In Show 090 – 5 Things to Look for in An Interview originally broadcast on Facebook Live on Monday 14 May 2018 we explore this interesting topic.
Show Notes
On Fast Fix Monday today we’re going into greater detail about bringing on new employees. The most important part of that process is the job interview. Here are the top five things you need to look for when interviewing a prospective employee
1. Attitude
It’s so important to get a good read on their personality. They need to work well within the team. This isn’t always easy. People are naturally on their best behaviour in an interview. You need to delve a bit deeper. Ask them about problems in their previous job and how they handled those issues.
2. Understanding
Does the person understand your company and what it actually does? If they do it shows they have been doing their research.
3. Preparation
Is the person prepared? We have interviewed hundreds of people over the years and It’s amazing how many people aren’t prepared. You can tell really quickly if the person has prepared or not. If they haven’t they aren’t the right person.
4. Soft-skills
Does the person have a set of personal skills over and above their technical abilities? These sorts of skills will add to their usefulness to the team and are sometimes just as important as technical skills.
5. Inquisitive
Does the person ask questions? If they aren’t they probably aren’t interested in the job. If they have lots of questions they have clearly done their homework.
More about this Show
We started Business Legal Lifecycle to create a simple way for you to understand complex legal terms. Most importantly we want to help you to develop a plan to take your business successfully into the future. There’s a startling statistic the underscores the importance of developing a solid plan. The majority of business owners are just seven months away from losing everything. A single aspect of your business that is not set-up correctly can shut down your whole operation very quickly. Legal advice is not cheap and even when you can afford it there is often a divide between lawyers and their clients. We want to close that gap once and for all. We want to put legal knowledge and tools into your hand to prevent the worst from happening to you.
Twice a week we are going to deliver those tools right to your home or office with Business Legal Lifecycle TV. We’ll start the week with Fast Fix Monday, a short 5-10 minute video that will tackle a single issue that businesses have to deal with. Then on Wednesday’s our main show will feature with more fulsome discussions and interviews all delivered in a straightforward and easy to understand format.
In Show 089- From Hire to Fire and Everything in Between an Interview with Natasha Hawker originally broadcast on Facebook Live on Wednesday 9 May 2018 we explore this interesting topic.
Download a copy of the workbook for today’s episode here: 089 Worksheet
Show Notes
Today, we’ve invited Natasha Hawker, the owner and director of Employee Matters to join us on the podcast. She is a senior HR practitioner, speaker, author and trainer. She is an expert in employee management, recruitment and mediation. She’s been published in the Sydney Morning Herald, The Age and The Australian Financial Review. She’s also the author of From Hire to Fire & Everything in Between. Natasha believes that small business is the backbone of the country and she’s driven to help them grow. We’ve worked with Natasha for several years and we’re excited to have her on the show.
Natasha started her career in finance, trading bonds for millions of dollars. Everyone kept telling her that she would be great in personnel. She moved into a recruitment consultancy which wasn’t very enjoyable experience. She was then hired by Accenture which became her lucky break. It helped her to gain a good footing in HR management. Six years ago she founded her own firm. The average small to medium business doesn’t know much about human resources. Natasha focused her business of providing those companies with quality HR management.
As your company enters Phase 4: Bringing on Employees you need to make sure you’re following the best practices. Getting this phase wrong can produce an enormous amount of unnecessary stress. That phase begins with hiring staff. Natasha says businesses often don’t know when to begin hiring. The other mistake is knowing who to hire and what skills they need. The staff needs to be aligned with your business. They need to fit into your business culture. This isn’t a small detail. It’s critical to the success of your business.
Finding the right person that’s aligned to your business isn’t easy. Everyone doesn’t have to be exactly like you. In fact, it’s the opposite. You need to find people that have a different skill set than your own. Alignment is all about the business culture you’ve created. If you like to work hard, play hard you can’t hire a group of people that just play hard. Sourcing your employees starts with making sure your corporate brand and your mission vision have to be the same. Your values have to reflect your brand. Once those values are in place it will help to attract the right people.
Increasingly, you don’t have to rely on job boards to find the right people. Social networks like LinkedIn and Facebook have become incredibly important. Natasha believes that good people know god people. Don’t be shy about asking colleagues to recommend someone for your business. It’s a very tight labour market right now. Finding qualified people is very difficult. When you do find someone be sure to snap them up otherwise your competitors will hire that person instead.
