Developing seasonal pricing strategies - Robert Bates & Co
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Q4 2020
Strategies
for managing
your business
Developing seasonal pricing strategies
A seasonal pricing strategy will help to wait until your peak period is over and
you minimise loss of cash flow in low your premiums do not drive away customers
periods and maximise profitability in looking for better value. Look to the market to
peak seasons. help you strike the right balance to maximise
the benefits of seasonal pricing.
Changing your pricing will help you
capitalise on your target market’s spending Holiday based strategies
habits. Keep in mind that creating a
The customer influx in Christmas and the
marketing campaign to bring awareness to
New Year is an opportunity for you to tap
your price change or seasonal deals will be
into the spending season with your pricing
critical in meeting your business objectives.
strategies. Advertising seasonal deals well in
Consider the following steps to get the most
advance are essential to reaping the benefits
out of your seasonal pricing strategy.
from your price change and gaining an edge
INSIDE: Know your customers on your competitors. Offer incentives like a
gift wrapping service, loyalty credits or special
• Insolvency reforms to support small business Previous buying patterns should influence deals on your most popular products. In the
• What is Organisational Culture? campaigns. Tailor your pricing to the needs of post-Christmas sales look to your competitors
your target market, and segment your market to see how far you should discount your
• Tips to upscale your business
and develop a range of pricing strategies to prices to capture the largest market segment
• And more maximise customer engagement. while keeping your profit margins high.
Pricing for low and peak periods Reuse and recycle
Your pricing strategy should accommodate Seasonal pricing strategies and their
fluctuations in customer demand. Break your accompanying marketing campaigns can be
year into low, mid and peak seasons. While costly. In order to reduce costs, reuse past
offering an off-peak discount may boost marketing campaigns that were successful
your profits by incentivising your customers, and recycle them only if they are still
increasing your premiums in peak season relevant or need a few minor amendments.
will help you capitalise on high customer Assessment of pricing strategies should be
demand. Experiment with pricing so that ongoing to ensure your business is up to
your discount does not encourage customers date with your customers’ spending habits.
Liability limited by a scheme
ROBERT BATES & CO approved under Professional
Standards Legislation.
Level 2, Suite 4, EMAIL PARTNER Business Growth Solutions
90 Phillip Street, info@rbcaccountants.com.au Robert Bates SMSF Accounting
Parramatta 2124 Sharon Hewitt SMSF Advisers Network Authorised Representative
TEL (02) 9891 9388 WEBSITE CLIENT MANAGER Financial Accounting
www.rbcaccountants.com.au Urwik Patel Corporate & Personal Taxation
Maria Rinaldi Xero Silver Partner
Business Matters Quarter 4, 2020
Mitigating conflicts of interest
Conflicts of interest are often a trigger Common examples of conflicts of interest communicated to employees verbally and re-
for workplace tension and gossip, in business include: enforced through discussions.
reducing productivity and damaging • Recommending a friend or family A good code of conduct will reflect the
employee relations. member for a job position. culture and values of the business, provide
information on how workers can expect
• Employers not disclosing that a
to be treated and how they are expected
candidate being considered for a job
to behave. It should be accessible to
is a friend or family member.
all employees, be well organised and
Tips to upscale
• An employee starting their own comprehensive but also easy to understand.
business that provides similar products This can be achieved by providing situational
your business or services, especially if a non-compete examples, answering common questions
agreement has been signed. workers may have, and avoiding technical or
legal jargon that may be confusing.
• Working for a competing company.
Set realistic and actionable goals • Posting to social media about the
business’ failures.
Businesses should set realistic and
actionable small goals which they can work • Romantic relationships between an
towards, rather broad goals which provide no employee and their supervisor.
direction. Setting broad and unrealistic goals
is demotivating and makes any progress • Accepting a favour or gift beyond the
made seem insignificant. Every person in the agreed amount from a client.
business should be given a target to meet
The best way to avoid conflicts of interest
over a reasonable timeline which contributes
towards achieving a larger goal. in the workplace is to establish a code of
conduct that clearly outlines the standards and
Establishing standardised and expectations of the business. It should cover
automated processes
details of business policies and list everyone it
Small businesses can make the mistake applies to, including employers and employees,
of ‘doing things as they come’ but this board members, management, officers, and
means that as business grows, adjusting to contractors. This code of conduct should be
high scale tasks is difficult. To avoid this,
business should standardise all processes
of work. Any individual placed into a role
should be able to follow standardised
procedure and yield a product which is of
similar quality to the previous one. Investing
money into automation tools is worthwhile
What is Organisational Culture?
