Justin Bohlmann: So a little while back, uh, we started talking about the idea of, um, forming this business alliance because everything that we do is complimentary, right? Easy company, sprint while pop and Thriday. Um, so we've got Alex, um, from Easycompanies. Please tell us a bit about yourself and what you do.
Alex Whiteside: Yeah, thanks.
So, I mean, I started
EasyCompanies in 2013 just to get it off the ground. Um, I saw the opportunity to basically make the easiest company registration platform out there. Uh, I feel like we've done that. Say we've done that. Reviews would show. Um, but yeah, I came from a tech background and um, I've built the platform myself basically.
I just love getting into code and building things. Building products. Awesome.
Justin Bohlmann: Yeah. Super cool. Alex Solo Sprintlaw.
Alex Solo: I can
be called solo for the purpose of this discussion. Um, I'm the founder of Sprintlaw. We're an online legal provider for small businesses. We've been around since early 2017. My background was sort of working before as a corporate lawyer in a very traditional law firm, but seeing this big opportunity to sort of combine technology with law and design something that's much better for smaller businesses than using the more traditional law path, both in terms of efficiency, quality, and ultimately cost.
Um, so we've got, uh, a bit of a 5,000 clients. We've been, um, sort of expanding internationally and, and sort of have big visions for the business. So it's been a exciting journey over the last few years for sure.
Justin Bohlmann: We got Lee from Pop.
Lee Bui: Yeah. So my name's Lee. I'm a tax accountant by trade. So POP is a progressive online accounting business.
So we started in 2019. We have help a few thousand clients so far, and the reason Pop started was because we saw, um, the gap between, um, traditional accounting firm and what the client needs these days. So we wanted to minimize all the red tab and we wanted to make accounting and tax advice more accessible to clients, especially the, the, the younger generation or people who prefer a seamless, you know, um, communication with your accountants.
That that's where we coming in and hopefully fill the gap.
Justin Bohlmann: Awesome, thanks. Awesome. Um, I'm Justin from Thriday. Thriday is a financial management platform for businesses. Um, you know, the, the old way of doing things was super inefficient, um, where banking held the data and then that had to feed into an accounting platform and tacked on an invoice platform and an expense management platform, and then gave all of your data at the end of the year to your accountant.
What we've done is combine all of that into one, just to make the cash flow management process as efficient as it possibly can be for small businesses. And, um, you know, partnering with businesses like yourselves makes it easy for everybody. So, yeah. Great. Perfect. There's a shift at the moment for businesses, um, and there's two forces coming together, right?
There's a positive on one side and then there's a negative. The on the negative side, we've got inflation and that is creating chaos, right? And then on the positive side, we've got these massive technological leaps with AI, et cetera. But the, what is happening in the middle of those two things is the need for businesses to become more efficient, right?
Basically, if you are not the most efficient business, you're gonna lose the business. Your customers are expecting you to be more efficient, they want more for less, and you've basically gotta deliver. So off the back of that, um, Our businesses came together because of that efficiency, really, at the end of the day, um, and we'll get into it, Easycompanies is a quick and efficient way of streamlining the actual setup of your business.
Um, Sprintlaw is a quick and efficient way of, um, getting all the legals and everything you've done need done within your business. And Pop is a super efficient way of the accounting and the tax side of the business. And Thriday as a financial management platform just makes it very easy for a business to understand how healthy their business is and manage their cash flow.
So that's kind of how it all came together.
Um, if we start at the top, um, let's start with, um, Easycompanies and talk about, you know, what it takes to start a business,
Alex Whiteside: Alex. Yeah. Thank you. Um, yeah, it's interesting getting, getting underway and starting Easycompanies back in the day. Um, you know, I started, I started the business in 2013.
It was a very different world back then, um, and I didn't see much opportunity to kind of get investment or to, um, you know, make it big back then. I just bootstrapped the whole business mm-hmm. And got it underway myself with, you know, the knowledge I had. Um, but when I went out there to start my own business, back then, I found there was a lot of red tape, um, by the government.
It was gonna be using either clunky systems, you know, filling out ASIC forms. Mm-hmm. Um, or at the time there were a few competitors in the market, but, um, they were very outdated and very clunky. Um, so you could say that Easycompanies, it didn't really create a whole new industry. We just got into an existing industry and just did it better.
Yeah. I just saw opportunity for amazing customer service and amazing products and a better user experience. So we, we just reinvented the wheel essentially. Yeah, scratch your own itch. Yeah. And, and made it better. I just saw that opportunity back then when I was trying to merge a few different companies I had, and I had to start my own company, how, how complicated it was.
Um, and that, and that's where Easycompanies was birthed. Really. Yeah. Um, and then I went, wow, this is what I should be doing instead of all these other companies. I should just build Easycompanies. Makes sense. And, uh, you know, went out and did it and pick and shovel play. Yeah. And now 10, 10 years later we've helped 150,000 businesses, which, you know, it, it's, it sounds like a lot 'cause it is.
Yeah. Um, when you sit there and think, well, that's a lot of people going out, starting their dream, you know, putting, putting it out there, putting their, putting their ideas out there and actually getting underway. Um, that's, that's a lot of businesses that, you know, have taken that leap Yeah. To kind of start their dream.
Justin Bohlmann: That's awesome. And, um, I love that reinventing the wheel. We say that internally at Thriday as well. We wanna reinvent the wheel, not necessarily at spokes, right? Yeah. Let's just make it all work together seamlessly and easily. Um, I also know from starting my own business back in the day, how much of a punish it was to navigate and, and understand what to do, when to do it, and how to do it and where to even look.
Right. Um, I was a parachute rigger coming outta the army. I just had no idea. Yeah. So,
Alex Whiteside: yeah. Yeah. I mean, it is, it is still confusing. I don't, I don't think even the work that we've done in this space, I don't think it, it's still that easy. There's complicated structures. There's, um, you know, complicated. You know, we're looking at what do I do?
I choose a sole trader, don't this partnership on and on and on. Yeah, absolutely. But, but we're all out there to make that easier. I mean, that, that's our core. Um, but I'm sure you could say that, you know, the other businesses in this room are also trying to do that as well, is make life easier for small businesses.
Yep. Um, but yeah, when you're starting a business, you're confronted with, you know, what, what structure do I even choose? Yep. Um, before that it's even what name, you know? Yeah. You, you, you would think, well, choosing a structure is the hard part, but there's just so many businesses out there now that any name you think of, it's probably already taken.
Um, and if it isn't, there could be a trademark internationally or other components. Um, so, you know, choosing a name is really the first step, that one that's avAIlable and the domAIn names out there. Yep. Um, 'cause even if you choose a company name, maybe someone's already taken the.com au or the.com. Yep.
Um, and then if, even if they had, then you've gotta check socials and Facebook and, you know, see that you're gonna fit into all these spaces, right? Mm-hmm. Um, but yeah, once you've got the name, then it's, then it's down to really choosing the structure. Um,
Justin Bohlmann: yeah. Right. And is, is the name something that you guys do?
Like, well, navigating that sort of section,
Alex Whiteside: we, we don't help with choosing a name because I think it's the most, it can be one of the hardest parts, and I think it really comes from inspiration. Yeah. Um, if you can't think of the name on the spot, you've just gotta let it sit and it will come, you know, just, just think of the, the core components, the business you wanna build, and then one day it just comes to you.
That's how Easycompanies came. Yep. I was just like, we wanna make setting up a company easy. And we do companies, we just merged it. Um, you know, before we had a brand that we have now, it, it was a bit tacky. It was like Easycompanies and people thought it was easy acquire and whatnot. Um, but now it, it's, it's formulated into what it's today.
Yep. Um, but it just came to me. I, I think at times you've just gotta wait for that inspiration with the name. Yeah. Cool. Um, and, and we've tried using AI to, to generate names, but it, it's, you know, that's what I was saying to, to Alex before, this is just sometimes it. It's not as creative as you think it is.
AI it's not there yet Fully, yeah. To kind of build that, it just joins worse together or it helps with
Justin Bohlmann: ideas I find. Yeah. It's not a guarantee of, um, output. I'm helping my 14 year old daughter start a business actually. And we used AI the other day to help come up with a name and, uh, what do we come up with?
Uh, mural Maven, um, 'cause she's gonna be selling wall decals designs, right? Yeah. How'd you come up with your name, Alex?
Alex Solo: Well, yeah, similar. Um, I would like to say it was a beautiful moment of inspiration, but, um, my co-founder, Tommo, uh, gave me a list of about 80 different names that captured, I think the essence of what we were trying to do, which very kind of aligned with sort of what you were talking about, thinking about, you know, we've got a traditional industry, um, super outdated, but we wanna do something a little bit different and progressive.
Um, you know, think about efficiency, think about technology and a lot of the concepts for, you know, what are we gonna brand this thing? What are we gonna call this thing More about thinking about being progressive, but also introducing the concepts of technology and combining it with law. Sprint's a concept, obviously it means running fast, but it also means, um, something in sort of agile project management, which is, you know, a, a, a concept that came outta the technology industry about when you are building things, you listen to your customers, you think about, um, iteration, uh, you try things, you fAIl fast and you improve them.
I think, you know, in the industry that we were in, which is law is very hierarchical, very traditional, and very much sort of, it is done this one way sort of thing. And so for us, the name and why it kind of stood out to me in that big list was, was certainly, it captures all that stuff. We're gonna be different, we're gonna be progressive and we're gonna do this law thing a little bit differently.
Yeah. Awesome. Yeah,
Alex Whiteside: that's cool. And also moving quickly, right? Yeah,
Alex Solo: absolutely. Yeah. It, it gives the right message, I think. I think also, you know, with Easycompanies, right? Like you look at the brand and it, you just know what it is and what it does. And same with Sprintlaw, um, you know, we're clearly doing law and we're clearly doing it differently and it's gonna be pretty fast.
So it helps give that message, I think. Mm-hmm. And I think, um, there's many different ways to do a brand, but you know, that's one way to do it. Yeah.
Justin Bohlmann: Awesome. Um, Lee, I don't know if you're, you're pretty new to pop, so I dunno if you know the background of how Pop was actually created as a business name, but if you do let us know.
Lee Bui: So, um, so from what I know, so back in 2015, the s were, so they were still wing at another accounting firm at that time, and it was a, um, Melbourne company, van and Pop was actually the name of the, the horse that won the race. They, and they put money on it, and I think they. I think the rate was
Alex Solo: like one 50.
Yeah. I made a lot of money that day on that same horse. It's like called Prince of, um, uh, pen. Prince of Penance. Yeah. Yeah. Prince Prince. Yeah. Prince of Penan.
Lee Bui: So that is the name. But, um, yeah, we started using it. Um, yeah, it's, it's when, um, c and Pat, you know, Matt and started, you know, became friend and started, you know, building business ideas and that's how it all started.
Mm-hmm. So it's a name that helped them, you know, cement the, you know, memory and, you know, looking to grow just like the horse. Yeah.
Justin Bohlmann: Yeah. Awesome, awesome. Thriday was a bit of a different story. We were originally called Thrive and um, a company came into the market and bought, um, census in Australia, which is a massive company, right.
And they had much deeper pockets than we did, um, from a marketing perspective. So we decided to pivot slightly and, um, change from Thrive to Thriday and Thriday's actually, a port material means, um, thrive every day. Um, but the way I like to think of it is, um, it gives you a day back in the week. Thursday becomes your Thriday.
Ah. 'cause we save you so much time. Um, cool. Um, so let's start from the top. Yeah. Starting your business. These, these are the things you need to think about. Um, the name we talked about, um, entity type. So you've got sole traders, partnerships, companies, trusts. Where do we start? Yeah. Well,
Alex Whiteside: (How to choose your business structure) I think, I think that's the second decision.
So you've, you've chosen the name. I think now you've gotta move into, I. How do I wanna structure? And, and that really fits into, you know, the, the, the three categories there. It's really so traded partnership and company. The trust, you can say is an addition, a technical addition. Um, from, from our perspective, you've gotta look at like, what are you, what are you planning to do with the business?
Um, because you don't, you don't wanna set yourself up in a position where you set up a company, now you have these, um, extra obligations from a financial perspective. You know, you've gotta renew a company. It's around, you know, $300 a year, then you gotta do a separate tax return. Um, so you've gotta look at like, is this just a side hustle that you kind of just getting off the ground, you'll see how it will go, then potentially a soldier rate is gonna fit you best.
Um, is this, you know, you're really gonna put some investment into the company and you're really gonna put some time in. Um, and you're even thinking about investment, then a company might be the right structure. Um, you can't really make a mistake if you, because you can always restructure. Um, the mistakes happen that if you start, let's say a sole trader and the business just completely takes off and you haven't restructured into a company, now you're in a difficult position with tax and capital gains and things like that.
Mm-hmm. So you do kind of wanna get the structure from day one, but if you catch it early, you can restructure without having, you know, major tax implications. Got it. Um, the partnership is a kind of odd one because it, it kind of merges like what a sole trader is, but then you're working together with other partners.
Um, but they're quite complicated. 'cause if you wanna change partners, you have to like, set up a whole new a b N. Um, so I would say generally company, it's, it's, it's either solder or a company. Um, we do get people saying our partnerships, but you kind of wanna fit into one bucket because if you set up a company, um, you know, when you're intending to set up partnership, then you can always just change partners down the track by selling off the shares or, you know, adding in new directors.
Um, so it is a bit more fluid than being locked in. Um, but yeah, sot trader, I would just say if you're earning, you know, it, it, it's more of like a subcontract, uh, subcontracting kind of business or you're just not looking to earn a lot of money. Um, it's just a kind of side hustle. You can always just start with a sole trader plus a business name.
Yep. Um, if you've got the business name locked in, no one can take that company name. Mm-hmm. So as long as you own the business name, when you come to restructuring to a company, you will own that company name. So, you know, as long as you add on the business name and you don't just set up with an AP n then you know, that pathway is kind of set out.
Um, so yeah, the only, the as, as I mentioned previously, the only thing to think about with the company is the ongoing obligations. Um, so you've got the annual review fee every year. Um, you'd be adding on another tax return and then you just got the overall added compliance weight of a company. Um, but if you know what most people would see and come to us, they're ready to kinda start, they're ready to go all in.
Um, and in that case, our platform can just kind of help people through that whole process, set up the company, set up the A, b N, et cetera, et cetera.
Justin Bohlmann: Yeah. And, um, is there a consideration to the, like difference between trading name and business name when it comes to maybe moving from a so trader to a company?