You need to be very clear with your candidates about what kind of business you operate. Put the candidate at the center of your recruitment practices. Treat everyone with respect. Make their experience so positive that even those who don’t get the job will still respect your company. Behaviour interviews are really important. Past behaviour will predict how they will work in the future. Ask about how they deal with tight deadlines. How will they behave under stressful conditions? A culture interview is also important. Ask about the favourite places they’ve worked at in the past and why.
Natasha says the first rule of leadership is that everything is your fault. What she means is that great leaders need to be authentic. You don’t have to be perfect but you do need to take responsibility for everything in your business. What that means in practice is making sure you’ve created failsafes in your management. Leaders need to have integrity and have to surround themselves with people who are better than themselves. You have to build, maintain and your business culture at all costs. Leaders also have to be continually educating themselves. Training and education should never stop.
What book are your reading right now?
Never Split the Difference: Negotiating as if your life depended on it by Chris Voss
What book should every business owner read?
Smart Business Exit by Geoff Green
If you could give advice to your younger self what would it be?
Back yourself. You’re worth more than you think.
Additional Resources from Natasha
More about this Show
We started Business Legal Lifecycle to create a simple way for you to understand complex legal terms. Most importantly we want to help you to develop a plan to take your business successfully into the future. There’s a startling statistic the underscores the importance of developing a solid plan. The majority of business owners are just seven months away from losing everything. A single aspect of your business that is not set-up correctly can shut down your whole operation very quickly. Legal advice is not cheap and even when you can afford it there is often a divide between lawyers and their clients. We want to close that gap once and for all. We want to put legal knowledge and tools into your hand to prevent the worst from happening to you.
Twice a week we are going to deliver those tools right to your home or office with Business Legal Lifecycle TV. We’ll start the week with Fast Fix Monday, a short 5-10 minute video that will tackle a single issue that businesses have to deal with. Then on Wednesday’s our main show will feature with more fulsome discussions and interviews all delivered in a straightforward and easy to understand format.
In Show 088 – 10 Ways to Distinguish between an Employee and Contractor originally broadcast on Facebook Live on Monday 7 May 2018 we explore this interesting topic.
Show Notes
Today on Fast Fix Monday we discuss the difference between independent contractors and employees. This is part of the Phase 4: Bringing on new employees. It’s an exciting time for a growing business but you have to get the status of your workers right or your risk running afoul of regulators. There are 10 ways to tell the difference between a contractor and an employees.
- An independent contractor has their own business. They don’t work exclusively for you.
- Contractors are experts in their industry. They are guns for hire that are brought in for their specific expertise.
- Contractors openly market their services. They are free to work for others.
- Contractors are brought in for a specific project for a set period of time.
- Contractors submit their own invoices.
- Contractors determine when they work and the hours they work.
- Contractors determine how they work. They can determine how they will perform their service.
- Contractors are responsible for their own taxes. An employee will have taxes deducted from their paychecks.
- Contractors are not eligible for company benefits like sick leave or vacation leave
- Contractors can subcontract or delegate work to others.
More about this Show
We started Business Legal Lifecycle to create a simple way for you to understand complex legal terms. Most importantly we want to help you to develop a plan to take your business successfully into the future. There’s a startling statistic the underscores the importance of developing a solid plan. The majority of business owners are just seven months away from losing everything. A single aspect of your business that is not set-up correctly can shut down your whole operation very quickly. Legal advice is not cheap and even when you can afford it there is often a divide between lawyers and their clients. We want to close that gap once and for all. We want to put legal knowledge and tools into your hand to prevent the worst from happening to you.
Twice a week we are going to deliver those tools right to your home or office with Business Legal Lifecycle TV. We’ll start the week with Fast Fix Monday, a short 5-10 minute video that will tackle a single issue that businesses have to deal with. Then on Wednesday’s our main show will feature with more fulsome discussions and interviews all delivered in a straightforward and easy to understand format.
In Show 086 – Phase 4, Bringing on Employees originally broadcast on Facebook Live on Wednesday 2 May 2018 we explore this interesting topic. download the workbook here: 086 Worksheet
Show Notes
Today we start Phase 4 of the Business Legal Lifecycle. It’s subtitled Bringing on new employees. By the time you reach this phase you are ready to bring on some help to help your business to continue to grow.
