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2016 Federal Budget - Review

Last night the government announced the 2016 Federal Budget - like the Abbott-Hockey budget last year, there have been some big changes to the taxation system and to small business in this years Turnbull-Morrison budget.
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In the 2014 election, the Victorian Government made the commitment to establish a new startup entity that would support entrepreneurs to develop and grow businesses.
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GMG Financial Group have been involved in Co-Operatives in the local community for over 40 years. Read more…

Get Active!

With the busy Christmas period over, it's so easy to get back into that bad routine of Eat, Sleep, Work, Repeat. After all those New Years Resolutions and January gym memberships we always seem to end up back on the couch! Read more…

Are you making the most of your time?

In the office recently we conducted a session on Personal Efficiency. We all only have a limited amount of hours in the day, how do we make our time at work the most efficient that it can be?
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Are Computers replacing Farmers?

There has been a lot of discussion about the potential impact of "Big Data" on Australian agriculture over recent times, with views ranging from "They'll never replace farmers" to "Its the end of agriculture as we know it, and farmers will soon be redundant." Exactly where advances in computer technology and digital information will take the agriculture sector over the next few decades is as yet uncertain, but what is already clear is that it is likely to result in pretty significant change.

In summary, the use of data analytics to analyse enormous datasets (think of a database of all the individual customer transactions of a major bank over a year, or all the purchases made by supermarket customers over a similar period, - both of which also have customers personal details included) banks now have this information available for retail business  to produce insights into customer behaviour, it is effectively replacing the judgement and experience of managers rather with computer processing power instead.

"Now comes the second machine age. Computers and other digital advances are doing for mental power – the ability to use our brains to understand and shape our environments – what the steam engine and its descendants did for muscle power." (Erik Brynjolfsson, Director, MIT Initiative on the Digital Economy, Massachusetts Institute of Technology, 2015).

As recently as perhaps ten years ago, the cost of storing digital information such as harvester yield maps for example would have been prohibitive, it is now rapidly approaching the point where data storage capacity has no cost, with new cloud based systems

Computer developments appear more advanced in the cropping sectors, but applications are also beginning to emerge and gather momentum in the livestock and horticulture sectors. Exactly what the implications of these developments will be for the future of farming is as yet unclear in my mind. Perhaps the response that "a computer will never replace a farmer" is more wishful thinking than most might realise!

The Journey Through Retirement

There is an old saying: Old Accountants don't die, they just lose their balance!!

Whether or not this is true, we all come to a stage in our lives where contemplating life after work is part of our psyche.

After having spent many years working with clients, most of whom are friends, formulating plans for business handovers to the next generation, it has always been a topic in which I have been heavily involved.

Probably the most oft asked question I have heard is: "How much money will I need to retire?"

My reply is always the same: "How long are you going to live?"

Most major life-changing events such as marriage or divorce, involve an ongoing process of adjustment. Retirement is no exception. Marriage, divorce and other family related family-emotional issues have been the focus of decades of research and analysis by both clinical therapists and religious institutions. Unfortunately, the emotional and psychological frontier of retirement has remained virtually unexplored until recently. However, while research on this subject has barely begun, it is clear that the psychological process of retirement process follows a pattern similar in nature to the emotional phases accompanying other areas of transition.

Geoff of the Coast of WA near Broome after hauling in a snapper

Retirement: The Final Frontier

Retirees must face what is essentially the last transition in their lives. The first transition comes when we leave the security of home to begin our school life in kindergarten, and after school we have the rest of the day to ourselves. Another major transition comes when we join the working world. Now we work all week but still have the weekend to ourselves. Then finally comes retirement, a time when careers are over and the work is done. Retirees have the rest of their lives to themselves. The transition into retirement can be broken down into six main phases.

1. Pre-retirement Planning Time

During the working years, retirement can appear to be both an oncoming burden and a distant paradise. Workers know that this stage of their lives is coming, and do everything they can to save for it, but often give little thought to what they will actually do once they reach the goal. The current demands that are placed upon them leave them little time to ponder this issue. Many people face retirement like a player on the football ground who dodges and  weaves his way  through one defender after another until reaching the inside fifty and shoots for goal. It's hard for many workers to think seriously about what their lives will be like in 20 or 30 years when they are trying to stay on top of their mortgage, put their kids through school, and have some fun in the meantime. They want to kick the goal, but other issues will tackle them long before then if they don't take immediate action.

