July 2018 – McAdam Siemon

Personal insurance for business owners: your 5 best options

Posted on July 27, 2018 by Carolina Jaramillo

It’s easy to be wise after the event. Taking out certain types of personal insurance is being wise before the event!

What happens if you’re in a bad accident and need to take an extended period off work to recover? Or you were left permanently disabled – or worse? What would happen if you got sick and needed around-the-clock care for a few months?

The more you have, the more there is to lose.

But there‘s a whole suite of personal insurance products available today to protect what you have. And, while wedding insurance (yes, it exists) might not be top of your list, there are at least five types of insurance you might want to consider as a business owner.

Each of the following will provide important protection and peace of mind for you and your family, in the event of an accident, a disaster, or simple bad luck befalling you…

1. Life insurance

This is about protecting your family, should the worst happen to you.

Life insurance policies pay a tax-free lump sum or annuity to those you nominate as the beneficiaries, if you pass away. This helps loved ones maintain their standard of living and ensure they can cover their debts in the event of your death.

In addition to helping to cover the funeral costs, a life insurance pay out should cover the mortgage or rent, provide a source of income for a spouse or partner you leave behind, and cover other assorted expenses that arise.

You may even be able to arrange a pension through your life insurance – this is worth considering if your self-funded retirement plans are not on track.

2. Health insurance

In additional to any available government aid for health care, it’s also a very good idea to take out personal health insurance if you own a business – especially if you spend time out of the country on business.

Business owners get sick, just like everyone else. The stress of being the business owner can often complicate matters but it helps to know that the costs of care and treatment are looked after.

Coverage may extend to family members – an additional benefit of private health insurance.

With health care costs covered and access provided to quality care in or out of the country, one potential cause of stress is reduced.

3. Long-term disability insurance

Say you have an accident and are rendered disabled temporarily or permanently. It’s not just the costs of care you need to think about – it’s the potential loss of income from a business that depends on you being there.

Disability insurance covers you with a monthly payment to compensate for part of the lost income during the period of disability.

While it’s primarily designed for employees, business owners may also claim it – but you may need to provide tax returns or profit and loss statements that demonstrate expected income.

You can also look at business overhead expense (BOE) disability insurance, which covers all business expenses if you become disabled. This includes rent, utilities, salaries, payroll taxes, accounting fees, etc.

It means one less thing to have to worry about in the event of a bad accident or serious injury.

4. Critical illness (‘trauma’) insurance

Another supplement to health insurance is critical illness (or ‘trauma’) insurance.

This covers you with a lump-sum payment should you be diagnosed with a serious health condition such as cancer, stroke, heart condition etc.

However, depending on the provider, ‘critical illness’ has different definitions and you usually need to survive your condition for 15-30 days before a payment will be made.

This insurance goes over and above the costs of medical care, which your health insurance covers. It provides useful funds for other expenses incurred during the period of illness or recovery, including the possibility of funding the lost income if your spouse has to stop work to care for you.

5. Key Person Insurance

What would happen to your business if a key employee, partner or director suffered a major illness, injury or death? Could your business sustain the sudden loss of a key technical employee or a star salesperson? How much disruption and cost would be incurred?

If there is anyone in your business whose know-how or overall contribution is uniquely valuable and it would be difficult and time-consuming to replace them, you should consider Key Person Insurance.

This is insurance on the life or health of any employee where the policy can offset the costs (for example, hiring a temporary replacement or recruiting a permanent successor) and losses (such as decreased business performance until successors are trained), which the business may experience when a key person suddenly departs.

Like many insurances, the cost of a Key Person Insurance policy is insignificant compared with the potentially business-threatening disruption that losing a key person incurs.

**Be wise before the event…**

It only takes one serious event to knock you back financially in life. Your savings can be left looking paltry against serious medical bills or unexpected support costs.

Whatever stage in life you’re at, as a business owner it makes sense to take precautions for your own peace of mind now and in the future.

While most people consider the common personal insurances (like comprehensive car insurance or home and contents insurance) to be ‘must haves’, the more optional ‘nice to have’ nature of the above insurances means that many people fail to protect themselves in these areas.

You can purchase these insurances as separate policies and some providers bundle policies together and provide discounts.

The five options above are not exhaustive but they should help you narrow down your priorities. Just remember – you still need to read the fine print before signing up! We know it can be a little baffling with so many providers, so many options, and so much fine print, but just get in touch with us and we’ll be happy to point you in the right direction with these important insurances.

Where did it go?: Taking the mystery (and pain) out of managing your money

Posted on July 20, 2018 by Carolina Jaramillo

Most people will quite literally earn millions of dollars in their lifetime. Yet many people struggle financially and live from one pay period to the next.

