These industry advisors have extensive experience in commercialising novel products, services and processes and provide businesses with the necessary strategic advice and feedback in order to get novel ideas into the market effectively.

    The objectives of this program are focused around:

    • Accelerating the commercialisation of novel products, services and processes;
    • Creating new business based on novel IP with high potential for growth;
    • Encouraging greater commercial and economic return from research and development to drive business growth and competitiveness.

    Summary

    Over the years, dVT Strategy has successfully helped a large number of businesses gain access into these programmes, with our clients recording positive results and financial uplifts. We work closely with businesses and government advisors to prepare applications for entry into these programmes to ensure they are successfully approved.

    No matter what stage of business development a business is in, it is worth checking what assistance you could potentially be eligible for.

    If you have a business or know someone that may potentially benefit from access to one of these programmes, dVT Strategy are happy to conduct a free no obligation, initial discussion to see how this programme can assist.    Contact Brendan Ryan on 02 9633 3333 or email brendan@dvtgroup.com.au

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  • Business Mentors:  a secret weapon behind thriving businesses!

    Business Strategy Articles

    We are all aware of the numerous challenges business owners face when running a business.  These challenges can be grouped into three key areas being:

    1. Having the skills and experience needed across every aspect of the business:
      Most businesses are started by people that have an idea, skill or passion for a particular product or service. Whilst they are often very good in their area, very few also understand or are highly proficient at HR, Operations, Finance and Sales & Marketing, which are basic requirements for every business owner to run a successful business.They often learn this knowledge and experience from first-hand situations, but this can be both costly and demanding for a business owner. Larger businesses will employ a large team of specialist managers who have the required skills in each of these specific areas, but for a smaller business who is yet to generate the profits to afford the large management team, this responsibility falls back onto the owner.
    1. Managing the business whilst dealing with personal conflicts, culture, and history;
      The second key challenge for a small business owner is that at some stage they are likely to need to make a choice between a sound business decision or maintaining a personal connection, which often occurs in small businesses who work with, employ, buy from or sell to family or friends.  Many times these personal relationships have been built up over many years and often a business owner continues with them despite knowing it is no longer the best outcome for their business. A perfect example of this is having a staff member in your business who has been there since the business started, however, they are not performing, are difficult to deal with or are causing issues, yet the owner continues to employ them through a sense of loyalty.
    1. Having the time to step out of the business and work on the business:
      The third key challenge for business owners relates to the old adage of “working on the business vs working in the business”. The daily pressures of getting work done, meeting deadlines and managing everything can take a toll on the efficiency of the business. It also means that there is not the time to identify the issues, (Refer the boiling frog syndrome) let alone focus on what can be done to improve performance.

    This all means that a business owner needs to work smarter, not harder and that they need to ensure they have the right support.  Having a business mentor and a network of trusted experts can help business owners with the advice and support to address the challenges in these three key areas.

    There is sometimes the perception that having a mentor means that a business is struggling and is looking to get back on track.  In reality, many thriving businesses use mentors as their secret weapon.

    So what is a mentor?

    A mentor is an experienced individual who employs their own knowledge and skills to help coach business owners through the challenges of running and growing a business.  They can provide experienced, challenging and non-biased advice that help make informed decisions for the business.  A mentor can also act in a similar way as an advisory board but at a one to one level that has the ability to be flexible in its approach.

    How can a mentor help?

    A mentor can make valuable contributions in these areas:

    • Identify issues within the business that may be impacting on overall performance
    • Provide direct assistance in solutions to remedy issues
    • Act as a sounding board for ideas and concerns & give thoughts on major business decisions
    • Coach the owner on how to achieve their own personal goals within the business environment and gain some sort of work-life balance
    • Setting goals, introducing new strategies and tracking process to ensure you understand how the business is tracking.
    • Assist with compiling a business plan
    • Drive performance and delivery of the business plan
    • Improve business sales and help you to find new opportunities
    • Provide linkages to other experts to assist in remedying issues

    The benefits of having a mentor will vary from business to business and will range from utilising their business knowledge and experience right through to evolving both professionally and individually. Success for your business cannot be accomplished without both you and the business performing effectively.

    Business mentors do come at a cost, but the cost to the business is only a fraction of employing a management team and represents a strong investment when you consider the financial return they can bring.  Business owners that get the most out of engaging with a mentor are ready for change and are committed to achieving strong results.  They also understand the effect that wasted time, money and valuable resources on ideas that may not be effective has on the business.

    At dVT Strategy, we act as mentors to all of our clients and coach them through any issues that they may encounter. We ensure that our clients are kept accountable to their goals and are regularly challenged on their progress. As a result, we have seen a number of our clients achieve goals they originally deemed unobtainable and as a result, have received and enjoyed increases in their financial return.

    If you or someone you know is worried about their business or would like to receive an objective view of how a business is performing; or are ready to take the business to the next level, contact Brendan Ryan at dVT Strategy on 02 9633 3333 or email brendan@dvtgroup.com.au.

     

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  • Article 1

    Uncategorized READ MORE
  • Business Strategy

    Business Strategy Case Studies

    A business case of how the dVT Group worked with complex cultural and hierarchal considerations of the Church to consider the specific objectives of the Church leaders and the needs of the community, to obtain a unified acceptance of the recommended strategies.


    Situation:

    dVT Consulting were approached by a national religious organisation for assistance in
    reviewing the social services arm of the Church. Whilst the objectives were relatively clear, being a
    registered not for profit organisation responsible for raising funds as well as delivering services, meant a
    complex set of rules and regulations to adhere to. The organisation and the controlling board needed to
    heed the obligations of corporate law, regulations of the Australian Charities and not-for-profits
    Commission and the rules that apply to the church. With limited resources and complex cultural and
    church based hierarchal considerations, the organisation was struggling to achieve its objectives and
    lacked the appropriate corporate governance to manage its risks.

    Actions:

    A series of interviews with the Church leaders, board members of the social services body as
    well as a review of the market and structures of similar organisation operating a “best practice” model
    identified a series of options available to the church. Each option required a “trade off” in terms of the
    objectives of the church and as such recommendations were made on a best course of action based on the
    available resources, the specific needs of the community and the priorities as set by the Church leaders.
    This recommendation involved a hybrid of two of the identified options . This then required a smaller
    and more clearly defined internal structure, managing largely outsourced services accessed via other
    providers. This option allowed the church to retain a degree of autonomy and management of the
    process but enabled delivery of a wider range of services to more of their congregation at a lower but
    known and set price.

    Outcomes:

    Recommended strategies were accepted by the Church leaders and the implementation process is
    currently being rolled out. The cost of these services to the church are being shared equally across the
    national organisation now that the entire community can benefit.
    Supporting documentation including corporate governance and communication guidelines are being
    written. This is to avoid the cultural and hierarchal challenges present within a church based environment
    and thereby allow the autonomy of a newly appointed board and management team to deliver on the
    objectives.

    When you consider the complex cultural and church based hierarchal considerations of this assignment,
    it highlights how effective and successful implementation of this type of exercise would be for a business
    where there is a unified approach with a single overall business goal.

    READ MORE
  • Erin Garlick

    Uncategorized03/08/2018 READ MORE
  • TEST INVESTIGATIONS

    Investigations and Forensic Services02/05/2018 READ MORE
  • Information on Corporate Insolvency

    Creditor Information

    These information sheets have been produced by ASIC and ARITA to assist you if you are affected by a company’s insolvency.

    They are written to give directors, employees, creditors and shareholders a basic understanding of the most common company insolvency, liquidation, voluntary administration and receivership.

    Please note this is for general guidance only. Many of the terms have a specific technical meaning in certain contexts that may not be covered here.

    Click on the links below:  

    Voluntary administration – a guide for creditors:  Voluntary administration for creditors
    Voluntary administration – a guide for employees: Voluntary administration for employees
    Liquidation – a guide for creditors: Liquidation for creditors
    Liquidation – a guide for employees: Liquidation for employees
    Receivership – a guide for creditors: Receivership for creditors
    Receivership – a guide for employees: Receivership for employees
    Insolvency – a guide for shareholders: Insolvency for shareholders
    Insolvency – a guide for directors: Insolvency for directors
    Insolvency – a glossary of terms: Insolvency a glossary of terms
    Approving fees – a guide for creditors: Approving fees for creditors

    Creditor rights – liquidation: Creditor rights liquidation
    Creditor rights – voluntary administration: Creditor rights voluntary administration
    Remuneration of an external administrator: Remuneration
    Proposals without meetings: Proposals without meetings
    Committees of Inspection: Committees of Inspection
    Offences and recoverable transactions in a voluntary administration:  Offences and recoverables

     

    READ MORE
  • Information on Personal Insolvency (Bankruptcy)

    Creditor Information

    These information sheets have been jointly developed by AFSA and ARITA as a resource to help creditors in the event of personal insolvency.

    Please note this is for general guidance only. Many of the terms have a specific technical meaning in certain contexts that may not be covered here.

    Click on the links below:

    Creditor Information Sheet – approving a trustee’s fees:  Creditor Information Sheet

    Creditor rightsCreditor rights

    Proposals without meetingsProposals without meetings

    Committees of InspectionCommittees of Inspection

    READ MORE
  • Be aware of the “boiled frog syndrome” in business!

    News Articles23/02/2018

    Welcome to part two of our podcast series with Joanna Oakey, Lawyer at Aspect Legal and Antony de Vries, Partner at dVT Group. In this podcast we dig deeper into the underlying concepts and warning signals that business owners and their accountants and other professional advisers should be looking out for.

    The main points covered in the podcast include:  
    a)  Importance of financial information;
    b)  Good growth vs Bad Growth;
    c)  The concept of having enough;
    d)  The danger of over exposure;
    e)  The boiled frog syndrome;  and
    f)   Talking to your accountant. 

    Financial Information – Cash Flow:
    Poor cash flow is always one of the biggest issues when running a business.  It is difficult to know what your cash position is if your financial records are disorganized, incomplete or you don’t understand how to read them.

    The podcast (see link below) features an example of a white goods retailer that, whilst was generating extra sales as a result of an advertising campaign, was actually creating a false economy as the selling price turned out to be less than the cost price.  This was due to the actual true cost being clouded by complex ways of dealing with rebates and stretch targets from suppliers.  In fact, the more he sold the more he lost.

    To avoid getting to this point, it is critical to have and understand the proper financial information to identify issues and allow corrective action to be taken early.

    Good growth vs Bad growth:
    Directors or shareholders often start to tip money into a business as they have this underlying belief that the business is growing and that anything that is growing is good without obtaining the right financial advice to really understand if it is good growth or bad growth!