Alex Whiteside: Not particularly. I mean, if you're a so trader and you set up a business name that's, that's your trading name, they, they're kind of interchangeable. Um, trading names is more like the legacy term for these, for these things. Yeah. Um, but if you own the business name as a sole trader and now you wanna set up a company, you can bring that into the company so easily.
So yeah. That will just become your company name. Got it. Um, so that's the kind of migration path usually is like a lot of people start out as sole trader and then move into company. Um, people hitting our platform, we obviously see a lot more companies 'cause it's our brand and it's what we're, we're, we're targeting.
Um, but we do offer sole trader partnerships and it, it is still common. I would just say it's more like hobby driven mm-hmm. Or subcontracts or a tradies or things like that. And more into the A B N. Got it. But the other component of a company is, is you get all the benefit, um, you can talk more about that is around liability.
Yeah. And, and why a company protects you from an asset protect, uh, perspective.
Alex Solo: Absolutely. I mean, yeah, we, we, as, as you are kind of talking about, Get a lot of questions. Should I be a sole trader? Is it time to convert to a company? And then it's a big decision for people who are either starting out as a side hustle or their business in the early stages.
Am I ready to spend the money, get on, um, the sort of trAIn of having the compliance burden of renewal fees and management of a company. Uh, we're lawyers, so we're risk averse. It's kind of part of our job. So, so we're, we're often saying, um, you know, um, there's a, there's really big advantages from a liability perspective to sort of running a company.
You have limited liability, um, with which means, um, with, with, uh, a few exceptions generally, um, the people running the company, the directors or the, or the shareholders who are the owners of the company aren't necessarily liable for issues that occur within the company. Uh, you know, customers of the company can generally sue the company, but they can't come after the shareholders or the, the house, their house, things like
Alex Whiteside: that.
Their own, their car and all this sort of stuff. So, which is a sole trader easily.
Alex Solo: Yeah, yeah, for sure. And I think, um, to your point earlier, um, it's a trade off, right? Uh, uh, of, um, the complexity with setting up a company, uh, simplicity of running as a sole trader. Yeah. One thing I I often say is, you know, the longer that you do this, just the lower of numbers, um, you know, Customer one and two things might not be likely to go wrong.
Once you've serviced 50, a hundred customers or your business has been running for longer and longer, chances are you'll have that, you know, one in a hundred event where there's a liability issue and you're gonna wish you, you were a company. Mm-hmm. So, um, and then another, I suppose consideration is like, what, what industry are you in?
And, and, um, what kind of work do you do, do, uh, again, even if you are early stage, but you're doing something really risky, you might wanna think about the company even earlier. Yeah, yeah.
Alex Whiteside: I mean, if, if the, if the $2,000 ongoing, you know, roughly, I'm estimating that ongoing obligation for, for a company, uh, $2,000 a year, it seems like a lot then, then maybe a salt trade is the, the, the way to go.
But realistically, if it doesn't, then it's probably better just to take the leap and, and start with a company from day one. Yeah. Because then it's there. 'cause if you don't catch it quick enough, the problem is when you structure restructure from a salt trade to a company, you create a capital gains event.
Mm-hmm. Um, which, which can then be quite tricky. You're paying tax on the valuation of the, the business as it stands, which you don't really wanna be doing at that stage of the business. Right. That's right. Yeah.
Lee Bui: So, so I think in terms of restructuring, you know, um, if you set on a good structure initially that will save you a lot of cost in the long run.
Um, there are times where you can restructure without a, a significant amount of tax. Um, but there could be times where it could be a bit late on, you know, the size of the business and what stage you are you're in, and your personal circumstances as well because of different tax concession applicable in different cases.
So I think it's important to speak to your advisors, um, on a regular basis to see where, and get advisor the right time to make the right decision, make informed decision.
Justin Bohlmann: Give, give us an example, like a business, say a self trader starts out and they predict that they're gonna make like 120, 130 grand a year.
Um, just to sort of get by, is that like, should, but then all of a sudden they're making like 200 grand a year and they're thinking, what should I do? Like, is when is the point where if, if someone did start out as a sole trader, they should consider moving to a company or if they've got different goals and um, a different view of where their business is gonna end up reasonably quickly, what consideration should they have as to starting a company or a, at that point?
Lee Bui: Yeah. Okay. That is, that's a very good question. So, uh, for me to, if someone come and ask me, um, about this issue, You making it this business. So I'm good looking at whether you're having a personal services income or a business income. The reason is, um, the way you distribute money and pay tax, these two incomes are different.
So if you're making 200 K a year and it's your personal services income, then essentially all profit would end up in your personal name. So having a company may not necessarily help you in terms of tax. Mm-hmm. But as you guys already mentioned, you know, if you are in a, in an industry where there's a lot of risk, then maybe it's the right time to move onto a different structure where another layer of asset protection against your, you know, personal asset.
So that is something that you might want to look into. For the other one, the business income, right? So business income give you more flexibility in terms of, um, tax and profit distribution. Mm. So, um, if you're looking at $200,000 in profit each year, you are obviously paying, uh, paying a lot more tax in your personal name.
So if that's the case, it is a good idea to move on a different structure such as company or trust or combination of whatever works for you. Um, so that's what I would advise my client.
Alex Whiteside: I, I think that's the challenge. If, if you start out as a sole trader, once you see, if you're seeing income take off, you, you should be really restructuring 'cause mm-hmm.
If, if you're earning 200 K as a sole trader, You're paying tax on that every year. Mm-hmm. It's not that you're gonna avoid tax, but in a company you, you get to kind of move it around more. Mm-hmm. Um, you, you can pay the 30% company tax and let it sit there and reinvest it into the business. Mm-hmm. As a sole trader, you're just paying tax on it.
That's it. Got it. Um, you don't, you don't get that opportunity to move it around or let it sit there as, as equity. That
Justin Bohlmann: makes sense. So either if you predict you're gonna be doing really well from the beginning, start as a company and if you start doing really well change as soon
Alex Whiteside: as possible. Yeah. Or if you, if you see yourself taking investment or anything like that, investors aren't gonna touch the sole trader.
Yeah. They're gonna wanna see a company constitution and all that kind of stuff. Um, so yeah. You, you really have to sit down and think, how serious is this? Yeah. Um, and understand just the ongoing obligations of having a company. Uh, it's around $2,000 a year roughly, you know, that's an estimate of, of the yearly ongoing kind of cycle.
Yeah. Um, of getting a tax return and whatnot. And that, and that's, and that's the kind of make or break is that a lot for me? If it is, or maybe the sole trade is the right structure for now. Yep. Yeah.
Justin Bohlmann: Because it becomes not
Alex Whiteside: a lot if you, yeah. If it's not a lot, then you see the business kind of taking off, then that's it.
But you can, you can restructure. Um, it's, you're not locked in.
Justin Bohlmann: (What do you consider a "Risky" business?) The risk thing was interesting. What, I guess one for you solo, what, what would you see as a, a risk, a riskier business? And then a less risky business.
Alex Solo: I mean, look, the, think about what, what are the kind of circumstances where a customer or supplier or someone might sue you 'cause they've suffered loss.
Um, if you are doing things that involve a risk of personal injury, maybe you're running an event or maybe you are, um, doing, I don't know, um, physical activities. Um, maybe you are, um, taking people to places that, you know, they could fall off a cliff. You know, these things, um, you know, have a risk of personal injury and with personal injury comes liability and so, so, so that's kind of one, one area.
Um, are you providing risky kinds of services or advice? Um, are you providing financial advice or health advice or those sorts of things? Something that market gets lost to somebody else that, that, that might cause loss to somebody else? Exactly. Um, uh, you know, are you dealing with expensive equipment or, um, you know, things that you might damage of your customer's materials.
I don't know, you, are you cleaning expensive sports cars for people that you might, um, you know, knock off one of their windshields? We've, we've seen scenarios like that. So, um, I think, um, you're just thinking about if something went wrong in what I do, uh, and, um, you know, someone could be very upset about it and suffer loss.
Um, I wanna make sure that, you know, if, if the worst of the worst happens as much as precautions of protections I put in place, I've still got this layer of, of protection of the company. I think that's kind of what you might think about. Yeah. Got it.
Alex Whiteside: So you, you can see it's still weighing up the kind of ongoing obligation versus is, is it worth it?
That's, that's what you have to kind of consider really. Yeah. Is it worth it, you know? Yeah.
Alex Solo: Um, yeah, yeah, for sure. There's, there's this like, um, the risk matrix people have probably heard of where you think about a a, a way of thinking about risks is sort of, um, what's the likelihood and impact of a particular risk?
And, and, and it's a, you know, in any business there's tons of risks and you know, if you are, if you want to exist, you can't spend your life doing a risk management and preventing, you know, um, every single kind of risk from, um, from, from occurring. Uh, 'cause then you'll never run a business and you're probably run outta money, uh, kind of trying to protect yourself.
So you, you're weighing up, you know, how likely is this to happen? If it did happen, how severe would it be? Yeah. And the company is certainly a tool depending on your situation, which may make more or less sense at a particular time. Got
Alex Whiteside: it. The, the only other thing I'd add on to that is, is the trust component, which, which really sits as, as a shareholder of the company.
Um, so you're basically setting up a family trust that then owns shares in the company? It is, it is a bit more an advanced structure. Um, we just added on. 'cause it, it is quite a common question these days from clients. They've obviously got advice from a tax agent, um, or tax advisor saying, you know, you set up a trust.
The trust just gives you an, an extra layer of flexibility down the track. Um, it basically means that the trust owns shares in the company. Um, and then you can kind of control the income coming outta the company a bit more and where to distribute that income. Mm-hmm. Um, but it also protects you again as another layer between the company and yourself.
Um, and allows you to kind of move income around and assets as well, right? Quite
Alex Solo: easily. Yeah, for sure. So, I mean, there's certainly, um, tax components, um, around the trust, trust set up, um, from a legal perspective, um, as you say, one of the, one of the advantages is particularly for businesses that have multiple shareholders, for example.
So you know, when you have a company, you can think of it as kind of a shield against issues with customers. Um, but there are owners of the company, the shareholders, and between each other there's, there's, if you're all holding your shares individually, not necessarily that same layer of protection. So particularly in startup companies that might take funding or, um, businesses where there are multiple shareholders, there could be risks between each other.
And often having a trust structure, a certAIn type of trust structure where you've got a company involved, um, you can add that extra layer of protection from not only customers sort of suing you, but potentially other shareholders suing you as well. So, um, that's certainly one reason. Um, but I think there's also sort of the,
Alex Whiteside: the flexibility down the track, right?
Say you sell the business, you can leave that sitting in the trust or in, in a bucket company or something, uh, you get, you get more flexibility, right? That's right. If you are owning the shares yourself and you sell the business, you pay capital gains from, from day one.
Lee Bui: Yeah. A, a good, um, business structure would allow you to access, you know, um, concession from, you know, from the tax, um, perspective.
For example, you know, the small business CGT concession, you know, if you have a good structure, you potentially can minimize tax altogether. Mm-hmm. So the key is, as you guys say, you know, it's very important to have company your trust set in a way that assists you should that happen in the future.
Alex Whiteside: But I mean, trust trusts are complicated structures.
I wouldn't, I wouldn't advise people to be setting it up on their own. You'd definitely wanna see a lawyer and accountant to get that initial advice and Yeah. Even, even though we offer trust, it's really designed for people who have got the advice and know what they need to kind of structure. Yeah. Um, they're not you kind of d y products 'cause you don't wanna find out five years down the track that the trust isn't even valid.
Yeah. You know, that's not, these aren't good experiences. Yeah. So, you know, you wanna have the right advice.
Justin Bohlmann: Even little things like, you know, naming trusts and, you know, having companies, um, who's the trustee? Who's the trustee reporting Exactly.
Alex Whiteside: Company. And is it a corporate trustee? Which is, which is an extra layer, which is good.
Yeah. Um, but you can see that kind of adds up now, now you've got a tax return for the company, tax return for the company, the trust. Mm-hmm. You've got another annual fee for the corporate trustee. Yeah. Um, but these are the Right, if they're done right, they're really good structures. You just have a lot more ongoings ongoing.
Yep. And a lot more letters from ASIC and the ATO
Alex Solo: accountant.
Alex Whiteside: We all, we all want them and more work for accountants, lawyers. Yeah. Yeah. But, but that is the, the kind of pinnacle structure if it's there. Yeah. Yeah, yeah. Agreed. Um, um, you got the big decision, GST GST
Justin Bohlmann: (Should you register for GST?) should you register for GST or not? Um, depends on a lot on what we just spoke about in terms of the structure.
Um, and it also depends on where you are in terms of where you're starting your business. Once you start earning more than 75 K, you have to register for GST. Mm-hmm. Um,
Alex Whiteside: you know, remember you, you've probably got, you, you've got that aspect from the law, like it dictates if you own over 75 K you have to register.
So that's the first thing. Correct, yeah. Or if you are, um, taxi driver or Uber or things like that, that there are a few other categories. I haven't covered them all, but
Justin Bohlmann: Yeah. Yeah, exactly. Yeah. Some of them are forced to,
Alex Whiteside: uh, register G but then apart from that, it really becomes a decision that you make on your, you know, on your own, whether you're gonna register it or not, and weighing up the pros and cons of that.
Right. Yeah. So
Justin Bohlmann: I guess the question is, um, is it easier to start out like just register for GST right from the get go? Um, assuming that you're gonna earn 75 K, um, or wait until you hit that point? Hmm.
Alex Whiteside: easier? Well, the thing, the thing is, if you register from day one, um, and you're only earning a lot of income, there's a lot of expenses, then you're paying more GST than you would have if you weren't registered for it.
Right. Because you're adding, you, you're paying, you're basically paying GST. Um, but if you're earning a lot more on expenses from day one and the GST, you know, applicable expenses, then you can claim that back. Um, so it can work out more beneficial. You, you'd agree, right? Yeah, I agree with you.
Lee Bui: In terms of, um, um, commerciality, right? So if you are not registered for GST, your customer would perceive you as a small and may not, you know, treat you with the same
Justin Bohlmann: respect and you're not allowed to charge GST. That's right. If you're not registered to GST that's right. That's
Alex Whiteside: definitely looks weird.
Not having GST on an invoice, you'd kind of question that. You'd be like, what's going on? Yeah.
Lee Bui: Yeah. That's why you want deal with larger, you know, clients or Yeah. You know, a a a different, you know, entity. They might be looking at it, say, oh, are these guys you know, legit? Are they reliable? Why are they not register for GST?
You know, they'd be thinking about the size of the business and you know, what could happen in the future.
