How do you choose your virtual CFO?

Where do you start? What do you look for? Who is right for you?


Listed below are the most important attributes you should seek in a virtual CFO:

Qualification: They must be qualified to a minimum level of Certified Practicing Accountant (CPA) or Chartered Accountant (CA). This will confirm that they are educated to a superior level, as these organisations not only require the tertiary qualifications, but they also require postgraduate studies and continued professional development for every year they run their practice. This will provide you with a technical-ly skilled and educated team of professionals to work with you.

Experience: They must be able to display that they have at least ten years of experience working with businesses on all facets of tax compliance, financial reporting and analysis, strategic planning, cash flow management, financing and advisory services. In addition, the more experience they have in your industry, the better service they will be able to provide.

Communication: They must be good communicators and be able to clearly explain and demonstrate the advice they provide so you are able to clearly understand that advice. They should not only be able to work well with yourself, as the business owner, but also with all your key employees that they are likely to liaise with over the life of the relationship.

Analysis: They must be analytical in nature. Any accountant who has the relevant qualification and experience is able to prepare annual tax returns. CFOs, however, are much more. Not only are they able to prepare all of your compliance requirements, they are able to review and assess the financial position of your business and provide feedback on which areas need attention. Having done that, they will then of-fer different solutions.

Strategy: They must be strategic thinkers, always looking towards the future and to you achieving your goals. Your virtual CFO should be able to work with you to develop strategies that suit your long-term vision and then help you deliver those strategies. Having delivered those strategies, they need to be flexible and adaptable to be able to cope with changing competitive dynamics, differing customer needs, new technologies and the ever-changing regulatory environment.

Risk: They must be very mindful of all the exposures to risk in your business. Risk is rapidly becoming one of the most important factors in business and, with continued regulatory changes and restrictions, it must be front of mind at all times in every facet of your business. The ability to make your business resilient and strengthen your structure and processes is a key trait to look for in a virtual CFO.

Technology: They must be up-to-date with all relevant technology that can assist you in the financial management of your business. Technology continues to evolve and you want your virtual CFO to be able to evolve with it. This will not only create efficiencies in your business, it will also provide opportunities to innovate.

Passion: They need to care about you and your business and your continued growth. This will ensure they do everything in their power to help you reach your goals.

Before deciding on your virtual CFO, you should do a little research on them. What you should be looking for is whether they meet the criteria listed previously. Some of those attributes can be easily determined, such as their qualifications and experience. However, the remaining attributes will require meeting with them.

Think of the first meeting with your virtual CFO as an interview – this is someone you will be working closely with and, hopefully, for some time. Just some of the questions you could ask include:

• I see your firm is (CPA or CA). Are all your accountants qualified accordingly? (Remember, you might find yourself working with different members of the team.)
• You appear to have the experience in years but have you worked with many busi-nesses in building and property development?
• Can you give me some examples of the type of clients you currently working with that would be similar to me?
• Can you give some examples of how you’ve helped similar businesses with their tax compliance?
• How have you helped similar business owners protect their personal and business as-sets? Can you give me an example?
• What strategies have you used to help your clients improve their cash flow?
• Do you use and/or do you clients use the latest technology in their business? If so, did you recommend and/or implement the systems? How has it helped them?
• Have you not been able to help a business owner better manage his finances? If so, why? What was the outcome?
• Some of my strategic goals are (explain some of the goals you’d like to achieve in the next one to three years). What are some ways we could go about achieving them?

Depending on your level of comfort, you may wish to ask more questions and be even more specific about how this virtual CFO can help you. That’s totally fine because you need to be sure.
Having gone through this process, the only attributes that you didn’t ask about are the ones that will answer themselves, being communication and passion.

It’s now up to you.

Getting the most out of debt finance

As long as your business can service the level of debt and has enough security to support the funding, debt finance can be a viable way to fund business operations. You will benefit by retaining ownership in respect of the growth and profitability of the business. Why give it away if you can afford not to?

There have been many businesses that have benefited from the use of debt financing as it has enabled them to grow, arguably, more than what they might have without it.