    When a business is growing, it often experiences similar signs of cash flow pressure as a business that is actually struggling or shrinking. Obtaining more funds can help, but it also masks the problem.  You need to differentiate between the symptoms and the causes.  An example is also featured in the podcast. 

    The concept of having enough:
    In business, we all understand the simple concept of making sure you can sell your product or your service for enough to cover the costs, plus the actual costs of the infrastructure that you need to be able to put you in the environment whereby you can provide that service or product.

    Whilst it is a simple concept, it is not always clear in reality.  You need to continually look for the signs that may indicate that this is not happening, such as exceeding overdraft limits, bouncing of cheques, defaulting on loans or interest payments etc.  

    Asking for help and obtaining assessments of where your business is can help identify where leakages are so they can be rectified early before it’s too late.  And with prudence, hard work and a little luck you can actually avoid disasters.

    The concept of overexposure (or too much concentration on one customer):
    Another sign is when clients have over exposure to a large amount of money that they are owed from one particular client.  In this case, it is important for business owners to understand the risks associated if that particular client was to be wound up and they end up with only 5 or 10 cents in the dollar for the money that’s outstanding to them.  It is imperative to look out for possible insolvency signs or signals from these clients. 

    Other warning signs are when payments being made to clients end in round figures, indicating that invoices are not being paid in full.   If this is your one and only customer, you must take the necessary precautions and action, otherwise it may affect you like a virus and you are going to suffer.  

    The boiled frog syndrome:
    The time to get help is a line that is not always clear as there are a lot of elements of ‘you don’t know what you don’t know until you realize you don’t know it!”.  

    It’s like the boiled frog syndrome?  If you put a frog into a pot of boiling water, that frog would jump straight out.  But if you actually put the frog in a pot of cold water and then slowly turned up the heat, it happens so gradually that the frog does not realise its environment is becoming toxic and ends up being boiled to death.

    Hence, the accountant plays an important role of talking to their clients to help identify when it’s time to hop out of the water and suggest when it’s time to get external help from someone like the dVT Group.  Coming in together to go over the situation and using our expertise in this area, we can assist by quickly summarising the situation and what options and alternatives are available.  Remember… “when something’s broken, it doesn’t get better by itself”.  

    First, talk to your accountant:
    Accountants are in a great position to have these conversations.  They can sometimes be difficult conversations to have as no one likes to talk about failure or be challenged with severe consequences.  The aim is to assist directors to reduce the noise and to avoid it becoming a massive distraction to running their business.

    However, accountants have many clients to service and may not necessarily have the time needed to fully analyse and identify the best course of action with the urgency that is sometimes required.  They should direct them to someone like dVT Group to help them recover and get back in control. 

    We have close relationships with accountants and work with them to help the business owners.  We do not poach clients but in fact they are made more robust which helps not only the client but also the accountant.

    Our success has come from our commitment to getting the right outcomes.  When somebody comes to us our approach is to start with the real issue, identify the alternatives, and work out a practical solution.  We don’t point the finger or criticise!

    If you would like more information, please call Antony de Vries (or any one of our 5 partners) at dVT Group on 02 9633 3333 or if you would like legal advice, please call Joanna Oakey at Aspect Legal on 02 8006 0830 or visit our websites dvtgroup.com.au or talkinglaw.com.au. 

    In the meantime, we hope you take the time to enjoy this podcast (27 mins) and that you obtain some useful tips of how to recognise trouble brewing in business before it’s too late.  Please click on the link below. 

    [EP 036] Recognising Signs of Insolvency Risks Part 2: Top things many business owners and accountants miss

    READ MORE
  • Avoid the risk of insolvency and know what to do when there is a risk of it knocking on your door!

    News Articles

    dVT Group were recently invited to participate in a podcast with Joanna Oakley, Lawyer at Aspect Legal.  It is a two-part series providing insights and advice on recognizing the signs of insolvency and what to be aware of should you find yourself in this situation.

    The main points covered in the podcast are:
    a)  Understanding how time can make the difference when a business is in financial strife;
    b)  The personal risk exposure for directors of businesses;
    c)  Knowing the warning signs of trouble and what questions to ask at the right time.    

    Antony de Vries is the founding partner of dVT Group, which is a specialist accounting and advisory firm and experts in the areas of business turnaround and insolvency.  Over the past 23 years they have helped more than 2,500 businesses overcome their financial challenges and regain the control they desire.   

    The podcast is aimed at all businesses, arming them with information about recognizing signs of financial distress both in their own organization and in the clients who may owe them money.  But it’s also aimed at providing accountants and other professional advisers that work with these businesses some insight as to the warning signals they should be looking out for and what to do if they are seeing some of those troubling signs.

    Business Owners coming through too late!
    Antony says, “The most common and disturbing theme that we see is that business owners come through to ask for help too late.  Australians are actually quite a proud society and no one really wants to put their hand up and say, look I’m just not sure whether it’s getting a little bit too hard for me. But she’ll be right mate, I’ll be able to sort of bat on. We’ll get through this”. 

    It is frustrating to see the damage that can occur when people are unaware of what is slowly happening to their business, especially as these situations could be resolved if they were dealt with early in the piece.  Their options start to evaporate and sometimes they are left with no options at all.

    A success story: turning a business around. 
    In the podcast, you can hear a great success story where we were able to help a business that came to us for help early.  Through the appointment of a voluntary administration process and other actions, the business got out of trouble and 14 years later has a business that is five times in size and with no debt.

    These success stories can only be achieved if the signs are recognised and acted upon early.  Accountants can help by keeping a look out or just simply knowing the conversation starters. 

    By asking a couple of simple questions, the majority of people will most likely be more than happy to talk about their business and would value such an open dialogue.

    The podcast also features a not so successful case study of a good solid profitable business that was starting to experience difficulty following a change in law and serious health problems.   They did not think to ask for help as they did not think anything could be done to change the situation.  It was difficult to hear that the family were left with no business and no money.  This could have been avoided by getting the right advice at the right time, to identify the right pathway to either find the right person to take over the business or to potentially benefit from the sale of the business. 

    Personal risk exposures for directors.  
    Many business owner are aware of their duties as a director, but just don’t fully appreciate that whilst they have this entity that is separate to them in their company, there are still risks for them personally if they continue to trade in a business that effectively is insolvent or seen to be insolvent at a particular point in time. 

    So when does it become a risk for the directors?  Antony says: “When a company can’t pay all its liabilities or all the debts that it incurs whilst running its business it creates a shortfall. The law says that you shouldn’t go and seek money from other people (employees, suppliers for goods and stuff like that) when you don’t have a reasonable chance of knowing that you can actually pay them for that work.  If this is the case and the company goes into liquidation, the directors will become personally liable for any shortfall of all those debts that they allowed to happen and that remain unpaid.

    In reality what happens is the active creditors, suppliers or the employees will actually threaten to withhold their services if they don’t get paid.  This can then result in other liabilities such as taxes to go unpaid.  The director thinks he’s doing the right thing because he is keeping the business running, but in the back of it, he’s just created this sleeping time bomb.  The tax department have given themselves a special rule that says if you don’t fill in your BAS form within three months, the director becomes personally liable.  So in these situations, the onus is on the director to not let these issues accumulate and to obtain the right advice on who to pay and how they are paying, as it can make a difference between personal liability and not. 

    Warning Signs 
    So what are the tell-tale signs of a problem brewing.  Signs that should have business owners or their accountants (on their behalf) starting to ask questions and perhaps thinking about getting external assistance?

    Poor cash flow is probably the biggest indicator – is there enough cash in the bank to actually pay for what you owe, when they’re asking for it.  Some of the questions may be – are you overdue with any of your taxes, are you paying your employees superannuation liabilities on time?

    The second podcast of this series will feature the warning signs of financial trouble, how to recognise them and what to do about them once you see them.

    In the meantime, we hope you take the time to enjoy this podcast (27 mins) and that you get some useful tips about what to do and what not to do if you’re involved with a business that is starting to feel a cash flow crunch. 

    https://www.stitcher.com/podcast/joanna-oakey/talking-law-legit-legal-tips-for-business-with-all-the-jargon/e/51560685

    If you would like more detail about any part of this article or podcast, please contact Antony de Vries at dVT Group on (02) 9633 3333 or Joanna Oakley at Aspect Legal on (02) 8006 0830. 

    READ MORE
  • 2018 NRL Tipping Competition

    Announcements06/02/2018

    Back by popular demand –
    the dVT Group 2018 NRL Tipping Competition

    We have received numerous requests from our clients, staff and their families to bring back our tipping competition.   So we have and this year it is going to be even better with two parts to the competition.   Entry is free and the winner takes the $1000 prize!

    So get in the footy spirit and see how well you do.   Who will be our best tipster? 

    2017 was the year of the Storm and in particular their captain Cameron Smith who won everything that a player could win – what a sterling year!

    But who would have believed that North Queensland could have made the Grand Final without JT and Matt Scott.  This year they will only be stronger and more determined in JT’s swansong season. Last year also saw the re-emergence of the Parramatta Eels and Manly Sea Eagles, whilst the bottom 3 remained the same.   

    This off season has been one of the most active with a mass of player transfers as teams rebuild and redesign their playing squads. So with all the turnaround in personnel, who will gel and who won’t.  But most importantly, who will raise the Telstra Cup in October to reign supreme to 2018? 

    Details of the Competition:

    We have organized two parts to the competition for you to partake in. 

    • Part 1 –   2018 Tipping Competition
      Be the overall winner at the end of the season with the highest tipping total (and best margin score if tipsters are equal) and you will take $1000 (compliments of dVT Group).

    Rules are on footytips.com.au, but briefly:
    –      Tipping is all NRL Rounds and Finals; it includes all representative games.
    –       1 point per correct tip and a 2 point bonus for picking the round.
    –      You are required to pick the margin for one stand out game in each round
    –      Tipping includes the State of Origin and Final Series

    To be part of the competition, you will need to register at: http://www.footytips.com.au/comps/NRL_dVT_Group_2018_Tipping
    Competition name is NRL dVT Group 2018 NRL Tipping Comp
    Competition password is dVtGrOuP2018.

    • Part 2 –   Pick the top 8 (optional)
      Submit your pick of who will be the top 8 teams at the end of the season, before Round 1 and the winner will receive a bottle of Blue Label Johnny Walker.

    Rules for the Top 8 pick are:
    –      Select your top 8 in order that you think they will finish
    –      To qualify for Part 2, you must tip right through until the end of the season
    –      The winner will be the person who gets the top 8 in the correct order or closest to it. In the event of a draw, it will be the closest to the correct order (1st, 2nd, 3rd etc). If still a draw, oh well, it will be a bottle each!
    –      To enter all you have to do when entering the tipping competition is send me your top 8 either via email rmuscat@dvtgroup.com.au or through the message section of the tipping competition before the start of Round 1 of the season.