Alex Whiteside: Mm-hmm. Well, you instantly know if someone's not registered for GST, they're only under 75 k. Yeah, that's right. It's a dead giveaway. 'cause by law you have to be, or they're either breaking the law, it's all the other That's right.
Yeah. You don't, so it's, it's a giveaway. You're right. Mm-hmm. It's a kind of signal that we're serious about business. Yes. And it's not a
Justin Bohlmann: threshold either, is it? Like if you, if you, as soon as you hit that 75 K mark, you've gotta pay the GST on the 75 K that you've made, right? Is that, that's right. So not once you earn, once you hit the 75 K mark, then you register for GST.
You only pay GST on anything you earn over the 75 K. How does that work? Is it a threshold or is it So, no,
Lee Bui: I, so as long as you are hitting that threshold, you have to register GST from that point onward, start paying GST and you be able to claim GST credit from that point onward.
Justin Bohlmann: Makes
Alex Whiteside: sense. Yeah. It, it, it is a, it is a difficult decision.
I mean, we, we see it with all our businesses coming through. Should I, should I shouldn't I, um, our approach is usually just like, do you see yourself owning 75 K mm-hmm. Um, then that can, that's the legal decision. Um, but I do agree with the other points just around like, you know, the, the perspective of the business, how it's seen, how other suppliers see you.
Mm-hmm. Some companies, you know, banks would be looking at weird potentially if they're giving you a loan and you're not, you know, hitting that mark. Mm-hmm. Um, these are all the kind of giveaway signals. Um, the second thing is, if, if you're earning, as we mentioned, if you're, you've got a lot of expenses, big expenses, which most businesses are kind of expense heavy in the beginning.
Mm. If you, if you're investing in it, um, then all that, you're not gonna be able to claim back.
Lee Bui: So, know, one, one thing I'd like to add. So during Covid, a lot of the government grants were to businesses register GS d. So, you know, that is something to think about too. Yeah. You know, I'm not saying that, you know, anything like that would happen in the future, but from a government's, um, perspective, they would like to support an established business, you know, so having a GST register would potentially give you a better chance of accessing government grants and support in the future.
Justin Bohlmann: Mm-hmm. It'd be interesting to see a calculator actually, like the, you know, if you're gonna register for GST right from the get go, you're probably not gonna save much money by not registering for GST right from the get go. Mm-hmm. Like at the end of the day.
Alex Whiteside: I mean that, that's where it really comes down to the business plan.
Like mapping out your projections or what you see, you know, the financial of the business being and then going register GST, not register GST. Yep. You probably need an accountant to kind of help you through that
Lee Bui: or maybe look at the cost of that. So let's say the first 75 K, what is the most, you know, you would've to pay on that account through seven K roughly.
So it's like your GST cost, but obviously you would've other expenses that you can claim GST as well, so that would be a bit lower. Mm. So, you know, I'm more of a number person. I'll look at, it's like it is, you know, seven K worth it, you know, or should I delay it or, you know, what's, you know, the net justly payment that we have to pay.
Mm-hmm. You know, should I do it now, save for the, you know, hustle of looking at it again in the future, or, you know, if there's no chance I would be making significant amount of money in the future, or there's too much hassle, then may be delay it. Yeah. So
Alex Whiteside: I, I think if, if you really don't see yourself earning over 75 K ever, then it, it probably is a decision that you might own Well and, and you're gonna be having profitable sales.
Yes. Then it might not be the right decision. Mm-hmm. But if you see the business scaling and you see it taking off much the same as the company structure should, I should know, um, it may be easier just do on day one. As you move along the business, setting things up, you can make sure it's all established and correctly set up like you've setting up Shopify or something.
It's, it's all set up and ready to go. Mm-hmm. That's right. Not getting a letter from the a t o then going, oh no, what do we have to update now? We have to update our prices, our suppliers, all these kind of things.
Alex Solo: No, absolutely. I mean, one, one thing, and I'm not an expert on this topic, but I I I've seen with some of our clients is, um, another consideration when they're setting up sort of B two C businesses, um, and they're in their first year, uh, essentially having GST makes it 10% more expensive for them to make a sale.
Exactly. And I think, um, you know, uh, it's the chicken and the egg. If you're dealing with, you know, corporate customers or customers that might judge you for not having GST, then that's a relevant factor. If your customers might not care and you're in year one, yeah. There can be an argument for going, okay, well I can, I can be a bit cheaper for a bit until such, such time as my business is established and then, and then sort of register.
So I, I see that decision being made. That's true. Yeah. Yeah. Which is an interesting one. Yeah. In, in
Alex Whiteside: saying that in the B two B space, you don't usually quote A GST price. No. You'll say xg t Yeah, everything will always be assumed xGST in b2b. Mm-hmm. Um, like if you issue us an invoice it, we assume, okay, that's plus G sst plus G
Alex Solo: sst.
Alex Whiteside: Yeah. Um, so in that case, you would just get an invoice and then it wouldn't add on, which is kind of cool because you'd be like, oh, cool, it's cheaper. Yes. But plus GST you're gonna get back anyway. Exactly. As a business if you are earning a lot of income. Yeah. Yeah. It, it just business to business, you don't really see the effects of GS t that's why they don't quote it.
'cause it brings down their price by 10%. Right.
Justin Bohlmann: But if you've gotta side hustle, you're gonna sell on eBay or Etsy. It's different. Make an extra 50 grand for the year, maybe leave
Alex Whiteside: it out. Yeah, absolutely. That's true. Cool. It, it, it is, it is one of those questions for sure. Yeah.
Justin Bohlmann: Yeah. It de definitely is.
Yeah, it makes a lot of sense. Um, okay. We've, uh, set up our structure. We've decided whether we're registering for GST or not, and what are our legal considerations.
Alex Solo: There's many of them. Um, and, uh, sort of as I sAId earlier, um, I think, um, you know, uh, speak to, to, um, a, a lawyer, depending on their personality, they'll tell you that there's a million things you have to do when you've just set up a business.
Um, I think the right way to, right way to approach it is to think about, um, what is your business? What are the sort of key risks? Um, and, uh, what am I gonna invest my startup cash in sort of protecting against? And what might I put on the roadmap, uh, for a little bit later? That's sort of how we think about it.
At Sprint long, we know that people don't have unlimited budgets to spend on, on legal things. Um, one thing I'll say is sort of, um, particularly for businesses where brand is important, pretty much the first thing that we recommend people do is, is get their trademark secured. Um, I think Alex touched on this earlier, but, uh, you know, you've come up with your name.
Um, you, you've, um, for your business name, uh, if you're a company sort of, um, secured your registration that's different to a trademark that doesn't give you the exclusive right to use that, um, name or if there's a logo. That logo or, or if there's a key phrase, that key phrase, um, that's a separate thing.
You need to secure, uh, through a process known as sort of registering a trademark. Um, and in addition to registering a trademark for your, uh, sort of, um, na the name of your organization, you can register it for your products. Um, if there's key brand names that you sell products under, you can get additional trademarks for them as well.
Um, so what the trademark gives you is exclusive right to use a name, logo, phrase or combination of them, um, in a country and in a class, which is sort of like an industry. Uh, so for example, Sprintlaw, have a trademark for the word Sprintlaw. Um, this cool little Ss shape we have as our logo. We have another trademark for that.
Uh, we're registered in, um, the, the legal services class. And what that means is no one else in Australia in legal, uh, Can use the name Sprintlaw to represent their products or services or anything sort of deceptively similar to it. So Sprint, legal, sprint, lawyer, uh, those things as well. Hmm. Um, now someone could start a cafe called Sprint Slaw that sells coleslaw or something.
Uh, that's, um, not a great name for a, a, a, a cafe, but, um, potentially not infringing because, you know, it's got nothing to do with law. Yeah. Um, so it is very much, um, about the kind of class or industry that you register in. Mm-hmm. And the country's, and another component for people with international ambitions costs more money, but early on you can think about registering overseas.
So we've registered Sprintlaw in the early days. We knew we were gonna go to New Zealand, the uk, so we registered there. As we've grown, we've also secured a bunch of other countries, US and Canada. Yeah. So I think, um, that's another kind of component to think about. But definitely my view on the trademarks, uh, you're gonna spend time, money, effort, investing in growing your brand.
You wanna make sure you own it. We've, we've seen, it's probably one of the most common mistakes we see is someone's got a name, built a website, built a brand, six months in, find out someone has a trademark for, for it already, or something similar to it. Yeah. They gotta rebrand. Sometimes they can't afford it and the business just ends.
Other times there's significant costs involved in sort of fighting it. So it's, it's definitely like number one on the to-do list, I would say for a lot of people. Yeah. Yeah.
Justin Bohlmann: Yeah. That makes a lot of sense. I know we went through the Rett trademarking of our brand once we changed from Thrive to Thriday.
Alex Whiteside: that, that just goes to show, right? Having the trademark, it kind of sets you in the right tone if you,
Justin Bohlmann: if you haven't, there was a couple of reasons, I guess, like we had the trademark to, to our Thrive brand, but we made a decision for different reasons to move, um, just because the marketing message was kind of similar and it was gonna be really expensive to build our brand.
We were at the early stages as well, um, where we hadn't really built the brand and in fact thrive. Um, try and get, you know, any U R L with Thrive in it, um, or anything like that's actually was actually pretty difficult. So it was an interesting, interesting move, but yeah, you wanna get it right the first time.
Agree for sure. Um, because it's a lot of work and a lot of effort, uh, if you don't, um, customer agreements.
Alex Solo: Yeah, so I think some of the other things to think about, um, you know, most businesses have customers, not all, but most have customers. Um, and with customers comes liability, uh, and, um, often your key revenue streams.
So you know where possible if you can secure agreements with your customers, whether they're, if you're a e-commerce business, that that's your terms and conditions. People accept when they make an order. If you are a services business, it might be a, a service agreement or a consulting agreement. Um, if you supply wholesale goods, maybe you put a sale of goods agreement, uh, whatever it is.
We kind of look at them as a category called customer agreements. These agreements. Pretty important. They do a few things. One is liability protection, uh, if things go wrong with your orders. In addition, you know, if you've got the company structure, you have that kind of backstop shield, but you know, um, you still may want further liability protections with each of your customers because just 'cause you're not personally liable doesn't mean you want your company to be liable either.
So, um, you know, oftentimes we, we spend time in these agreements drafting limitation of liability clauses, which basically say if something goes wrong in the course of me providing good services or whatever, uh, you know, our liability will be limited to a refund or some amount of money, which means you can't sue me for a trillion dollars if you just pAId me, you know, a thousand bucks to clean your sports car, for example.
Mm-hmm. Um, so, so it, it makes sure that the liability is commensurate to the amount being pAId. There's laws around what you can and can't limit liability for in your customer agreements. And, and that's why it's important to kinda get lawyers involved to make sure that they actually work. But that's a really sort of key component of these customer agreements.
The other is securing your revenue stream. So you know, if your revenue comes from these agreements, you know, if, if it's a, you're a service provider and you're providing services, you're gonna get pAId at the end. Um, there, there's a scope of work that's, that has been kind of agreed to, and then you're gonna get pAId for that.
What are the specifics of that scope of work? When are you gonna get pAId? What happens if they don't pay you on time? What rights do you have if there's issues around payment? Mm-hmm. All these things can go in, in a customer agreement. They could be standardized if you want. So you can have a standard agreement, they can be customized, but having it all in writing, uh, uh, first of all gives you the legal right to, to sort of get those payments.
And second of all, actually just practically reduces issues and disputes in your business. Mm-hmm. So often we see issues between businesses and customers where there was just not a clear agreement as to how things worked. And maybe neither sides being particularly unreasonable, but they both had different assumptions and no agreement in place and things fall apart and, and something that could have been avoided, um, you know, becomes a big issue.
So, super important. So I think, you know, you've got your trademark done. Definitely getting those customer agreements sorted is, is up the top of the list. I should mention some businesses, like if you're running a cafe, um, you're not making people sign a wAIver before they drink a coffee. Um, so it, it may not be practical to have customer agreements all the time.
Mm-hmm. And that may just be the risk of your industry and risk of doing business, and there's other ways to prevent against it. Um, I have though been to a couple of Mexican restaurants where they made me sign a wAIver before I. I had their hottest chili, so, so it is done sometimes. Yeah.
Justin Bohlmann: So how many different kinds of customer agreements could there be?
Like one for pretty much every industry?
Alex Solo: Yeah. I mean, look as a category, the agreements are, let's say 50 to 60% the same. 'cause they all talk about liability protection. They often talk about payment and how they work. They, they talk about the same kinds of things. Um, we have, um, the way that we look at them though, you know, we have, I think.
300 different types of customer agreement that we, we kind of, um, have standardized at Sprintlaw. So, you know, and there's things like gym terms and conditions, marketing service agreement, wholesale, good service agreement, um, e-commerce, TSS and Cs, marketplace terms and conditions, uh, cleaner service agreement.
Um, these agreements are, like I sAId, 60% the same. But there are differences. There are things, if you are, um, if you are operating a gym, um, there's certAIn risks around personal injury use of the, the, the equipment versus if you're a cleaner at something else versus if you're a, a sort of, um, e-comm business.
So, um, those kind of risk protection clauses look a bit different. The payment clauses look a bit different, but, but lots and some, some
Alex Whiteside: could be a lot more tAIlored. Like if you had a financial services company come along, it's not gonna be an off the shelf thing as much as looking at what you're doing.
Alex Solo: Mm-hmm. For sure. Absolutely. And the, and the other, the other thing with, and that, that's a really good point. I think like these agreements are your sales doc as well, right? So like, um, they're legal. But one of the issues we saw with traditional lawyers in these agreements is that they produce like 90 page terms and conditions that you're asking your customers to sign every time for small businesses.
That can be confronting. People just want a simple one or two pager. So,
Alex Whiteside: well Apple do the same thing. Like you've never scrolled through the terms and conditions on No, for sure. App store. Right. And each time it's updated, it's like, check it again. You're
Alex Solo: like, I wonder. There's
Alex Whiteside: no, there's no way preread.
I'm sure someone has read through it all.
Alex Solo: Yes, for sure. Well, I, I have, but that's something because I'm a lawyer, I can't do that in your spare time. I can tell you it's, it's not fun reading, but, um, but definitely, yeah, like, you're right. Um, and I think standardization and, and, and simplification and is this an e-signature?
Is it a tick box? Is it a wedding signature? How does this work? How tAIlored is it? These are all decisions you wanna make in your customer agreement. Yeah. Hmm,
Justin Bohlmann: interesting. Um, anything from an accounting perspective that people should consider in customer agreements and milestone payments and that kind of thing?
