1. Rather than just waiting for the customers to come to you, actively work to give customers what they want. This might take some research.
2. Customers are looking for a different sort of experience. If your business does not supply it then your competitors or some big business will try.
3. The secret of success for a small business operator is to establish the systems, train staff, develop a marketing strategy and then supply the customers with excellent service.
4. Don’t be afraid if you appear different to your competitors. Deliberately try to differentiate your business, so your customers will know and recognise you and be enthusiastic referrers of their friends and associates.
Click here for your Auckland Xero Experts
Monday, August 29, 2011
Thursday, August 25, 2011
Issues with Forgiving Trust Debt
With gift duty to be abolished from 1 October 2011, many clients will be wanting to make a one off forgiveness of debt for the amount owed to them by their trust. We discuss the tax and non-tax issues that should be considered before any such gift is made:
The debt is an asset for the lenders and often it is used as a means by which to control the trust. Clients need to understand that once the debt is forgiven they may lose the most effective way to control the trust. This can particularly apply to loans by parents to trusts for their children.
It is often easier for disappointed beneficiaries to establish a claim against wills/estates than against the trustees of a discretionary trust. Many clients will be wanting to extinguish the debt so that potential claimants against the estate are not able to access the debt back, which is an asset of the estate. Any clients wanting to exclude a person inheriting from their estate will most likely see the abolition of gift duty as an opportunity to make a one off gift to a trust, and control the inheritance “from the grave”.
Relationship Property claims often focus on the debt back from the family trust. If there is no debt back, PRA claims against the trust are that much harder. We are therefore likely to see more debts forgiven for PRA reasons.
A one-off forgiveness of debt will not give rise to any added advantages in terms of entitlement to rest-home subsidies or other WINZ benefits. The rules only allow a certain level of gifts for the five years preceding the application (currently $6,000 p.a), and for periods beyond that at only $27,000 per year. If there is a one-off gift, all but the annual exemption amounts will be clawed back in the calculation. This suggests it may well be appropriate to continue with a regular gifting programme if WINZ considerations are going to be relevant to the client in the future.
For tax purposes, if there is a distribution from a trust to a beneficiary for whom the creditor would not have natural love and affection, remission income can arise in the trust under the accrual rules. This applies where there has been a debt forgiveness programme, not where there were cash gifts to the trust.
This claw back on distribution is most likely to apply where there is an investment trust looking to distribute income or capital to say, a company (that may or may not have tax losses). The general rule is where there has been debt forgiveness, do not allow the trustees to make any distribution to a non-natural love and affection beneficiary.
Insolvency and the timing of any debt forgiveness is relevant. Many readers may be well aware of Section 346 of the Property Law Act and the Regal Castings case, as well as the relevant sections of the Insolvency Act. These sections need to be addressed and full information of a client’s financial position is required. It may be that it is appropriate for clients to ask their accountants to provide a solvency certificate at the time of any one-off forgiveness of debt. We note that there are differing views as to whether the relevant solvency test is a cash flow test or balance sheet test.
Many clients with trusts will also be the shareholders in a Look Through Company (“LTC”) which will own a geared investment rental property. A potential issue arises with the shareholders forgiving the debt owed to them by the trust, where the trustees are also guaranteeing the debt. Forgiveness of the debt can affect the “equity” for the shareholders and lead to the application of the loss limitation rule whereby they are not able to claim all of the losses arising from the LTC.
Written by Keith Turner NSA Tax
Brought to you by your Xero accountants
The debt is an asset for the lenders and often it is used as a means by which to control the trust. Clients need to understand that once the debt is forgiven they may lose the most effective way to control the trust. This can particularly apply to loans by parents to trusts for their children.
It is often easier for disappointed beneficiaries to establish a claim against wills/estates than against the trustees of a discretionary trust. Many clients will be wanting to extinguish the debt so that potential claimants against the estate are not able to access the debt back, which is an asset of the estate. Any clients wanting to exclude a person inheriting from their estate will most likely see the abolition of gift duty as an opportunity to make a one off gift to a trust, and control the inheritance “from the grave”.
Relationship Property claims often focus on the debt back from the family trust. If there is no debt back, PRA claims against the trust are that much harder. We are therefore likely to see more debts forgiven for PRA reasons.