    This competition is restricted to dVT Group clients, referrers, staff and family only.  Entry is free and the competition ends with the 2018 NRL Grand Final.

    Enjoy the season!  

    READ MORE
  • How to extract the maximum value from your business when selling!

    News Articles

    There comes a day when a business owner decides it’s time to sell all or part of their business.  It may be for one of many reasons including bringing in investors, providing a buy in mechanism for management, selling to purchase a new business or for retirement purposes.  It is often disappointing for business owners to discover that failing to plan ahead often results in a reduction of the value of the asset that is their business or that they find it very difficult to sell at all.

    This is where preparing for the transaction can increase the enterprise asset value and maximise the return to the business owner.  All business owners will need to do this at some stage when they ultimately decide to step down from the business, so why not start early and ensure that the maximum value is extracted from the business.

    Having a succession plan can also give you more options and this will allow you to select the option that is in the best interest for you and your business.

    Different options:

    There are a number of ways that a business sale can be structured with different risks and considerations associated with each of them:

    Trade Sale – selling a business on the open market is the most common exit option. The list of potential buyers could include investors, competitors as well as suppliers and other aligned businesses wishing to expand their operations. The sale of the business to an external party can also be an excellent way of allowing an owner to completely separate themselves from their operations in the cleanest and quickest way possible.

    The key challenges that are associated with a trade sale is that there is a high risk placed on the purchaser around the reliance of the business on the current owner for both the day to day tasks as well as customer and supplier relationships.  This risk can influence their decision as to whether or not to purchase the business. Often a purchaser may want to minimise this reliance risk by contracting the current owner into the business as an employee for a period as well as structuring the sale so that a portion is paid immediately and a second portion is paid out at a later date and is subject to the ongoing performance of the business.

    Family or internal succession – keeping the business within the family is a source of pride for some owners. As part of this succession option, the owner gets to leave a legacy behind by handing over an asset that continues in their name, as well as providing jobs, income and opportunities for generations to come.

    However, when succession planning and family relationships intersect, tension can emerge. While you might want your family members to take over, is the next generation interested? If they feel that they are obligated to take over the business, they may not have what it takes to ensure its continuing success.

    Determining whether family members are interested in taking over the business early on is important in being able to properly plan for what will happen to the business when the owner is ready to move on. Another key consideration is that the younger generation will rarely have the funds to purchase the business outright or the personal assets to secure a loan to payout the original owners. The way this is usually circumvented is by the old owner providing vendor finance to the related party which places a lot of risk back on the original owner. If the business doesn’t perform and they lose control, they may never get paid for the sale, which is then an issue particularly if the sale proceeds are needed to fund their retirement.

    Management buy-out – it may not just be family members that are keen to take control of your operations. Your management, employees or a mixture of both may be eager to take over the reins. In this case, your business may be sold to a group of individuals within the business.

    In this option, the purchasers of the business are largely known to the owner. They have spent time watching the business grow, working together to overcome challenges and have an extensive knowledge of the product, market and customer. This can be a useful factor in ensuring business continuity during the sale or transaction process.

    This option however may be a lengthier process as there are multiple stages before the business is sold and the owner can step away. It requires additional legal documentation such as shareholder agreements and/or buy sell agreements and potentially vendor finance.

    The ability of the purchasers to fund the transaction can again be an issue with a reliance on vendor financing. Having multiple purchasers also adds to the complexity of ownership and management during any transition period.

    It should be noted that this method can be made safer for the owners if staged over a longer period of time and by using a structure whereby bonuses are used to gradually (and at least partially) fund the purchase over a period of time.  This ensures the purchaser can afford the transaction and the owners can extract the value from the business whilst maintaining a level of control.

    Do nothing – many owners may not consciously choose this option, but if there is no plan for succession in place, owners are in fact doing nothing and unfortunately this is all too common. By the time the owner is no longer able or willing to run the business, the only option available may be to shut the business down if no one is interested in buying.

    As can be seen, there are a number of different ways a business can be sold  Choosing the best option involves the consideration of a number of factors. It is also essential to be flexible and have an open mind about your preferred succession options, as potential purchasers’ circumstances may change and having a plan B is always advised. For example don’t hold out for your children to buy you out, as more often than not, they won’t be interested!

    The ability to sell your business will become increasingly important for small and medium enterprises as there are still a large number of business owners from the baby boomer generation, which may mean a glut of business for sale and a shortage of like for like potential new owners to replace them.  Unfortunately this may see many businesses either being shut down or rolled up into a larger competitor.

    Key considerations when preparing  your business for sale:

    1. Separating the owner from the business i.e. can the business operate without the owner? A good litmus test for this is …. can the owner take an extended holiday without receiving any calls from the business? If the answer is no, then the investor will be reluctant to buy your business as they will likely need to replace your skills with expensive management which reduces their return on investment. This leaves the owner with internal succession or having to find a like for like owner with the right skills set willing to step in and take over the business.
    2. Preparing the business accounts to show maximum profits whereas a business will typically present the accounts to minimise tax. The more profit you show the more you can ask for the sale and the more a purchaser will be willing to pay or a bank be willing to fund a new purchaser.
    3. Being able to emotionally let go and/or step back allowing someone else to take over or step up to the role. Many business owners underestimate the emotional connection they have with their business especially if they founded the business.
    4. Finding other things to do, especially if retiring. Stopping work altogether may not always be a good option as it may cause business owners to become bored and this may lead to both physical and mental health issues.

    Life gets busy when you are running a business and planning for a business’s future, particularly one that may seem quite distant, can sometimes be neglected. Good strategic planning should incorporate preparing a business for the eventual business sale to improve the return generated and to increase the chance of selling it in the first place.

    At dVT Group we have successfully assisted and prepared succession plans for our clients and are happy to initiate discussions to help you prepare for the future.

    If you would like to discuss the best succession options for you and your business, speak to Brendan Ryan at dVT Group today on 02 9633 3333.

    READ MORE
  • New Partner Announcement – Antony Resnick

    Announcements02/02/2018

    We are pleased to announce that Antony Resnick has become the fifth partner at the dVT Group – joining Antony de Vries, Riad Tayeh, Suelen McCallum and David Solomons.

    Antony joined our firm in September 2015 bringing over 30 years insolvency experience in the areas of corporate insolvency, turnaround management, consultancy as well as corporate restructure and strategy.

    Before migrating to Australia in January 2003, Antony ran the Grant Thornton South African Insolvency Practice as Managing Director for 10 years. Prior to that, Antony spent three years at KPMG during which time he became a Registered Liquidator and Trustee in Bankruptcy.

    Moving to Australia, he then spent 6 years involved in commercial undertakings and dealings with businesses in the Australian market, before joining BRI Ferrier as a Director in 2009 and later became an equity partner in 2013 and remained so until 2015.

    While Antony has worked in a multitude of industries, he brings a wealth of experience in his specialty areas of retail and leisure (pubs/hotels).

    Above all, Antony is passionate about helping individuals and businesses who need help to get back in control, which may include restoration of operational capability in insolvency assignments through to recapitalization, merger or sales etc.  He attributes his success to his negotiation skills, creativity, initiative and ability to work collectively with stakeholders and colleagues

    This practical experience together with his commercial and entrepreneurial style, ensures that Antony brings real value to all assignments he undertakes.

    Life outside work sees Antony enjoying golf and most outdoor sports and activities.

    We are elated to have Antony join our partnership team.  We hope you will join us in congratulating him and that you will enjoy your dealings with him and our professional team.

    READ MORE
  • Australian Urethane & Styrene Pty Limited (Administrators Appointed)

    Creditor Reports22/01/2018

    We advise that on 19 January 2018, Antony Resnick and Riad Tayeh were appointed Joint and Several Voluntary Administrators of Australian Urethane & Styrene Pty Limited (A.C.N.  094 317 085).

    By proceeding to view information about Australian Urethane & Styrene Pty Limited, you are declaring that you are an investor, creditor or professional advisor for this matter and that you agree not to communicate any information to any person other than another investor or creditor of the Company, without the express written consent of de Vries Tayeh or unless otherwise compelled by law. 

    Creditors of the company can find a report to creditors available here.  Report to Creditors January 2018

    If you believe you are a creditor of the company or if you hold information which may assist the administrators in their investigations into the affairs of the company, please do not hesitate to contact Tony Hui of this office on +612 9633 3333 or at mail@dvtgroup.com.au.

    To view a letter to employees dated 19 January 2018, please click here 20180119 Letter to employees

    To view a notice from the Administrators regarding the extension of the convening period click here....  Letter to Creditors 16 Feb 2018

    To view the Administrators report to creditors pursuant to section 439A of the Corporations Act dated 6 March 2018, click here ...2nd Report to Creditors March 2018

     

    READ MORE
  • A.C.N. 000 168 874 Pty Limited (formerly Australian Urethane Systems Pty Limited) (Administrators Appointed)

    Creditor Reports

    We advise that on 19 January 2018, Antony Resnick and Riad Tayeh were appointed Joint and Several Voluntary Administrators of Australian Urethane Systems Pty Limited (A.C.N.  000 168 874).

    By proceeding to view information about Australian Urethane Systems Pty Limited,  you are declaring that you are an investor, creditor or professional advisor for this matter and that you agree not to communicate any information to any person other than another investor or creditor of the Company, without the express written consent of de Vries Tayeh or unless otherwise compelled by law. 

    Creditors of the company can find a report to creditors available here. Report to Creditors January 2018

    If you believe you are a creditor of the company or if you hold information which may assist the administrators in their investigations into the affairs of the company, please do not hesitate to contact Tony Hui of this office on +612 9633 3333 or at mail@dvtgroup.com.au.

    To view a letter to employees dated 19 January 2018, please click here  20180119 Letter to employees

    To view a notice from the Administrators regarding the extension of the convening period click here….  Letter to Creditors 16 Feb 2018

    To view the Administrators report to creditors pursuant to section 439A of the Corporations Act dated 6 March 2018, click here…  2nd Report to Creditors March 2018

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  • Proof of Debt Form & Proxy Form

    Creditor Information18/01/2018

    If you are a creditor of a company and you wish to vote at a meeting of creditors, you must complete and lodge a Proof of Debt form.

    PROOF OF DEBT FORM ……..     Proof of Debt Form

    If you wish to appoint a proxy to represent you at a creditors meeting and vote on your behalf, you must complete and lodge a Proxy form.

    PROXY FORM …….   Proxy Form

    Both these forms are available to download by clicking on the links above.

    You should complete and lodge the completed forms by emailing them to our office before the start of the meeting or bring them to the meeting.

