STOCKTAKING

Associated Stocktaking Services is the most experienced stocktaking firm in Western Australia. They have provided answers to some of the most common questions about stock and stocktaking.

"I don’t want that stuff; it’ll never sell"

Sometimes purchasers are reluctant to take on some stock which they consider to be particularly slow moving, or "dead" (not moving at all!).

The broker can suggest that they notarise their offer to exclude such items if they wish. However this needs to be done prior to acceptance. This can in turn discourage the vendor from selling his business since he will then be left with this excluded inventory, but without a business from which to sell it.

A workable solution may be found by calling us at Associated Stocktaking.

"What about old and damaged stock?"

As a purchaser you should not pay for stock that is damaged or out of date. Associated Stocktaking Services uses date codes to assist in determining saleability, however, you should be checking the stock yourself while the stocktake is in progress. This helps us to identify unsaleable stock and brings to our attention any items of stock you wish to query.

As a purchaser, you may have preconceptions about what is saleable and you should discuss this with the broker who may ask Associated Stocktaking to give them some guidelines.

"How much does it cost, and who pays for the stocktake?"

Unless otherwise arranged, both parties pay half each for the stocktaker which insures his independence. There is a standard schedule of fees, but this may vary with the business in question. Usually we like to view a business before quoting, but for some types of business which we do often (eg. newsagents) we can produce a competitive quote without viewing the business.

"What if there is too much stock?"

In cases where the stock total exceeds the estimate we suggest that the purchaser keep the extra stock. You may want to discuss this with the broker who may be able to organise the vendor to finance the excess if it is a large amount.

"When do we stocktake?"

A changeover stocktake will usually occur after trade on the day of business settlement. This may vary if both parties agree.

"How do I know the values are correct?"

As an independent party and with our experience in a wide range of businesses we are in a position to make an impartial assessment of the value of stock using various methods at our disposal.

We will also investigate any pricing queries by either the vendor or purchaser at any time before or during the stocktake and up to 7 days after stock figures are published.

"Who picks the stocktaker?"

As an independent party the stocktaker should not be seen to be working for one side, so using staff from the business or reps from suppliers is not usually encouraged.

The broker may recommend a reputable professional stocktaker that both parties will agree to before settlement.

"Can we do a ‘walk-in-walk-out’ deal?"

This type of transaction is not encouraged for a number of reasons.

Firstly, the purchaser cannot be sure of exactly how much he is paying for stock. Of course the vendor may have been conservative in his estimate, but there is no guarantee that stock hasn’t been removed prior to settlement.

Even stock which is already recorded on a computerised inventory control system can be readily audited to the purchaser’s satisfaction.

This is cheaper than our complete stocktaking service and allows purchasers to have an accurate opening stock value. Subsequent profit and loss calculations will then be more precise.

"What about freight?"

Country businesses will have paid freight to get their stock into store and vendors therefore need to be compensated for this when selling.

Associated Stocktaking uses accurate methods of calculating freight and can advise on any freight-related issue.

"How do I know if something is an item of Plant or Stock?"

Goods that are rented or hired such as video tapes are technically classed as plant and equipment items, not as stock. Items that are consumed in the course of trade eg. till rolls, meto price marking labels, light globes etc. are classed as stock for a hand over. The purchaser pays for these items whether they are listed as plant or stock.

"Is there anything else I should know about stocktaking?"

There are many specific issues that arise with the various types of business that are too numerous to mention here that we are happy to discuss anytime with the broker or parties involved. We are always ready to help a broker with a question and our advice is free.

Our thanks to Bill Cameron of Associated Stocktaking for this article. 

Bill can be contacted on 9385 1515 or 041 981 1818. 

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Business Migration by Roz Baker - Ascend Business Marketing 4/10/05

BUSINESS MIGRANTS WISHING  TO LIVE IN AUSTRALIA

If you are hoping to come and live in “the Lucky Country” visit your nearest Australian High Commission, to receive information and assistance. Moving countries is exciting but highly stressful and often worth it!

Try to apply before you are 55, preferable before 45, as the older you are, it is not only more difficult to be accepted, but emotionally and physically, you will find yourself less able to cope with the complete change of environment. It also effects

the whole family, as each tries to establish their new identity, where all is new and unknown.

There are many business visas available and once you have decided that you wish to apply to come to this lovely country, you will require the services of a Migration Agent. Speak to more than one, as the fees can vary considerably.

Spend some time on the Internet, where much information is free to you.

For instance, there is plenty of free information on the Small Business Development Council www.SBDC.com.au. Visas which may apply to you, are listed and explained clearly on this website.