With the ageing population and many Baby Boomers now continuing to work—at least on a part-time basis—past the traditional retirement age, people are working more years than ever. Even if a person works only 40 years, at average earnings, that’s a lot of money.

It is said, “Money talks”, but for many, all it ever says is, “Hello, and Good-bye”.

Have you ever found that the month lasts longer than the money? Or have you ever got your tax return and looked at all the money you have earned over the past 12 months and then thought, “Where has it all gone?”

You’re not alone. And the good news is, now there’s a simple solution.

There’s a great quote from Charles Dickens’ book David Copperfield where the character Mr. Micawber says to Copperfield, “Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

This is so true, regardless of the income level.

Yet keeping track of what you spend your money on, for many, is too hard, too laborious. The benefits of doing so are obvious to anyone, yet the discipline to keep all your receipts, enter the information into a program like Quicken Personal or MS Money (or just to write it into a paper ledger), and keep that going consistently over time is beyond most of us.

Well … and here’s the good news … what if a piece of software could track and categorise what you spent your money on, but it involved very little effort by you?

Imagine the clarity you’d get if you knew exactly how much you have spent and what percentage of your income is going on the various areas including mortgage/rent, vehicles, groceries, schooling/education, eating out, entertaining, mobile phones and internet, medical and pharmaceutical, and so on.

For most people, it would be a real eye opener.

It is said that knowledge equals power.

That is very true when it comes to your personal finances.

Once you can objectively see exactly how your lifestyle and your habits—that is, you—are spending your money each year, and month-to-month as you go, you then have the power to make decisions on where you can change your spending (and saving!) habits.

In this information age and electronic era, many of us use credit cards, debit cards and EFT when buying things. We have now reached a point for the first time in history where more money is exchanged electronically than through cash transactions.

That’s a lot of transactions. And it’s a lot of data.

This data is available to be analysed on a societal basis, industry basis, business basis and … a personal basis.

And that’s where a brilliant tool comes into play: Xero Cashbook

Here’s how it works …

Xero Cashbook is online software. It’s the non-tax-tracking version of the Xero software used by businesses.

It analyses and categorises all your electronic transactions to give you a snapshot of your complete financial position in an instant. This also organises a view of all your bank accounts and credit card accounts in one place. Very handy.

This is precisely what a lot of people have been waiting for: An easy way to track and control your finances.

Xero Cashbook categorises your spending and saving, so you can tell whether your money is being used for essentials or you’re splashing out on other things.

If you are concerned about security, Xero protects your financial data with 128-bit SSL encryption, the same as online banking. Your data is well protected.

You can also invite people you trust, such as your spouse, accountant or other financial advisor, to access your Xero reports for free. This means that as your advisors we can see the true picture of your finances and spending habits, and help you stay on track.

This allows us to help you plan ahead and make the most of your money.

You will never before have felt so in control of your personal finances.

Being web-based, rather than being stuck on one computer like traditional software, you can access Xero from home, work and even on your smartphone such as an iPhone and Android device.

If you’d like us to step you through getting set up with Xero Cashbook, or their Xero equivalent for Business, or both, get in touch and we’ll hand hold you through the process. It’s not difficult, and once your bank accounts are set up, it happens automatically from there.

The way we see it, the more clients we help keep track of their finances in such an easy way, the more clients who will prosper and find financial happiness instead of financial misery, to paraphrase Dickens’ Mr. Micawber.

Your next step … Call us on 07 3421 3421 or email us on cpa@mcadamsiemon.com.au to make a time to meet and discuss your options. We’ll then outline the costs so you know exactly what lies ahead.

It’s time to stop saying “good-bye” to so much of your money each year!

8 apps that make creating quotes and proposals faster (and more effective)

Posted on July 13, 2018 by Carolina Jaramillo

When a prospective client asks you for a quote, it’s a powerful opportunity to make a sale. In fact, with the right response you may be able to ‘seal the deal’ almost immediately.

But if you take your time to respond, provide wildly different quotes for similar work, or otherwise send bad signals about your business, you could easily lose that client. Which is a pity, because it seemed they really wanted to do business with you.

That quote (or proposal, which we’ll get to in a moment) is where you can win the client over and get the sale.

Or lose them both.

The good news is that technology can now help you respond to prospective clients quickly and consistently, and show them just how capable and competent your business really is.

Software packages are now available that can automatically generate quotes and proposals. They even include templates you can quickly edit instead of having write the entire document from scratch—great for proposals that vary widely from client to client.