    Our email address is mail@dvtgroup.com.au
    Our postal address is PO Box 218, Parramatta NSW 2124.

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  • Abbee Pty Ltd (formerly A.C.N. 166 404 253 Pty Ltd) A.C.N. 166 404 253 and Zakee Pty Ltd (formerly A.C.N. 600 432 880 Pty Ltd) A.C.N. 600 432 880 (Both Administrators Appointed)

    Creditor Reports

    We advise that on 27 December 2017 David Solomons and Riad Tayeh were appointed Joint and Several Voluntary Administrators of Abbee Pty Ltd (formerly A.C.N. 166 404 253 Pty Ltd) (A.C.N. 166 404 253) and Zakee Pty Ltd (formerly A.C.N. 600 432 880 Pty Ltd) (A.C.N. 600 432 880).

    Eligible employee creditors of the companies can find a report to eligible employee creditors available here.  Click on this link for the report:  Report to Eligible Employee Creditors 17 January 2018

    Creditors of the companies can find a report to creditors available here.  Click on this link for the report:  Report to Creditors 18 January 2018

    If you believe you are a creditor of either company or if you hold information which may assist the administrators in their investigations into the affairs of the companies, please do not hesitate to contact Tony Hui of this office on +612 9633 3333 or at mail@dvtgroup.com.au.

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  • dVT Group loves and sponsors Volleyball!

    Community28/11/2017

    The dVT Group loves volleyball and were sponsors at the Volleyfest at Manly Beach on Saturday, 25th November 2017. Volleyfest is an annual Beach Volleyball Festival that hosts other competitions to show case Australia’s best Beach Volleyball.

    It was a great day with a beach side atmosphere, stunning views and with special guests Gina Rinehart (Chairman of Hancock Prospecting and Principal Sponsor) and John Coates (President of the Australian Olympic Committee).

    The results saw Canada beat France to take the men’s Gold Medal and the Australian Golden Girls winning the women’s event, moving them one giant step closer to their Commonwealth Games dream.

    Clancy and Artacho del Solar are the first Australian women’s team to win an FIVB World Tour event on home sand since the women’s World Tour began in 1992. It is also their fourth consecutive Gold Medal since they joined forces in early October 2017.

    This is a great result and is great preparation as Australia looks like grabbing gold for both the men and women at the Commonwealth Games and the dVT Group will continue to be proud supporters.      Read the full articles below …….

    CANADA WINS MEN’S GOLD MEDAL


    Canada has taken the men’s Gold medal at the FIVB World Tour at Volleyfest on Manly Beach in Sydney this afternoon, defeating France in two quick sets in front of a sell-out crowd.

    Canadian Olympian Ben Saxton and his new partner, 24 year old Grant O’Gorman, were thrilled with their win.

    “My sister won a gold medal in Sydney earlier in the year so I couldn’t let her be the only one in the family,” said Saxton.

    The French had earlier defeated Australia’s best men’s team of Chris McHugh and Damien Schumann who fought hard in a tough three set semi-final. That meant a Bronze medal play-off for the Aussies against a US duo of William Kolinske and Miles Evans.

    To read more:  http://www.volleyballaustralia.org.au/post/canada-wins-men-s-gold-medal

    AUSTRALIA’S GOLDEN GIRLS MAKE HISTORY AT VOLLEYFEST


    Australia’s beach volleyball golden girls, Taliqua Clancy and Mariafe Artacho del Solar, have won the women’s FIVB World Tour event at Volleyfest Manly this afternoon, all but sealing their selection for the Commonwealth Games.

    It’s the first international tournament win at home by an Australian women’s team since Kerri Pottharst and Natalie Cook won Gold at the Sydney 2000 Olympic Games. Clancy and Artacho del Solar are the first Australian women’s team to win an FIVB World Tour event on home sand since the women’s World Tour began in 1992.

    Clancy and Artacho del Solar defeated China’s Fan Wang and Xinyi Xia in two straight sets with a scorecard of 21:17 and 21:14. China didn’t make it easy for the Australians, continually applying the pressure but the composure of the Australians in front of their home fans saw them respond stronger each time.

    Taliqua and Mariafe’s self-belief was evident the entire match, openly enjoying each point win and showing the smooth teamwork which makes this pairing so successful. The final two points to end the match came from powerful spikes from Artacho del Solar which found empty space in the Chinese half.

    The win also gives Australia the Hancock Prospecting Perpetual Trophy, awarded each time Australia and China play.

    To read more:   http://www.volleyballaustralia.org./post/australia-s-golden-girls-make-history-at-volleyfest

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  • Happy Holiday Season from dVT Group

    Announcements23/11/2017

    Please CLICK ON ARROW below to view our short video ….   

    As the end of year fast approaches, the team at dVT Group would like to thank you for your support and hope that you enjoy your break.  

    We also hope that you have enjoyed our Newsletters this year and that you may have gained some insights, no matter how small, that may have assisted either yourself or one of your clients. 

    Please note our office will be closed from
    Friday, 22 December 2017 until Monday, 8 January 2018

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  • Achieving Business Growth and ensuring it translates into Profit Growth

    News Articles18/10/2017

    Growth is a common objective for most business owners, however it is not always easy to achieve, and even if achieved but not managed well, it can cause a business to fail.  

    Growth usually requires a business to make some proactive changes and undertake specific activities designed to achieve the growth. It may also require the business to make investment into resources (in the form of both time and money) to achieve result. The old adage rings true, if you fail to plan you plan to fail.

    If you are looking to grow or are presented with an opportunity for growth that you would like to take advantage of, there are two key elements of growth management that all businesses should employ.   It is the development of a strategic plan, which includes sales and marketing, as well as having and practising good quality forecasting that provides visibility on the business cash flow.

    Strategic Plan

    A strategic plan will outline the best way for the business to deliver the growth.  It will also determine the who, the how and the when of what actions are required to deliver the growth.  The plan should also provide the mechanisms to track and monitor the growth and provide levels of accountability on those responsible for delivering the growth.  As well as the sales and marketing requirements, an effective strategic plan also considers the business operations, HR and finance needed to achieve the growth and to then effectively manage the growth.

    Once sales growth is achieved, in either a planned or unplanned fashion, a number of issues can arise with the three most common ones being as follows:

    • An increase in sales does not always equal an increase in profit and or cash available to the business. For example the increase in turnover may be achieved by taking on a larger client but in order to secure the client, margins are reduced and payment terms extended. This action whilst increasing turnover, can deplete cash reserves. Increased sales also means increased cash outflow, however if there is also a reduced GP margin and longer terms given it means a slowdown in cash inflows.
    • Growth can also result in increased company overheads, such as the need for new equipment, a new system, larger premises or additional staff, all these further erodes the net profit margin. Overhead costs tend to increase in steps rather than via a gradual linear line and growth can trigger a large jump in costs that may outstrip the turnover increase which cut into the net profit margins.
    • The growth of the business can also mean it becomes too large for the founder/manager to be across every aspect of the business, which challenges both the management capabilities and the culture of an organisation. As a result, the business can lose its competitive advantage or unique value proposition that allowed the business to grow in the first place.
    • Management information systems are imperative as a business grows, but often one of the last investment to be made.

    Forecasting

    Strategic plans accompanied with forecasts that consider the current business model including the current operational and management capacity can then incorporate both the Capex and Opex costs required to deliver the growth plans. This will provide a business with several significant advantages.

    The aim is for there to be no surprises.  This forecasting provides real clarity as to how the growth will impact your GP and NP margins and allow the business to plan accordingly. If for example the business has visibility on the cash requirements, it can plan for the additional debt or equity required to fund the growth at the right times.  If that additional cash needs to come from debt, the likelihood a lender will provide additional working capital facilities is greatly increased if the business has good visibility and plans are in place to manage the growth.  The strategic plan and the forecasting become tools that enable the lenders to provide the required funding.

    Sometimes having visibility means a business can make the hard but ultimately wise decision on when not to grow. This should be the case when additional resources such as cash or management skills are not actually available. This hard decision can in certain circumstances ultimately save a business from failure and protect the existing business.

    In summary, growth is not easy to achieve and is not always the remedy for all business problems. For a business to achieve it, it will need to make certain investments upfront and be prepared to make changes in the business. The first investment should be into the creation of a solid strategic plan and the subsequent preparation of detailed forecasting. These two actions will not only greatly increase the chances of achieving the business growth goals but also de-risk the growth so that the revenue growth can be translated into profit growth.

    If you would like advice on how to start planning for your own business growth, please call Brendan Ryan at the dVT Group on 02 9633 3333 or via email brendan@dvtgroup.com.au  for a FREE consultation. 

     

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  • Supporting the Australian Defence Force Reserves.

    Community

    dVT Group recognise that all Australians share the responsibility for our national security.  This includes a capable and resilient Australian Defence Force with permanent and reserve components.  As part of our ongoing commitment to support our community,  we have recently become part of a group of organisations offering their support to Reservists.

    The Defence Reserves Support Council provides an important link between the Australian Defence Force, employers, industry groups and other peak bodies in the wider community from which Defence Reservists are drawn. It promotes the benefits of Reserve service to the business community and develops partnerships with employers that facilitate Reservists’ contribution to Defence capability.

    At dVT we pledge support to our employees/students who serve our Nation as Australian Defence Force Reservists, and we acknowledge the skills and other attributes which they bring to the workplace.

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  • Businessmen lead a new Industry Body to tackle the housing crisis!

    News Articles04/09/2017

    A newly formed, not for profit Housing Supply Association (HSA) has been formed to increase affordable housing supply for first homebuyers, key workers, ex-servicemen and people with disabilities.  Riad Tayeh, a partner at dVT Group, is one of the founding members as well as the Treasurer of this Association.

    NSW Minister for Planning and Housing, the Hon. Anthony Roberts MP, launched the HSA which will work closely with government and industry to influence policy at a legislative level to unclog bottlenecks in our planning system.  He welcomes HSA’s commitment to help break the cycle of the spiraling property market, which slams the door on many new first homebuyers and prevents key workers living where they work.

    The NSW Government is committed to working with businesses, organisations and local communities to address housing affordability and those who are most disadvantaged in buying their first home, or renting where they live.  Mr Roberts said “I commend the formation of the not-for-profit Housing Supply Association to assist in tackling these challenges and look forward to working hand-in-hand with all participants to break down the barriers for future generations of new home owners and renters and helping key workers to live where they work.”

    The HSA already has 1,800 new dwellings in the pipeline across Sydney which will be allocated to first homebuyers and key workers.

    “Our policies will have a direct focus on accelerating housing supply and affordability for those first homebuyers and those in the rental market.  We are greatly encouraged by the support of the NSW Government and the commitment and foresight of Minister Roberts to include the HSA as part of the solution”  Mr Tayeh says.