for this procedure. This can include
automating management of social media,
Understanding what organisational formal procedures and guidelines and
email, and customer relationships. Both of
structure is can help with making decisions maintaining power structures.
these will contribute to creating structures
which support growth. about your business in all areas. The organisational culture reflects in all
Identify competitive strengths and aspects of the business. It can help with
Organisational culture is multifaceted, it
weaknesses determining which potential employees
consists of the shared values, beliefs and norms
may be more suitable than others and
Recognising the strengths and weaknesses of in the workplace, and determines employee
the way that those in leadership positions
one’s business is essential. Strengths will allow interactions as well as customer interactions.
communicate with employees.
businesses to hone in on unique qualities
There are four types of organisational cultures.
they possess which give them a competitive The way a business communicates and interacts
advantage. Weaknesses will reveal which • Clan Culture: Focussed on collaboration with their customers is also influenced by
areas require growth so that changes can be between teams to form a family-like organisational culture. Businesses may desire
made before upscaling takes place. relationship. friendly and informal relationships, or formal and
Network reserved relationships. Communication methods
• Adhocracy Culture: Focussed on
may also change, such as preferring email
Businesses should continue to develop creativity and innovation and open to
interaction as opposed to utilising chat functions.
relationships with service providers, sales continual change.
channel partners, suppliers and customers. Of course, the culture of an organisation can have
Keeping an open mind about partnerships • Market Culture: Focussed on achieving
overlap of the different types. More important than
or potential collaborations could open up goals through competitive drive
focussing on one type of culture, is recognising
different avenues of business growth. amongst employees.
what works best for your business and trying to
• Hierarchy Culture: Focussed on foster values and norms that embody that.
Business Matters Quarter 4, 2020
What business structure suits your business?
An important decision to make before obligations of the business directly to the corporation
you start a business is what structure • Low-cost structure • Members not liable for company’s
your business will run under. Partnership debt (only liable if you breach legal
obligations)
This will reflect into all facets of your business, • Share control and management of
so you should spend time understanding the • Complex business structure plus Extensive
business
implications of each structure. documentation and record-keeping
• Each partner pays tax on the share of
net partnership income each receives • Wider access to capital
Sole Proprietorship
• Minimal reporting requirements + Trust
• You have complete control of your
Inexpensive to set up
business • Expensive set-up and operation
• Requires more documentation
• Your business assets and liabilities are • Formal trust deed outlining operation
not separate from your personal assets Company required
and liabilities • Separate legal entity from its owners • Trustee responsible for yearly
• Personally liable for debts and - all profit, tax, and legal liability is administrative tasks
Entering a partnership: pros and cons
Whether you are in the business game Consider the following advantages and If a partner wishes to resign from the
already or setting your sights on a new disadvantages before starting or joining a partnership, it is relatively simple to dissolve
business venture, starting a partnership partnership: the partnership and recover their share.
may be a high-yielding decision. Advantages Disadvantages
A partnership business structure is an A partnership structure is easy and This type of business structure carries
incorporated business with 2-20 owners. inexpensive to set up. Unlike operating as a unlimited liability, meaning the business
The individual owners work together to sole trader, there is increased opportunity for owners are liable for the debts of the
achieve the goals of the business; sharing income splitting, more capital available and business and are subject to reasonably
responsibility and profits. higher borrowing capacity. cover what is owed or risk seizure of their
Partnership laws vary depending on your Working as a team can also provide more personal assets.
state or territory. There are two types of perspective than working as an individual. Each partner is responsible for the debts
partnerships - general and limited. High performing employees can also be and liabilities of the business (with the
made partners. extent depending on the type of partnership)
A general partnership is where all partners
are equally responsible for the day-to-day From a tax perspective, partnerships do not including the actions of other partners.
management of the business. need to pay tax on their income. Each partner This can cause disputes and friction
pays tax on the share of the net partnership among partners, resulting in unfavourable
Whereas, a limited partnership has at least
income they receive. Superannuation is a circumstances. For example, one partner may
one general partner who is responsible for
responsibility of the individual partner, as have a differing vision or a different opinion on
controlling the day-to-day operations and is
partners are not considered employees. administrative control or profit sharing for the
liable for the debts and obligations of the
Additionally, there is limited external business compared with the other partners.
business. The passive partners in this type
regulation and reporting requirements. Although the process of adding and
of partnership are called limited partners.