Consider one of my clients, who operates a business from an office warehouse that he used to lease for an annual rental amount of $66,000. The lease agreement had annual four per cent rent increases built in, which was a benefit to the landlord who was not only receiving more rent each year, but was also increasing the value of his property given commercial value is generally based on yield (or the percentage return on investment). In the first couple of years, it suited my client to rent given his personal circumstances, and the rent expense was fully tax deductible.

After a couple of years, he decided to buy the property he was renting as it suited his business requirements and had potential for some expansion. He successfully acquired the property for $1.35 million at a rate of 3.8 per cent, which meant his interest cost on the full loan amount was $51,300 per annum ($14,700 less than his rental payments). Beyond the annual cost savings, a secondary benefit was that he now had an asset that was increasing in capital value year on year.

As you can see, taking on the debt of the mortgage was a sensible business decision.

If you decide that debt financing is your best option then it is important to review a range of finance products from different lenders, as there are many options out there in today’s market and you need to find the best option for your needs.

Not only are there various lenders, there are also various finance types, such as a bank overdraft, line of credit, credit card, cash flow lending, debtor finance, fully drawn advance, mortgage loan, interest only loan, lease and hire purchase and chattel mortgage, just to name a few.

The important thing here is to make sure you match the type of finance with the reason for the finance. That is, you want to match the term of the loan with the life of the asset you are funding.

Let’s look at an example.

You need to upgrade the motor vehicle you use for your business, be it your ute, van or truck. Having made the decision to purchase the vehicle, the next decision is how you will pay for it. Let’s assume paying it all up front is not an option, so you need to finance. Your options include a hire purchase agreement, a chattel mortgage, a line of credit or a personal loan.

Motor vehicles have an effective business life. In an ideal scenario, you would want to use that vehicle for a period of time where you are receiving the maximum benefit, both operationally and financially. Typically, that period is between three and seven years, depending on the type of vehicle, the kilometres you will drive and how it will be used (will you be carrying building materials in it or a regular basis or not?).

The most popular finance options for vehicles are hire purchase agreements and chattel mortgages. They are both taken out for a defined period of time (in years) and have the option of a balloon payment at the end of the period, meaning an amount you need to pay to buy it outright and pay back the finance. The balloon payment can be anywhere from zero to 50 per cent, depending on the length of the finance period and how the vehicle will be used. As a general rule, the shorter the period, the higher the balloon. The more the vehicle is driven, the lower the value of the vehicle and hence the lower the balloon.

The fundamental difference between a hire purchase and a chattel mortgage is that with the hire purchase you do not legally own the vehicle until the finance is paid out, whereas with the chattel mortgage you own the vehicle from day one. Other than that distinction, they both have very similar attributes from a financial perspective.

A line of credit, which is used solely for tax deductible business costs, could be a cheaper option as the interest rates are generally lower. If you have a line of credit already in place, it has the added advantage of no extra application process or fees. If the line of credit is not in the name of business, then you will need to apportion costs and allocate accordingly. For example, you may have a line of credit for an investment in another entity name, such as a trust, and the vehicle you are acquiring is for the business in the trading company. Therefore, you need to work out the amount of interest apportioned to the vehicle and account for that in the business company accounts so you get the full benefit of the tax deduction. This option is not ideal from the point of matching the finance to the asset and has the added complexity of one loan applying to various entities. While the line of credit is an option, from a trading business perspective it is generally used to manage working capital, not for motor vehicle purchases, as it is available on a long-term basis and generally secured against your property.

The other finance option for the vehicle is a personal loan. I would suggest this as a last resort due to the higher interest rates that are attached to such loans. It is very unlikely you would be in a position to have to use such a facility and I would not recommend it, other than in extreme circumstances.

In summary, this example shows that a hire purchase or chattel mortgage fits best, as its purpose is solely for the vehicle.

When dealing with banks and other lenders, you need to understand that they tend to be a little conservative regarding your business potential, especially when compared to your own thoughts. Of course, you know how well your business will perform with some additional funds; however, the banks need a little more persuasion and then there is that frustrating issue of red tape that they may force you to try and break through to get anything achieved.