But while these software packages are becoming more and more sophisticated, they can only send a quote or proposal to someone who asks for one. And people won’t ask unless they recognise the value in your service.

Quotes or Proposals — Which best suits your business?

While automation is one way to streamline your business processes, it might be worth considering whether quotes or proposals are really working for you and serving a useful function in your business.

A quote is usually just a list of products or services, their quantities and the total price. But a proposal also:

acknowledges the issue from the client’s perspective
outlines a proposed, actionable solution.

Quotes are the standard for most industries because they’re quicker and easier to produce. And for those selling goods predominantly in retail (physical and digital), a quote is probably all the client needed. Chances are they’ll just be comparing your price to that of your competitor, and whoever has the lowest one wins the sale.

But in an industry such as ours, you often need to communicate how you’ll help a potential client, and why you’ll be of value to them. As explained earlier, you need to acknowledge their issue, and show them how you’ll solve it with a great solution. And for that, you’ll need to send them a proposal.

But unlike the quote, where they’ll be weighing up your price against your competitor’s, they’ll be weighing up your price against the benefits you’ll be giving them.

Yes, proposals take more time and effort to produce. You have to know your clients, understand their problems, and come up with ways to help them. But proposals also make it easier to make a sale, because instead of just giving them a product or service you’re actually solving their problem.

Whether it’s quotes or proposals that make sense for your business, drafting and sending them can still be time consuming — even with the help of templates.

Fortunately, automated quote and proposal software can help you prepare and submit them much quicker, which frees up your time for more productive tasks. It can also reduce turnaround times and the need to train new team members, and give your business an air of professionalism.

5 reasons to use software that automatically generates quotes and proposals

1. Producing quotes and proposals manually is a huge time sink

Your team members’ time is worth too much for them to be creating these documents—especially quotes. After all, other than the quantities, prices and addressee every quote is pretty much the same, isn’t it? Wouldn’t they be better off spending the time reaching out to prospects, checking in with past and current clients, or delivering extra value?

Automation allows more time for high-touch, creative and innovative activities, which all require a human touch.

2. It signals your business as being capable and quick to act

Automating your quotes and proposals means you can get it to the prospect sooner. And that shows not only competency, but also that you respect their time. Nobody likes to be kept waiting.

Within minutes your prospect can be reading your professionally laid out document full of comprehensive information without any errors or unclear/undefined elements. Add a good call to action, and it will be a no-brainer for the client to accept.

3. It enables faster turnaround

Quotes and proposals help you and your client understand each other, and formally document:

the product or service you’re providing
the cost to receive your product or service
any relevant terms and conditions.

They also put the ball in the client’s court. Once they have your quote or proposal, they need to make a decision. And so the faster you can give them one, the less time they have to investigate alternatives or reconsider.

Of course, they can still look into competitors after they get your quote. But they won’t be doing it beforehand. And if it meets their expectations (i.e. you can solve their problem for a price they’re happy with), they can accept it without spending any more time looking around.

Perfect.

4. It can help with branding

By using software to generate your quotes and proposals, you’ll be consistent with both your presentation and pricing strategy.

Some clients will come from word-of-mouth, and so quoting different prices to different prospects for similar services could raise a few eyebrows. People may think you don’t have any pricing strategy and just make it up as you go along, which makes you look unprofessional.

Giving your document a consistent look is also important. Your logo, colour palate, website design, stationery design and vehicle signage all influence people at a subconscious level. It increases trust, and boosts your reputation in the eyes of your prospects. And your branding should flow through to your quotes and proposals to ensure they look clean, crisp and are an integral part of your business.

5. You won’t spend as much time training new staff

With automation software you’ll spend less time training new team members, as most of the document is produced automatically. All you’ll need to teach them is how to use the app to make any necessary adjustments or additions for special cases.

As you can, there are many advantages to using software that can automatically generate quotes and proposals for clients. So why isn’t every business using it?

Some business owners think the software will limit their ability to make modifications because everything is generated automatically. Of course, some people might say, “Well that’s the price of eliminating mistakes and getting it presentable and consistent”. But the software will often take this concern into account by letting you add a ‘miscellaneous’ field to the template where you can make amendments or comments. Some templates even include one by default.

Another concern is how the software will get the information it needs to generate the quotes and proposals. Fortunately, nearly all of the software packages will integrate with at least one CRM. And for those that don’t integrate directly, the third-party app Zapier can probably link them together.

Automation software that’s currently available

Here are just some of the software packages that can automatically generate quotes and proposals:

Proposable lets you query clients and respond to their questions with inline comments—useful for high-touch businesses or those dealing with detailed and specific services.