Employees vs Contractors
This is an important distinction you need to understand before you hire additional help. An employee will usually work exclusively for you. They don’t need to provide their own tools. A contractor works for themselves and are expected to bring their own tools of the trade. You will be able to exert a much higher degree of control over an employee, a contractor less so. An employee is also not liable for the work they perform – you are. You are responsible for deducting tax and super annuation from paycheques of employees but not for contractors. This is an important part of making sure you are classifying your workers correctly. You don’ want to be penalized for not contributing to the tax pool. The Australian Government has an online tool that is very useful for business owners to make sure they get this right. You can find that tool here: https://www.ato.gov.au/Calculators-and-tools/Employee-or-contractor/
Different kinds of employees
Under Australian law there are five main kinds of employees. Each category has their own rights and responsibilities. Those categories are:
- Full time employees
This is a person that works at least 38 hours per week. A full-time employee can become a part-time employee but it’s quite difficult to make that transition. - Part-time employees
Any employee that works less than 38 hours. There is no guaranteed amount of work each week. - Casual employees
Similar to part-time but not entitled to holiday and sick days. Lots of employers make the mistake of miscategorizing there casual workers as part-time. - Fixed-term employees
A worker that will work for only a set amount of time. Not guaranteed to a definite number of hours. - Daily hire employees
In the construction and plumbing industries workers can be hired on a daily basis but they must be told they are daily hires from the start.
What you need for your staff
There are some basic things you need to provide your employees. Minimum wage is the most obvious. You can decide how often those payment will be made but they must be consistent. You also need to provide pay slips. You may have to reimburse employees for any work related costs. You also need to ensure a safe work environment for your workers. Payment of taxes are your responsibility. You are expected to deduct those taxes from workers cheques. Same goes for super annuation deductions.
Employment agreements
There is a myth that employment agreements are worthless. That’s not true. As long as the agreement has been properly written they are extremely useful for business owners. They need to be a backstop for a number of eventualities. Putting the agreements in early will save you a lot of headaches in the future. You need to protect yourself. Some of the things you need to address are the term of the employment, the payment level and the duties of the employee. Workplace duties should be specifically laid out along with the hours of work. There should be a probationary period of three months, Bonus structures should also be clearly laid out. The grounds for termination need to be written in a very detailed manner.
Workplace policies
These tie in with the employment agreement. The employer should be expected to conform to the policies laid out. The policy should be highly detailed. That includes dress codes, drug and alcohol policies and a harassment policy. There should also be a grievance policy so employees will know who to speak to about any problems they are experiencing. Most of these are common sense but if they are not detailed early you will end up with a lot of headaches.
Restraints of trade
People often think these restraints are not enforceable but that’s not true. As long as they are put in place to protect the legitimate business interests of the owner they are very useful. If a former employee begins to steal clients or other employees you will be able to seek a restraint of trade. They must be drafted carefully and be very detailed. You can’t craft an agreement that says a former employee can’t work on your industry for ten years it’s not enforceable. It must be reasonable.
Dismissal of employees
If an employee breaches your workplace policies you are able to dismiss an employee. It’s not something you want to rush into. You want to avoid the possibility of a wrongful dismissal suit. Redundancies is one legitimate reason to let an employee go. Termination can be inertaken for inappropriate behaviour, fraud or theft and poor performance. Warnings will have to be given for poor performance before they can be let go.
More about this Show
We started Business Legal Lifecycle to create a simple way for you to understand complex legal terms. Most importantly we want to help you to develop a plan to take your business successfully into the future. There’s a startling statistic the underscores the importance of developing a solid plan. The majority of business owners are just seven months away from losing everything. A single aspect of your business that is not set-up correctly can shut down your whole operation very quickly. Legal advice is not cheap and even when you can afford it there is often a divide between lawyers and their clients. We want to close that gap once and for all. We want to put legal knowledge and tools into your hand to prevent the worst from happening to you.
Twice a week we are going to deliver those tools right to your home or office with Business Legal Lifecycle TV. We’ll start the week with Fast Fix Monday, a short 5-10 minute video that will tackle a single issue that businesses have to deal with. Then on Wednesday’s our main show will feature with more fulsome discussions and interviews all delivered in a straightforward and easy to understand format.
