22567 Planning and Control for Small Business Enterprises Spring Semester 2019
Small Business Portfolio - 20 Marks
On the 2nd November, 2018, The Deputy Commissioner of Taxation, Deborah Jenkins gave a speech to the Institute of Public Accountants’ national congress stating that small businesses are a diverse group that1…
Small business enterprises are a significant contribution to the Australian economy, consequently, their decisions make an impact. Therefore, it is necessary for small business owners to be accurately and timely informed whenever making decisions, such as, how to set up, operate, control and manage a small business enterprise in Australia, as well as, when to expand or dispose of this business.
Ideally, the small business owner will obtain the appropriate information so as to make effective and efficient planning and control decisions, especially for those decisions necessary to meet legislative obligations.
Although there are various sources of information available to small business owners, they must ensure that planning and control decisions are made using current information. Information can be gathered from various sources, such as, accountants, lawyers, local councils, small business agenciesand, in particular, directly from government departments.
There are also a numberof small businessmagazines in Australia, such as, My BusinessMagazine and Dynamic Business Magazine. Ournewspapers also includesections and, at times, specialfeatures on small businesses - the Sydney MorningHerald even includesa My Small Businessarea on their online publication which archives a range of small business articles, with many small business owners posting their own online comments in response to these articles. Industry and trade journals also are aimed at Small Business owners. Retail Pharmacy is an example of a monthlypublication aimed at Pharmacy owners and their employees and includes advice from business finance to marketing to technical information. Accounting bodies also have their own magazines, such as, the Chartered Accountants Australia and New Zealand Acuity magazine which is freely accessible online.
With an abundance of government websites, magazine, newspaper and journal publications (online and print) aimed at small business owners; your task is to prepare a portfolio to present your findings. Students should include footnotes when making statements or making factual claims in their portfolio.
Students will build a portfolio based on current issues for small businesses. The portfolio will be separated into the 6 topics given below. To assist students in meeting the criteria, each of these listed topics have instructions under their heading. Do Not Write/Repeat the words of the Questions/Instructions given below in your Portfolio.
Topic 1: Record Keeping and Compliance
While some businessowners have stated that legal and taxationrequirements are a burden for small business owners, the former Australian Treasurer, Peter Costello, commented at the 2013 MYOB Roadshow, that the introduction of GST helped small businesses to improve their efficiency.
Discuss and evaluate both opinions in connection with legal and taxation compliance.
The issues discussed by the Deputy Commissioner of Taxation, Deborah Jenkins in her speech may assist your evaluation of both opinions.
Include in your answer current taxation requirements to help justify each opinion.
Topic 2: Environmental & Sustainability (survival)
During tutorials, the differences between Environmental and Sustainability have been distinguished for our small business topic. Explain the different interpretations between these two topics. Discuss the hot topics for environmental issues that are relevant to small business owners. List reasons why knowing the business life cycle may assist in the sustainability of a small business.
What is meant by budgeting? How can Labour costs be included in a budget and for what purpose? Explain one other area of a small business that can apply budgeting. How can actual results assist in preparing budgets? What is the role of KPI’s in small business budgeting? Find a current article that demonstrates the usefulness of budgets for cash flow purposes of a small business..
Government websites are increasing their online information to help supportsmall business ownersto protect their information. Give reasons why this might be important? Provide an example to demonstrate the importance of online security for small businesses. Discuss and explainthe 2018 changesto the Privacy Act. List and briefly explain why a small business should also protect tangible assets. Provide examples how a small business may protect its tangible assets.
Provide a definition/meaning of E-Business as provided on an Australian government website. Explain how E-Invoices work. Include in your answer an example from a small business.
Provide an interpretation of innovation from an Australian government website.
Describe and explain the steps you believe are important when a SBE decides to implement a significant innovation that may affect some employees’ work systems/procedures.
Find and discuss a current, real life example of a SBE that had introduced an innovation and include the types of issues that they may have experienced.
Planning is a critical business function that needs continuous effort from the organization's administration team to completely realize the advantages. The small business enterprises have planning procedure on an annual basis for managing their regulatory compliance, working in accordance to the environment, sustainability, budgeting, security and innovation, where interior financial control helpful to manage money properly. In relation to such aspects, the assessment aims to delivery in-depth knowledge related skills needed for the successful operation of SBE or small business enterprise. SBE is an important contributor to the Australian economy, and their owners require to take timely as well as informed decision-making approach to meet necessary legislative obligations.