What are banks looking for? Your bank wants to know as much about you and your business as possible so they can assess whether you are suitable for a loan. Some of the things the bank will want to see include:

  • A description of your business, including and a brief history and where you are now.
  • Your personal financial information, including personal assets and existing loans.
  • Historical business financial information, including your profit and loss reports, balance sheets and tax returns (likely for a minimum of two years).
  • Projected financial information, including cash flow forecasts and/or business plans.
  • Details of what you require the loan for and why.
  • If you have business partners, their personal information.

Providing all the above information in a complete and timely manner is the first step to showing the bank that you are well prepared and on top of your finances.

The bank will review this information to establish whether you will be able to support the loan with the required level of security, and service the loan with the required level of profits and cash flow. Therefore, the stronger your application, the more likely the bank will approve the loan. Keep in mind that your historical information is just that – historical – so you cannot do much there. Your cash flow forecast and business plan, on the other hand, are where you can really make a difference.

Finally, remember that numbers are just one aspect – don’t forget the words that should go with them to demonstrate that you know exactly what is required and where you are headed. The level of confidence you have in your business and yourself will help increase the level of confidence the bank has in you and your business.

If you are faced with your loan application being denied, rather than getting angry, turn your energy towards finding out why. The better informed you are regarding this, the better prepared you will be to either seek alternative funding or review your strategy and prepare for when you are ready to make your next application.

Armed with this information, you could approach other lenders that may wish to deal with you, as their offering may be better aligned to your requirements.

You need to make sure you exhaust all options before giving up on the loan. I have had a number of clients who have not been successful on the first attempt, but then secured the loan they wanted from another lender. There are many lenders in the market and you should keep you options open. Start with the ‘Big 4’ banks and, if not successful, approach the second-tier financial institutions. There is an option is almost every situation.

Another alternative is to review your loan requirements and establish whether you may be able to reduce the funding amount required to achieve your goals. While this is not ideal, you may find that a lower funding amount may allow you to work towards your ultimate goal as servicing the loan is more manageable. Again, it will come down to your specific circumstances and requirements.

Assuming you do successfully get funding, you can be assured that your bank will require you to undergo reviews. At a minimum, this would be annually and, depending on the level of funding and your business situation, it could be as regularly as quarterly. Being well prepared for these reviews will show the bank that you understand their requirements and demonstrates that you have good internal management practices.

Keeping the lines of communication open with your banker will ensure they are ready to respond to any request you may have. The more you give, the more they do. If you do not provide information and respond to requests, then they will feel that there might be a problem with your business and will therefore become guarded and reserved in future dealings.

If you need any assistance with any finance requirements it would like to simply bounce some ideas off us, please do not hesitate in getting in touch.

Ownership vs Control – in the structure of your business.

The structure of your business and the people involved will determine who has ownership and who has control.

Ownership and control are not the same thing. It is important you understand the difference and how it may impact you moving forward.

Control is when a person, or group of people, have a controlling interest (more than 50 per cent) across two or more businesses. Control is not limited by the type of structure that you operate in, meaning the different businesses could be operated as a sole trader, partnership, trust or company. Therefore, you cannot escape these provisions just by setting up a new company or trust, unless there is a different person in control (meaning, someone else is the director or trustee).

The key distinction between ownership and control is that the owner and the person/people in control may not be the same under the different structures you may operate your business under. For instance, in a business run as a sole trader, the business owner also has the controlling interest in the business, so the same person has both ownership and control. In a company, on the other hand, the business is owned by the shareholders, whereas the business is controlled by the director. See the table below.


Structure Ownership Control Same/Different
Sole trader Sole trader Sole trader Same
Partnership Partners Partners Same
Company Shareholders Directors Can be different entities
Trust Beneficiaries   Trustee Can be different entities


In companies and trusts, the owner and the person/people in control may or may not be the same.

For instance, Scabbit Builders Pty. Ltd. is run and managed by Brett, who has been appointed the Director of the company. Brett’s wife, Kristen, assists with the business when she can and she holds all the shares in the company. They own their family home and the title lists Kristen as the sole owner. This structure has Brett, the director of the company, as the person in control, while Kristen, the shareholder, is the owner of the company. In addition, we have the added benefit of protecting the family home as there is no responsibility attached to Kristen as she does not control the company and therefore does not have any liability should there be any legal of financial disputes.

