CASE STUDY 1
SELLING A BUSINESS AT THE RIGHT PRICE
Jacob started an e-commerce business in 2015 as a sole trader. He imports fidgets spinners from overseas and sells them in Australia to teenagers at a 100% mark up. In 2019, Jacob decides he is done with fidget spinners and wants to sell his business to his friend Stephanie for $150,000.
Below is a breakdown of the assets Jacob has on hand when selling the business.
Assuming Jacob has no other income and deduction for the financial year he will be assessed on $76,250 on the marginal tax rates which equates to around $16,328. So don’t spend it all on that new caravan and remember to put some money away for the tax man!
Key things to look out for:
- Are you eligible for small business entity concessions? If Jacob was running the business for more than 15 years or if he is over the age of 55 and retiring, he may be eligible for further tax concessions.
- Are you valuing the business assets correctly? It is imperative to get these correct in order to have a better understanding of the tax position.
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We are here to make sure that you don't short-change yourself when selling your business. Have a chat with us today, and let us show you how to calculate the right sale price for your business!
CASE STUDY 2
CHOOSING THE RIGHT BUSINESS STRUCTURE
Stephanie has always wanted to be entrepreneur and own her own business. She has a budget of $200,000 to purchase a business and has finally found a suitable small take away shop with the perfect location. How should she purchase the take away shop?
SOLE TRADER >
PARTNERSHIP >
COMPANY >
TRUST >
Choosing the right structure can not only save you lots of money, but also protect you and your business. Let us identify the best structure to suit you and help set you up for success! Contact us today >
The risks of incorrectly pricing your products cost businesses a significant amount of money each year, and the larger the business grows, the costlier it becomes. Not knowing, or incorrectly pricing your products could lead to lost profit margins, due to selling something below its cost, or lost sales volume due to pricing products above their true market value.
So, how does a business know that the true cost of one of it’s 30 different manufactured products costs what it does?
We were recently engaged to assist a local winery in regional Victoria with the year-end accounts preparation and tax return. In doing so, we identified that the pricing of their wine was at risk, due to the business not knowing the true cost of producing each bottle of wine.
For example, a 2017 bottle of Shiraz, may cost 30% more to produce than a bottle of 2016 Sauvignon Blanc. In consultation with the business owner and wine maker, we were engaged to develop a costing system, and pricing strategy for their current and future wines.
Based on this work, we were able to identify the cost to produce each bottle of wine, and revealed that the current cost in which the business owner thought it cost to produce the wine was significantly more for some varieties and significantly less for other varieties. In addition, we were able to assist the business with the following key strategic decisions:
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Identified which wines cost less to produce, and can therefore be sold at a lower price to derive increased sales volumes
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Identified which wines cost more to produce, and therefore require a price premium
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The optimal price to sell each bottle of wine to maximise profit and sales volume
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The minimum level selling price before selling the wine at a loss
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Determined the most profitable wine varieties to devote future resources to in order to maximise future returns and eliminate varieties that yield low profit margins
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Identified areas in the business where significant cost savings could be achieved without impacting on quality, to further improve future profit margins
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Identified the optimal sales channels to devote future marketing resources in order to maximise return and ensure a profitable customer portfolio
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Want an expert to go through your business pricing and financial situation and identify real ways to help it grow? Contact the experts at Evergreen Partners today >
PRICING YOUR INVENTORY
CASE STUDY 3