In Show 086 – Deregistration and Voluntary Winding Up originally broadcast on Facebook Live on Monday 30 April 2018 we explore this interesting topic.
Show Notes
On Fast Fix Monday today we are talking about deregistering your company and members wind-up.
As your company comes to the end of it’s lifecycle you may want to consider deregistration. Companies cost money to keep in operation so one option is to simply deregister it. There is an ASIC form that you have to submit to start this process. All the members of the company have to sign-off on the deregistration. The company cannot be currently carrying out any business and can’t owe any debts. It also has to have assets that are worth less than $1000. All penalties and fees have to have been paid. The business can’t be involved in any legal proceedings.
Liquidation is usually associated with a company in financial difficulty. But that’s not always the case. A members voluntary liquidation is something different. If the business is solvent a liquidator can still be appointed to sell-off the companies assets. There isn’t a one size fits all solution to this. If you are thinking about using this to wind-up the company you need to consult your advisers first. There are some tax benefits to doing this. But it is more difficult to re-register a company that has been subject to a voluntary liquidation.
More about this Show
We started Business Legal Lifecycle to create a simple way for you to understand complex legal terms. Most importantly we want to help you to develop a plan to take your business successfully into the future. There’s a startling statistic the underscores the importance of developing a solid plan. The majority of business owners are just seven months away from losing everything. A single aspect of your business that is not set-up correctly can shut down your whole operation very quickly. Legal advice is not cheap and even when you can afford it there is often a divide between lawyers and their clients. We want to close that gap once and for all. We want to put legal knowledge and tools into your hand to prevent the worst from happening to you.
Twice a week we are going to deliver those tools right to your home or office with Business Legal Lifecycle TV. We’ll start the week with Fast Fix Monday, a short 5-10 minute video that will tackle a single issue that businesses have to deal with. Then on Wednesday’s our main show will feature with more fulsome discussions and interviews all delivered in a straightforward and easy to understand format.
In Show 084- Surviving Insolvency with Hank de Jonge originally broadcast on Facebook Live on Wednesday 25 April 2018 we explore this interesting topic.
You can download the work book here: 084 – Worksheet
Show Notes
Insolvency and winding-up has been the focus of this month’s episodes. Today we’ve invited an expert on insolvency to share his decades of experience with us. Hank de Jonge is the co-founder of de Jonge Read a business consultancy focused on guiding business through insolvency. Hank has an extensive background both operating and buying businesses. He founded de Jonge Read in 2006 and has strived to help companies to navigate the complicated world of bankruptcy.
Hank had been buying and selling small businesses for most of his career. He was a running a successful business but everything changed in 2001 after September 11th. Tourism dropped dramatically in Australia and that put his company into insolvency. He found it difficult to find someone that could give him straightforward advice. Insolvency experts usually work for the creditors not the debtors. Once he emerged on the other side of that stressful experience he decided to found a firm that would help others avoid the difficulties he encountered.
Every insolvency situation is different but Hank says there are some similarities. About 75% of his clients do end up going through a formal insolvency process. But in the last five years banks have become much more amenable to proposals to avoid that. Some businesses have encountered a one off event like a flood or an embezzlement. Those businesses are still in good shape they just need help over the hump. Other businesses, however, are no longer profitable and need more dramatic intervention.
Hank has seen it all when it comes to insolvency. Companies can make many different mistakes that leads to bankruptcy and winding-up. Poor management is one of the main reasons for companies faltering. However, one-off events can also put a company in dire straights almost overnight. When companies don’t react quickly enough to a problem it can lead to disaster. The sooner a firm like Hank’s becomes involved the better.
Hank often represents companies that are facing an insurmountable debt. They may owe money to the tax man or to their creditors. So long as the business is still viable there may be an opportunity to restructure the business to keep it from sliding into insolvency. But that’s not always the case. Hank once had a client who moved opened a fruit market and was losing close to $10 thousand per month. In that case the only viable option was to wind-up the business.
One of the newer changes in Australian law around insolvency is the concept of safe harbour. If you continue to trade while your business is insolvent you could become personally liable for any of the debts the business incurs. Recently, Hank represented the owner of cafe on the Gold Coast. The businesses debts were secured with the owner’s personal home. If she would have gone into liquidation she might have lost her home. By using safe harbour she was able to trade for another five months by showing that she was going to be able to turn around the business. That would allow her to sell the business rather than becoming insolvent. The safe harbour strategy allowed her to show to creditors that her continued business would benefit them in the end. Her loss in the end was reduced by nearly $180 thousand. Hank is quite passionate about safe harbour and thinks it’s a hugely useful tool for struggling businesses.