It is common in smaller businesses that the person or people who own the business also control the business. In the vast majority of cases it will depend on the owner’s family network and personal circumstances. The point to note here is that there is a distinction and understanding that could be of assistance when it comes to running more than one business and the possibility of minimising taxes and costs.

If you have any questions about your business and the structure you operate under, don’t hesitate to contact us.

SWOT Analysis – What does it mean for you?

You will benefit greatly from reviewing your financial statements, namely, profit and loss statement, balance sheet and statement of cash flow on a regular basis.

But what then?

It’s important to put all of that information together to give yourself a holistic view of where your business is now.

One effective exercise to assess this is a SWOT analysis. If you haven’t come across this before, SWOT stands for Strengths, Weaknesses, Opportunities and Threats. The exercise requires you to reflect on your business’s internal strengths and weaknesses, as well as external opportunities you can take advantage of, and threats you need to protect yourself against.



·         What do you do well?

·         What do you do better than others?

·         What unique resources and/or processes do you have?

·         What do others in your industry see as your strengths?

·         What factors get you a sale?



·         What could you improve?

·         What should you avoid?

·         What does your business lack?

·         What do others in your industry see as your weaknesses?

·         What factors lose you a sale?


·         What opportunities can you see in your industry?

·         What interesting trends do you see?

·         What can you do that others are not?

·         How can you turn your strengths into opportunities?






·         What obstacles do you face?

·         What are your competitors doing?

·         Is regulation threatening you and/or your business?

·         Is technology threatening you and/or your business?

·         What threats do your weaknesses expose you to?

·         Do you have cash flow problems?


Once you have completed your SWOT analysis, you will have brought to the front of your mind some really important issues for your business, some good and some not so good. The truth is, they are all good to get out in the open so you can do something about them.

So, what do you do?

For each of the quadrants, you need to consider how you can use that information to your benefit:

  • What opportunities can you take advantage of? How can you use your strengths to take advantage of these opportunities?
  • Which of the threats can you address today, using your existing strengths?
  • How can you minimise your weaknesses? Are there opportunities you can leverage to do this?
  • How can you avoid or insure against the threats you listed?

For example, if you have identified one of your business weaknesses as lack of labour and equipment and have identified a major growth development in your area as an opportunity, then a strategy for you may be to strengthen your resources to be able to successfully quote, win and undertake the large development project in your area.

Knowing your strengths is great, taking advantage of them is something else. Knowing your weaknesses is also great, doing something about them is really something else. This analysis shows you how, and gives you the first steps to move closer to your big vision.

If you need assistance with your financial statements and your SWOT analysis, do not hesitate to contact us.


What are the different ways a virtual CFO can help you and your business?

You can work with a virtual CFO in a couple of different ways. How you do so will depend on the level of support you require.

You are able to use the services of a virtual CFO as little or as much as you would like, although the true essence of working with a virtual CFO is an ongoing arrangement so you receive the maximum benefit for you and your business.

The typical working arrangement with a virtual CFO is ongoing monthly or quarterly guidance and advice, including the following services:

  • Bookkeeping
  • Accounting
  • Income tax returns
  • Activity statements
  • ASIC compliance
  • Strategic planning and advice
  • Budgeting
  • Cash flow management
  • Performance management and financial reporting
  • Tax planning

The alternative arrangement is to use your virtual CFO on a specific project basis, which could include services such as:

  • Strategic planning
  • Business plans
  • Budgeting
  • Cash flow forecasting,
  • Development of key performance indictors (KPIs)
  • Profitability analysis and improvements
  • Cash strategies
  • Financing or capital raising
  • Systems assessment and development
  • Due diligence
  • Business valuations
  • Mergers and acquisitions
  • Exit strategies

The reality is that you can tailor the virtual CFO services to suit your specific needs. Your virtual CFO will take the time to understand your unique challenges and needs, and will help you develop a tailored solution to achieve your goals faster and more efficiently.

One of the benefits of having a virtual CFO is that they are flexible and can adapt to your changing needs. As your business grows, so does their level of service and support because you are not just working with a single professional, you have a team of professionals behind you.

A good CEO (You) needs a good CFO to help drive their business forward.

For any questions you may have regarding virtual CFO services, contact us and we’d be only to willing to assist.

What are you funding options for business / investments?