    The Association, which is backed by commercial property experts and has the support of the police, ambulance and fire services, will target moderate income earners, with a focus on key workers.  The current housing crisis means some emergency services personnel are flying in weekly to Sydney from interstate or commuting large distances to maintain their jobs because they can’t afford to live here.

    The HSA will also work with government and industry to secure property exclusively for those who need it most, many rental properties at 20 – 30% below market value.  Property allocation will also focus on ex-servicemen and women and people with disabilities.

    This is the only holistic, industry-driven solution to deliver real outcomes for first homebuyers and key workers, such as the police, ambos and fire services who look after our communities 24/7.

    “We look forward to working with the Minister to progress our mandate to implement positive change to unclog bottlenecks in our planning system so we can benefit those who need affordable housing most” says Mr Tayeh.

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  • Keeping your investment secure – tips for business owners.

    News Articles Uncategorized

    How do business owners feel when they are told to join the queue to recoup some of their own money in the event of a liquidation?  Their loans could be at risk and business owners could see their hard earned money being lost if they do not take the necessary steps to protect their interests.

     

    It’s very common for shareholders of a company in its infancy to regularly advance significant amounts of money to their company, in order to provide working capital – particularly as banks and other traditional lenders are unwilling to fund start-up businesses.

    Once a company has a trading history and a proven record of profit, banks are more willing to lend, but will still usually require security registered on the Personal Property Securities Register (PPSR) to reduce their credit risk.

    This risk mitigation strategy relied upon by banks should also be used by shareholders as an added level of protection.  Unfortunately this step is usually skipped as optimistic shareholders are unlikely to be thinking of the possibility of liquidation at this early stage of the business.  A valid security registration can act in a similar manner to a life insurance policy, becoming vital in the event of the death of the company.

    What Is PPSR? 

    PPSR is an online national register which is searchable for a fee.  In most cases a security interest is required to be registered on the PPSR to be valid.  The PPSR operates on a first in best dressed basis, meaning the first registered security in time has priority except in the case of a Purchase Money Security Interest (PMSI).

    PMSI’s provide a super-priority over other security interests. The basis for this is to stop the earlier registered secured party receiving the benefit of the property provided by another party.

    What should be done?

    1. To become a secured creditor and receive payment ahead of unsecured creditors, the first step is a security agreement evidenced in writing (and preferably prior to the transfer of funds), in which the company grants the registration of a security interest on the PPSR.
    2. The second step is registration which can cost as little as $6.80 on the PPSR done via the PPSR website (https://www.ppsr.gov.au/register-security-interests).

    Case Study

    The following case study outlines various scenarios and the distribution of funds in the event of a liquidation in accordance with the Corporations Act.

    Barry is the sole shareholder and director of Barry’s Printing Pty Ltd and he loans $500,000 to the company to purchase a large commercial printer to start operations.   A couple of years later, as a result of a down turn in the printing industry, the business ceases to trade and a liquidator has been voluntarily appointed by the shareholder of the company.

    The liquidator sells the printer at auction and realises $100,000, as well as $50,000 of trade receivables – total of $150,000 available for distribution.    Trade Creditors are owed $250,000

    So what happens to those monies?  Let’s look at the impact of different security interests on the distribution of the funds.

    Scenario 1 – Barry advanced funds as an unsecured loan to the company.

    Barry will rank equally with other unsecured creditors, all receiving a 20 cents in the dollar distribution.  Barry (as a creditor) received $100k and the balance of $50k to trade creditors.
    Scenario 2 – Upon advice from his accountant, Barry registered a security interest over All Present and After Acquired Property (ALLPAAP) of the company.

    Barry will receive all of the available funds as the secured creditor of $150k.  As Barry’s claim of $500,000 has not been repaid in full the trade creditors will not receive a dividend.
    Scenario 3 –  ABC Bank has a prior registered security agreement for an overdraft of $100,000 and Barry also registers a PMSI over the printer as collateral, but this does not grant him an interest in the company’s trade receivables.  The bank also holds a higher ranking security interest.  Barry will receive the printer sale proceeds of $100k and the bank will receive the proceeds from the remaining assets, in this case the $50,000 from trade receivables.  There are no distributions to trade creditors.

     

    As shown in the above scenarios, the method in which security is handled results in various outcomes in a liquidation.   It is important to obtain a security agreement and get it registered when setting up a company and prior to lending money to protect business owners in the event of a liquidation.

    Don’t wait until a company runs into financial difficulty to register security interests, as it may be too late and possibly be voided by the liquidator!

    If uncertain about what to do, shareholders should seek advice on the selection of the appropriate security prior to advancing funds to their company, to ensure their interests are protected.

    For any questions regarding this article, please contact the dVT Group on 02 9633 3333. 

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  • Managing ownership disputes before it’s too late.

    News Articles

    The best solution to ownership disputes is prevention, but in the event of disputes find out how to best manage them to avoid it becoming a serious threat to business.  

    In small/medium enterprises with more than one owner, it is inevitable that partners will occasionally disagree on how the business should be run.  Where an environment of mutual respect embodies the partnership, disputes are able to be quickly and simply resolved. But what happens if partners find themselves in far deeper disputes?

    Many businesses are founded by friends/family who share a vision or idea they hope can be turned into a successful venture. More often than not these ventures are started on trust and goodwill, but  with very little or ineffective documentation of the intended relationships of the parties involved. Too often the stresses connected with managing a growing business, or one that isn’t making money, or dealing with changing personal circumstances, can lead to tensions between owners. If these tensions are not resolved, they can lead to significant damage to a business. The simplest form of disruption is the “distraction factor”.  It takes the owners’ focus off the business and reduces the levels of motivation and effort. This seem relatively inconsequential in the short term but can become significant over time to the point where it impacts on the profitability and/or cash flow and the enterprise value of the business and therefore acts to reduce the value of an owner’s asset.

    As conflict grows, the disruptions spread to other stakeholders including employees and family and it then becomes more and more difficult for the dispute to be resolved.

    The best solution to ownership disputes is prevention.  If two or more people are to work together, it is important to establish at the beginning the respective roles within the business and who will be in charge. This may seem very one sided but that is what is intended as most partnerships still require a “Managing Partner”. This must be a documented process.

    If you are determined to have a business ownership structure where there is equal ownership and decision making control, it is essential to agree to some basic rules which include a “dispute resolution process” and this should be agreed and set out in writing while the business partners are still in the stage of enthusiasm and a working friendship.

    These rules are best documented in a partnership or shareholder agreement, which should allow the owners to quickly resolve any disputes.  If these mechanisms have not been established and a dispute has led to a point of impasse between the concerned parties, then external help should be sought to resolve the position as quickly as possible to minimise damage to the business.

    A simple shareholder agreement can be prepared along these lines by an experienced commercial lawyer and there are many articles available to give guidance on the preparation of the content such as CPA Australia’s Factors to Consider in a Partnership or Shareholder Agreement’ (2016)’.

    If a business finds itself in a position where there is no clear agreement in place and the commercial relationship has begun to degrade to the point where it is negatively impacting, or has the potential to negatively impact, not just the personal relationship but the business itself, it is time to seek external assistance.

    When it comes down to it, there is no ONE way to resolve dispute however the quicker a dispute can be resolved, the less damage that will occur and the sooner the business can look to recover any lost ground. A protracted dispute will not benefit either party and it may mean all parties need to accept a trade-off to reach an outcome. Often business disputes are similar in emotive strain to divorces, they can wreak as much havoc emotionally and financially and be difficult to resolve unemotionally.

    Having an independent party acting in the interest of the outcome rather than the interest of any individual party can greatly increase the likelihood of a mutually beneficial outcome and in a timely manner which will ultimately save the business money and work to preserve the business value.

    Over the last two decades dVT Group have acted in over 100 of these types of scenarios, where we have carefully navigated management disputes to achieve the best possible outcome and often to everyone’s benefit.

    To learn more about ownership disputes, call Brendan Ryan at the dVT Group on 02 9633 3333 or via email brendan@dvtgroup.com.au.

     

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  • Discover the benefits an advisory board can bring to a business

    News Articles01/08/2017

    If you own or know of a business that is experiencing or has the potential for high growth, one of the most worthwhile things you should do is look at starting an advisory board.  Growing a business is challenging work, so find out how you can benefit from drawing on experience, perspectives and knowledge that enhance your own. 

    An advisory board consists of a group of advisers that are strongly dedicated to the success of the business.  They can not only provide a platform to test and develop your ideas, but can potentially open doors to access important resources and capabilities.

    An article from the Harvard Business Review, ‘Who advises the Entrepreneur? (22/10/13) , outlines that many owners, especially those in the primary stages of their business,  find the task of building an advisory board intimidating. The article also identified questions that may be raised by owners around whose strengths would complement their own and whose would counteract their weaknesses or perhaps bring insight that they may have otherwise missed. Additionally, most people who have not had direct experience with the operations of an advisory board haven’t given much thought to the potential benefit it could bring to the business.

    An advisory board is a selected group of individuals that have the knowledge and skills a business owner lacks and they provide their time to assist, guide, challenge and provide perspectives on new opportunities. The advice they provide is non-binding to the organization, as the board holds no legal or financial responsibility for the decisions a business owner makes.  This makes it rather informal in nature and provides owners and managers with a ‘safe’ space to discuss issues of major significance.

    The benefits of having an Advisory Board: 

    • Utilises the knowledge and skills of advisers who possess the understanding and experience in growing and developing a business.
    • Acts as a platform to take the heat when others may not agree with the decisions of owners/management.
    • Can improve the credibility of a business in the market place.
    • Provides diversity of opinions. A good advisory board will comprise of different personalities, talents and expertise which lead to differences in opinions from different points of view.
    • Helps garner information to manage risks.
    • Helps to manage and control disputes and disagreements between family members that work together in a family business.

    When would a small or medium business benefit from an Advisory board?

    • A company is undergoing a stage of rapid growth.
    • A company needs to raise necessary funds.
    • A company is facing major decisions and/or changes in direction, such as entering into new markets, introducing new products/services or expanding operations.
    • A company is experiencing specific functional and/or structural issues.
    • A company wants to build strategic business partnerships.
    • A company lacks a strong internal leadership team.

    Setting up an advisory board will provide you with the necessary provisions needed to prosper.  It will also allow you, as a business owner, to access others specialised knowledge, while enhancing your own knowledge and abilities. A strong advisory board can be essential in allowing you to take your business and expanding it to the next level.  At dVT Group we have successfully set up such Boards for our clients in the past and are happy to discuss with you your individual situation and needs.