Disruption is a constant in business and that’s true in the pre-insolvency world too. Hank feels the industry has been tarnished recently by some bad operators. Hank is very keen that his industry becomes better regulated.
What book are you currently reading?
What book should every business owner read?
Richard Branson’s autobiography Finding My Virginity is a particularly good read.
What advice would you give to your younger self?
Don’t stick your head in the sand. Deal with things head on.
Contact Hank
More about this Show
We started Business Legal Lifecycle to create a simple way for you to understand complex legal terms. Most importantly we want to help you to develop a plan to take your business successfully into the future. There’s a startling statistic the underscores the importance of developing a solid plan. The majority of business owners are just seven months away from losing everything. A single aspect of your business that is not set-up correctly can shut down your whole operation very quickly. Legal advice is not cheap and even when you can afford it there is often a divide between lawyers and their clients. We want to close that gap once and for all. We want to put legal knowledge and tools into your hand to prevent the worst from happening to you.
Twice a week we are going to deliver those tools right to your home or office with Business Legal Lifecycle TV. We’ll start the week with Fast Fix Monday, a short 5-10 minute video that will tackle a single issue that businesses have to deal with. Then on Wednesday’s our main show will feature with more fulsome discussions and interviews all delivered in a straightforward and easy to understand format.
In Show 083 – 5 Consequences of Winding Up a Company, we explore the interesting topic of winding up a business/company and the consequences this process may have.
Today we’re talking about the five consequences of winding up a business. Once a business has been declared insolvent a liquidator will be appointed to sell-off the assets of the business. There are a number of consequences of having appointed a liquidator. Today, we’ll discuss five of those consequences.
1. You lose control
The first consequence is the most obvious but one that you have to understand before you go down this path. Once a liquidator is appointed you lose all control over the company and its assets.
2. The directors are directors in name only
The directors may still hold that title but they too lose all control. Once the liquidator takes over the directors can no longer exert any influence on the direction of the company.
3. All of the assets will be sold to pay debts
If the company needs to have a liquidator appointed it’s because the business is insolvent and can’t pay back creditors. A liquidator’s primary responsibility is to pay back as much of that debt as possible.
4. The directors may still owe for personal guarantees
If a director or someone else at the company has personally guaranteed any of the debts incurred by the business that money still has to be paid back. The bankruptcy of a company won’t wipe out the debt that was personally guaranteed.
Government regulations may stop you from practicing your profession
If you’re company has gone bankrupt in certain trades like the building industry you are banned from being able to operate in that industry for three years. Different industries have different rules so you need to know what those rules are before you declare bankruptcy.
Are you considering winding up your company?
More about this Show
We started Business Legal Lifecycle to create a simple way for you to understand complex legal terms. Most importantly we want to help you to develop a plan to take your business successfully into the future. There’s a startling statistic the underscores the importance of developing a solid plan. The majority of business owners are just seven months away from losing everything. A single aspect of your business that is not set-up correctly can shut down your whole operation very quickly. Legal advice is not cheap and even when you can afford it there is often a divide between lawyers and their clients. We want to close that gap once and for all. We want to put legal knowledge and tools into your hand to prevent the worst from happening to you.
Twice a week we are going to deliver those tools right to your home or office with Business Legal Lifecycle TV. We’ll start the week with Fast Fix Monday, a short 5-10 minute video that will tackle a single issue that businesses have to deal with. Then on Wednesday’s our main show will feature with more fulsome discussions and interviews all delivered in a straightforward and easy to understand format.
In Show 082 – Find Your Why With Peter Docker originally broadcast on Facebook Live on Wednesday 18 April 2018 we explore this interesting topic.
You can download the Worksheet for today’s episode here: 082 – Worksheet
Show Notes
Today on BLL we’re excited to welcome Peter Docker onto the program. Peter is a speaker, teacher and author of the book Find Your Why: A practical guide for discovering purpose for you and your team. Peter says he exists to help people find the real purpose in their working lives so they can do extraordinary things. Peter says your why is not created, it’s discovered. That’s what makes it authentic and real.