You can fund business operations and investment from debt (a loan from the bank or another third party), equity (your own funds), an equity partner (taking on an investor) or internal funds (profits).

Each of these options comes with its own set of risks and advantages, and it can sometimes be difficult to figure out the best option, or whether you should look for financing at all. Consequently, finance can be an extremely difficult and frustrating for business owners and, as such, needs to be planned for and executed as carefully and thoroughly as possible.

Let’s consider the four types of financing, to help you determine which is right for you.

Risks Advantages
You may not be able to generate sufficient cash flow from your business operations to service the debt. You retain control over your business by not having to answer to partners or investors.
You may be unable to repay the principle at the end of the loan period. The profit and growth of the business is all yours as you would not have to share it with partners.
The level of security required for you to finance may leave your personal assets vulnerable if you cannot meet repayments. Fixed repayments are agreed to from day one and you can better manage your cash flow.
You will need to pay interest on top of the sum borrowed, making the financing more expensive. Lower cost of capital (interest payable) and raising debt finance (bank fees, insurance fees, legal/accounting fees).
You may be vulnerable to changes in interest rates. Interest and associated costs are tax deductible.
If you are in the early stages of business, it can be difficult to get external finance.  


Personal equity
Risks Advantages
Putting your own money on the line means you bear the risk of the business and its ability to achieve the growth you require. You can raise funds without exposing your personal assets to risk.


While it does not impose any significant cash flow requirements, it could take longer to generate the level of funding required. You have no exposure to interest rates.


You might lose your capital if the business doesn’t survive. Less burden as there are no monthly loan repayments, improving cash flow.
No tax deductions are available as there are no servicing costs. An improved financial profile with lenders and/or investors.


It can place strain on family relationships should personal financial obligations (such as meeting mortgage payments) be put under stress. If you have prior credit issues, accessing debt could be a problem, whereas personal equity will bypass this hurdle.


An equity partner
Risks Advantages
You might lose control if they seek to acquire a share of your business. You could benefit from mentoring support from the investor.
If you sell a share of the business, this could trigger a capital gains tax event. Easier access to funds with less compliance requirements than banks.
Potential conflict with the investor. No exposure to interest rates.
Greater pressure from the investor to achieve growth and higher returns. External resources could add strategic input and alliances.
Need to establish an exit strategy. A more stable financial structure.


Risks Advantages
Funds used from the business may impact negatively on business operations. Increased profitability as there are no direct costs imposed on you and your business.
Reduced funds for working capital. You have no exposure to interest rates.
Inability to cover unforeseen costs. You retain control over the business.
  The growth of the business is all yours.
  Your assets are not vulnerable to creditors.


When it comes to choosing which financing option is right for you, there are a number of factors to consider.

If you are fortunate enough to have a profitable business and have maintained your cash reserves, using these funds can be one of the most favourable alternatives.

However, while the ideal scenario would be for all operations and investment to be funded by your profits, this may not always be possible due to cash flow requirements. Your ability to generate increased cash flow through good management of your working capital is very important. You need to be able to generate excess cash from your business operations to ensure this funding option is best suited to your circumstances. For this reason, you’ll need to look at all possible alternate sources of funding to ensure you adopt the one most suitable to you and your business.

If you need some assistance with any funding requirements, do not hesitate to contact us.

Maximising your working capital – What, How, Why…

One benefit of both reviewing your historical cash flow patterns, as well as creating a cash flow forecast, is being able to make changes that will maximise your working capital.

Working capital is the money you have available to operate your business from day to day. In the building industry, working capital is made up of three key components:

• Payment to suppliers (creditors)
• Work in progress
• Collection from customers (debtors)

How much working capital you have at any one time is dependent on the length of time between you using your cash to purchase materials and pay your labour, and receiving payment for completing a job.

Clearly, there will always be a delay between these two steps. Problems arise when you are unable to meet your financial obligations because you are still waiting for payment.

When you are working on a project that is larger than usual, and you know there will be a substantial delay before you finally get paid, you will need to plan for that by ensuring you have a larger amount of working capital on hand to tide you over. By contrast, for smaller jobs where turnaround time is quite short, your working capital requirements will be minimal and your cash position will be relatively unaffected.