This wonderful organisation can also assist you with your business plan and on all aspects about small business in Australia.

If you wish to read my article on USEFUL TIPS ABOUT BUYING A BUSINESS IN WESTERN AUSTRALIA, email me on roz@Ascend .net.au  (Roz Baker – Business Consultant – Ascend Property and Business Marketing)

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Business Migration by Bill Moser 

Western Australia is a sought after destination for business migrants. Business skill migration is a specialist field and the following article by Bill Moser explains some of the requirements.

Australia maintains its' reputation as a favoured destination for migration where applicants want to escape an uncertain future in their home country to a country with a stable political, economical and social climate, geographically isolated, contained within oceans of water and no border with other countries on land Western Australia contributes to the wealth of Australia far beyond its' population which is only 10% of the total population and contributes, as an example,  30% of the countries export income. 

Rich on resources and in the process to expand value adding secondary industries, Western Australia invites those migrants who want to participate in that expansion seeking a secure future for themselves and their children. There are a number (if categories under which entry to Australia as migrants can be granted, however whilst preliminary information on these categories can be made available through this website, I wish to address the "Business Skill Migration" in the following:

The Department of Immigration has issued general guidelines and in accordance, the following conditions towards an Application apply;

1. The Applicant should have a record of successful business or investment activities.

2. At least three years of experience in actively managing business or investment activities.

3. In one of the past five years the Applicant should have managed a business

with at least 10% equity or managed an investment of at least AUD$l mil.

4 The Applicant (and partner) should have owned in the last two fiscal years at least 50% more than the amount intended to invest in a designated investment in Australia.

5. At the time of the decision to apply, the Applicant should have made a designated investment of at least AUD$750,OOOin Australia. However this amount is determined by the point test to which all Applications will be put. The investment linked point test must score 105 points determined by the information contained in an Application.

6. A non refundable Application Charge of AUD$3,1OO must be lodged with the Application. In addition the General Conditions of any application applied for which the cost must be paid by the Applicant:

6.1 Character clearance from the Applicants domicile.

6.2 Health Certificates.

6.3 Cost of tuition towards fluency in the English Language (if applicable)

6.4 Cost of certified translation of documents (if applicable).

Although the conditions as outlined may appear onerous and discourage proceeding with an application, a preliminary inquiry with relevant questions will be responded to free of charge through this website and if need be answers will be sought from competent Authorities.

The writer offers a thorough knowledge and experience of the economic and social conditions in Western Australia and he has dealt with many business migrants before and after their arrival and is also familiar with personal problems which may have to be addressed in a transaction (schooling, housing, etc.).

For a personal and confidential response, email William (Bill) Moser B.Ee. AFAIM CD here

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BUYING A BUSINESS - "NOMINEE" PURCHASERS March 2002

(Update October 2005. We have been advised through a business Settlement Agent that State Revenue will now NOT ACCEPT AND/OR NOMINEE. The information provided to us now states that an offer to purchase should be made "...............ON BEHALF OF XYX PTY LTD"  or if the company is not yet formed "..................ON BEHALF OF A COMPANY TO BE FORMED SPECIFICALLY FOR THE PURCHASE OF THE BUSINESS"

Recently "Business Online" was interested to hear that many of Perth's leading business settlement agents had experienced a marked increase in inspections of files by the Office of State Revenue. Specifically, files containing contracts with a "Nominee" clause are under investigation. The reason for this is that if the "Nominee" clause does not meet the requirements set out by the Office of State Revenue it may be deemed that a subsequent transfer has taken place and therefore additional (double) stamp duty may apply. Advice should be taken when using this clause. Specifically :-

(A)  A contract showing the purchaser as "........ or nominee" must show the subsequent transferee to be the purchaser or the nominee but not both.

(B)  A contract showing the purchaser as "........ and nominee", must show the subsequent transferee to be  the purchaser and the nominee.

(C)  A contract showing the purchaser as "....... and/or nominee", allows for either (A) or (B)

"Conclusive and unambiguous" evidence will need to be shown to confirm that at the time the contract or agreement for sale was executed the person named therein as purchaser was acting as agent for the person for the person to whom the subsequent conveyance or transfer is made, and was so acting under authority given by such person PRIOR to the execution of the contract or agreement for sale, or was nominated PRIOR to the offer being made.

Many business purchasers use the "nominee" clause if they think they may operate the business under a company structure rather than as an individual. This is normally after discussions with their accountant or financial advisor.