Topic 1: Record Keeping and Compliance
The process of record-keeping in context to small business planning and control is a crucial aspect for business owners. It helps to confirm that the business meets tax obligations. While operating under legislative compliance seems to be tedious, there exist several advantages to maintain a good record. The record-keeping helps to keep check of business health and let business owners make sound trade decisions (Business.gov 2019). The small business enterprises get a chance to prepare their tax return easily and effectively manage their cash flows. In addition, legal or tax compliance and record-keeping help business owners to receive highlight of their financial position to lenders or other banks. There have been certain business owners that look taxation and legal requirement as a burden to small business. The tax requirement has been vital for any corporate, tax obligation vary as per kind of business, benefits offer and staffs employed (Business.gov 2019). The taxation law has been difficult and complicated for SBE to implement and understand. It has also been the reality that more the government overspends, lack fiscal control and misappropriate funds, the more they would recover losses from the taxpayers involving small business. The Australian government have strict process and policies in place that enterprises need to adhere to. On the contrary, SBE still faces burdensome and red tape regulatory processes. The small business burden by problems surrounding tax compliance and absence of human capital makes it hard to assist tax compliance. The business owners often look for professional support with tax compliance, where tax practitioners charge high for assistance. The absence of funding has been a key issue that small businesses experience; thus, additional outsourcing tax-compliance costs impact enterprise success. The compliance charge observed to be regressive in Australia, whereby small business enterprises are impacted the most. The Deborah Jenkins as Deputy Commissioner of Taxation mentioned that lack of knowledge for tax applies for the distinctive or complex business framework, and poor resources related to tax compliance causes a burden for small business to lead business profitability (Ato.gov 2019). At current, it is noted that business owners feel that GST introduction has been helpful to enhance their efficiency. Goods or service tax or GST is wider-based tax accounting 10% of the several services, goods and other item consumed or sold in Australia. It is value-added tax, gathered at every focuses on production channel with considering inputs. The legislation introduced by Howard Government in the year 2000 has benefited business by replacing earlier Federal wholesale sales tax approach and constructed to eliminate several territories or state government taxes, levies, duties like stamp duty or banking taxes etc. (GSTIndiaExpert 2019). The main purpose of the new tax has been to widen the tax foundation that was largely biased towards the service provisions. Acknowledging the hardship encountered by the small business enterprise within the market, ATO or Australian Taxation Office has enhanced the program of work concentrated on supporting them to understand tax obligation as well as effectively lead their business, wider than just tax. In addition, the small business enterprises complying to present taxation needs likely to eliminate the burden and flourish under GST as well as taxation regulation to achieve business sustainability. The business record found to be useful for business to be sold and under tax regulation, keeping record related to business payments, income tax, GST as well as employee pay are important for business transparency (Business.gov 2019). The business owners require registering them for taxes using business registration service and for more information on registration type need to look for the registration section. The different kind of taxation that might apply for business involves payroll, fringe benefits, capital gain, land taxes, instalments like Pay-as-You-Go or PAYG, tax deduction and tax variation between the company or sole trader (Business.gov 2019). While several distinctive electronic record-keeping package is available, paying taxes over the online platform has been a convenient, secure and rapid way to operate the business. The ATO provided a wide range of online facilities to make the process of compliance easier. In order to confirm that privacy is protected, business owners require AUSkey to access several services like lodge monthly, annual or quarterly activity statement. In case any business owner is unsure about kind of taxes they require to register for, they can go to the official page on ‘what taxes do I need to register for?' or else seek guide from search or accountant Advisory Services to access business advisor within the area. Thus, taxation or compliance-related burden encountered by a small business often eliminated if they engage in the significant record-keeping process under GST and ATO norms.
The understanding of the sustainability adds to the effort to balance social, economic and environmental factors in equal harmony. Charles Jr, Schmidheiny & Watts (2017) contradicted that sustainability and environmental development have the similar overall objective of generating energy-efficient practices or projects and conserving the natural resource; however, two groups vary on priorities of action. The aspects of environmental sustainability are interpreted to work toward the goal of conserving the natural resource and enhance other power sources to reduce harm as well as pollution to the environment. The several projects rooted within environment sustainability include replanting forests, safeguarding natural areas and preserving wetlands from resource harvest. The interpretation of the environmental sustainability that gains criticism depicts that their priorities may be at odds with the requirement of the increasing industrialized community. On the contrary, sustainable enhancement is interpreted as an exercise of improving construction and land projects in a way that decreases their influence on the environment by facilitating them to generate the energy-efficient structure of self-sufficiency (Charles Jr, Schmidheiny & Watts 2017). The sustainable improvement often takes approaches of solar panel instalments, factory site having a wind generator, utilizing geothermal heating method or even participating in trade agreement or cap. The sustainable development received criticism related to aspects that it does not does more to preserve the environment at current and depend on the belief that damage done in the region of the world might counterbalance by generating environmental protection in another. Charles Jr, Schmidheiny & Watts (2017) discussed that sustainable development is all about finding the effective approach of doing things, both for present and future. Thus, sustainability and environmental variables in their interpretation and both group diverse when it is about the development of the endangered region.