Lee Bui: Yeah, that's right. So, um, I, so the way we see it is when you have a, an agreement, it could help you with cash flow as well. Mm-hmm. So we're talking about cash flow perspective, where in some industry you might want to have a payment agreement where you get progressive pay, um, or, you know, um, how would you manage, you know, the, um, service and, and process throughout, you know, the length of the, um, engagement.
So yeah, I think it's, it's important to have that. Um, agreement in place. So everything's clear. The customer knows what to expect and you know what to deliver.
Justin Bohlmann: Yep. Makes sense. Uh, and then the customer has skinning the game the whole way through the process as well.
Alex Whiteside: That's right. And then obviously if you're setting up a website, you need, uh, privacy terms and conditions, right?
Well, I mean, just in general. Yeah. It doesn't matter whether you're hosting a website or not, you'd obviously have a host of them. Most people do
Alex Solo: a Absolutely. I mean, so privacy is an interesting one. Obviously everyone, um, is thinking about it these days. Cybersecurity is becoming a big thing. People are getting more and more conscious about what's happening with their personal information and laws are changing around it as well.
There's been a lot of changes even the last 12 months in Australia around how privacy law works. People will be aware of probably of the G D P R, those popups you see all around the internet. So this is
Justin Bohlmann: interesting, right, because how many people are gonna update their terms and conditions and privacy policies on their website every 12 months?
Right? So there's, this is a danger in going and just copying, pasting.
Alex Whiteside: Somebody in UK is very different, but Yeah. Yeah. Here in Australia it, it's probably not that often, right? Yeah.
Alex Solo: And people are not thinking about it in the UK 'cause we have a sort of Sprintlaw UK business. It's one of the most common inquiries we get is people being aware of privacy and knowing they need to comply.
In Australia, we are the ones telling the clients, did you know. There's this thing called privacy that customers care about, and there's compliance obligations.
Alex Whiteside: And I think, I think it is shifting here in Australia though. Yeah, it is. It's starting to shift and it's probably brought on by the big privacy breaches and big companies lately.
Yeah. Many opus and stuff, for instance. And now that, now that we're getting targeted more and more by, by hackers, it, it's, it's becoming more of a thing.
Alex Solo: Yeah, for sure. I mean, there's talk of, um, sort of directors potentially being liable directors of companies. So we talked earlier about Wow, um, you know, the company gives you that limited liability protection.
Directors and shareholders are generally not liable. There are exceptions to that. Mm-hmm. Um, there's a bunch of existing exceptions for cases like fraud. One that's being talked about is for breaches of, um, people's personal information. Mm-hmm. Uh, if directors don't take steps to prevent Yeah. Um, you know, uh, people's information
Alex Whiteside: and that, and that's not on the breach itself, but you would be asked, what steps did you take to protect that?
How many? And if you can say, well, I've done really nothing that's, that's. That doesn't look good. Yeah,
That's the key concept in privacy law. Do you have someone's personal information and that is defined as something that could be used to identify them. So obviously their name, their emAIl, their phone number, their address, um, or some combination of other information that you could look at it and work out who they are.
That stuff, if you are collecting it, this is the, the domAIn of privacy law. And, uh, in general terms, you wanna be making sure that you've got consent to collect it, people know what you're gonna do with it. Mm-hmm. And they, they know how to contact you if they want information about it. I'd
Alex Whiteside: also add data retention these days, right?
Mm-hmm. Like a data retention policy, like what am I collecting? How long for Absolutely. Yeah. Even, even though it's not, we don't have G D P imposed here in Australia, you could still start mimicking that 'cause it's probably coming anytime soon. Mm-hmm. That kind of framework. Right.
Alex Solo: Well, for sure. And it, it may be, um, that Australia, um, copies the G D P R or does something a little different.
There's been sort of different opinions on what's gonna happen in terms of how we regulate privacy. But, you know, even in December last year, there was a bunch of updates post to Optus and Medibank breach to the Privacy Act that made us look a little bit more like the gdpr. Mm-hmm. Put more obligations around how people are managing data.
What documentation do we have? And also what processes and procedures do we have? It's all very well to have a document that says you do all these great things, but if you're leaking people's personal information left, right and center, there's liability and risk there as well. Mm-hmm. Uh, so I think, um, yeah, we do a lot of work.
Just, uh, the basic point is on your website, tell people what, that you're collecting it and what you're doing with it. In many cases, that's actually required by law. And if you don't do that, there may be a breach of law. In other cases, it's just something that's expected for good customer experience. Um, and then beyond that, once you have it, what are you doing with it?
And, you know,
Justin Bohlmann: it doesn't matter how you're collecting it either, it's still your responsibility. Like you might be using Typeform for example. It's not on Typeform necessarily, um, to, to their terms and conditions about how they're storing and handling the data, although of course they need to do that.
They're a third party party, they're a third party that you are using. So you are effectively got access to that data and you need to tell people how you're gonna store it and how you're gonna use it. You
Alex Whiteside: need to have the responsibility too to, to work with Typeform to, you know, delete it or, you know, ensure that your passwords are set up right.
So, yeah. Well it's, it's a mix,
Alex Solo: right? Typeform is in fact a great example because a few years ago they had a data breach and we had customers that were using Typeform and uh, you know, they thought it was all good 'cause they were using Typeform, but Typeform, which for those that dunno, is a kind of form creation, uh, sort of, um, software, which you can use as for web forms.
They had an obligation in many cases to emAIl all of their customers and say, Hey, we use this thing called Typeform. And there was a, a data breach doesn't look good if that happens. Um, so, uh, you know, you wanna be thinking about that, who you're using. Um, one thing we talk about a lot is a personal information register.
Where is all my personal information of my customers? I mean, everyone's got it online these days. It's on my website. Is it on seven different software as a service tools? Is it in my emAIl inbox? Where is it? And am I kind of minimizing all the unnecessary places it needs to be or clearing it out regularly to reduce my risk?
So that's one way to,
Alex Whiteside: I'm, I'm interested as a small business like this is, they've just started out, they've just, you know, set up their business, they've chosen the structure. This seems, it can seem like a lot right to a small business. What, what's imposed by the government for a small business not earning a lot of income to be able to meet these.
You know, obligations that aren't really even out there yet that are coming. How, how do you,
Alex Solo: how do
Alex Whiteside: you think about that? Show up to that with, with limited investment with li Limited funding? Yeah, yeah.
Alex Solo: No, that's an excellent question. Um, look, Australia right now, in fact has a small business exception to the Privacy Act.
So if you are earning, I think it's under three mil in revenue, um, and with a couple of other conditions, you, you don't need to comply with the privacy Act. So you should, but you should, should. So for branding reasons, PR you should for brand reasons, and you should, if you aspire to make more than three mil, yes, it'll be very complicated, like with transition to company structure to go back and make sure you've got consents for all the previous information.
So the burden is currently, um, a lot less for sort of smaller, smaller businesses. The exceptions of course are if you are collecting financial information, health information or other sorts of things, doesn't matter if you're a very, very small organization, you need to comply. Um, I think though, uh, G D P R in the UK and C C P A in the us, which are, are the new privacy regimes around the world, have abolished that small business exception.
So I thought it was a
Alex Whiteside: percentage of the tax taxable income on the fines that, that a business would pay Right in for
Alex Solo: gdp. D r in gdp, D P R. Yeah. I mean, the fines are definitely less for, for smaller organizations, but there's still this compliance and that, and that doesn't mean
Alex Whiteside: to avoid it. It means, yeah, but you think about that, you, you should be taking it seriously
Justin Bohlmann: regardless.
And all of a sudden I'm owning two or 300 grand a year, and that information leaks because of a, you know, a breach in whatever service I'm using. And one customer has a loss of three or 400 grand because of that. All of a sudden house, you're very exposed. Like you're
Alex Whiteside: very, very exposed. So you can see, yeah, you're in the red, the, the, it's not to say these, these are essential things.
I'm just, uh, it's just good to understand from this small business, you know, mindset. Um, as a, as a new business, I'm thinking, wow, this is a lot. I have to think about this and this and this. Yeah. Um, it's just how you kind of trickle it down into like what's the M V P
Alex Whiteside: think about this and in, and in 2023, it is good to think with that mindset of what's coming down the line mm-hmm.
Of what data am I collecting? How am I storing it? Where's it been stored for how long, et cetera, right? Yeah, absolutely. A hundred percent. Yeah.
Alex Solo: yeah, it, it, it depends, like generally I think looking at your legal documents, ideally once a year is a good idea. Um, just 'cause laws, laws change, um, privacy laws right now are more likely to change each year over the next few years 'cause there's a lot of activity.
Mm-hmm. So I would advise people to look at that annually. Uh, but customer agreement laws also changing. Um, you know, in the last between, I don't know, 2018 and 2021, there weren't a ton of changes. But 2022, um, uh, and 2023 and 2024 mm-hmm. Each year there's been substantial changes to the laws around customer agreements.
So again, if you weren't looking at it more than once a year, and for, for people that haven't updated it in a few years, they should. Now there's new unfAIr contract terms laws, which mean that you've gotta actually change your liability clauses. So I think as a rule of thumb, a year to review once a year to review your legal docs is not a bad idea.
And, and I guess
Alex Whiteside: what you're collecting as well changes Yes. Over the lifecycle of a business. Yeah, for sure. You, you might have not been collecting much personal information now you certainly are and haven't even thought about that. Yeah, a hundred percent. Yeah. For whatever reason. Yeah. We're an
Justin Bohlmann: example of that.
Like, you know, we'll, you know, we might have, you might be sending an invoice to a customer, um, and then you've got that customer emAIl address, but then once we launch payroll, you'll have all of your Yeah. You know, HR data. Yeah. HR data in there. So, yeah. Yeah. It's definitely worth considering. Shareholder.
Alex Solo: Yeah. So maybe the, the kind of, um, other, other area. Um, and this is relevant to people with more than one. Um, sort of person running the business. Um, and we, when, when we talk about shareholders, we're talking about you've got a company and there's sort of multiple owners of that company.
Mm-hmm. Um, it's like a co-founder situation or absolutely like a co-founder investor or an investor situation. Um, of course in the partnership structure Alex talked about earlier, um, there are also maybe multiple people involved and we'd have a similar agreement in that context called a partnership agreement.
Yep. Um, uh, but the shareholder agreement is, uh, the more common one that we see, um, when people are formalizing a, a more serious business. Um, very important document. Uh, again, in addition to the trademarks, probably the second biggest issue that we see are fallouts between co-founders or business partners or, or, or founders and investors.
This document, the shareholders' agreement, is an agreement between the owners of, of, of the organization setting out what are the rights, what are the responsibilities, what happens if someone wants to leave? What if one person wants to rAIse investment, the other doesn't. Uh, what if one person passes away?
How do all those mechanics that can happen when you're kind of in a business marriage together? Mm-hmm. How do they play out? And, and, um, if there's nothing in place, um, you know, while things are good, it's all good, but if people's situations change, which again, over time, it's more likely that things will just happen and, and, and, um, you know, people might not be on the same page about what should happen and it makes life a hell of a lot easier if you've got a contract that explAIns what happens.
Yeah, that's right. Um, so, so, um, you know, shareholders agreements, lawyers have thought through the most common scenarios. Um, we might not cover every scenario, but we've, we've, we've, um, thought through most of the, the, the, the, the scenarios. And in the document, often we're just asking, Um, the, the business owners, what do you guys wanna happen in this kind of situation?
What do you want happen in this situation? And then documenting that and setting up this contract. So very important agreement, I think. Yeah,
Alex Whiteside: it's, it's interesting how a lot of businesses don't think about this from day one because I mean, when you are first starting out a business, it's all very exciting.
You, you know, you, you're together with your co-founder, everything's going well. Mm-hmm. You haven't thought two years down the track. Most people wouldn't. They'll just be like, oh, it'll be fine. And then two years down the track there's a huge fallout. Yes. That's right. And there's nothing in writing, and that's, it can be a bit awkward to think about these things from day one, right?
Yeah. To suddenly have all the, the hype of the business. Yes. Suddenly you are, what if this happens? What if that happens? It's, yeah.
Alex Solo: But it,
Alex Whiteside: it's important. It saves you down the track, I guess. A hundred percent. And you know that it's there in writing. It's always in the back of your mind. Well, yes. You know, if things are starting to get a bit shaky, you know, well this is the agreement we have in this, in this circumstance.
Right? Yeah. Yeah. I mean, everything's good until less open.
Alex Solo: It's like, yeah. Well that's the hard part. Yeah. It's like an awkward conversation, but ultimately can improve the relationship so much because, you know, on those days when you are a bit frustrated with the other person and, and et cetera, et cetera, you kind of know how it all works.
And you are, you are going into it with this mindset of there is this kind of document that's the kind of, um, constitution of our, our relationship and. It just helps frame things,
Alex Whiteside: I guess in some, some ways a prenup, but not the same. Right? Yeah. It's not exactly the same. Yeah. But it's the same kind of conversation at the start.
What if it doesn't work out? Yeah. I'd
Justin Bohlmann: go as far as to say, if you can't have that conversation with a, like a co-founder, then you shouldn't be doing it together. Yeah.
Alex Whiteside: Like its, and there's gonna be a lot more conversations if you're getting into shareholder agreements and you know, down the track of um, you know, employee share pools and things like that.
Mm-hmm. Yeah. Taking on investors, they're gonna be a lot harder conversations with them. Right? Absolutely. Absolutely. Than, than that for sure. And you guys did that at Thriday day or? Yep, of course.
Justin Bohlmann: Like we've got, um, you know, multiple shareholders. We did a crowdfunding campAIgn, we've got thousands of shareholders.
Right. Wow. Like it's, um, we had a wild structure, um, right from the get go. Interesting. Um, and you know, hard conversations happen in business every day. Like if you can't have a hard conversation, I wouldn't say personally, I've sort of been in bad positions like this and, um, these conversations will save you a lot of money, a lot of time, a lot of effort and a lot of heartache later on.
Lee Bui: That's right. So I would say cash flow is probably also one of the top tier important things for business, right? 'cause you need cash flow to keep the business running. So how do you manage your wealth? So a couple of key principles that you gotta understand when you run the business is that you wanna, you have to understand you working capital, how much money do you need to have in your buying if there's no, you know, income coming in for the next month or, or two, for example.
And also, you've gotta be able to forecast how much, um, income coming in, how much expenses you are, you are paying for the, you know, upcoming period. And, um, also being able to meet legal application or a t l, you know, obligations such as tax or super, yeah. Things like that. So I would probably just bring these key points up as, um, something that a new, um, startup would've to think about.