Discovering your own why is an act of leadership, Peter says. You have to be vulnerable and dig deep inside to help you discover your purpose. Once a leader establishes their why they need to turn to a group why. What is it that makes your organization different or unique? What’s the higher purpose? Being able to put that purpose into a single sentence makes it actionable. It will affect every part of the business. It will help you to hire people who believe what you believe and to actually stand for something.
Peter served for 25 years in the Royal Air Force. He drew on that experience when developing his concept of a nested why. As the commanding officer of a squadron stationed overseas. The Air Force is nested inside the larger armed forces which consists of the Army, Navy and Air Force. The Air Force is then made up of individual squadrons. Each is different in character. This can be applied to business as well. A large company can have an overarching why but each division can have a slightly different why. That allows each part of the organization to better express it’s personality.
A why is just a tool. You have to use it to build something. Having a why without using it is pointless. Your why should infuse every part of the business. Everything you say and everything you do either adds or subtracts from your why. It will either add or take away from the trust your organization engenders.
When Peter first entered the Air Force he couldn’t fly. The Air Force then spent the next 12 months of basic officer training to figure out if Peter would be a good fit. Contrast that with business. Companies hire people based on their experience and skills and then hope that they will fit in. If you speak your why out loud you will attract people that will be a good fit. Your why will bring people together with common beliefs.
Change is the new normal in business but Peter believes a companies why can be a constant. Rolls Royce’s why is to attempt to create a perfect automobile. Despite being a century old their why never changes. That can be the same for your business too. Your why will be different but it will be your North Star.
Simon Sinek’s Ted Talk can be found here: Youtube
More about this Show
We started Business Legal Lifecycle to create a simple way for you to understand complex legal terms. Most importantly we want to help you to develop a plan to take your business successfully into the future. There’s a startling statistic the underscores the importance of developing a solid plan. The majority of business owners are just seven months away from losing everything. A single aspect of your business that is not set-up correctly can shut down your whole operation very quickly. Legal advice is not cheap and even when you can afford it there is often a divide between lawyers and their clients. We want to close that gap once and for all. We want to put legal knowledge and tools into your hand to prevent the worst from happening to you.
Twice a week we are going to deliver those tools right to your home or office with Business Legal Lifecycle TV. We’ll start the week with Fast Fix Monday, a short 5-10 minute video that will tackle a single issue that businesses have to deal with. Then on Wednesday’s our main show will feature with more fulsome discussions and interviews all delivered in a straightforward and easy to understand format.
In Show 081- Why You Should Avoid Bankruptcy originally broadcast on Facebook Live on Monday 16 April 2018 we explore this interesting topic.
Show Notes
Today on Fast Fix Monday we continue our discussion about bankruptcy. There are a number of consequences when you declare bankruptcy. Those include:
- A trustee will be appointed to manage all of your financial affairs. You will have to give up all the information related to your debts and other financial information.
- Bankruptcy will affect your income and your employment. You will have a set amount of money you will be allowed to earn for yourself. That amount depends on how many dependents to have. Everything else will go to the trustee.
- Bankruptcy doesn’t let you avoid all your debts. It will allow you to wipe out much of your debt but things like fines and child maintenance cannot be eliminated.
- Bankruptcy can affect your ability to travel overseas. You may have to hand in your passport. You will need consent from our trustee who may not let you go.
- If you’re bankrupt your name will forever appear in the National Personal Insolvency Index. People will be able to search that index and find that you’ve gone bankrupt in the past.
- Bankruptcy will affect you ability to obtain credit in the future. Credit reporting agencies will keep a record of your bankruptcy for five years from the date you declared.
- The trustee may sell your assets. Your allowed to keep your household goods and a vehicle as well as the tools of your trade. But everything else can be sold to pay your debts.
- You may lose the right to continue legal action. If you are in the midst of a lawsuit and the trustee will decide if that case will continue.
- Bankruptcy lasts for three years. You will have to declare all your financial assets and liabilities. You have to provide all that information before the bankruptcy comes into effect.