    To learn more about how an advisory board can add value to your business,
    call the dVT Group on 02 9633 3333.

     

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  • NRL clubs supporting Special Olympics

    Community News Articles

    Get behind NRL as the Clubs support Special Olympics – grab a special ticket offer for the Special Olympic Cup game played on 10th August 2017 & be one of the first to hear about a sponsorship opportunity for 2018.

    You may be aware that the dVT Group have been proud sponsors of Special Olympics Australia for over 9 years, where we have been actively involved in supporting and raising funds for this great initiative.

    This makes us very happy to announce that Special Olympics has become the world’s largest sports organization for people with an intellectual disability, with 4.4 million athletes in 170 countries.  We are very grateful to all the individuals and companies who support Special Olympics in many different ways.

    In 2012, the dVT Group initiated the Special Olympics Cup which has been played every year since then between the Canterbury Bulldogs and the South Sydney Rabbitohs. The idea behind the Cup is to not only raise the necessary funds but to also increase awareness of the work that Special Olympics do in the community.

    So what is the Special Olympics Cup?

    NRL heavy weights – South Sydney Rabbitohs and Canterbury-Bankstown Bulldogs – clash at ANZ Stadium on Thursday, 10 August 2017.  They will be playing for the Special Olympics Cup.  This year marks the 6th edition of the Cup, with Souths holding the advantage at three games to two. The event is proudly supported by ambassadors Tom Burgess from the Rabbitohs and Adam Elliott from the Bulldogs.

    In addition to the annual fixture, each club also conducts a mini-Olympics day, where they provide fun sports activities for Special Olympics Australia athletes.

    We encourage you to get out to the ground early to see a torch run featuring local police officers and Special Olympics Australia athletes. Volunteers will also be shaking buckets at the ground before the game. We encourage all fans to get out to ANZ Stadium to show their support.

    Tickets are available for the game at www.specialolympics.com.au with a portion of sales going towards supporting this wonderful organisation.

    “We have set up a $40* Family GA Pass.  This is for pre-purchase only and can be purchased online, over the phone or through Ticketek outlets by quoting ‘SPECIALOLYMPICS”.  To purchase online go to http://premier.ticketek.com.au/shows/Show.aspx?sh=RBS817
    Price excludes Ticketek service and handling fees.

    Latest News

    The relationship between NRL and Special Olympics continues to strengthen as this year we are excited to announce that the NRL clubs have taken another great leap forward and are offering the opportunity for you to become the Sponsor of the Cup in 2018.  This will include national TV exposure as the game is broadcast on Channel 9 and Fox Sports, as well as tickets and other exclusive benefits.

    For more information on how to become the 2018 Sponsor of the Cup, please contact Rory Muscat (dVT Group) on (02) 9633 3333.  If you would like to learn more about Special Olympics Australia, visit the website www.specialolympics.com.au.

     

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  • Avoid losing valuable franking credits

    News Articles

    As you no doubt know by now, the corporate tax rate for small business entities has been reduced to 27.5% from the standard corporate rate of 30%, effective from the 2016-17 financial year.  Find out how this poses a real risk of excess franking credits being wasted. 

    The corporate tax rate reduction to 27.5% applies to small business entities.  A small business entity is one that carries on business in an income year and has aggregated turnover in that year of less than $10 million.

    The problem that arises from this change is that the bench marking rate for a company that is a small business entity drops form 30% to 27.50%.  As dividends can now only be franked at a maximum of the applicable corporate tax rate, any accumulated earnings can only be franked at a maximum of 27.50%.  This could potentially result in excess franking credits being wasted.

    To give an example, say ABC Company Pty Ltd has been trading at around $8 million turnover for a number of years and has made $100,000 taxable income for the past five years, but has not paid a dividend.  In June 2017 it wants to consider paying out shareholders and finalising the company.

    At June 2017 its franking account looks like this:

    If the company continues to trade and the small business entity tax rate stays at 27.50% (or lower as is planned) then those excess franking credits can never be used.  In addition, shareholders may have to fund the shortfall between the imputation credit and their own marginal rate of tax, particularly in relation to years where the 30% rate applied.

    One solution is to liquidate the company and pay distributions to shareholders in a later year, i.e. when the company has ceased to trade.  If a company ceases to carry on a business, it is no longer defined as a small business entity, and therefore reverts to the corporate tax rate of 30%.  All distributions can then be franked at a maximum rate of 30%, or to the extent of franking credits available.

    For companies nearing the end of their useful lives, it will be worth planning the eventual liquidation and deregistration around the franking credits available.  A members’ voluntary liquidation is a good way to potentially unlock these franking credits.

    It would be worthwhile considering whether to delay all distributions until the liquidation of the company has started, and ensuring that the maximum corporate tax rate can be used as much as possible, especially to avoid leakage or wastage of franking credits.

    If you want to consider how this can best be planned for your individual circumstances, speak to one of the team at dVT Group today on 02 9633 3333.

     

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  • Congratulations Suelen McCallum

    Announcements14/03/2016

    Please join us in congratulating Suelen McCallum on becoming an accredited Business Valuation Specialist with The Institute of Chartered Accountants in Australia.

    Suelen understands how crucial valuations are to decision making and negotiations and over the last 20 years has been successfully providing accurate and reliable valuations of owner’s interest in a business – whether it be for taxation planning, family law matters, disputes with shareholders or for the sale of a business.

    It is exciting to have Suelen’s skills, knowledge and experience formally recognized by the Institute and to be officially identified as a trusted advisor in the business valuation sector. This is testimony to the high standards we strive for and allows us to continue to provide leading edge service to the people who rely on us.

    The last three years has seen dramatic changes in accounting rules, taxation regulation and corporate governance practice, so it is therefore important to recognise the importance of quality valuation skills and the key role it plays in business today.

    Once again, let’s congratulate Suelen on a distinguished and challenging achievement.

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  • Laugh Out Loud Breakfast and Special Olympics Cup Match

    Community

    The Laugh Out Loud Comedy Breakfast is an annual event run by the Special Olympics. de Vries Tayeh’s introduction was via a client and Riad Tayeh got involved and became an integral part of the organising committee prior to the first Breakfast being held. The first Laugh Out Loud (LOL) Comedy Breakfast was held in 2010 and had 300 guests in attendance. In 2012 there were 720 guests at the Breakfast in a packed to capacity Millennium Room at the ANZ Stadium.

    The mission of the Breakfast is to assist in the funding of the Special Olympics to provide year-round sports training and athletic competition in a variety of Olympic-type sports for children and adult with intellectual disability.  The funding from this event gives them continuing opportunities to develop physical fitness, demonstrate courage, experience joy and participation in a sharing of gifts, skill and friendship with their families, coaches, other Special Olympics athletes and the broader community. The Special Olympics receive very little funds from the State and Federal Governments…so event such as this are crucial.
    The LOL Comedy Breakfast is held during the Sydney Comedy Festival and is highly supported by the Sydney Comedy Festival who annually supply an international comedian to be the guest act at the Breakfast. It is entertainment loved by all that attend.

    Riad Tayeh has become one of driving forces behind the LOL Comedy Breakfast which is supported by the Greater Western Business Community and raises substantial funds for Special Olympics via sponsorship, table sales, raffle items and major auction items not to mention donations.

    In 2012 the inaugural Special Olympics Cup Rugby League game evolved from the Breakfast and was played between the Canterbury Bankstown Bulldogs and the South Sydney Rabbitohs.  Riad Tayeh was the brainchild in the initial evolvement of this event. The event was organised by a special committee with Rory Muscat of our staff being one of key members utilising his knowledge and contacts within the NRL. The first match was a huge success.

    Getting involved in the Laugh Out Loud Breakfast and Special Olympics Cup is de Vries Tayeh’s way of giving back to the community. de Vries Tayeh are extremely proud to play a major part in the development of this event.  If you are interested in attending or sponsoring the event or just making a kind donation please contact Riad or Rory of our office on 9633 3333.

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  • de Vries Tayeh Annual Prize

    Community

    The de Vries Tayeh Annual Prize was initiated to recognize and encourage young students at Ardlethan Central School who are looking at life opportunities that are available after the HSC.

    Ardlethan Central School – Started 2005

    These students have a vision or desire to take a hold of their future and de Vries Tayeh is happy to assist and support them in this life challenge. Antony de Vries grew up in Ardlethan and recognizes and values the solid grounding that he gained there as a student.

    de Vries Tayeh wants to contribute in a small way with this annual prize to students that have worked extremely hard and continue to show that they are worthy candidates. This small contribution hopefully will help them in their future path.

    Students attending Ardlethan School and are in year 12 that are interested in participating need to submit their application via email to Antony de Vries. They need to express their hopes, dreams, ambitions, what they are presently studying, and where they want to go in life? What do they want to achieve, further studies, and specific goals they have set for themselves? What present contributions they are giving to their future through their community and out of school activities? In November a final email from those that have applied summarizing what they have achieved to date and what lies ahead for their future is sent through to Antony de Vries. After perusal of all the applicants emails a final decision is made as to which student is the well deserved recipient for the year.

    Winners to date:

    • 2005 — Kirilly Farrell
    • 2006 — none awarded
    • 2007 — Luke McDermott
    • 2008 — No participants
    • 2009 — No participants
    • 2010 — Shantelle Guymer
    • 2011 — No Participants
    • 2012 — Hayden Minchin
    • 2013 – Taysha Fairley
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  • Pro Bono Work

    Community

    Both Riad Tayeh & Antony de Vries give their professional services free of charge to a number of worthy associations including, sporting and community associations.

    We take on various pro bono work for non-profit organisations to assist in the financial and structural restructuring. We believe that it is worthwhile being involved and wish to put back into the community. We are presently undertaking work for a major national sporting body on a pro bono basis to achieve a full restructuring for the sport. Please refer to turnaround achieved.

    The Firm is also proud to be associated with one of the states smaller rural high schools – Ardlethan Central School, Ardlethan, NSW. We provide the opportunity for senior students at this school to have first hand commercial experience outside of their normal environment, sponsor academic excellence and provide mentoring where appropriate.

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  • Access to Justice

    Community

    There are over two million people living in the Greater Western Sydney (GWS) region. The people and businesses of GWS deserve much better court services based at Parramatta from both Federal and State Governments to significantly improve their access to the justice system.

    Why should GWS locals be forced to travel long distances into the clogged Sydney CBD to get justice? This region needs fully functioning Courts at the Federal Court, Family Court, NSW Supreme Court and District Court levels. Parramatta has a well-established Justice Precinct with plenty of court facilities that are significantly under-utilised, disadvantaging the residents of this region.