Several environmental issues have been an important consideration for business owners to achieve reputation and corporate success. Over the decades, the environment has gone several changes and not for good. The environment issue related to climate change has been the top concern for business and the community in which they are operating. Climate change often triggers high energy demand, whereas climate getting warmer let individual consume higher electricity for more air conditioning purpose. The huge electricity consumption in return would mean high operational expense for the business. In addition, business owners need to understand that high-energy demand would translate to enhance natural resource consumption like water and fossil, resulting in the absence of resource for the organization to turn in services or products.
The issue like waste disposal and pollution has been among the top concern damaging environment sustainability. Tilman et al. (2017) stated that pollution poses a future and current threat to the environment and people. The small business owner, at present, along with other operating within the economy, has a responsibility towards their society and restore the environment for survival of the business as well as humankind. The business under corporate social responsibility that helps in increasing profitable business image has the role in preserving contamination of water, undertaking proper waste disposable and control air pollution by reducing carbon footprint. While largely polluted region makes it hard for business operating there to retain and hire employees, forcing them to provide high pay to keep or retain staffs. The NSW has been a crucial environment protection authority to safeguard community and environment within Australia (EPA 2019). The funding of worth AUD 3.4 million has been shared among to 27 projects to help regional and rural societies for landfill closure that for long has been a legacy problem to decrease environmental risk in future (EPA 2019). The idea of landfill of several non-degradable wastes has been criticised for decreasing soil fertility, and business owners require producing products from the beginning that can be processed or re-used for re-entry within the production cycle. Business life cycle noted to be business progression generally segmented into stages of launch, maturity, shakeout and decline (Muzellec, Ronteau & Lambkin 2015). The knowledge about corporate life cycle is likely to support small business sustainability. In ‘launch’ stage, the business can look for producing products or service that does not harm the environment, during ‘shake-out’ and ‘growth’ stage it may gain rapid sales or profitability with contributing some of its portion toward the betterment of the community. At maturity and decline stage, business-encountering decrease in profit margin may look for investment in technologies or developing nation without leaving a carbon footprint.
Budgeting is the procedure for constructing a strategy to spend money. Such spending tactic is known as the budget. Hughes & Kirby (2014) added that budgeting in business enterprise is generally balancing expense with income generated. The expenditure of salary paid to staffs at time of their accounting duration on weekly, monthly, daily or job basis, related benefits, taxes and payroll are termed as labour cost. Many corporate leaders acknowledge the huge cost of operating business is labour costs that almost account to 70% to overall business expenditure. In business enterprises, labour costs are included in the budget in terms of employee benefits, payroll, salary or other related taxes. The purpose of including labour cost into the budget is as they consume a huge portion of the overall expenditure of job or product. The labour cost negatively impacted by engagement of human element can increase the operational cost for business and their survival within the marketplace. Another important area that applied in budgeting for small business is production costs. Rocadembosch et al. (2016) explained that overall cost paid for resource utilized to manufacture or create services and products to sell to customers involving overheads, labour or the raw material is called production cost.
The businesses involving small enterprise engage in budgeting to analyse their original result over the year. The actual result related to updated budget assumption, bottlenecks review, capital and department budget helps in preparing the outcome of fund availability to support business growth. The actual results of the business provide information on the present status of the business and markets. These results define the capability and resources required for further growth of the organisation based on the current market condition. A KPI or key performance indicator in budgeting has a role in maintaining track of the business’s financial health. Laval (2016) argued that KPIs are gauged by which small business may track their progress throughout a particular period.Form the article based on a cash budget, it is determined as written approximate of company's future monetary position (Tanwar 2019). The common prediction duration of a cash budget is single year divided down by weekly or monthly period. It facilitates the involvement of seasonal variation within cash flow. For instance, if cash flow is moderately stable, the finance administers might build the budget for an overall single-year duration. For an uncertain outlook, the finance manager has to be satisfied with the projection for quarterly. In addition, the usefulness of budget for cash flow relates to the benefit for the business to assess their relationship among marketing, financing and production plans.
