Focus on your own budget, not the Treasurer's
I run a small bakery business, with three locations in Sydney. Despite many sectors struggling, I have been able to maintain a modest amount of growth by branching out from simply baked goods to things like coffee. Like most small business owners I have watched the government and media intensely in the past few weeks to see what the federal budget will do to help me.
I run a small bakery business, with three locations in Sydney. Despite many sectors struggling, I have been able to maintain a modest amount of growth by branching out from simply baked goods to things like coffee. Like most small business owners I have watched the government and media intensely in the past few weeks to see what the federal budget will do to help me.I was disappointed to see there would not be a cut in company tax but I was encouraged by business writeoffs for vehicles, especially since I am planning to deliver my products soon. The loss carry-back scheme seems like a good idea but will it really promote innovation? I know I would prefer to reduce my debt with any refunds, rather than put myself into more debt. What else in the budget will help my business and other small businesses? I know there are many who are doing it a lot tougher than me, as consumer confidence continues to flutter and with the banks not really helping, falling short of the Reserve Bank's 50 basis points cut.The budget did some favours for small business, and it looks like you are across the list.One of the cornerstones of the government's management of the global financial crisis that really had a positive outcome was the investment allowance for new plant equipment and motor vehicles. The latest initiative is similar and will hopefully have that same flow-on effect for small businesses' confidence.One point of clarification regarding the vehicle tax writeoff you are referring to: it is for more than vehicles. Basically what was announced in the budget was that the Tax Office would allow an immediate deduction for the first $5000 for a new or used vehicle, and an immediate deduction for new business assets costing less than $6500 for as many assets as you purchase. Good news for that new coffee machine.I do not necessarily agree that the loss carry-back scheme will not promote innovation. I have seen some negative media commentary about this initiative, specifically that it is available to only a small number of small- to medium enterprises. I think it will apply to a good number of businesses.The mechanics of the loss carry-back initiative will allow a business to claim losses of up to $1 million against the previous year's profits. In practice, this means that if a business made a loss in the year ending June 30, 2013 but it madea profit and paid tax this year, it can effectively combine the two years' results and get a refund of a portion of the tax paid. In the next financial year, the "look-back" period willbe two years.Why does this matter? We are in a volatile environment and many of the small businesses I talk to tell me that their results are anything but consistent from year to year. So if you are prepared to take a calculated risk and it does not pan out as expected, this tax refund can certainly soften a potential blow.From the sounds of things, you seem to be right in tune with what is going on, but my best advice for you, and for any small business, is to take matters into your own hands rather than wishing, waiting and hoping for some relief from the top.Get back to basics. Watch your spending and do not try to grow faster than you are able to manage. You are very focused on Wayne Swan's budget, but take a look at your own.I always tell people to have their budget forecast done by the time the treasurer announces his. Many people think about their business plan and budget but cannot do a summation in five key figures. Make sure you are not one of them: it is the best thing you can do to plan against uncertainty.Mark Bouris is the executive chairman of Yellow Brick Road, a wealth-management company and small business adviser that sells products and services for home loans, financial planning, insurance, superannuation, investments, accounting and tax. His advice here is intended as guidance only.Mark Bouris will be hosting his Secrets to Business Success seminar on May 30. For details, go to ybr.com.au.If you have a question for Mark Bouris, email it to Max Mason at firstname.lastname@example.org.