The real issues occur when delays are unexpected. For example, you may be doing a small renovation for a client and, while you have quoted the job and know how long it will take to complete, there is no way to be sure that the client will pay for it on time. Depending on the size of that job, you may wish to demand an upfront payment to cover the materials you need to pay for before commencing the job.

The key to successful cash management is carefully watching all the steps in the process and planning accordingly. The quicker you can make the cycle turn, the faster you can convert your trading operations back into cash, which means you will have increased liquidity in your business and will be less reliant on cash or extended trading terms from your suppliers.

Fortunately, you can manage your payments to suppliers, your work in progress and your debtors to improve your cash flow.

If you need some assistance, please contact us as we’d be more than happy to help.

Tax Minimisation – The “Structure” of your Business

When it comes to structuring your business to minimise tax, there are two areas to consider – your business’s taxable income and any potential for Capital Gains Tax (CGT).

If your business derives a taxable income, then minimising income tax will be an important factor when choosing your business structure.

You want to ensure that any profit generated by your business is taxed at the lowest possible rate. This can be done by ensuring that individual tax rates and tax-free thresholds are taken advantage of, and that any additional income is taxed at a corporate rate.

At the time of writing, income tax rates in Australia are as follows:

Taxable income Tax on this income [1]
$0–$18,200 Nil
$18,201–$37,000 19c for each $1 over $18,200
$37,00 –$87,000 $3,572 plus 32.5c for each $1 over $37,000
$87,001–$180,000 $19,822 plus 37c for each $1 over $87,000
$180,001 and over $54,232 plus 45c for every $1 over $180,000


Different structures have different treatments of tax. If you are a sole trader, all profit earned by the business will be counted towards your personal income and taxed at the rates above. The same goes for partnerships, though the profit would be divided between the partners.

Profits generated by companies, on the other hand, are taxed at a rate of either 27.5 per cent or 30 per cent, depending on their aggregated turnover.

Using the figures above, the percentage of income tax you pay increases as your income does, reaching a total of 30 per cent at $180,000 in income (total tax paid of $54,232 ÷ total income of $180,000 = 30%). After this, the percentage increases with every additional dollar earned. This means businesses making over $180,000 in profit can pay a lower percentage of tax than they would have otherwise if they use a company structure. You can also gain tax benefits if your income is less than $180,000 where you could pay yourself $87,000 as a salary or wage and leave $93,000 of income in the company to pay tax at the corporate rate. In this example, you would save either nine or 10.5 per cent tax.

When it comes to trusts, the income is distributed to beneficiaries and is then recorded as a part of their taxable income. As you can choose how much income goes to each beneficiary, you can maximise your tax benefit by paying more income to beneficiaries who are in lower income brackets, and benefit from lower tax rates.

Finally, SMSFs pay a flat tax rate of 15 per cent on the net earnings, including concessional contributions. This structure is the most tax efficient, however, it is also the structure with the most restrictions in regard to operating a business, as stated earlier.

Note that the government is continually putting in place measures to reduce the tax benefits of certain structures depending on the type of business you run and how you run that business. For example, contractors in the building industry are now facing the likelihood that the ATO will not grant them an individual ABN if the ATO believes that they are effectively operating as an employee contracting to one employer for only their labour services. Instead, a business operation in the eyes of the ATO is one where you contract to two or more employers and when you supply your own plant and equipment and/or materials.

The second area to consider when it comes to tax minimisation is Capital Gains Tax (CGT).

If your business derives income that is considered capital, then planning to minimise CGT is important.

Income that would be considered capital is the profit made when you sell an asset. Under that simple definition, property development would be considered capital. Unfortunately, it is not that simple, as the ATO has introduced significant legislation in this area. For example, if you undergo a property development and your intention is to make a profit by selling the developed properties at completion, the ATO now considers such an activity as income, not capital.

So, what might they consider capital? If we take the example above but change the intention from selling the developed properties at completion to renting the developed properties for a period of time before, then selling them at some time in the future, this scenario would be considered capital at the time of sale of the rental properties.

The ATO provides a tax incentive for you to hold on to assets for a period of at least 12 months, where they will give you a 50 per cent CGT discount on the profit on the sale of the properties.