Is that, anything else you guys
Alex Solo: want to add? I mean, I just say as, as a, as a founder, um, cash flow is, um, is super important and mm-hmm um, the thing that keeps me up at night and something I think about a lot, and I think, um, I think, uh, particularly for people starting business for the first time, um, you know, um, being aware of how much.
In the bank, um, and when the flows of payments are coming and, and going in and out. And particularly if you're not familiar with things like GST and BASS and, and how they affect what money you have in your business bank account. Um, you know, certainly for, for me, um, sprint loss, my second business for my first business, there were times when I thought I, cash flow was fine and I didn't know anything about a lot of the, um, GST and bass payments and those sorts of things.
And then, you know, we were in situations where there were these hits I didn't expect, and, and, and suddenly things were tight. So, um, I think it's super important to make sure that you are at least high level across how it all works and, and, and having enough funding to run the business. Yeah, that's right.
If I could, um,
Lee Bui: maybe give a, give an example of a, a startup business that, you know, we, we worked with in the past where, um, the FDO has attracted a lot of investment from, you know, a lot of investor, there's a lot of money coming in, but the way they, um, he managed the cash wasn't very efficient. So from his point of view, every month, every single dollar that came in came in the business should be invested in the business to grow.
He did not, um, prepare for any, you know, tax and other obligation that the business would have to pay to keep it going, for example, versus, you know, holding, um, you know, an income tax in future. So we, we kind of provide an advice that every, just a general advice, um, Say hundred dollars that are coming in, you should put $30 aside to prepare for all these ongoing.
The reason is, um, if you get investment coming in, you spend all of that and you can't service all these ongoing debt and everything, then essentially the business wouldn't, you know, thrive in the future then that would affect your chance of getting more investment, um, from, from other parties. And the thing with cash flow is that if, you know, you only have 70 to invest, then you either gotta work on getting more revenue or attracting more, um, investor, but at the same time, you still have enough cash aside to keep it going to get this fund coming in.
Mm-hmm. So that, that is probably the key message that I want to, um, you know, send across to
Alex Whiteside: hundred percent. Can I add, uh, just one other thing to that is, is accounting for GST and, you know, pay as you go, et cetera. On a cash flow sense because the last thing you wanna do is get to the end of the year and realize that you've been spending the GST that you need to give to the government or the, the collected GST.
It's a, it's a huge issue in, so traders a common issue. Mm-hmm. They get to the end of the year, they do their tax. Oh, okay, cool. Where's the 15 grand that you heard to the government? You know? Mm-hmm. Oh, I just spent my bank account. Exactly. They, they see, they see it as a bank account, not like the money in the bank account is the money they have.
Yeah. Not what they have to give to the suppliers or have to give it to the a t o. Yeah. That's where cash flow comes in. If you've set up zero or, or you know, um, try out correctly, then you, you've got your, you, you've got a good vision of cash flow. Right.
Justin Bohlmann: This is why we get outta bed every day. Yeah. Like to make cash flow management simple for business owners.
So there, there was a huge gap, like in the past it was hard to understand how much tax you owed. Hard to understand how much GST you needed to pay based on your income and your expenses. And a lot of this income's gonna be lumpy. Like, I might earn 15 grand one month, but I might only earn two grand another month.
And then, you know, how do I pay for the expenses in the, you know, month that I'm only earning two grand? Well, hopefully I've got some money the month I was earning the 15 grand. Right. Um, We set it up in such a way where every time a business logs into Thriday, they see their month-to-month cash flow.
Mm-hmm. Income comes in, expenses go out, tax gets calculated automatically. They can see exactly how much tax they need to pay, um, at that point in time, or how much they're gonna owe at that point in time. And there's a forecast for how much they're gonna owe at the end of the tax year, because Bill shock is crazy.
Right? Absolutely. You know, no one wants that
Alex Whiteside: feeling, especially a lot of suppliers, and you're not keeping track of that. Um, but the, the other component of cash flow is also people paying you, right. Accounts receivable. Exactly. And, and, and knowing that there's people that still are outstanding and owing you money, like seeing that as a
Justin Bohlmann: thing, seeing that, um, you know, and you guys also chase up having the ability to chase those invoices, having the ability to analyze your pricing, to understand whether you're charging enough to be able to analyze on a project level, whether that project is actually profitable versus the project that is, is not profitable.
You might have, um, you know, the old 80 20 rule, 80% of your revenue might be coming from 20% of your clients, but maybe the revenue coming from those clients is much more costly than the revenue coming from your other clients. And then you need to have that hard conversation with them and renegotiate your pricing and your terms and all of that kind of good stuff.
Mm-hmm. So understanding the health of your business at a glance, you know, priceless. Priceless, um, What other experiences have you guys had with cash flow being founders and, you know, the early days, you know, you sAId, um, the early days of a business are sort of, um, I guess spend heavy where you've gotta invest into the business to sort of get it up and running and get it going.
Any rules of thumb or any sort of methods you applied to to sort of get up and
Alex Whiteside: run? I, I think the p and l is like what I live and breathe on. To be honest, if that thing's not up to date at any given time, then you're just not getting the right data like that that needs, that's the source of truth really.
Your, your pro p and l profit and loss report, um, to me that's showing the health of the business. You consider cash flow, of course. Mm-hmm. Um, but if you're not around the p and l, you don't really understand how the business is working. Mm-hmm. You could think you're making a lot of money, but you don't realize you're giving all this, um, you know, expenses through the roof or whatnot.
Mm-hmm. So you really, my key takeaway would be checking that p and l one to month and, and going, how did we go last month? How much money did we make? How much did we spend? Where are we spending it? And what were we left with? Um, especially when you spend heavy at the start, you know? Yeah. Because that's gonna give you the projection of how much longer you got left, if, if you're taking investment.
Alex Solo: Yeah. I could not agree more. Like I also live and breathe the p and l and pretty much all of the business decisions that I'm making as a, as a founder or someone running an organization are, um, at some fundamental level, thinking about the p and l. How is this activity gonna tie back to increasing revenue?
How is this activity or operational project gonna improve our cost side? Maybe it doesn't improve it now maybe it takes six, 12 months. Uh, but, but it needs to at some point because, you know, we're running an organization and if I'm spending money, um, you know, are there ways I can be more efficient to reduce those costs or am, am I making sure that it's tied to some sort of outcome?
And then comparing what you thought you'd spend with what you actually spent. If you wait three, four months to, to look at your p and l and you find out you've been burning cash on some, that's, that could be business ending, right? You wanna look at it regularly. Um, you know, I, I agree. Small businesses, like once a month is a very good rule of thumb to be looking at it.
Um, if, if you could look at it more frequently or get, um, sub reports, um, particularly for larger organizations, um, it, it
Alex Whiteside: can be hard 'cause a lot of companies that bill monthly, right? Yeah, for sure. You know, like your suppliers are gonna be billing on a monthly basis. It's hard to get that streamlined For sure.
Alex Solo: there's this stuff, unless, unless you can accrue for it. Yeah. Agreed. And yeah, the data can be difficult to get, but um, you should have the intuition to want to see it more often. Even if you can't, you, you'd be
Alex Whiteside: checking, if you're in e-commerce business, you'd be checking Shopify quickly to kind of see, okay, how's, how sales doing going or mm-hmm.
You know, you'd want that early feedback Absolutely. Until it trickles down into the accounting system. Right. So you'd have a c r M or something that we'd be giving those insights throughout the month.
Justin Bohlmann: Exactly. Yeah. Like, you know, that's why we built that into Thriday. Yeah. Like literally when you log into the home feed, there's a cash flow section and it shows you each month, um, the profit and loss, um, for like income expenses for each month ongoing.
Uh, and then we've got a more advanced section in the tax where we actually forecast your potential income, um, and a revenue and expenses, um, for that 12 month period. Um, and I think there's a bunch, like, there's like seven different. Algorithms in there, depending on the kind of business that you are, because some are lumpy.
Yes. Um, e-commerce might make a lot of money over Christmas or whatever. Um, you know, the other thing that we've done, um, which is helping heaps of businesses, is partnering with a group called Profit First. Right. And they've kind of flipped it on its head. Um, the accounting, sort of the way accounting works from, um, you know, this is how much you earn, this is how much you spend, and then this is how much tax you're gonna have to pay.
It's, it's like you earn this much, now put this percentage away for profit, now put this percentage away for owners pay now put this percentage away for the tax, now put this percentage away for operational expenses, which is the leftover, right? So whatever the leftover is is how much money you've got for marketing, for staff, for all of these things.
Right? And if that operational expense account is growing in value, you can start to make really smart business decisions, right. Really easily. It's just simplifies it. That's right. Um, so having multiple bank accounts where you can easily distribute these funds to is another good visual thing for small businesses to consider.
Um, rather than having one bank account where all of your money's sitting, because that can look like a lot of money sometimes, and then it can look like not a lot of money. So, Do you guys do that at all? Um, within your businesses have multiple bank accounts set up or you just run it off the one thing?
Alex Whiteside: For other reasons, operational reasons. I try to keep it on the one.
Alex Solo: Yeah. We, we have multiple, but mAInly because we're in multiple countries. That's kind of the mAIn reason. Um, but yeah, mostly one I think for, you know, I I would say
Alex Whiteside: for smaller businesses you'd, you'd definitely be just wanting to put GST aside somewhere, put it into a savings account or something.
A hundred percent. Yeah. GS t's gotta come out before, especially from a yearly cycle. Yeah. You're not gonna, you're not gonna get the bill for a year. Yeah. Um, second thing is obviously accrue account for your income tax that you'll have to pay. Yeah. Um, especially if you're a sole trader or for anyone really.
Mm-hmm. But if you're a sole trader, yeah. You have to pay, um, tax on that. And if you're a company, you're gonna be paying 30% on, on the income tax. Eventually the ATO will catch up and what they'll do is they'll just put you onto a, um, you know, the pay as you go income tax. So you as a company we paying, you'll be prepaying your perceived company tax that you'll get a bill out at the end of the year.
Mm-hmm. Um, much the same as an, an individual does. You know, the, your, your company pays you, they automatically take out the tax. It's a bit different with the A t o. They'll just take it out. Um, Each cycle or each quarter they'll say, you owe us this much. So that when you get to the end of the year, it's not like, oh wow, I owe all this money.
Yeah. So they've seen it. That's why they kind of put that breaker in place. Yeah. Um, but those are probably the mAIn things. Just, just make sure that, you know, you're not spending all the money that's in the bank account thinking that it's, it's there. Yeah, absolutely. That's, that's it. It it actually puts businesses insolvent for that reason.
Yeah, absolutely. 'cause you think you're ahead of the game. That's why it's crucial to use a platform that's giving you that insight from day one. Yep. You know, the, the reporting information and reconciling as well. Right. Yeah.
Justin Bohlmann: Well
Alex Whiteside: the rec, you know, the reports are nothing without the reconciling no ones and knowing that it's been attributed somewhere.
Yeah. Well, the
Justin Bohlmann: reconciliation and the claiming of the expenses, right? Yeah. No one wants to maximize their tax. Right. They wanna minimize it. So yeah, the best way to do that legally is of course to claim as many expenses as you possibly can. So, um, expense management, um, is another super important thing. Is there any rules or things that we should consider from an accounting perspective when it comes to expense management?
Lee Bui: Well, obviously you. Um, as we talked about it earlier, so you should look at your, your monthly, you know, p and l on a regular basis and see the trend where it's bumping or is there any significant increase in, you know, a particular expense or not. You wanna look into it and see does that increase contribute to my increase in revenue or what sort of expense it is.
So you wanna look at every single, you know, key accounts in there and see does that add any value to your business and where you can trim, you know, any expenses. That's not any, any value. Mm-hmm. So obviously when you reduce, you know, your expense, you would increase your, you know, profitability as well.
But that's, that's one way to look into it.
Alex Whiteside: Yep. And, and definitely set up a separate bank account for the business as well. That's for the sole traders, the company, you have to, you don't, you don't really have a choice. I mean, definitely don't run your company out of your prospect. No, don't do that. But as a sole trader, even as a sole trader, um, you know, we, we see it all 'cause we just set up so many businesses, we just see all the things that they can do.
And you probably see it too, as an accountant Yes. And in, in tax advice, but just, you definitely don't wanna be running any business out of a personal account. Mm-hmm. That, that the mAIn reason is when it comes time to reconcile it would be a nightmare. Yeah. When you have to go, oh, that was personal. That isn't Yeah.
You just have a separate bank account, you can set 'em up for free. Um, you know, bank accounts takes three minutes. Yeah, that's right. Exactly. And, and have a separate credit card or debit card that you are using for the business and that's it. 'cause keep it separate. Yep. Makes it life so much easier.
Mm-hmm. Um, and the A would cringe at that as well if you're running a, a business outta your personal account. 'cause they would go, well how do you even know what's what. Yep. Yeah. Um, so that, that would be the mAIn thing. Definitely don't make those mistakes. Yep. Okay.
Justin Bohlmann: Business and personal banking separate
Lee Bui: Could potentially save you in terms of accounting fee as well. Because, you know, nightmare reconciling, we have to go in and go through maybe thousands fashion every year trying to figure out which one is for business, which one is your personal. The more time we spend the more expense, it'll, it'll be, you know, for you to pay.
Justin Bohlmann: We saved the client three and a half grand the other day. They, they, their old method take their shoebox full of receipts to the accountant, dump it on the desk, and then all of a sudden the accountant's paying, you know, charging a hundred bucks an hour for data entry. That's right. Yeah. Crazy, right? It's just
Alex Whiteside: doesn't make sense.
Yeah. You want, you wanna be automating receipts and if you're getting PDFs, automatically forwarding them on, you know, have, have it set up automated. For sure. Exactly. Automated as much as you can. 'cause don't, you don't wanna wait till the end of the year to know all this information. If your shoebox is full of expenses, how do you, how do you know how the p l's going?
You don't, sorry. Yeah, exactly. You're not, yeah. At the end of the year you go, oh wow, we're not profitable. Well, you'd know that 'cause the bank account's empty, but that, that's if you're trying to break even.
Justin Bohlmann: Yeah. So bringing all of these products together is why we built Thriday, right? Banking, accounting, tax expense management, um, all in one platform.
You can literally take a photo of your receipt as you receive it automatically reconciles to, um, you know, to the expense, uh, in that bank account. Um, and you're ready to rock and roll.
Lee Bui: Yeah. Um, maybe there's one more thing I want to add. Talking about bank account, right. For companies, I generally advise my clients to have.