They all integrate with a number of CRMs. However, as part of your evaluation you should confirm which ones will integrate with your CRM (or allow a connection via Zapier).

There are plenty of reasons to automate your quotes and proposals. The time you could save (and reinvest in wiser, more productive avenues) is just one aspect that makes it worth considering. Add to that the boosted reputation and sales figures (thanks to the quick turnarounds), and automation quickly becomes an option you can’t afford to ignore.

3 reasons a personal budget is vital for achieving financial goals

Posted on July 6, 2018 by Carolina Jaramillo

If a business owner said to you that they run their business without a budget, what would you think? You’d think they were incompetent. Or perhaps lazy? Or both?

But what do most families do?

When you think about it, a family is actually a mini business. There is income, there are expenses and there is, hopefully, something left over to invest and to enjoy.

So why don’t most families operate to a budget?

After all, a personal budget helps you to see your financial direction and helps you stay (or get back!) on track. It’s a great comfort.

One reason some people don’t put together a budget is a feeling of overwhelm, of being too busy, of feeling like life is too complex to keep track of all that.

Well the good news is we can handhold you through the process and make it easy for you.

But before we look at the ‘how‘ aspects, let’s consider 3 more reasons why a personal budget is such an important tool to help you achieve your financial goals and dreams.

1. Most of your money is already spoken for long before you get it

The money you earn has already been promised to keep the electricity on, make the loan repayments and pay for the insurance. Most of what many people think of as budgeting is really honouring the commitments you have already have.

Now since we are all honest people and plan to pay these bills, the first step is to track these bills and see what is left over for your day-to-day living.

2. Your day-to-day living money is spread all over the place…

Some of your day-to-day living money is in the bank. Some is in your purse or wallet. Some is with your partner or children if you have them.

You need a simple system that allows you to track day-to-day expenses such as fuel for your car, shopping and your discretionary spending expenses.

We suggest you don’t attempt to keep track of every cent of your day-to-day living money. It’s not worth the effort for the benefit you’d get out of that level of detail.

Instead, you need to identify your main day-to-day expenses and make allowance for all other minor day-to-day expenses as a total expense.

Here’s a key: You need a system that is so easy to use that you keep using it.

You can track these day-to-day expenses by entering them into a spreadsheet, or better yet, use a tool such as Pocketsmith or Pocketbook that can automatically pull in bank feeds to save you a lot of data entry.

3. The Number 1 reason people give up on their budgets is that they don’t have the right attitude

It’s ALL in the attitude!

Have you ever attempted to budget and given up in frustration? What is the reason your budgeting attempt failed? What will make you stick to it?

Think about this…

One of the top reasons—if not the top reason—so many people give up at budgeting is attitude. If you think of it as a penny-pinching sacrifice instead of a means for achieving your financial goals and dreams, how long are you likely to stick with it?

It’s like the difference between going on a diet and eating healthily. One is negative and restrictive; the other is positive and allows you to indulge every now and then and yet still achieve your goals.

To increase your chances of success, work on your attitude first.

Many people refuse to budget because of budgeting’s negative connotation. If you’re one of them, try thinking of it as a ‘spending plan’ instead of a ‘budget’. Once you’ve attempted to budget and failed, the bad feelings associated with any type of failure can keep you from trying again. Don’t give up!

The cold hard reality

Let’s face it. Money is a tool that enables you to reach your goals in life. But the cold hard reality is that until you know where your money goes, you can’t make conscious decisions about how to use this tool effectively.

A budget (or spending plan!) shows you exactly where your money goes and provides a clear plan that lets you save for the things that are important to you: a new house, a new car, a comfortable retirement, a tertiary education, high quality health care, travel, or whatever your particular goals and dreams happen to be.

And that’s exciting.

Whatever YOU decide you want to save for and achieve, you can. With the right attitude, a focus and a (spending!) plan.

Avoid This Pitfall

There are several universal budgeting concepts that every successful budget will include, but one of the most important features of a successful budget is for it to be easy to use and suitable for your needs.

Don’t try to use a generic, complex, one-size-fits-all budget. A simpler approach makes it easier to stay committed. If you stick with a realistic, effective budget long enough, the rewards will keep you motivated. In the meantime, do whatever it takes to keep yourself going.

The 3 steps for effective personal budgeting (spending planning!) are:

Build a Budget,
Track Income and Spending, and
Compare Budget to Actual.

Once you start budgeting with a positive attitude, you will see the difference a budget or spending plan can make in your life.

Your next step … Call us on 07 3421 3421 or email us on cpa@mcadamsiemon.com.au to make a time to meet. We’d love to discuss this with you and help you to get on track towards achieving your financial goals.