A one-off forgiveness of debt will not give rise to any added advantages in terms of entitlement to rest-home subsidies or other WINZ benefits. The rules only allow a certain level of gifts for the five years preceding the application (currently $6,000 p.a), and for periods beyond that at only $27,000 per year. If there is a one-off gift, all but the annual exemption amounts will be clawed back in the calculation. This suggests it may well be appropriate to continue with a regular gifting programme if WINZ considerations are going to be relevant to the client in the future.
For tax purposes, if there is a distribution from a trust to a beneficiary for whom the creditor would not have natural love and affection, remission income can arise in the trust under the accrual rules. This applies where there has been a debt forgiveness programme, not where there were cash gifts to the trust.
This claw back on distribution is most likely to apply where there is an investment trust looking to distribute income or capital to say, a company (that may or may not have tax losses). The general rule is where there has been debt forgiveness, do not allow the trustees to make any distribution to a non-natural love and affection beneficiary.
Insolvency and the timing of any debt forgiveness is relevant. Many readers may be well aware of Section 346 of the Property Law Act and the Regal Castings case, as well as the relevant sections of the Insolvency Act. These sections need to be addressed and full information of a client’s financial position is required. It may be that it is appropriate for clients to ask their accountants to provide a solvency certificate at the time of any one-off forgiveness of debt. We note that there are differing views as to whether the relevant solvency test is a cash flow test or balance sheet test.
Many clients with trusts will also be the shareholders in a Look Through Company (“LTC”) which will own a geared investment rental property. A potential issue arises with the shareholders forgiving the debt owed to them by the trust, where the trustees are also guaranteeing the debt. Forgiveness of the debt can affect the “equity” for the shareholders and lead to the application of the loss limitation rule whereby they are not able to claim all of the losses arising from the LTC.
Written by Keith Turner NSA Tax
Brought to you by your Xero accountants
Sunday, August 21, 2011
Converting Telephone Enquiries into Sales
A ringing telephone can be intrusive to anyone’s ears, but especially if you’re deep in conversation with a customer.
Yet, while you do need to give face-to-face customers your full attention, don’t overlook the potential sale on the other end of the telephone.
In fact it’s well worth the effort to determine the percentage of phone enquiries your business receives that are converted into sales on a daily basis. Improving the conversion rate is something all staff can aim for.
Developing a system for answering telephone enquiries is key to improving the conversion rate.
Twofold Approach
What you’re trying to do is twofold. Firstly you want to determine a response that will either encourage the potential customer to make a sale over the phone, or, follow up with another call or visit to the business premises at a later date.
The second reason for having a system in place is to ensure everyone in the business is saying the same thing to potential customers. If you know what works over the phone, make sure everyone else in the team knows it too.
One way to create the system is to categorise the different types of telephone enquiries your business receives, then work out an appropriate reply for each enquiry.
With a little work on the wording the team member taking the call could do a lot more than simply deal with the initial enquiry. By prompting the potential customer to divulge more about their needs, for example, the team member may be able to suggest a different model or an entirely different product or service.
It’s all about communicating, and the more you understand about a customer’s needs, the more easily you will be able to help them solve their purchasing dilemmas.
Click here for your Xero accountant.
Yet, while you do need to give face-to-face customers your full attention, don’t overlook the potential sale on the other end of the telephone.
In fact it’s well worth the effort to determine the percentage of phone enquiries your business receives that are converted into sales on a daily basis. Improving the conversion rate is something all staff can aim for.
Developing a system for answering telephone enquiries is key to improving the conversion rate.
Twofold Approach
What you’re trying to do is twofold. Firstly you want to determine a response that will either encourage the potential customer to make a sale over the phone, or, follow up with another call or visit to the business premises at a later date.
The second reason for having a system in place is to ensure everyone in the business is saying the same thing to potential customers. If you know what works over the phone, make sure everyone else in the team knows it too.
One way to create the system is to categorise the different types of telephone enquiries your business receives, then work out an appropriate reply for each enquiry.
With a little work on the wording the team member taking the call could do a lot more than simply deal with the initial enquiry. By prompting the potential customer to divulge more about their needs, for example, the team member may be able to suggest a different model or an entirely different product or service.