At least two bank account. One is for the, um, trading account, and the other one is a tax saving account. So we're talking about, you know, every quarter that you have to pay GST and p o wage, G installment, p o g withholding, right? So if you put, uh, the portion of your income through to this account, you have to fund there ready to pay every quarter.
Mm-hmm. So no, no surprise, you know? Yeah. Tax, um, you know, invoice from, you know, the a t o, so you only have to worry about your trading account to use it to get the business running tax is mostly well managed by the saving account. Mm-hmm. So if you can stick to that, that will help you with your cash flow and, you know, business operation in general.
Alex Whiteside: Hundred percent. And I mean, if you're, if you're getting underway with business and things, you know, regardless, you should be thinking from day one about, okay, what are the ongoing obligations? You know, it, it hasn't been covered here as much, but obviously, um, you know, reporting a, b, you know, lodging, a b lodging, a tax return, understanding what are the due dates of that when it's coming.
That's right. Um, and it should be setting up the relationship with an advisor, tax advisor, like pop to, to kind of do that, right? That's right.
Lee Bui: Yeah. An example is some, for example, for a small business may have like a hundred thousand dollars in your trading bank account. If you only have that one bank account, it may look big, right?
But if your quarterly, you know, tax bill is 90 k, you actually don't have much money. If you have a separate bank account that's got 10 K in trading, you know, account at moment and now you're getting, saving your tax is mostly safe, but you know, you don't have much to, um, money to keep the bills going. You gotta do something, you gotta, you know, get your receivable in or manage your expense a bit better.
Alex Whiteside: Mm, exactly. Yeah. So I, I would engage an advisor early on in the business just, just to understand the business, right? Mm-hmm. Just to understand what are the things I should be thinking about from a tax perspective. Yes, exactly. Um, you know, to have that relationship set up. It doesn't mean that you need to sign up to all these crazy subscriptions or anything, but just
Justin Bohlmann: nah, what do I need to do?
What don't I need to do? Yeah, yeah. Absolute. To make it as easy as possible. '
Alex Whiteside: cause you could be in a certAIn industry that needs a lot more tax advice than you realize, or That's right. Or you could be claiming a lot more than you realize, or, you know, it's good to have the right advice. Exactly. That's right.
Like a cafe for instance, they can't claim g ss t on coffee, beans, all these kind of things. It's good to understand all this. Yeah. Which is
Justin Bohlmann: exactly why we partnered with Pop to start with, right? Mm-hmm. Because, um, people can manage their expenses and everything, um, throughout the year, but when it comes to lodging their bas, they can choose, you know, the accountant assisted version, um, and the account assisted version for tax, and then POP can go in through with a fine tooth comb and start asking questions, well, why did you do it like this?
And have you considered doing it like this? That's right. Make those changes and make it simple.
Lee Bui: Yeah. I would say, you know, typically the cost you pay for your, you know, trusted advisor, um, the value you would get. Typically exceed the cost you pay, you know, you'll be very saving, more tax in terms of, you know, the fee you pay to your lawyers or your accountant.
Mm-hmm. So I think it's, it's a good investment to speak to someone if you don't know what you're doing. Yeah. And you should always get guidance,
Justin Bohlmann: opportunity costs. Yeah. Doesn't matter what it is, you know? Yeah. You only know what you know. Um, and look, there's a lot to know.
Alex Whiteside: Um, so I now, now you've got the foundation of the business set up.
Right. I think, like, honestly, that's, that's the core components of making sure you've ticked all the boxes, right? Yep. You set up the company, you've chosen the name, you've got the right structure, um, got your legal, you've got your legal sorted, and you have an understanding of accounting, and you've at least set up the banking and accounting system.
Yeah. And built a relationship with an accountant. Yeah. And, and, and a, and a legal advice. Um, yeah. Now you're really building the business. Exactly. To a degree. It's all about, um, I mean, we've got insurance there that, that is probably not the checkbox. Obviously consider insurance PIs and non-negotiable, we'd probably say personal indemnity.
Uh, professional indemnity. Indemnity, yeah. Sorry. Yeah. Depending on the industry, public liability. Mm-hmm. Um, and then it would, then it would come down to each industry. You, you probably, you know, if you're a gym, your, your P'S gonna be higher. Yeah, exactly. Whereas public liability,
Alex Solo: a lawyer or service provider, the professional indemnity is a really big one.
Alex Whiteside: Or you'd have specific. Insurances for each business. You know, any, any insurance advisor can help you through that. Yeah. Or there's sites like biz cover, things like that, that kind of automate all of that for you. That's right.
Justin Bohlmann: And then you've got your trade risks and those guys, um, for, for specific trade insurance.
Alex Whiteside: Right. Which is that, that's not the tick box though, you could say. Yeah. I wouldn't, I wouldn't be going without insurance. Insurance isn't much and you'd be silly not to have it. Yeah. And then
Justin Bohlmann: when you get bigger, there's considerations around your business structure and insurance. Yeah. Um, I know a mate of mine who's even thinking about splitting his business into multiple different businesses to restructure his insurance depending on how it, um, or works.
But, um, I think about
Alex Whiteside: that you can do that when you, you're earning a lot of money and Yeah, it makes sense. That's right.
Justin Bohlmann: Funding. Funding. Funding. Let's touch on funding. You do. I need to think about it. Yeah, definitely. And it's, it, it might not be from investors, it might be, you know, an overdraft or, um, and there's tax implications and all that kind of stuff.
Alex Whiteside: Let's touch on funding thing. The thing, the thing is, is the business, most banks aren't gonna touch you for quite, um, you know, throughout the year.
Like, you're not gonna be able to sign up date one with a bank, uh, a bank loan or something like that. You can't just go to the bank and get a loan. Mm-hmm. They're gonna wanna see business performance. Mm-hmm. Um, I think it's like prosper selling. They don't touch you for six months. Mm-hmm. Um, depending on, you know, the type of business.
Justin Bohlmann: And this is where your cash flow records and everything is selling for,
Alex Whiteside: you'll, you'll need all that. You can't go to the bank and go, just gimme a loan. Well, how much you making? Well, my bank account's got this much. You need the proper documents to show all of that. Yeah. Mm-hmm. They're gonna wanna see p and l, they're gonna wanna see cash flow.
Even tax statements, things like that, GST statements. Um, but yeah, you can't, you can't really, if you're just starting out, the bank route isn't really an option. Mm-hmm. You can credit card it, but you're gonna be personal liability. It's gonna Yeah. You're not gonna get a credit card under the company, it's just gonna be your own credit card.
Yeah. Um, but apart from that, yeah. You can, you then, then you've got the funding routes, like seeking investment and rAIsing capital and whatnot.
Alex Solo: For sure. I mean, I would say for, for very small businesses, um, we see people funding it out of either friends or family loans or investment, or they, they might have to get actually a personal loan rather than a business loan.
Mm-hmm. And then, and take the personal risk, which is very risky. Sometimes you might have to give your property as collateral for that. Is
Alex Whiteside: it, is it legal per se to take a personal loan and
Alex Solo: you, you, you, you can, yeah, for sure you can. I mean, depend, it depends on the terms of the loan, if it needs to be disclosed at the time, but, but certainly, um, you know, that it's riskier because again, if you can get a loan against the business and the business assets, then uh, you know, things go wrong.
Alex Whiteside: exactly why banks won't give a business money from day one. Correct. 'cause the
Alex Solo: limited liability. Yeah. And, and they're not secured, right? Mm-hmm. And even as you grow as a small business, um, you'll find that, um, uh, from the more traditional banks, it's difficult even still to get loans without.
They know about the company structure. Mm-hmm. Uh, and they know that the directors might not be liable, so they'll ask for director guarantees and things like that. Um, uh, some of the alternative, um, sort of, um, uh, newer funders prosper and, and, um, Muller and a bunch of others, um, who are coming out now, um, are doing, uh, unsecured loans, um, for earlier stage Yeah.
Small businesses. Mm-hmm. Prospers are good for a small business. Yeah, for sure. But of course, from day one. Yeah, yeah, yeah. But of course the interest rates on those things could be pretty high. And, um, and if you're not aware of how those things work and, and, and understand particularly the interest rates and those sorts of things, then cash flow can become a even quicker problem.
Um, so, um, and that's something that, um, not as necessarily as legal advice. We do review these agreements, but we definitely see with our clients, Um, too much debt has been taken on, which can't be serviced. So, um, so I mean, loans are one route. The other route of course is, is equity funding, um, or, um, these, these things called safe notes, the convertible notes.
Um, probably more used by startup, um, companies that are looking to grow very big. Mm-hmm. Um, and what you're doing with those kinds of, that, those forms of funding, rather than like a loan where you take, uh, money and pay it back with an interest rate, you're actually really selling a portion of the, of your, of your company.
So you're gonna have an investor who actually owns a piece of it. You don't have to pay them back, uh, with interest necessarily. They're hoping though, that the company will, in the medium term, long term, depending on what you're sort of saying, you know, gonna be generating dividends for them in the way of profits in the organization that will get issued to them as shareholders or, uh, it might sell in the future.
And, you know, they own 1%, uh, and the value of the business goes up a hundred times and they make a hundred times on their, on their 1%, if that makes sense. Yeah. Um, the, the, the, the path of going down that kind of funding is, is very different. It involves people are actually buying a bit of the business.
They wanna know, what's your strategy? How is this thing gonna generate me returns? And, and you know, there's, there's funds out there, private equity, venture capital firms or angel investors that you can go to for that sort of stuff. So, um, certainly for many organizations it's difficult to get these loans at the beginning unless you willing to take personal risk.
So it's kind of the only option is to do that. But once you've been around a little while, built up, um, a bit of history, um, and have some cash flows coming in, then the sort of loan route becomes a bit easier to access. Yeah,
Justin Bohlmann: yeah. Uh, crowdfunding's another one. Yeah. For, you know, for sure. You know, we had great experience with crowdfunding early on, and, um, you've got companies like B who go and organize, you know, all of that for you, and you literally end up with, you know, tens, hundreds, maybe thousands of investors.
Mm-hmm. Um, depending on what your pitch is like really.
Alex Solo: Yeah. Definitely a new, new thing We're seeing in the last two years, lots of, lots more of the kind of equity crowdfunding thing happening. Um, and yeah, you end up with a lot of shareholders, but, um, virtual I think is, is one of the, the mAIn platforms that's doing it now.
And there's a couple of others as well have made the process really easy. Right. So, yeah, and
Justin Bohlmann: it's, you know, it's not, you don't have to be a tech business or anything like that. There's people doing hot chili sauce and stuff like that. Crowdfunding, you know, I invested in, um, zero Coke, which is sustAInable.
Um, packaged housing products, et cetera. So there's all kinds of things. Um, maybe there's,
Lee Bui: there's one thing I would add to this. You know, the structure you choose to operate your business would either help or your ability to access funding as well.
Alex Whiteside: Hundred percent. Yeah, I think we did touch on that at the start when we're talking about company and we kind of mentioned that an investor's not gonna touch the salt trade structure.
Yeah, that's right. Or any other kind of, it's, it's gonna be a company usually. Yeah, yeah, yeah. Wouldn't deal with Salt Trade
Justin Bohlmann: trust. Yeah. But you know, if you go and talk to them, they'll help you out with, um, in the restructure structure that you need to Yeah. Set up and all that
Alex Whiteside: kind of stuff. That those are the, if, if you're serious about getting funding in that, you're probably gonna want a company structure.
Yeah, that's right. It's
Alex Solo: just not, and I reckon the
Lee Bui: other structure probably, um, can just allow you to get debt funding, which is loan borrow from the fund, but wouldn't get any investor if it's not a company.
Alex Whiteside: I agree. Sure. Yeah. Um, we kind of touched on branding when we were speaking about, you know, choosing a name and whatnot, and we spoke about trademarks and
Justin Bohlmann: Yeah.
Would you agree? Yeah. Lot. You know, a lot of people start with a brand and go out and buy their domAIn name and, you know, build their website and all that kind of good stuff, and then struggle to even sell anything. Um,
Alex Whiteside: that's the exciting stuff. That's exciting. Yeah. That's, we've spoken about. That's, I love starting the business.
It's good and all that, but this is the fun stuff. This is the fun stuff. This is the fun stuff, the brand and setting up the website and setting up emAIl and Yeah. Actual operations of the business and Yeah. You know, getting it off the ground, setting up Shopify. Yeah. You know, whatever the cool Yeah. Tools are that you know you're gonna use to run your platform, your business.
Yeah, exactly. To me, that's, that's the fun part. I agree.
Alex Solo: Yeah. Yeah. I, I mean, I, I, I used to say to people, starting a business. Like, um, there's a lot of admin at the beginning that or could seem like there's a lot of admin. Obviously all of us are trying to make it, uh, simpler. Um, but um, if you go out and just make your first sale, uh, all this admin seems, seems much more exciting.
'cause you're like, I got money coming in now I need to set everything up. A hundred
Justin Bohlmann: percent. Yeah. So, so even that little chaching you hear on that shop before I ask Exactly. Amazing. That's right. Yeah, for sure. Yeah, it's super cool.
Alex Whiteside: Um, I mean, we, we were bootstrapped off, you know, I put literally $3,000 into the business and bootstrapped the whole business off that back in 2013.
Yeah. I didn't have that much legals back then and nothing. And, you know, we're here thriving today. Yeah. It's not to recommend people to choose that route. It's always good to be risk averse. Mm-hmm. But I'm just putting it out there that, you know, the most exciting thing for me was getting an emAIl, making our first sale, and that was driven by our amazing sales agent, you know, Google, Google Ads, and I didn't hire anyone or anything.
It just, just literally turn on the ads and traffic comes through. Yeah. Um, hard to, hard to break even in the beginning, but to me that that's the fun stuff. Building the business and getting it off the ground and getting your first sale and, you know, speaking to customers. Yeah. Getting out there into the world.
Justin Bohlmann: had a website and a wait list. Set up before we had a business, right? Mm-hmm. Um, just to see if the idea was valid. Um, and even way back in the day, um, I started selling on eBay, made enough money to get outta the army, right? 'cause I replaced my military wage just by selling on eBay. I didn't have a business name.
I didn't have, you know, GST I didn't have anything set up right. It was just a side hustle that turned into something good at the time. Exactly. Um, so, you know, you might wanna start here.
Alex Whiteside: I, I agree. Testing an M V P, I mean, we, we took a similar route. I just put up a, a, a basic WordPress landing page that sAId, registered company today.