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As of the 1st of January 2016, Vic Roads is offering a 50% discount on 12-month vehicle registrations for eligible trade apprentices. That means a possible saving of up to $385.70! However, the following criterion needs to be met:

  • You must be registered as an apprentice with the Victorian Registrations Qualification Authority (VRQA) in an eligible course
  • The vehicle needs to be registered in your own name (motorcycles, trailers and mobile plant are excluded)
  • Not already have a concession applied to the vehicle(except for discounts for hybrid and electric passenger vehicles)
  • The vehicle must be used for work purposes, including travelling to multiple and varied work sites (this does not include commuting or travel to and from a single work site)
  • You must hold a current drivers license
  • Not already have a trade apprentice discount applied on another vehicle

Once you have received your renewal notice, you will be able to apply online or in store at Vic Roads where you will have to provide them with your VRQA registration number, vehicle registration number and driver's license number. Vic Roads will also verify with your employer that the vehicle is used for work purposes. 

Small Business New Year's Review

For small/medium business owners (this includes you, farmers!), the stress of returning to work in the New Year is usually quite overwhelming - so many emails to answer and things to do! It is no surprise that planning for a successful 2016 is far in the back of your mind. However, the most successful business I have worked with taught me one critical lesson for business profitability - "Failing to plan is planning to fail".

Put simply, PLANNING IS THE SINGLE MOST IMPORTANT THING YOU CAN DO FOR THE ONGOING SUCCESS OF YOUR BUSINESS. Furthermore, planning is something that locally owned businesses and farmers are notoriously known not to do – when was the last time you set targets for each category of expenses in your business and checked in to make sure you were on target? Do you know how much other businesses similar to yours spend on the same sorts of things? 

In Swan Hill I have heard many people talk about big business "taking over" - so why do they have a competitive advantage over the small guy? With a few exceptions (Dick Smith!), the fundamental reason is that they are exquisite planners. This involves precise daily, weekly, monthly, quarterly and annual planning and consistent and ruthless follow up.

Whilst managing at a national retailer, I recall blunt, non-negotiating calls with head office regarding a 1% overspend in budgeted weekly costs (it was less than $100, and EVERYTHING had a budget). Strict budgeting across all the expense areas improved the profitability of that individual business site by at least 20%-25% per annum.

So how does this affect you? In a break-even business with sales turnover of $500,000, a 1% improvement in expenses adds $5,000 to your bottom line. A 5% improvement (very achievable) could generate $25,000 – and as the owner, this money goes in your pocket. It is small improvements across lots of expense areas that add up very rapidly.

A couple of quick ideas to get you started in 2016:

·         Get a formal, written plan for what you want to achieve this year. Be very specific!

·         Phone around for better rates – on interest, electricity, gas

·         Check-in with your employees

·         Update your technology

·         Most importantly - Ask your accountant for help! Our range of knowledge – including but not limited to industry benchmarks, planning strategies and great ways to improve your profit - are sure to help you plan to succeed. Call us today – (03) 50329422!


How to survive on the Farm

How to survive on the farm

Primary producers have always been creative, otherwise they wouldn't survive. Their world is full of changing conditions and circumstances, to which they adapt, as a matter of course.

However, this does not always apply to the survival of the farm itself.

I read recently where Isobel Knight of Proagtive (based in Tamworth NSW) stated that "most farmers don't use their accountant to see how their business will stand the test of time or to delve into what's required to maintain its viability and give clarity  and direction to the next generation."

She also indicated that farmers needed to lift their financial acumen by focusing on farm strategy for and involving the next generation. The aim should be to grow the asset base, not divide the asset pie.

One of the changes we have noticed is the concept of separating the ownership of the farming land from the entity operating business of farming on it.  This can provide security for one generation and an opportunity for the next.

There is no one size fits all in family farming. Sometimes the family farming model is not a good fit at all.

We have the experience and expertise to assist in lifting financial acumen and providing assistance to all parties involved in finding creative strategies for the future.

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