    To achieve this, Governments at both levels need to appoint more Judges to the Parramatta jurisdiction and to establish a permanent presence for the NSW Supreme Court and the Federal Court to hear the full range of cases every week.

    Greater Western Sydney (GWS) region is one of the fastest growing regions of the country. This region has a total population of 2.005 million people and is growing at 1.5 per cent a year. With a population of that size, the region is a comparable jurisdiction to the City of Brisbane, and is larger in population that the State Capitals of Perth, Hobart and Adelaide.

    With the number of people and companies in and around this region the case is made. The time is right to give us “Access to Justice” we deserve.
    We aim to promote the Greater Western Sydney region, with Parramatta as the natural base, for improved and increased legal and judicial services to service the 2 million+ population of this region. In particular, we highlight the need for:

    • Greater use of the existing 13 Federal Courts facilities in the Garfield Barwick Building in George Street, Parramatta through the engagement of additional Family Court Judges to this Court;
    • The appointment of additional Federal Circuit Court Judges to the Parramatta Federal Courts;
    • The inclusion of Parramatta permanently in the circuit for Federal Court Judges hearing the full range of Federal matters in this region;
    • The establishment of a permanent NSW Supreme Court in Parramatta and the appointment of up to 6 Supreme Court Judges to be based at Parramatta.

    Riad Tayeh of de Vries Tayeh is part of the working committee of the Access to Justice for Western Sydney notion. At the recent successful launch of the concept Riad Tayeh was a guest speaker voicing the reasoning of why de Vries Tayeh is throwing its support behind this cause. de Vries Tayeh are advocates of the Access To Justice in Western Sydney are contributing to the cause to get Judges and Magistrates to Parramatta, the real heart of Sydney to ensure the people of Western Sydney get their “Access to Justice”

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  • How To Find the Cash

    Useful Information13/03/2016

    It’s common procedure to utilise the services of an independent expert, be they accountant or property valuer, to provide a report on the value of items included in an asset pool. This report can then be used to support claims for division of assets either through mediation or application to the Family Court.

    Introduction

    Independent Report by Accountant or Valuer
    We certainly have experience in this type of request and are more than happy to provide our services; however, we believe that there is a service that we can provide that is not always provided by other experts, and that is the valuation of undisclosed and undervalued assets.

    Undisclosed assets need to be identified and valued

    Where there is a suspicion or indication that assets and income have not been disclosed to the other side, we are often called upon to provide an opinion as to both the existence of these assets and an indication of their possible value.

    The ease with which these assets may be located and valued will depend to a large extent on the methods that have been used to hide them. It’s a bit like tax planning – the more resources you have at your disposal such as professional advisors, access to international facilities and so on, the better the scheme!

    Disclosed assets need to be analysed to reveal their true value

    One thing we’ve come to know over the years is never take anything at face value, and carrying out a valuation of assets is no exception.

    We look at the assets that have been disclosed and determine as a starting point whether or not:

    • The value given seems fair and reasonable;
    • There would be any circumstances which would change the value of this asset;
    • Other parties are involved with the asset, eg partners, shareholders

    This enables us to “weed out” those assets that require further investigation and then plan our approach to the valuation as a whole. It also enables us to obtain instructions from the client as to whether to proceed with such an investigation as it would of course increase the costs.

    HOW DO WE FIND THE CASH?


    Initial Information Provided by Both Sides

    There will be some assets which are known by both sides and there is no dispute on the existence of these items. There may, however, be a large discrepancy between, say, the husband’s estimated value of the family business and the wife’s value. We try and determine straight off why there is a large discrepancy as this often leads to areas that need to be investigated. For example, the wife may have a larger value in mind for the shop, because she knows that the husband pockets $200 cash per week. The husband may have a lower value because he is basing the value on declared income shown in tax returns.In the first instance, such information may only be allegations with little evidence; nevertheless it provides a starting point.

    Research into all entities

    Once we have an outline of what entities are involved – companies or individuals – we conduct full past and current corporate and business name searches, land titles searches, as well as searches of directorships and shareholdings.

    Analysis of financial information

    Where possible we try and obtain as much financial information as possible – financial statements, tax returns, budgets, loan applications are all good sources of information regarding the financial affairs of a company or individual. We also like to review financial information for at least the past five years where possible, since this gives us a feeling for where that company or individual should be positioned now.

    The types of review we carry out, especially in regard to a business, might include:

    • Comparison of formal to informal financial figures (eg income tax return to budgets or loan applications) to determine whether there are any sources of income not declared;
    • Review of financial performance over the last five years –
    • has income dropped recently without a corresponding fall in expenses;
    • have wages increased substantially without a corresponding increase in productivity (are there ghost employees?);
    • do the accounts show the debtors not being collected (with perhaps collections being diverted);
    • Use of benchmarks to compare the financial performance with other businesses in the industry.
    • Are the results and accounting methods consistent – in other words can we rely on the financial statements?
    • Has the business been efficient in its operations or use of profits/assets, or is there room for improvement?
    • What is the true value of assets disclosed in the balance sheet?

    Review and consider information provided by third parties

    The difficulty in valuing undisclosed or undervalued assets is often that third parties are unwilling or unable to provide you with the required information. We don’t have any direct legal standing in regard to those entities and we therefore rely on information that is either on public record or is supplied to us by the other side.

    Once we can show a link between these assets and the party who did not disclose them, the next step would be to request this information via the solicitors.

    In some cases, and to be frank if we’re lucky, there will be assistance from third parties. These may even be friends or relatives who feel one side is being hard done by, and who are quite happy to provide additional information. This is sometimes inaccurate, and even the result of “Chinese Whispers”, but again gives us an indication of the areas to review.

    Calculate value of undisclosed assets or income

    The final step is to provide a valuation of the undisclosed or undervalued assets or income. This may be difficult, since the fact they have been previously undisclosed will probably mean that there is little documentation around to support a value. Even a demand from one side’s solicitors to the other for production of documents may not be successful in obtaining all relevant information. In these cases, we would at the very least include a mention of the assets in our report and perhaps a range of values that would be applicable in the circumstances.

    Case Study “F”


    Family Law Matter

    This was a Family Law matter, with Mrs. F not employed, and Mr. F being a sole practitioner with a couple of accounting practices and interests in other businesses.

    Possible Undisclosed Income

    We were told by Mrs. F that Mr. F was diverting income through trust accounts of his and other colleagues’ practices and we were asked to see whether we had reason to believe this was the case. We were also asked to advise whether a sale price that had already been achieved for one of the accounting practices was, in fact, a fair price.

    Productivity Review of Accounting Practice

    The records kept by the 2 accounting practices were at most adequate. They did not distinguish the income and expenses of either practice and it was impossible to isolate the income and expenses without a lengthy reconstruction of the accounts. We did not feel that this was warranted in light of the costs of same.

    As part of our review of the records, it became obvious that the main accounting practice was not earning as much as it could. We compared the expected productivity of the principal and staff to the declared income and found that there could have been as much as $200,000 variance. We attributed this to the principal, who was the only professional who didn’t maintain formal timesheets, and came to the conclusion that either he was diverting funds from the business or was not working very hard.

    In fact, it turned out to be the latter. From discussions with Mrs. F and other parties, it was clear that Mr. F was running pretty much a “lifestyle” practice and essentially spent his time in the office managing the rest of the staff and marketing.

    The result was that our valuation was higher than under an ordinary cents/$ approach to fees, because the firm had substantial unused capacity.

    Case Study “S”


    Liquidation

    This was a liquidation of a car importer. It became obvious that we had a good chance of recovering some preference payments that had been made to creditors if we could show that the company was insolvent at the time the payments were made. We also decided to take action against a former directors for insolvent trading.

    Books and records destroyed or concealed

    The difficulty in establishing the insolvency of the company was the fact that the company’s books and records were in a complete mess. The company in fact maintained at least 3 general ledgers, none of which agreed with each other, and most of the source documents were either mislaid, concealed or destroyed by the current director.

    Complete rewriting of accounts

    We ended up reconstructing the accounts for the company, based not only the documents that were provided to us but also:

    • Copies of bank statements obtained from the company’s bankers;
    • Copies of police statements (the director was convicted of fraud at around the same time);
    • Correspondence with various external parties;
    • File notes and facsimiles between staff members describing monies received and how to disburse them;
    • Claims by creditors
    • Discussions with creditors and other parties regarding various transactions;
    • Post-it notes, faxed memos and scraps of paper contained in various files
    • Trashed hard disks were recovered by specialists

    Identification of Quantum and Timing of losses

    From the reconstructed accounts we were able to identify the quantum and timing of losses incurred by the company as well as acts of fraud committed by the director and other offences committed under the Crimes Act and the Corporations Act.

    From an in-depth analysis of these accounts we were able to:

    • Compare sales with purchases to calculate gross profits from year to year. In the 2 years before liquidation the company was suddenly making gross losses, indicating that cars had been sold for cash and not put through the company’s books;
    • Compare monies paid for registration and compliance fees with actual sales declared – this showed that the company paid for more vehicle registrations and compliances than were shown as being sold;
    • Review registrations of vehicles and compare them to sale records and other documents – we found a number of vehicles that had deposits taken for sale from more than one customer at a time.
    • Compare apparent assets/lifestyle of director and wife with the declared salary drawn from the company and determine whether this came from undeclared sales.

    We were then able to continue legal action for recovery of preference payments and for insolvent trading.

    CASE STUDY “C”


    Review on behalf of ASIC

    This was a request by the Australian Securities & Investments Commission to review the records of investments undertaken by a financial planner and determine whether funds had been misappropriated, so that ASIC could establish a framework for further enquiry to be carried out by them.

    Suspicion of misappropriation of funds

    We obtained from the financial planner all files relating to his clients. Comparison of these files with a list of clients and commissions indicated that a large number of files were missing, and our review of the existing files showed that they were maintained in a haphazard state. This straight away rang a few alarm bells, and we attempted to reconstruct the clients’ investment portfolios and compare them with records held by the fund managers.

    We found a number of client files where documents purportedly signed by the clients, ie giving authority to deal with funds, had what can only be described as inconsistences in the signatures, leading to a suspicion of misappropriation of funds.

    Audit of Documentation received from various parties

    Our audit of the documents received from the fund managers as well as the files taken from the financial planner revealed substantial discrepancies in approximately 60% of the portfolios. The details of the discrepancies were provided to ASIC and they were advised to contact the individual clients to confirm the transactions and then build any case against the financial planner.

    This case is a good example of “thinking beyond the square” and using a variety of information from a number of sources in order to build up the total picture. For example, we obtained copies of commission remittances paid to the financial planner. The commission was calculated on the transactions entered into by the planner and we were able to use the remittances to trace those transactions.