Where the nominee is a corporation which is yet to be incorporated, the Commissioner will accept that the named purchaser was acting on behalf of the newly incorporated company if at the time the contract or agreement was entered into, action in the form of written or substantiated verbal instructions had been given to incorporate the corporation and it was intended that the corporation would be the purchaser.

We believe it is common practice to use the clause "the nominee is a company to be formed specifically for the purpose of purchasing the business" which is sufficient, provided the company is the final purchaser. If you are unsure of you final structure you may want to use the "and/or" nominee clause. Consult your professional advisor or the Office of State Revenue for further information.

More information can be found at the Office of State Revenue web site. Enter "nominee" in the search box.

www.srd.wa.gov.au/search/srd_search.asp?site=Internet  

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Privacy Law Expands

Since 21 December 2001 the "Privacy Amendment (Private Sector) Act 2000" has applied to organisations with a turnover of more than $3 million - including sole traders, partnerships, bodies corporate trusts and not for profit groups.

From December 2002 the privacy legislation will also apply to organisations with an annual turnover of $3 million or less if they:-

·         Legally linked to another organisation which does have an annual turnover of more than $3 million

·         Trade in personal information

·         Provide a third party with with a benefit, service or advantage to collect personal information

·         Are under contract with a commonwealth agency: or

·         Voluntarily opt to be covered by the new legislation.

Note that employee records essential for maintaining an employer/employee relationship are outside the provisions of the act.

f you are unsure of your obligations you need to consult your legal advisor.

A checklist can be found at:- checklist.html#BSA   and more information at www.privacy.gov.au

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Privacy a must when buying or selling a business

Anyone buying or selling a business that includes a customer database after 21 December may be caught by the Privacy Act, even though the business has a turnover of under $3 million, warns CPA Australia.

'From 21 December, small businesses that trade in personal information, are related to a large business or provide services under a Commonwealth contract, will need to comply with the Privacy Act,' says Judy Hartcher, Business Policy Adviser for CPA Australia.

'Trading in personal information includes buying or selling a business with a customer database, so businesses should check their compliance obligations before finalising the sale or purchase.

'For instance, anyone buying a business should ensure that the customers are aware of the transfer of information and have the opportunity to remove their personal data from the new owners' database.'

When buying or selling a business, small business operators also need to ensure that customers can reasonably expect their personal data to be used only for the purpose of which it was originally provided.

'Businesses that are sold as a going concern, offering the same services, will find that the legislation has little impact,' says Hartcher.

'However, if the nature of the business is to change after the sale or purchase, business operators need to seek permission from their customers to transfer their personal information to the new business owners, in order to comply with the Privacy Act.

'For example, an independent lawn mowing service may need to seek permission from its clients before selling its customer database to a large company providing a range of domestic services. Clients may not want to receive information on other domestic services apart from the lawn mowing services.'

The compliance obligations are not onerous, and comprehensive information on how the privacy laws impact on the due diligence process associated with the sale or the purchase of a business can be obtained from the Federal Privacy Commissioner's Office.

'Small businesses with annual turnovers under $3 million should not assume that they are exempt from the Privacy Act. To avoid potential litigation, they should review the way they handle their clients' personal information,' warns Hartcher.

Guidelines on compliance requirements are available on the Federal Privacy Commissioner's website at www.privacy.gov.au

The Privacy Act came into effect on 21 December last year, regulating how businesses in the private sector collect, use, store, disclose and dispose of personal information.

Written by CPA Australia's Business Policy Adviser Judy Hartcher

CPA Australia is one of the world's largest accounting bodies, representing 97 000 finance, accounting and business professionals in Australia, Asia and Europe. View the website at www.cpaaustralia.com.au

Customer Retention

A recent survey showed:-

3% of customers you lose will go somewhere else because of convenience eg. they go to a competitor closer to where they live.

9% of customers you lose will go somewhere else because of relationships at a higher level eg. one of their friends opens a business similar to yours.

15% of customers you lose will be because of dissatisfaction with your price, your product or your delivery time.

5% will leave because of miscellaneous reasons.

You will note that this only adds up to 32%. 

A staggering 68% of customers that leave your business will do so because of a perceived indifference.

Put this another way, 68% of customers you lose will go because they think the owners or the staff simply don't care about them.

The reality is you may well care about them but if they perceive that you don't, they're gone!

Therefore these days the aim is not to merely satisfy your customers. The aim is to delight them and be memorable.

If customers perceive your business to be different than your competitors you can afford to charge higher prices (remember only 15% of people leave a business because of price, product or delivery time.)

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