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The combination of federal Treasurer Peter Costello's pro-business budget and Prime Minister John Howard's industrial relations revolution will create the most positive environment for competent small and medium-size enterprise for three decades. Now is the time to ensure that business and marketing plans for growth and development are taken out of the bottom drawer and given a thorough shake-out.

Businesses with fewer than 100 employees should be planning to take advantage of the new climate to make and keep a profit, and to expand over the next few years rather than adopting a more-of-the-same mentality. 

Managers, owners and partners associated with enterprises with fewer than 100 employees stand to win a substantial share of the $21.7 billion in tax cuts over the next four years. There will be more funds in the community for households to buy well-designed business and professional services. Business owners should be working out how to benefit from the billions of dollars in tax cuts.

The lower the amount of income taken out of the business this year, the greater the share of high income tax benefits to be gained next year after the Senate passes the budget. At the same time, funds can be safely invested in business development rather than negative gearing of property investments.

Owners or partners who have been taking an income of more than $120,000 a year will have $42 a week more to invest in their business without fear of a wage explosion or regular increases in the costs of minimum wage and conditions.

Business owners need to reinvest in business development, maintenance costs and systems that will earn a good income next year and take advantage of all the extra money available to their customers.

They should defer making payments into a superannuation fund until next year when the scrapping of the superannuation surcharge on high-income small-business owners and managers will encourage people to put some of the extra income into savings rather than fuel another interest rate rise.

Family members can help cut the overall small business tax bill by allowing the 'non-earning' business partner or low-earning family member to accumulate their own superannuation benefits. Where a 'mum-and-dad' enterprise has been paying out wages to only one of the family members, it will be important to visit the family accountant and arrange to make payments into the partner's super account
Industrial relations practices based on defences against union interference can now be redirected towards individual employee relations that encourage long-term commitment.

At the same time, the removal of the unfair-dismissal provisions for firms with fewer than 100 employees means that business owners have greater flexibility to bring in professional managers and employees with specialist skills rather than seek the safety of employing only members of their immediate family.

Now is the time to work out which employees the business needs and to see if the business can be redesigned with a lower salary and wages bill. Employees can now be more readily placed on individual employment agreements and/or encouraged to form their own small business to make the most of the new economic climate for sole traders who work with a number of small-business owners.

 CONTACT: Dr Colin Benjamin, Marshall Place Associates

Marshall Place Associates offers a range of strategic thinking tools that open up a universe of new possibilities for individuals and organisations committed to applying the processes of innovation, creativity and entrepreneurship.
CONTACT
Dr Jane Shelton
Chief Executive Officer,
Marshall Place Associates
Level 15, 461 Bourke Street
Melbourne 3000
Ph: +61 3 9640 0099
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Email: contact@marshallplace.com.au