    CASE STUDY “G”


    Family Law Matter

    This was a family law matter where Mr. G claimed that various properties and cash holdings should be included in the asset pool, even though they were ostensibly in the joint names of Mrs. G and 2 children from a previous marriage, as it was claimed that the funds to acquire these assets were contributed by both parties.

    Asset Betterment Principles

    Since the parties involved were individuals, records were incomplete and consisted only of some bank and investment transactions records and documents arising from the purchase and sale of properties. Accordingly, our review meant taking the assets as they presently stood and going back to the time of acquisition to try and reconcile where the funds for acquisition were sourced.

    Tracing of funds in and out of Australia

    Part of the investigation also included funds that had been transferred from Australia to Greece in the name of the wife, with some of those funds subsequently transferred to other members of the wife’s family living in Greece.

    Constructive Trusts over a number of years

    Most of the value of the assets was attributable to capital growth in property and investment values over a number of years. It was therefore a matter of determining where and when the initial funds had been sourced to acquire the assets. It was determined that the wife had in fact held the 1st property in a constructive trust for the 2 children of the first marriage. The funds had come from the husband who had died intestate, leaving 2/3 of the estate to the children and 1/3 to the wife.

    The assets were therefore excluded from the asset pool, although the Judge did order an amount of $75,000 to be paid to the husband.

    CASE STUDY “J”


    Bankruptcy

    Mr. J was made bankrupt as a result of his refusal to honour a personal guarantee made by him in relation to a family company which went into receivership. Mr. J was a man of apparent substantial means and it was thought that we would be able to trace the source of his income and enable sufficient funds to be paid to the trustee and in turn to the creditor.

    Overseas Trust Distributions

    The major source of Mr. J’s private income was as a beneficiary under a long-established family trust based in South Africa. Annual distributions were made to various bank accounts of beneficiaries located in Europe and the U.K. Mr. J denied at all times that he was entitled to the distributions.

    Tracing of funds in and out of Australia

    Our investigations involved tracing the flow of funds from South Africa to the banks in Europe and the U.K. and then to Australia. These distributions, at least for Mr. J, stopped at the time of bankruptcy. As part of our efforts to establish Mr. J’s right to these funds, we made application for the trustee to be recognised as such in the U.K. which would have made it substantially easier to get access to the relevant banking documents etc.

    Tracing of blood lines for racing stock

    We were aware that Mr. J and his wife had apparent interests in a number of racehorses but we were told by Mr. J that the most valuable horses had been sold off prior to bankruptcy and that the remaining stock was not of any value. We obtained details of all horses held by Mr J and his wife through the Australian Jockey Club. These records in fact show the bloodlines of dams and sires and we recognised that in fact he had horses with a very healthy lineage and there was a good chance that these horses were worth considerably more than stated.

    Utilising informant to obtain background knowledge

    A very useful source of information was the bankrupt’s son-in-law who obviously had a grudge against Mr. J or believed that honouring a financial commitment was more important than good relations with his wife’s family. The son-in-law would ring our offices from America each week to check on the progress of the investigation and to let us know when monies were being paid out of the South African trust, etc.

    We made a comment earlier about the direct relationship between the resources you have available to you to structure your financial affairs, and the difficulties encountered in unravelling those affairs. This case is a perfect example of that relationship – the trust had been established for many years with annual distributions of around $1 million, so was not insubstantial. As we got closer to recovering Mr J’s assets, the matter was settled. While the settlement was less than we could possibly have recovered, the costs of unravelling Mr. J’s affairs were becoming prohibitive.

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  • Profitability Restored And Business Growth

    Useful Information

    We were approached by a client who had a company running a variety of businesses under one umbrella.

    As a conglomerate, the group was not producing sufficient profitability and business growth to continue in its present structure. After careful analysis of all the varied businesses and structures, we recommended that three of the four businesses be closed and/or sold off, and that the company and its principal’s concentrate on one business to achieve both the growth and the profitability targets required. It was foreshadowed that the closure or sale of the three businesses would create some cashflow problems and that this would be further exasperated by the growth of the remaining business. Nonetheless, detailed business plans were prepared and cashflow projections undertaken to ensure that there was a road map for the future direction.

    As anticipated, and after overcoming the issues in relation to closing of the businesses, repaying the creditors in full and growing the remaining business, growth has been spectacular in that it is anticipated that the business will more that triple in less than one year, and the company was also able to open an interstate office to meet demand. Consequently, profitability is anticipated to be greater than previous turnover.

    This result has demonstrated that more is not always better and that companies concentrating on a core business can effect a market domination and produce results far in excess of a scattered approach where management does not focus on any of the businesses to the extent required.

    As a result of the restructure and the planned going forward, de Vries Tayeh instead of fees took an equity and fees position to enable the company to overcome its cashflow.

    Further, we were also placed as Chairman of the Board of the company to oversee its continued growth. As a consequence, certain of the clients of this business have made approaches to buy the business, however, the exit strategy for the owners calls for further growth before the contemplation of sale.

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  • Strategic Planning

    Useful Information

    Some time ago we were approached by a medium sized family group to help restructure their company and achieve profitability. The group was successful in its market niche and was in fact a leader in its segment. Turnover at the time was significant however, profits were not. With growth came cashflow and management issues that were difficult for the family to deal with.

    How we help Strategy Success

    After careful analysis, it was considered that a full structural and operational restructure had to be undertaken on the group. This involved aspects of the management & financial information systems, operational structures, hierarchies and chains of command.

    The scope of any restructuring is the challenge the change brings, which is often met with considerable resistance. This was the case in this project. However, the owners of the company were confident in the process and supported the change. The restructuring impacted upon the workers on the factory floor, right through to the most senior of management. As the restructuring proceeded, tangible benefits began to show, which gave more momentum to the restructuring.

    The restructuring continues to date and the group’s turnover has increased significantly, more than tripling in three years with turnover exceeding $70 million, with profit exceeding world best practice. We still retain a strategic position as advisors to the company and are assisting the company to grow further, with a view to listing on the Australian Stock Exchange.

    It was as a result of the restructuring that the company was able to achieve unprecedented growth and profitability. With good corporate governance and interstaff relations and satisfaction, the company now is a world leader in its field and continues its good growth prospects.

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  • Turnaround Achieved

    Useful Information

    We were approached some time ago to review the financial position of a major national sporting organisation in Australia.

    The organisation was in dire financial straits having embarked upon an event that caused it to go into a considerable deficit, which its future trading could not under any circumstances allow it to recover from. After an analysis of the situation, it was clear that a financial and structural restructure was required to enable this body to continue to operate and remain a viable part of the Australian Olympic movement.

    Negotiations were begun with Creditors and an informal scheme was agreed to individually with each of the creditors, which enabled the sport to repay some of the monies outstanding and ensure that it had the ability to continue in existence. It was clear that had these accommodations not been met with its creditors, the sport would not have been able to continue, this would have severely impacted its ability to compete in world championships and the next Olympics. The sport being a gold medal winning sport, and a major sport worldwide. Concurrent with the accommodation reached with creditors, there was a rationalisation of the activities of the sport and the consequent reduction in the expenses to enable the sport to continue operating and meet the obligations that it had committed to.

    In order to reach accommodation with its creditors, the sport had to borrow money with which to pay a one off lump sum payment in final settlement of all creditors’ claims. This loan had to be repaid from ongoing trading activities. This crisis resulted in the onset of major structural reform in the sport, culminating in proposals of an integrated governance model. This model is now being piloted and could become the model for all other sports to follow. The Australian Sports Commission is monitoring the restructuring of this sport with a view to assisting other similarly troubled sports in overcoming their structural and financial difficulties. The sport has achieved a turnaround in that it will have repaid its loans and be in an asset positive position by the end of this year and with the anticipated structural reforms, could become a very viable and strong entity delivering a higher level of service to the sport throughout Australia.

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  • Viability Restored

    Useful Information

    The Directors approached us regarding advice in relation to their company in April 2001 following a Statutory Demand pursuant to Section 459E of the Corporations Act being served on them and the collapse of their insurer HIH Ltd which put in jeopardy their ability to trade on.

    During the Administration period we continued to trade the company on a cash positive basis and control returned to the Directors following the creditors resolving that the company enter into a Deed of Company Arrangement.

    The Deed allowed for the directors to realise real property in Sydney and apply the proceeds to pay a substantial secured creditor, employee entitlements, and 100 cents in the dollar to all personal guarantee creditors and a substantial dividend to remaining unsecured creditors.

    The Deed of Company Arrangement has been effectuated and company continues to trade successfully today.

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  • Insolvency

    Useful Information

    There are a number of warning signs that indicate that a company may be insolvent.

    What are the indicators of Insolvency?

    • statutory debts being settled late
    • a pattern of trade creditors being paid outside of terms, or offering part-settlement
    • unpaid employee superannuation
    • non payment of insurance premiums
    • poor collection procedures, poor cash flow management, debt factoring
    • creditors taking legal action, loss of suppliers
    • erosion of profit margin
    • undercapitalisation, high gearing
    • overstating the value of debtors and / or stock; understating liabilities
    • taking on new business to fund existing work in progress
    • incomplete management information and / or badly kept accounting records
    • indications of cosmetic accounting

    Director’s Responsibilities

    What To Do If Insolvency Is Suspected

    If insolvency is suspected, it is very important that a company arranges to have cash flows completed to determine the liquidity of the business. If the problems appear to be temporary, solutions such as capital injection may be appropriate. However if the problems appear to be long term, the Director/s should consider appointing a Liquidator or Voluntary Administrator.

    Voluntary Administration

    This is a useful tool to assist the rehabilitation and reconstruction of a business. Voluntary Administration provides immediate benefit, in that it prevents the winding up of the company by creditors, and provides time to develop a recovery plan for the business. Under this situation, the Administrators assume full responsibility for the operations of the business. They also investigate the books and records, contracts and other commercial considerations. This period of operation and investigation enables them to determine whether the best possible outcome would be to continue trading in order to find a buyer for the business as a going concern, or to liquidate the assets.

    Act Now

    If your business is in financial difficulty, you need to act quickly. If Directors continue to trade while insolvent, they are exposed to liability for civil and criminal penalties.

    It is essential to establish whether a potentially insolvent business can develop the cash flow and other conditions that will support future profitable trade. Acknowledging problems quickly is a positive step, because it creates additional potential for expert solutions like restructure and refinance to save not only the business itself, but the futures of key people associated with it. Contact de Vries Tayeh for experienced, professional advice on securing the best possible outcome for the particular circumstances. The potential to avoid business failure or mitigate its effects is increased, the earlier advice is sought. We offer years of specialised reconstruction and insolvency experience, and look forward to the challenge and responsibility of putting those skills in your service.

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