The other main activity that would be considered capital, and one that is generally not even considered when setting up a structure, is the sale of your business. If your intention is to build value in your business and sell it for a significant profit at some point in the future, then CGT should be a major consideration.

Structuring your business so that you can get access to both the CGT 50 per cent discount and various small business concessions is important if you plan to generate income that is considered capital.

So which structure should you choose? The only structure which is not entitled to the 50 per cent CGT discount is a company. Therefore, all of the other structures are valid options for accessing the CGT discount along with other small business concessions.

However, while a company cannot access the CGT discount, there is a loophole. If you operate your business in a company structure you can benefit from the CGT discount if you sell your shares in the company, rather than selling the business and retaining the company. The shareholder then becomes the seller and if the shareholder is you (individual) or a trust you are connected with, then you can access the CGT discount. You need to be aware, though, that a purchaser may not wish to acquire the shares in your company as it may not suit their requirements.

You may also minimise CGT by conducting your business through an existing entity with available capital losses. For example, if you have an existing trust that has capital losses from a previous investment that was sold at a loss, this can be offset against a future capital gain, thus reducing the total profit and the tax you’ll need to pay as a result.

It is important to also consider the other taxes that affect your business, including payroll tax, stamp duty and land tax. Other costs include workers’ compensation, superannuation guarantee contributions and leave entitlements.

[1] Note that these rates do not include the two per cent Medicare levy, or the Temporary Budget Repair Levy – payable at a rate of two per cent for incomes over $180,000.

It can be a bit of a minefield but that does not change the fact that you need to be aware of the tax implications of the structure of your business. We’re here to help.

Defining your mission statement

The first step in choosing your destination is defining your mission statement.

A business mission statement defines your goals, ethics, culture and behaviour. A complete mission statement defines what the business does, not only for its owners, but also for customers, employees and the community as a whole.

A personal mission statement, on the other hand, is what you want to focus on, accomplish and become in your personal life. It is what guides your actions, behaviours and decisions towards what is most important to you.

As the owner of your business, the two will most likely be closely aligned.

Some examples of mission statements within the building industry include:

  • Bunnings: Our ambition is to provide our customers with the widest range of home improvement products at the lowest prices every day, backed with the best service. Our team members are the heart and soul of our business.
  • Lend lease: To create the best places. We work closely with clients, investors and communities in Australia, Asia, Europe and the Americas to create unique places. Places that leave a positive legacy and inspire and enrich the lives of people around the world.  We do this through putting safety first and delivering innovative and efficient solutions which provide long term sustainable outcomes for a range of stakeholders.
  • Metricon: We’re all about building homes where you’ll truly love to live.


The benefits of having a mission statement which defines who you are, what you do and the values that guide you are:

  • Marketing your business to potential clients – differentiating yourself from your competition by specialising in a certain field or product or target client. Becoming the best at what you do.
  • Assist you in your business planning – as it sets the scene as to why you do what you do. It can help your business attract finance, investment and/or business partners.
  • Gives you purpose and motivation – far beyond just making a profit. It will help guide you to determine the types of products and services you will provide.
  • Helps you with your decision-making – providing you the framework within which you will operate. It’s your compass, your map, your steering wheel.
  • Provides direction to help you through the challenges that business will throw your way – by keeping you focused on what you want to achieve. Sometimes, the easy decision will create a short-term fix. Your mission will help you make the long-term beneficial decision to ultimately get to where you want to go.


If you don’t have a mission statement, on the other hand, you will find yourself having to spend time and resources rectifying poor communication and unwanted cultural behaviour whether that be with clients, employees or other stakeholders. Communication is extremely important in business and it is incumbent upon the owners of the business to clearly communicate to internal (employees and contractors) and external (clients, suppliers, banks and so on) parties their desires for their business. If all parties do not know what the owner wants to achieve, the business will likely not get there, despite the owner’s efforts. Poor communication will lead to poor decisions and ultimately, poor results – whether that is labour-centric (processes) or material-centric (supplies/suppliers). Both can have significant adverse effects if not managed well and the key to that is communication.