The small business owners need to be proficient in operating the internet for increasing their technical and communication skills required for the business. Businesses of small enterprises are intended for growth and development in order to gain financial feasibility and operational excellence in the market (English 2006). In other words, it tries to demonstrate the fact that if government websites are increasing their online information, it would be beneficial for small business owners to find a wide opportunity of protecting the password and any kind of customer information profile and background of confidential data from unwanted access. Apart from this, Government websites are thinking positively for the benefit of the SMEs mostly to enhance the country’s economy by the help of adopting the new payment terms and policies for cash flows (Smallbusiness 2019). Certain reasons are efficient for securing small business owners from risks.
Online security is another significant element related to the information shared by the Government. In other words, online security is important for small businesses for gaining the idea of cybersecurity crimes and precautions before handling such issues (Asbfeo 2019). It demonstrates an example that if a small businessman is well aware and trained about their clients and staffs about the process of cyberculture and external threats and vulnerabilities in advance, it would further benefit in the growth and development of such businesses to flourish well.
Changes to the Privacy Act:-
The year 2018 has actively focussed on establishing new changes in the business sectors in all aspects. According to Pwc (2019), there have been changes in the opportunities to commercialize and consumer trusts related to privacy concerns in business. In addition, Australian Notifiable Data Breaches scheme has been launched in the market in the year 2018 that involves the Australian agencies to the Office of the Australian Information Commissioner (OAIC) for any kind of Data breach notifications practiced by any human being in any sector of business or such kind of practices within the consumer market. There is a Resource-based approach to initiate, investigate, and evaluate in the proper order to finalize a confirmation about a breach of data gap by any client of staff involved in a small business.
Other than the above privacy concern, GDPR is another important regulation that discusses the privacy rights, consent, and legal basis for processing the personal data of the customers online or offline. The concept of data protection act provides security more stringently to the customers under the norms of DPO (Pwc 2019). This is another change implementation in the year 2018 that are initiated under the legal obligations of a Data Protection Officer in official form. Hence, the following consumer protection rights are a key concern in monitoring business on the right track.
Provide examples of how a small business may protect its tangible assets:-
Small businesses generally adapt strategic directions for gaining profit and sustain its business at the peak point. There are some of the lists of tangible assets that can be protected and better illustrated:-
Property or land: Property or land is a big tangible asset for an organization of start-up businesses or small businesses in the Australian market. The land owned under the legal procedure of small business owner is a good provision of gaining financial benefit in the form of business loan or mortgage loan against property (Teece 2018). For example, if small business organizations tend to seek growth and prosperity in business, it can depend on its tangible asset, as the last option for saving their own business from its competitors.
Machines or manufacturing plants: For the small businesses of manufacturing processes, it also includes types of machinery and types of equipment and power plants, as another big asset (Dai, Ivanov and Cole 2017). Such things can be transformed with advanced techniques and operations for designing innovated model and advanced working process. For example, owners of such businesses can invest more in advanced tools for bringing change in the traditional method.
Transportation: Transportation is another example of a tangible asset for an organization of Australia for maintaining a fast and steady flow of materials in small businesses.
Labour cost: At the end, labours are fundamental assets for small business, especially for controlling and managing the entire process of invention and logistics supply chain network.
Topic 5: E-Business
The concept of E-Business refers to a technology that makes it possible for a business to fasten and strengthen its speed of communication and commercialization to the world for twenty-four hours. According to the review of the article online, Australia (2019), e-business is a wide platform for exploring the small business, especially in the segment of B2B and B2C promotion of products and services. In other words, it helps small business in multiple aspects.
Business Planning and Execution Process: Other than the above-mentioned progressive areas of development, as per Australian Government norms and regulations, e-business gives an opportunity to plan and execute business in a systematic way and direction (Business 2019). It helps in finding the accurate tools and techniques for managing a business in an efficient way.
Strengthening the communication level:
E-business process makes it effective for owners to pursue the advanced medium of communicating with the clients (Business 2019). For example, the promotion of products and service as well as for establishing changes implementation process in businesses of small start-ups.
For Managing Risks: With the incorporation of E-business in Australia, as per Government norms and policies, it can utilize for the purpose of identifying risk profiles and intended vulnerabilities related to cybersecurity business as well (Business 2019). Hence, it would benefit managers to take legal initiatives and strategic decision for increasing value of the business under an ethical code of conduct.
E-Invoice is a standard process of sending bill or information between suppliers and customers. According to the online information, Law path (2019), it can be acknowledged that it makes it possible for businesses to maintain large scale business transactions within less time and secured process. In fact, there are ranges of benefits in this process of fast invoice generating system.
