Over the last few months I've been engaged in quite a few conversations with a lot of new business owners seeking a path to enlightenment and philosophising about why their businesses are where they are.
This is when I start to hear some statements normalising or justifying what might reallyjust be simply a bad result that could have been avoided.
Some sayings in business we repeat so often it's almost as if we've stopped questioning them. But what if they weren't actually true?
Eighty per cent of businesses fail in the first five years. This statement would scare the crap out of anyone wanting to start a business. But recent stats show this number to be more like 25 per cent. And the truth is business operations may close, change and cease for a number of reasons, not necessarily failure.
This might be from the end of a contract, end of a relationship, they may be sold, they might change entities from a sole trader to a company. Don't use it as an excuse to slack off.
Don't expect to make a profit in your first few years of business. What? Are you a charity?
Even charities aim to make a profit. If you didn't expect to make a buck then why did you do this in the first place? How will you reinvest to grow, save, pay your bills and eat?
If this is year one with no money, better plan for next year and make some changes. Your first year may not always be the best but you need to make some money or seriously reassess what you're doing.
Your first year in business is tax-free. Pure lies. Taxes come in all shapes. From GST to FBT to income tax.
Sorry, there's no tax-free year. In year one if you've made a profit there's no income tax bill until your first tax return is filed at the end of the financial year. And if you're over the threshold for provisional tax then there's double to pay in the second year.
Do some critical thinking and ask your peers, mentors and advisers for help.
- Jeremy Tauri is an associate at Plus Chartered Accountants.