More about this Show
We started Business Legal Lifecycle to create a simple way for you to understand complex legal terms. Most importantly we want to help you to develop a plan to take your business successfully into the future. There’s a startling statistic the underscores the importance of developing a solid plan. The majority of business owners are just seven months away from losing everything. A single aspect of your business that is not set-up correctly can shut down your whole operation very quickly. Legal advice is not cheap and even when you can afford it there is often a divide between lawyers and their clients. We want to close that gap once and for all. We want to put legal knowledge and tools into your hand to prevent the worst from happening to you.
Twice a week we are going to deliver those tools right to your home or office with Business Legal Lifecycle TV. We’ll start the week with Fast Fix Monday, a short 5-10 minute video that will tackle a single issue that businesses have to deal with. Then on Wednesday’s our main show will feature with more fulsome discussions and interviews all delivered in a straightforward and easy to understand format.
In Show 080 – What to know about Insolvency with Lee Crosthwaite originally broadcast on Facebook Live on Wednesday 11 April 2018 we explore this interesting topic.
You can download a copy of the worksheet for this episode here – 080 – Worksheet
Show Notes
Insolvency is a dirty word for anyone in business. But there is always a risk that you will have to wind-up your business because of a lack of funds. Today, were joined by Lee Crosthwaite a partner at Worrells Solvency and Forensic Accountants. He’s a registered liquidator and has worked at the firm since 2002. He has been involved in administering a number of high profile bankruptcies in Australia. He has a lot of great insights into what an insolvency practitioner does. We also discuss how business owners can turn their business around and avoid insolvency.
Lee says working in the industry can be difficult as he has to deal with people during one of the most difficult times in their lives.
“You have to have a lot of compassion for the people involved.” He says.
There are several stages to the insolvency process. An individual may become insolvent and so to can a business. A company is in the early stages of facing insolvency is very different from a company that is heavily insolvent. You have to deal with those situations in different ways. Early on the focus is on trying to turn around the business, usually through the restructuring of debt. The other aspect of insolvency is when the company is on its last legs. A creditor may have wound up the company through the courts. At the at point Lee’s work is all about liquidating the company assets and paying employees and creditors.
There are a lot of misconceptions about the insolvency process. The most common is the idea that no one gets paid during a bankruptcy. That may be true at the very late stages of insolvency. But if a turn around process begins early enough that outcome can be avoided.
There are a lot of mistakes business owners can make that could lead to insolvency. The biggest is, of course, financial mismanagement. Not having proper budgets or up to date financial information is a very common error that Lee encounters. Not having up to date financial information means the owner may not know things are going wrong until it’s too late. Having enough capital on hand is also critical. Many people start a business without enough capital and are never able to catch up.
You have to have a good business plan if you’re going to succeed. Understanding your target market and you ability to head in the right direction is critical. There are excellent accounting programs available to ensure that your financial information is up to date. Making sure you’re balancing you cash flow against your expenses and creditors is also key. If you do start to struggle you need to deal with it immediately. Keep your bank, your employees and other creditors informed throughout the process. The earlier you start trying to the fix the problem the more options you will have.
If you get to the point in your business where you are starting to have trouble seek advice. Whether it’s a lawyer or an accountant do it. Don’t put your head in the sand. When you’re going into your business make sure you have an exit strategy.
What book are you reading right now?
“I’m reading Tim Cahill’s autobiography that my kids bought me for Christmas.”
What book should every business owner read?
“It’s James Kerr’s book Legacy which all about how the All Blacks principals can translate into business.”
If you could give advice to your younger self what would it be?
“Ensure that you enjoy yourself along the way.”
Connect with Lee
More about this Show
We started Business Legal Lifecycle to create a simple way for you to understand complex legal terms. Most importantly we want to help you to develop a plan to take your business successfully into the future. There’s a startling statistic the underscores the importance of developing a solid plan. The majority of business owners are just seven months away from losing everything. A single aspect of your business that is not set-up correctly can shut down your whole operation very quickly. Legal advice is not cheap and even when you can afford it there is often a divide between lawyers and their clients. We want to close that gap once and for all. We want to put legal knowledge and tools into your hand to prevent the worst from happening to you.
Twice a week we are going to deliver those tools right to your home or office with Business Legal Lifecycle TV. We’ll start the week with Fast Fix Monday, a short 5-10 minute video that will tackle a single issue that businesses have to deal with. Then on Wednesday’s our main show will feature with more fulsome discussions and interviews all delivered in a straightforward and easy to understand format.