Fast cash flows and enhanced way of handling payment procedure: For example, in case of fast cash flows and better handling power of payment procedures, small businesses like HiSmile, a small start-up company based in Australia dealing with products and services selling a number of teeth-whitening medicines and tools (Choice 2019). Depending on e-invoice, the manager would be able to keep track of daily sale online, and the cash flows for its products outside.
Easy to process and cost-saving: Apart from the above benefit, e-invoice also helps to reduce approximately 80% time and easy access for checking the billing of sold and delivered products and services to the customers in case of HiSmile.
Fewer Errors in business: In addition, e-invoice helps to remove the number of errors that usually happens in a manual or traditional process against any sale of products (Choice 2019).
Direct and Secured business: Further, it can be acknowledged that e-invoices are basically a safe and secured process of doing business that transfers directly into the accounting software (Law path 2019). Hence, for a small start-up like HiSmile, it becomes easier to control any kind of fake or corrupted invoice record against any customer.
Availability for all types of businesses: In other words, e-invoice can be possible to apply for any kind of business in Australia. In fact, it is available in all categories of an enterprise like HiSmile, or it is Liven. It is applicable for all size and scope of business established in Australia or any other regions.
According to the online review of the article, Business (2019), innovation is a planned execution with the help of grant funding to attain innovative solutions for the service delivery challenges and trending new government policies. In other words, in a simple term, innovation means a new attempt to inventing something new for the growth and development of a business that attracts a large number of customers. For example, if an entrepreneur becomes the creator of something new and innovative with his/her ideas and new dimensional thoughts, it would make him/her an innovative entrepreneur. SISA or Supporting Innovation in South Australia is one major example, focussing on entrepreneurialism and modernized schedule that increases value to the local ecosystem, job formation, and increasing the number of business start-ups (Migration 2019). Such examples give an idea and understanding of innovation, as per the Australian Government's perception.
Other than these, it is also true in the sense that innovation does not always depend on thinking or developing a new idea for creation, rather it also brings into notice about innovation related to the facing of challenges (Business 2019). It tries to indicate that even problems and challenges can be resolved by the help and support of innovation initiated by an entrepreneur for small business establishment in Australia. For example, some steps of solving problems and techniques to overcome challenges such by selecting the challenge that means to identify the major issue at first. In addition, a feasibility study shows the necessary requirement for solving the problem and the estimated cost or fund requisition for SMEs, especially. At the end of the scrutiny, it comes about the grant stage with regard to the proof of concept. This is the final stage for the solution of an issue with the confirmation and proof in case of monetary investment or back up plan to secure small business owner.
SBE is an Australian local enterprise helping hand for new start-up businesswomen living in Australia. In other words, the full form of SBE stands for SpringBoard Enterprise, accelerating women-led business. The enterprise started in the year 2013 and running since then, as an active organization for supporting the women budding entrepreneurs with tools and technological support and knowledge-based system of learning (SBE Australia 2019). Some of the steps are believed to be initiated by SBE to implement further innovation and the intended conflicts that might affect some of the employees' work process and systems:-
Three Accelerator programs under the SBE group for women:-
First Step for E3 Program:
This first step is for the women, especially the beginners in small business. In this step, such women are provided with a number of sharing experiences and challenges faced by the network team and industry leaders for gaining a valuable concept of designs and network (SBE Australia 2019). During this learning stage, some of the employees might be facing some issues with communication and understanding the right perception directly from such powerful leaders.
Second Step for Tech Program:
In the second step, the Tech program involves a number of activities to gain sustainable business by engaging the expert community and established resources. In other words, the step consists of the application review process, and five days Boot camp, Eight-weekadvisory program and a global Alumnae network session. These sessions of practice and learning are encompassed by highly professional and expert team members, as it is the advanced stage (SBE Australia 2019). Therefore, during such processes, existing employees might feel the interference and cross-examination or involve in a minor conflict of interest.
Third Step for Life Science Program:
This third step is implemented for the Health Care and Life Science industry segment entrepreneurs. During this step, experts give solutions of how to find an appropriate source of funds and generate suitable connections and network channel strong enough to withstand in a market like Australia (Smart Company 2019). Similarly, this step also contains programs like the second step. Hence, the existing employees' work might face a common issue like the mentioned above.
Based on the overall discussion and analysis, it can be understood that small businesses in Australia need to maintain various aspects of growth and sustainability. It involves, taking intensive care of the environment and the community ecosystem programs, budget commitment and the security of Government based on strategic examination and intervention. Other than these, small business entrepreneurs need to depend on innovation in terms of creation and solution as well. Further, it can be recognized better that the function of SBE for the women budding entrepreneurs struggling for setting up their businesses in Australia.