So how do you define your mission? Start by answering the following questions:

  • Why did you decide to go into business for yourself? What were the drivers which led you to make that decision? Was it centred around your own personal desires or that of family, or did friends influence you?
  • Who is your ideal customer? Who do you want to provide your services to? Is it private clients or other businesses? Is it residential or commercial? How will your service make a difference in their lives?
  • What do you want your business to be known for? How do you want your customers and the general public to view your business? How will you influence that view?
  • What are the essential products and services you will provide? How will they be different to your competitors? How will you position yourself in the market? Will it be based on price (low-end) or quality (high-end) or a mix of both?
  • How will your level of service differ from that of your competitors? What will you do differently? How will you be better? Do you know their strengths and weaknesses? How will you take advantage of that?
  • What type of business owner will you be? Will you lead by example? Will you delegate responsibility and authority? Will you empower your employees? Will you mentor your employees?
  • How will you interact with your suppliers? What type of relationship will you have with them? Will you want to have a close relationship with few or a distant relationship with many? How can they help? How can you help them?
  • Will you use technology to your advantage? How will this work? How will it benefit you? Will your processes be more efficient?

Answering the above questions will confirm to you why you are in business and what it is exactly that you really do.

Once you have an idea of why you do what you do and what your business stands for, it’s time to put it into a single statement – a mission statement.

A mission statement will require your time and effort, however, it will be well worth it.

After working through the questions above, I recommend you speak with all the people connected to your business, not matter how big or small your business is. You will gain some great insight into what it is you do well and, if the conversations are honest, some things you might need to work on. They are just as important to you in your business. You should take advantage of the things you do well and work hard to improve on those things that you do not do so well, because they are important to the success of your business. That is where you will derive the most benefit and see an upward spike in your business.

Take the time to do this thoroughly and completely. While a mission statement is generally rather short (that is, only up to a few sentences), it is important for you get the right words together to truly define your mission. Use words wisely to best describe your mission. Less is more, but only if it tells your story.

Once your mission statement is complete, it should be a part of all your marketing and advertising. It should be what drives your business and excites your customers.

Working with a virtual CFO versus doing it yourself

When should you work with a virtual CFO, rather than doing everything yourself?

If you are an ambitious business owner who wants to truly grow your business in the most efficient way possible, then the simple answer is always.

However, the commercially realistic answer is that it’s time to engage a virtual CFO when you are spending so much time on the financial management of your business that it is taking you away from profit-generating activities, or the sales and operations of your business.

In the early stages of your business, you will have the time to manage the basic financial aspects because you may not be fully occupied every day with actually performing jobs. As your business grows, it might become difficult for you to continue to handle the financial management as you look to grow your business to the next phase. One of the first signs that it is time to consider a virtual CFO is when your attention moves away from financial management. If you have taken on all the bookkeeping for your business, paying employees, contractors and suppliers, receipting payments and managing your cash flow, those responsibilities can fall to the wayside when you get a project or job that seems more important and requires your full attention.

At this point, you know that your business needs to take the next step towards growth, and a virtual CFO is required to help you plan for this growth.

You will also need your virtual CFO for your financing requirements, particularly as your business grows. They will help decide if financing is appropriate and, if so, what type of finance will best suit your business and then prepare you sufficiently for the finance application process to provide the best possible chance for approval.

Even if you have systems in place for your financial accounts, your virtual CFO is able to work with your bookkeeper and finance officer to identify and measure exactly what is driving your business performance and where you should be focusing. Conversely, they will identify what it is that could be causing you problems.

If you have issues with your cash flow, you will generally know that, however, you may not know exactly why or how to resolve those issues. There are many reasons for cash flow problems and some of those you may not even be considering, such as sudden growth or winning a large new client or contract. These things are great, but only if they are managed well financially because they could turn very bad, very quickly. Worse case, you could lose that new client or contract because you cannot manage it well and provide the level of service required.

If your financial reports are not making sense or you do not believe they are correct, you may need some help from an experienced financial adviser. Your virtual CFO will make sure the financial reports are accurate and they will then make sure you understand them and what they mean to your business. Together you will work through them to monitor your business performance and put in place the measures to improve those areas that need attention.

You will know when you are not managing the financial part of your business efficiently enough to help you with your business. All you need to do is be honest with yourself and make the decision to look for that support.

To discuss how a virtual CFO can benefit you and your business, please get in touch and we will guide you through the process.