When you click register, it showed a credit card form that, you know, nothing happened. No payment came out. The minute they click continue, it just sAId an errors occurred. We'll get back to you shortly. What was I trying to do there? Just test how much it costs to acquire a customer from Google. Yeah. And what the conversion rate is there.
Yeah. You know, basic funds that I could put that into a business plan and go, wow, there is money to be made here. Yeah, exactly. There is these, the kind of hacky things. Yeah. Even if it sounds silly, like our customer gets an error. These are things you need to, to think about. A hundred percent. We started off and, and required $10 for a WordPress landing page.
Yeah. To test it out. Yeah. As you say, a wait list just to show demand. Yeah. We started
Justin Bohlmann: with the wait lists. People join the wait list. We added a, um, skip the queue, pay five bucks to skip the queue. There's your, there's your, um, you know, and 10 Right. That people actually gonna wanna pay for this product.
And with all the
Alex Whiteside: tools like Facebook ads and Google Ads and everything, you can, you can get instant feedback for literally short to no money. Easy. You'd agree a hundred percent.
Alex Solo: Absolutely. I mean, so much of, um, of what we did, and again, coming back we're called Sprintlaw, and the idea was do stuff fast, get feedback, and, and then change your business model.
Our first, we were bootstrapped for the first two years of the business and very much, I know we're lawyers, so we probably did a bit more admin than the average, but very much we were just quickly getting the site set up, getting the landing page up, um, seeing what our customers actually wanted. And within the first nine months, our business model changed significantly.
Based on the feedback we got from customers. We thought we were gonna be, in the very early days, a complete self-service solution. Mm-hmm. We thought we were gonna have a whole bunch of forms where people could just generate any kind of legal doc. Uh, but you know, When we actually launched that, uh, people were answering these forms with like 50 questions and falling asleep and we realized this is not the model people want.
We need some kind of lawyer assisted element. And that kind of informed the business model and ultimately so much else. So I think it's super important. Um, and I do think, you know, cash flow is think to, to worry about, but um, in the beginning, the exciting part, you know, if you're bootstrapping or building the M V P, the, the tightness of the cash can give you some of that excitement and motivation to make this thing work.
Mm-hmm. We were at, at a point, um, We started in early 2017 and I didn't save too much when I left my corporate job to start the business. Uh, but I bought one Bitcoin in 2012 and ended up just selling that got 20 grand. And that was the kind of startup capital for Sprintlaw. Yeah. And then we just had to make it work with 20 and, and, and managed to get some positive crash flows within, within
Alex Whiteside: six months.
You know, I think, I think some people overthink that the, the early days like, oh, I've gotta get investment, I've gotta get this. Yeah. Otherwise it won't happen. And I feel like maybe bootstrappers. It's disappeared lately, but mm-hmm. Not, not that it's disappeared as in people aren't doing it. I just think investment's so hyped up.
Yeah. Um, I still own a hundred percent of the company and, and once again, yeah. I own a hundred percent of the company. Maybe it could be a bigger company with investment, but I don't have anyone to answer to. I answer to myself. And
Justin Bohlmann: you know what, I love that. This is an interesting point. A bunch of research we did.
Um, because, you know, we try and market and attract small businesses. 70% of business owners don't wanna grow at all costs. Mm-hmm. They just wanna make enough money to make the kind of living that they want. Um, and there's nothing wrong with that whatsoever. Uh, and then you've got the, um, you know, the passionate professionals Right.
And they just wanna do what they love. Mm-hmm. Right? They don't even really care about the money side of it. If they're making enough money, great. But the passion, and then you've got the ones that wanna grow at all costs. Right. It's about 10 or 15%. You
Alex Whiteside: probably, you don't always have to think about the exit from day one.
No. I mean, you could just think about doing what you love. Yeah. Mm-hmm. And just building a lifestyle out of the business. It's. Your hAIr doesn't go gray quicker, you know? Yes. Mm-hmm.
Justin Bohlmann: And although we've got,
Alex Whiteside: it's not, there's different routes for every business. I mean, you guys took investment. It's not, it's not saying it's better or worse.
No. Just think about what you want to achieve. Exactly. It doesn't have to be investment to get the business off the ground. You can bootstrap certAIn industries. Absolutely. Especially like an e-commerce site or something. Right. Or just, just, just, that's just an example. But just giving 'em, you know, something.
So we've got
Justin Bohlmann: all of these points here and there's a lot to think about. Right. But at the end of the day, right here and now, it's never been easier Yeah. To, to start a business and to set all of this up. Exactly. Exactly. So you can, you know, you can jump on an eBay, sell a piece of clothing you didn't wear anymore, get that first sale, get pumped about it, and then go, cool, I'm gonna, you know, I'm gonna run away and do this.
Alex Solo: with us three, four days. Yeah.
Justin Bohlmann: Takes, you know, three minutes to get a bank account with Thriday and then you've got your full cash flow management system.
Yeah. You know what? Takes two minutes to lodge a bs and then it's right front of pop.
Alex Whiteside: So in under a week your business is up and running. You're ready. Rock and roll. Yeah. So, In, in most cases, you've got the basic framework set up and running. Mm-hmm. Mm-hmm. Yeah.
Justin Bohlmann: Yeah. Um, and then super important, uh, customer support.
So, you know, w I know we're massive on customer support and voice of the customer listening to our customers. We have a, a feedback program, one called Refiner. Right. And every time someone does something, um, important, like sends an invoice, receives a payment, um, it, you know, claims an expense, we'll pop up a little survey that says how easy was it to do that particular thing?
And that'll give, they'll give a score out of, uh, between one and five, five being good, one being bad. Uh, and then the question after that, where, where the real goal is, we say, why did you give that, um, why did you choose that option? And what that enables us to do in the business is not only can we track on aggregate how well we're performing out of five across the whole product, but we can go and look at, all right, invoicings got a four and a half, um, you know, expense management has a 4.8, let's focus on invoicing, um, and, you know, fix that part of the product or make that part of the product better with goal of getting that customer effort score to five.
Uh, and I just, I can't talk enough about how important customer service is listening to the customer and changing the way you do business, changing the way you serve your customers based on their feedback in as real time as possible. Mm-hmm. You need to do that. And I learned this. Back in the day when selling on eBay, they had feedback, right?
Like, if you didn't chip that item quickly mm-hmm. And the person didn't receive it, you get bad feedback. Right. Uh, and then everyone can see that. I agree with that.
Alex Whiteside: I think it's good to, to really get feedback from the customers and live and breathe that. I mean, if you were to ask how do we build the business?
How do we choose the products that are in our business? Um, it's really listening to what the customer keeps asking for. Mm-hmm. And that we've been saying, no, we don't deal with that. Mm-hmm. Um, you know, from day one, company registration is all we offered. Um, and then people start asking, can you do an A, B N as well?
And then we just add that on. Now we have a, a, you know, 15 products that we offer. It's all just been working with the customer, listening to what they want. Mm-hmm. That really dictates the need. If you are kind of charging ahead and you're going, this is what people want and you think you know it, it doesn't necessarily mean that that's gonna work.
Yeah. It might because you might be, you know, Steve Jobs bringing out the iPhone or something. We need that. Yes. Um, but sometimes you just are reinventing the wheel, just doing it better. Mm-hmm. Just doing it a different way. Yeah. Um, doing it in a more customer centric way, potentially.
Alex Solo: Really agree with that.
I mean, we had a. One metric or one target in the first couple of years of the business was we never want less than a five star Google review and we want a really high n p s. Uh, and that was like the only goal. Um, we didn't even actually think about sales targets and other targets. Um, we introduced them later 'cause we needed them, but it was just like, we want everyone to have an amazing experience.
And that was good to help build the brand, but it had all these kind of unintended fallen effects, which is what you're alluding to. It actually meant well, we're optimizing for amazing customer experience, so hey, we, we actually need to change the product. We need to change the service. We need to change the way we write emAIls until we make sure that everybody's mind is blowing when they work with us.
And I think, um, I wouldn't necessarily suggest everyone just have one goal like that, but I do think it's a good mindset of going, ultimately business is gonna rest on customers choosing you, advocating you, coming back to you depending on your business model. Yeah. Um, and that's, again, going back to the p and l, all that's gonna eventually lead back to the p and l, but does your actual offering achieve the goal, achieve the mission of making customers happy?
Mm-hmm. And so I think, um, that mindset is really just like a, a good one to have. Um, they're gonna,
Alex Whiteside: they're gonna tell you what's wrong or right in your business. Mm-hmm. And you've gotta listen to that. Yeah. Um, you don't have to implement everything that's wrong. Especially when you're starting out a business.
There are gonna be a lot of things that take time to catch up on. Yeah. Yeah. And to implement. You might feel like you're behind. 'cause customers are demanding this. You can't do everything from day one. Yeah. But eventually you'll get there and you'll be able to service that. Right. Exactly. I'm sure it was the same kind of story with Thriday taking off, ah, you didn't do payroll, you didn't do this, you didn't do that.
Justin Bohlmann: could build a team of a thousand people to try and service every request that we get for a feature or a product or whatever. But you've gotta start somewhere. Mm-hmm. Yeah.
Alex Whiteside: Um, stick to the core. Stick to the core and then, and then the core kind of grows, but you don't wanna
Justin Bohlmann: a hundred percent. Yeah.
The core grows. Um, you know, you've gotta always progress. You've gotta always be getting better and sometimes that means adding additional features, making features better. Sometimes it means removing things. Mm-hmm. Taking things away because, um, you know, you've created friction or, uh, not enough people are using it.
So, you know, it's taking away the time that you could be investing in the things that people are using. Um, you know, and I imagine in a business like pop, you guys can improve dramatically 'cause of the network effect of all of the clients that you have and the various questions that they're asking. And, you know, just your service overall could evolve.
Um, really rapidly with what you know and the feedback that you guys get.
Lee Bui: That's right. So we, we do listen to our customers feedback. So based on, you know, the feedback that we get, we can formulate our team better and look at the range of services that we provide. There are things that you would believe when you first started that these are the things that people would need from an accounting and tax per uh, perspective, but it might not be true.
Mm-hmm. When you hear feedback from people, you started knowing, oh, these actually the key things that people would like to look at. Mm-hmm. And how do we manage our team? How do we manage our processes to help and maximize, um, the benefit that we could give to our client? And at the same time making, you know, a nice profit too.
Mm-hmm. So, you know, it's, it's very important to get that because it, it helps, um, I think from a financial point of view, it could help you increase your revenue and from a HR point of view, it could make the team better because we as, um, professional, probably like you as well. Um, the biggest expense is also our biggest asset.
Mm. You know, employees. Yes. Um, how do we manage our employee workload is very important. So if that comes down to the feedback and what they need to do to service the need of our clients, if they do enough, they're happy with that, that will help us grow. Yeah. That's how I see it. A
Justin Bohlmann: hundred percent agreed.
For sure. A hundred percent. And you touched on, um, employees being the biggest asset. Let's talk about that quickly. Um, you know, obviously employee contracts, Imperative.
Alex Solo: Yeah. To success. I, I think, I mean, if you are, if you are hiring staff, um, which, um, you know, if you are at that point, um, well done. It's one of the hardest points.
Yeah, exactly. It's a, it's a milestone and things change when it goes from just, you know mm-hmm. You or a couple of founders starting starting a new business to, to employ people. Sure. Yeah. Um, and, uh, you, you, obviously there's financial things you wanna think about from, from a legal perspective. Um, you wanna have an agreement in place with your employees and you wanna make sure you're complying with workplace laws.
Um, it's not rocket science. Um, the FAIr Work website in Australia has really good information for small businesses, uh, that are gonna be employing people. Yeah. Um, they've, there's, uh, uh, reasonably good regulations in Australia for smaller organizations to make it easy to comply and take staff on. Um, essentially you've got, um, sort of national minimum wages and min minimum conditions that pretty much every employer in Australia has to comply with.
Mm-hmm. And then industry specific, what they call awards, um, well, this
Justin Bohlmann: is the rocket science part, right?
Alex Solo: Yeah. That's where things get a bit more difficult. Yeah. Um, and where, you know, um, you gotta be working out what are the pay rates for the different industries and how does, is there over time requirements and certAIn things depending on what industry you're in.
Yeah, yeah. And um, where we often get involved is with the agreements, um, You should, um, it's not necessarily a legal requirement, but pretty much every business should have an employment contract with their staff. Setting out things like, what's this person's job? Um, if they're gonna leave, what's the notice periods?
How does that work? Yeah. Is there a probation period? When and how does pay work, um, if they're creating ip, intellectual property for your business, who owns it? If you don't put anything in writing, the employee actually owns it by default. So this is why contract's essential just to make sure they do something for your business.
It's yours. Um, you know, if they're a key hire, do you wanna put any restrAInts on them? You know, leaving and working for a competitor strAIghtaway. These kinds of considerations. Um, um, you know, what notice notices, um, do they need to give you for holidays and, and, um, how does the Christmas period work is a big thing for a lot of organizations.
Mm. So just having a contract that covers these items is, is important. Um, and there's usually two types of contract that, um, we broadly do. Um, there's other ones for more complex executive roles and so on, but for most small businesses, if you've got casual staff, there's a casual employment agreement, you'll have a template you just use for everyone.
And then you'll have a full-time slash part-time template. Pretty similar for permanent, full-time and part-time staff. And if you have those two documents, that will get you, um, sort of, um, most of the way there. Um, if you have things like commission and bonus arrangements, so on, there's more complexity.
But for most people it's just those two. Yeah, yeah,
Alex Whiteside: yeah. Makes sense. And I mean, hiring people isn't the easiest thing. You're gonna make mistakes. Um, yeah. Especially from day, you know, day one, getting out there, you know, getting employees into the business. Your first hire is probably not gonna be the best, but you'll only realize that after.
Mm-hmm. Um, but I think that. You know, one of the mentalities hire, you know, hire slow, fire fast or whatnot. You can adopt whatever, you know, works best. But I think it is good to, to really move through and make decisions quickly in that. Yeah. I think, you know, as a founder in the early days, I think I definitely held onto people a lot longer than I should have.
Mm-hmm. Um, just, you know, for whatever reasons. But it is good to, you're trying to feel like
Justin Bohlmann: you need to, and even in this market where it's hard to find people as well,
Alex Whiteside: like you can get caught up that you can, you can, and, and it can, you can feel a little, a little bit guilty as a founder. Like bring someone on and then the hardest thing is like, oh man, they're not the right fit.
Mm-hmm. And those are the only things that you learn as you go along. Yeah. It's gonna happen, but sometimes you just have to take the leap and kind of make that action. Yeah. Um, and eventually the business grows and grows and you learn the values and the culture and it, you know, becomes apparent. Um, but the second biggest thing is managing people as well.