It’s all about communicating, and the more you understand about a customer’s needs, the more easily you will be able to help them solve their purchasing dilemmas.
Click here for your Xero accountant.
Wednesday, August 17, 2011
'Can-Do’ Attitudes Go a Long Way in Business
You’ve probably heard the catch-cry of the modern day household a thousand times - “this year is even busier than the last”.
No doubt theories abound on why the modern family feels more and more burdened, but whatever the reason, ‘busyness’ and stressfulness do seem to hit us a little bit harder every year.
And every year people are looking for more convenient ways of running their lives.
Here’s where the small business comes in. If you’ve got a ‘can-do’ attitude to business, you’ll be more likely to attract the attention of ‘convenience-seeking’ customers.
The customer wants to hear you say: “Yes, we can do that”.
Can you deliver this afternoon?
Can you locate the part for my car and have it fixed by tomorrow?
I like the colour but the size is wrong, can you make me a new one?
My drains are blocked, can you come this morning?
“Yes, we can do that.” You can probably hear the relief in the customer’s voice. You have just solved a big problem for them. They love you already. Just make sure youdeliver what you’ve promised.
Obviously, you simply may not be able to stretch to the customer’s demands and deliver that afternoon, especially if you’re relying on other companies along the way.
But don’t simply say ‘no’ because that’s not the way you usually do things, or because it’s going to take too long to organise. Instead, carry with you the positive attitude that anything is possible.
Plan to improve your business
When you set aside time for business planning, these are the issues you need to be addressing. How can I make life easier and more convenient for my customers? What changes can be made here, time-savings made there?
Try to be on the front foot by offering an improved service to your customers before they’ve even thought of it themselves.
For example, you might consider sourcing a new product for a particular customer just so they can have their total order supplied by you. This would be far more convenient to the customer than having to order the same products from several different suppliers.
Or, if a small component of an overall sale deal is not readily available, could you go out of your way to purchase that component from another retailer or wholesaler? Ideally you don’t want to let the customer walk away just because you can’t supply a small component of their overall purchase.
This ‘can-do’ business attitude is likely to become very important in the future as more and more big businesses look to reduce the number of suppliers with whom they deal.
Click here for your Xero expert accountant
No doubt theories abound on why the modern family feels more and more burdened, but whatever the reason, ‘busyness’ and stressfulness do seem to hit us a little bit harder every year.
And every year people are looking for more convenient ways of running their lives.
Here’s where the small business comes in. If you’ve got a ‘can-do’ attitude to business, you’ll be more likely to attract the attention of ‘convenience-seeking’ customers.
The customer wants to hear you say: “Yes, we can do that”.
Can you deliver this afternoon?
Can you locate the part for my car and have it fixed by tomorrow?
I like the colour but the size is wrong, can you make me a new one?
My drains are blocked, can you come this morning?
“Yes, we can do that.” You can probably hear the relief in the customer’s voice. You have just solved a big problem for them. They love you already. Just make sure youdeliver what you’ve promised.
Obviously, you simply may not be able to stretch to the customer’s demands and deliver that afternoon, especially if you’re relying on other companies along the way.
But don’t simply say ‘no’ because that’s not the way you usually do things, or because it’s going to take too long to organise. Instead, carry with you the positive attitude that anything is possible.
Plan to improve your business
When you set aside time for business planning, these are the issues you need to be addressing. How can I make life easier and more convenient for my customers? What changes can be made here, time-savings made there?
Try to be on the front foot by offering an improved service to your customers before they’ve even thought of it themselves.
For example, you might consider sourcing a new product for a particular customer just so they can have their total order supplied by you. This would be far more convenient to the customer than having to order the same products from several different suppliers.
Or, if a small component of an overall sale deal is not readily available, could you go out of your way to purchase that component from another retailer or wholesaler? Ideally you don’t want to let the customer walk away just because you can’t supply a small component of their overall purchase.
This ‘can-do’ business attitude is likely to become very important in the future as more and more big businesses look to reduce the number of suppliers with whom they deal.
Click here for your Xero expert accountant
Sunday, August 7, 2011
Smart ideas with smart phones
Recently there have been a ;arge number of press advertisements which include a symbol you can scan with your smart phone.
The symbol – called a QR (quick response) code – is marketing genius. It can take you to the advertiser’s website, to a YouTube video of the product, show the advertiser’s phone number or a map of the advertiser’s location, prepare an email, provide details for your phone’s contact list, and probably a lot more that people haven’t yet thought about. If you’re a real estate agent, you could direct potential buyers to on-line images of the house you’re selling. You might consider putting the code on your business card so clients with smart phones can find out how good your service or product really is!
The codes haven’t caught on in New Zealand yet, but with more people using smart phones, it’s probably only a matter of time.
Click here for your Xero Expert Auckland Accountant
The symbol – called a QR (quick response) code – is marketing genius. It can take you to the advertiser’s website, to a YouTube video of the product, show the advertiser’s phone number or a map of the advertiser’s location, prepare an email, provide details for your phone’s contact list, and probably a lot more that people haven’t yet thought about. If you’re a real estate agent, you could direct potential buyers to on-line images of the house you’re selling. You might consider putting the code on your business card so clients with smart phones can find out how good your service or product really is!
The codes haven’t caught on in New Zealand yet, but with more people using smart phones, it’s probably only a matter of time.
Click here for your Xero Expert Auckland Accountant
Thursday, August 4, 2011
Don’t Blame Others for Lost Time
How many times have you dreamed of having more than 24 hours in a day?
Probably quite a few. But in reality, would you do things any differently? If you’ve got bad time management practices now, you’re likely to fill any extra hours in the same way.
Good time management involves planning, delegation and elimination of bad time-wasting practices, and it’s essential for small business owners.
Everyone is allocated the same amount of time each day. How you spend it will have a significant impact on how you perform in business.
You need to work out what hours you will allocate to work, sleep and leisure. Then work out how you will allocate the competing areas of responsibilities within your business, for example: sales, attention to clients and staff, planning, leadership, training and development and skills maintenance.
Working on your business, on the planning of your business, is really critical. This is where you need to be spending most of your time – looking for new opportunities, relationship building, long-term planning and so on. To achieve it you should try for a quiet, uninterrupted time each day. Consider having messages taken for you to return at specified times.
Other things to consider include:
Goal setting and marking off when each task is completed
Encourage your staff to set time goals and productivity targets
Periodically prepare a log sheet of the amount of time you spend on various tasks
Analyse your daily log at the end of each day. Did you achieve what you set out to do? Why didn’t you achieve what you set out to do?
Control the telephone. Do not allow it to control you
Determine the activities that waste your time and plan to overcome the problem
Stick to agendas and time limits at meetings. Take minutes and distribute
Create specific times when you will meet with visitors and network with colleagues
Never blame other people for your time management problems!
Click here for your Xero Expert Accountant
Probably quite a few. But in reality, would you do things any differently? If you’ve got bad time management practices now, you’re likely to fill any extra hours in the same way.
Good time management involves planning, delegation and elimination of bad time-wasting practices, and it’s essential for small business owners.
Everyone is allocated the same amount of time each day. How you spend it will have a significant impact on how you perform in business.
You need to work out what hours you will allocate to work, sleep and leisure. Then work out how you will allocate the competing areas of responsibilities within your business, for example: sales, attention to clients and staff, planning, leadership, training and development and skills maintenance.
Working on your business, on the planning of your business, is really critical. This is where you need to be spending most of your time – looking for new opportunities, relationship building, long-term planning and so on. To achieve it you should try for a quiet, uninterrupted time each day. Consider having messages taken for you to return at specified times.
Other things to consider include:
Goal setting and marking off when each task is completed
Encourage your staff to set time goals and productivity targets
Periodically prepare a log sheet of the amount of time you spend on various tasks
Analyse your daily log at the end of each day. Did you achieve what you set out to do? Why didn’t you achieve what you set out to do?
Control the telephone. Do not allow it to control you
Determine the activities that waste your time and plan to overcome the problem
Stick to agendas and time limits at meetings. Take minutes and distribute
Create specific times when you will meet with visitors and network with colleagues
Never blame other people for your time management problems!
Click here for your Xero Expert Accountant
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