Mm-hmm. You know, it's not an easy thing. Some people are better at it than others. Yeah. Um, all founders are gonna have a different skillset for sure. Yeah. Um, and be better at it. But people speak to most founders and people is like one of the biggest challenges in the business, but it's also where most of the stuff happens and things get done.
Yeah. You wanna get it right. That's Sure. You know, people, people create the products and create an amazing business, so Yeah. HR is crucial.
Justin Bohlmann: Yeah. Look after your people, give 'em the trAIning that they need, the tools that they need to do the
Alex Whiteside: job and listen is what, listen, listen. Yeah. Yeah. It's not a, not a dictatorship.
Justin Bohlmann: No. Yeah, definitely not. Um, yeah, so, you know, we touched on payroll, but at the end of the day, you probably don't want to be using an Excel spreadsheet to manage payroll. No. Um, payroll is a beast with various awards and all that kind of stuff. So, um, you know, you wanna get, um, help where that's concerned and make that easy.
Alex Whiteside: Um, and that, and that's a, that's a obligation as well, like reporting on payroll and Correct. Yeah. Having, having the
Justin Bohlmann: right system. There's a lot of stuff in the news at the moment, right. Of
Alex Whiteside: 70, that kind of unpAId. Yeah. There, there's um, there's legal requirements around payroll and making sure that it's handled correctly.
Yeah. It's not just, you just pay someone money and that's it. You want to have a system that tracks it all. Yeah.
Justin Bohlmann: Yeah. And you do not wanna be one of
Alex Whiteside: these, and depending on the industry, you've gotta have time. You want to have time sheets and things like that. Yeah. Um, you know, if it's mostly full-timers, you don't need that.
But Yeah. If you're a casual, heavy business, then deputy or something
Justin Bohlmann: deputy, yeah. There's great tools out there. Hundred percent really streamline
Alex Whiteside: things and just streamlining payroll tax as well. Yeah. Those, those things can be so automated, they shouldn't even be an issue. Really. Exactly. I mean, they, I'm saying they can be that automated that they're not an issue.
Yeah. Um, not that they always are, but yeah. Those are just parts of the business that should just be, should be done. Right. It's not if it, if it's done right and it's set up right, it shouldn't be a hassle. Yeah. It's, if it's set up wrong, it's a hassle that it
Justin Bohlmann: becomes a, then it becomes a hassle for sure.
Alex Whiteside: Yeah. Um, so you wanna have the right system in place.
Justin Bohlmann: Definitely. Um, inventory management's another, um, big one, especially from account, an accounting perspective. Um, you know, I, I know how hard it was back in the day managing, um, inventory that we had in stock and that we'd sold and, you know, the spare parts that we were using and even just having a record of it to know how much you could sell, let alone, um, Taking into account at the end of the financial year, um, how much value you had in stock on hand and all that kind of thing.
So there's all these considerations. That's right. So
Lee Bui: I think, um, eventually management is very important because it affects your cash flow and your, um, profitability as well. So, um, it is important to, to work out a breakeven point where you know how much inventory you, you should be holding. Mm. Because you don't want all your cash to be, you know, uh, tied up in inventory where you could use that cash for, you know, something else in the business.
Right. It's, it's a common mistake or something that people don't usually do often is knowing and keeping track of their inventory. Um, you'd be surprised, like how often I ask my clients that, you know, to know what stock level you have at the moment. And I think 80% of the time no one knows. Mm-hmm.
Especially for smaller businesses who don't have a good system of tracking it. But the key is you should know, so you know, whether what you have in the book, it's actually reflected in your warehouse or something. Is there any issue with stuff? Is, um, because there could be items where it could be expired or updated that you may need replacement that will affect your profit, or is there any issue with, with, uh, theft?
Yeah. You know, so those sort of thing that you should know on a regular basis so you can make informed decision to help your business grow in the future.
Justin Bohlmann: Yeah. Sometimes it'd be cheaper to give a, um, a replacement than a refund. Right. That's even things like that. Um, and if you don't have enough stock on hand to do that, then you're outta luck.
Um, marketing and sales. Um, I could talk all day about this stuff. Yeah. Um, it's kinda my bread and butter, but at the end of the day, um, if people don't know you exist, um, then it's gonna be be very hard to, um, sell your product. And awareness is imperative. Uh, but then you've gotta have something interesting, uh, a reason for them to wanna interact with you.
Um, and that's effectively, you know, your landing pages, um, your ads, um, all of that kind of good stuff. And then you're gonna have to wanna create some sort of desire for them to wanna work with you. Um, you've gotta be contactable. You're gonna have, wanna have, you know, your phone number, your emAIl address, chat, whatever set up.
Um, and then you've gotta have a way for them to take action by your product. Um, and then all of these things need to be coherent and set up in a way that makes a lot of sense, um, for marketing and sales to work effectively. Um, so it comes back up to your brand and your website, I mean, your,
Alex Whiteside: your website's, your shop front.
Yeah. In many cases, not, not all businesses have that, have that applied to them, but yeah, it. You know, if you walk into a messy shop, do you really wanna check out and, you know, buy something from that person? I think in today's world, we think, oh, the website is just a website. It all websites are websites, right?
They're all the same, but they're not. No. Mm-hmm. You want to kind of have it done. It's your opportunity to brands and if there's any issues or technicalities on the website preventing people from checking out, it's a bad experience, but it's also just gonna be functional and work well and flow well. Um, you know, in the beginning maybe you don't have the budget to put into like a full branded website design and it's just gonna be using something like Wix or Yeah.
You know, getting it off the ground. Um, but eventually you're gonna wanna put the money into a really well designed site that flows well. Mm-hmm. Exactly. Um, that's functional and that's your brand. So that's your opportunity for branding,
Justin Bohlmann: um, and your positioning, right? Like, people need to understand what it is you do.
Yeah. And what it is you sell quickly, easily, upfront, you know, don't try and be too clever. Yeah. Um,
Alex Whiteside: is, and then, and I guess it then gets into industry specific and marketing, like every business is different. Um, you know, you could be in B two B where it's outbound sales and you're making a lot of calls and using LinkedIn data, or you are getting into like, I guess what the, the territory that we're in, where we can capitalize on Google's ability, um, which I mentioned before.
So I won't go into that too much. Look, if you're a business where people are typing things online and looking for you and you're not there, um, that's a problem you wanna be found. Yeah. And organic ss e o it's not easy to just get into from day one. Mm-hmm. Um, if you're just getting a business off the ground, that's a six to nine month journey minimum, depending on the, um, scope that you're in or the, the industry that you're in.
Um, so then you wanna look at search engine marketing, like paying Google or, or binging. Um, but we also live in this amazing world where we have Instagram and Facebook where it's just so cheap. Um, it is hard to drive conversions from those platforms depending on the business you're in. Um, but you have those tools out there now, um, is it done right?
Most of the time, probably not, but it's at least better to do something hundred rather than nothing. Yeah. You know? Yeah. Yeah. And, and it's, and it's working for you. So, yeah. Um, customer acquisition, you know, it's a challenge for all businesses, but it can be done so well and, you know, it can get your business off the ground.
I think if, if you've just set up a website and you're waiting for people to show up, it's not gonna happen. You've gotta Yeah. Build it and they'll come And, and, and Facebook organic strategy and Instagram, I mean, Instagram Organic's still kind of working these days. By organic, I mean, you're not paying, you're just putting up posts.
It kind of works. Um, maybe if you have an influencer background or something. Um, but yeah, I guess you've gotta look at the quickest way is just to look at what competitors are doing, successful competitors in that space. Where are they, what are they doing? Yeah. What's working for them. Um, it's super industry specific as well.
It's, that's why you don't want to go too much into it, but. Most small businesses, I would say, have the capacity to, to market their products online somehow. It just depends where and what Yeah, exactly. You know, what's happening. Exactly. But in today's world, I think if you're not online, you're not found, I would just hope that, you know, you'd take a business, you'd put it into Google, and you'd hopefully be the first result for that brand keyword at least eventually.
Correct. Yeah. One be found. Right, exactly. It shows reputation and, you know, having a profile and whatnot set up
Alex Solo: Yeah. In Google. Yeah, for sure. I think like, um, for a lot of like small businesses, your, uh, there's, there's a threshold I think you need to do online. So, you know, for some businesses you may make your entire marketing sales strategy totally online driven, where you are, um, you know, targeting search, you're targeting social.
Um, but for pretty much any business is a threshold level where your website represents your brand. Chances are, no matter what you do, someone's gonna type it in Google and they wanna see a professional looking site that represents a type of brand and, oh, this is legit, this looks good. Yeah. Um, so you, you wanna just make sure as a threshold you have that sorted.
Um, then I think a question for the marketing sales stuff is like, where, where are my customers? And. And how do they find out about what I'm doing For us, uh, we, we knew that there's kind of two common places, at least. The, the low hanging fruit was people find out about lawyers traditionally just through referrals from people.
Um, and that's true for a lot of very small businesses when you're just getting started. Just get a few customers from people that you know, and then they tell their friends and you, that can be your first attempt at marketing and sales. But we knew that there's like something like 250,000 search terms, um, around specific legal things.
So we're like, that's our playground. Let's show up when people search for that. Let's write blog content. Let's, let's spend our time on Google. Um, and, and now increasingly being, which is growing a bit, um, but, you know, um, I have a client that runs like an ice cream business. There's not 200,000 search terms for ice cream.
Mm-hmm. And the, there's, there's a few. There's only so many. So, you know, they can't write that much content and search may not be the place where they acquire customers. Maybe they, they do social, maybe they just rely on, on, um, referrals and, and their product organically growing over time. But even they still need an amazing website and, and a good brand.
Yeah. It still matters. Just might fulfill a different purpose. It, it is a
Alex Whiteside: show. It's, it's the first shop front the customer sees for sure. Yeah, for sure. It's, it's the way to communicate your brands. Yep. Um, In today's world, it's a given. Yeah. Even, even if you're not a pure online business, you'd still want a business card there or something, right?
Yeah, a hundred percent.
Justin Bohlmann: A hundred percent. And a profile set up. Yeah. So cheap, so easy. Um, it's an absolute no-brAIner.
Alex Whiteside: Yeah. It, it's not the easiest setting. Well, yeah. It, it is. Point and click mostly that website's still technical things and Yeah. It's pretty easy. But point and click Wix or something, you can be done in what, 20 minutes and that's something better than nothing.
Justin Bohlmann: Yeah. A hundred percent. Um, BSS and tax, we kind of touched on this earlier, right? Um, if you're registered for GST, you're gonna need to submit your bs. Um, and like it or not, you're gonna have to submit your tax. That's right. So I,
Lee Bui: I think, you know, key points for business owners to know is to know the due date that your passed is due.
Have cash aside and, you know, be prepared for it. You know, know the exact date, have you know your fund ready and, um, talk to your advisors. Or also utilizing software like Thriday, you know, where you, where you can sort of foresee, you know, how much tax you have to pay when it it's due. Yeah. So that helps a lot with planning.
Justin Bohlmann: Yeah. Don't leave it till the last minute. No, no. Um, don't give you accountant a shoebox full of receipts because you're gonna be paying through the, for data entry. Yeah. Um, just stay organized. That's right. Exit
Alex Whiteside: legal.
Alex Solo: I mean, probably a, a a whole topic in and of itself, which, um, um, you know, but just to give, um, a bit of a sense, I think it's just worth knowing when you are setting up running your business, um, at least having an understanding of how, how can this thing end?
And that can be happy endings or unhappy endings. I think, um, some common ways that, um, the business, um, can end are, um, on, on the more negative side, um, you know, it doesn't work out, um, and, or, or you just don't wanna do it anymore. Um, and, you know, couple of ways, if it's a very small business, um, with not much liability assets, you can actually just de-register the company.
And, um, there's a simple process through that and, and sort of move on for many businesses, uh, who have, um, you know, let's say outstanding creditors or or other stakeholders, uh, you would go through a sort of insolvency process and there are service providers that can help out with that. Um, so if, if things don't work out, you are looking at, you know, in simple cases, deregistering or in more complex cases, the kind of insolvency process, the more positive side, um, you know, there are different, different ways where, you know, you actually get some money back instead of, instead of not getting any money back.
Um, and, and a common is, is one is to sell the business. Um, uh, for a lot of small businesses, um, you know, there are, uh, sort of websites and brokers that will help you sell your business. Uh, and there's a process that you'll go through where, um, depending on your organization, you'll either sell the assets of your business, uh, so you, you'll have a company usually at the point that you're selling, although you may be a sole trader business.
Um, but, um, It's not the case that you would necessarily sell ownership of your company, your P T Y L T D entity to someone else. You can do that. Mm-hmm. But for small businesses, more commonly you'll come up with a list of assets, which will include all of the inventory, all the things you own, and an item called my brand and goodwill and my trademarks.
Mm-hmm. And you'll have a package of items, um, and you'll sell that to someone for X dollars. Um, hopefully lots of dollars. Uh, and that's often how, um, a business will be sold, um, for, um, sort of the startup companies that reach, um, bigger scales. Uh, different things happen at, at larger scales where you do actually have these, um, sale of the entities share acquisitions.
In some cases, if they get really big, they might I p o and sell to the public on, on the stock exchange, um, or be, become a subsidiary of a large, um, entity. So, um, uh, and that, that whole field is kind of called m and a Mergers and acquisitions, um, which is the, the bigger business version of the small business sale.
So, um, in those cases, people will be owners of the, of the company. Um, there'll be proceeds of sale. Whether it's the m and a or the small business sale, um, hopefully they're making more money than they put in or money that they're, they're happy with. And, and that can be a way for the sort of story to end.
So, um, as I think Alex sAId earlier, like, um, you don't necessarily need to be thinking about from day one what is my exit? Because if you're a human being, you are, you will probably change over time in terms of what you wanna do. Um, but it's useful to have in mind where this story could end. What am I trying to achieve here?
Do I want to sell this thing in a few years and am I building it in a way that's sellable? Um, do I wanna generate profits from the business and, and just do this 'cause I love what I do and do this for the rest of my life? What is it that you're working towards and that might influence your business strategy and and so on.
But um, but those are some ways I think that the story can end, if that makes sense.
Justin Bohlmann: Yeah, makes perfect sense. Guys, we've reached the end. Mm-hmm. Thank you so much. Uh, it's been awesome. Great. Alex Easy Companies. Yeah. Alex from Sprintlaw Lee from Pop Me From Thriday. Awesome. Thanks
Alex Whiteside: guys. Thanks. Yeah.
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