Limited partners generally contribute a defined Removing partners is generally removing partners is simple, partners will
amount of capital, and their liability is limited straightforward. The only condition is that at most likely need to value partnership assets
to the amount of capital that is contributed. least two partners are left in the business. which can be expensive.
We are here to help
Make use of us! This guide is merely a starting point, designed to help you identify areas
that might have a significant impact on your personal and business planning.
We are always pleased to discuss matters with you and advise in any way we can.Business Matters Quarter 4, 2020
Insolvency reforms to support small business
The government recognises that its owners, while a debt restructuring plan is the ordinary course of the company’s business.
despite support to get through the developed and voted on by creditors.
The temporary relief measures give businesses
COVID-19 outbreak, not all businesses Liquidation Pathway needed breathing space and highlight the im-
are going to remain viable. portance of working with financial professionals
The costs of liquidation can consume all or
Many small businesses will have significantly as soon as required, ensuring that your small
almost all of the remaining value of a small
increased levels of debt in order to remain business has the best chance of success.
business, leaving little for creditors. Under
in business during the COVID-19 pandemic. the government’s new process, regulatory
The government is introducing a number of obligations will be simplified, so that they are
permanent and temporary measures to expand commensurate to the asset base, complexity
the availability of insolvency practitioners to deal and risk profile of an eligible small business.
with this expected increase in the number of
businesses seeking to restructure or liquidate. Temporary Relief Measures Extended
The package of reforms features three key The government announced a further extension of
elements: relief measures to 31 December 2020. The tem-
porary increase in the threshold at which creditors
Debt Restructuring can issue a statutory demand on a company from
Currently, requirements around voluntary $2,000 to $20,000; and a temporary increase in
administration in Australia are more suited the time companies have to respond to statutory
to large, complex company insolvencies. The demands they receive from 21 days to 6 months.
new debt restructuring process will adopt a In addition, there is temporary relief for direc-
‘debtor possession model’ where the business tors from any personal liability for trading while
can continue to trade under the control of insolvent, with respect to any debts incurred in
Small business delivery tips
Important Businesses that fail to meet their customers’ consider offering a credit or discount to minimise
tax dates expectations of affordability and efficiency
of delivery cannot remain competitive.
damage to your reputation.
Setting free delivery
If customers see that a competitor in your Increasingly e-commerce retailers are offering
market can offer the same product with a more free delivery. Consider the following strategies
21 NOVEMBER convenient delivery option, your paying customer to meet market expectations without your profit
Lodge and pay October 2020 monthly numbers will dwindle. You can adopt delivery margins suffering significant losses:
business activity statement. strategies to make your supply chain a strong
• Charge for shipping in the price of the
point and boost your customer satisfaction.
good or service
25 NOVEMBER Deciding on a courier
• Set a minimum spend to get free delivery
Lodge and pay quarter 1, 2020–21 Quit waiting in line at the post office to send
• Limit the locations for free delivery
activity statement if you lodge your parcels and take advantage of technology.
electronically. MyPost Business will allow you to print • Give free shipping for membership sign ups
postage labels and arrange for next day pickup Offer options
for a small additional charge. Independent
28 NOVEMBER couriers may also be an option but make sure
Delivery information must be clearly set out.
You might charge for express delivery and
Lodge and pay quarter 1, 2020–21 you research their reputation and average wait
assess how they would like to pick up their
Superannuation guarantee charge time before partnering with them.
package. Disclose any risk the customer
statement - quarterly if the employer did
Meet your delivery date incurs, for example, if they want the package
not pay enough contributions on time.
Issue a clear delivery deadline and make sure left at their front door, to cover your liability.
you meet it for every order. Give your customer State your return policy
1 DECEMBER access to track the order for their piece of mind.
A vague return policy can deter the customer from
You should also have a tracking system so you
Pay income tax for companies and giving you their business. State your policy clearly
can recover the package or damages should it go
super funds when lodgment of the tax and be upfront with any return charges that will be
missing in the delivery process.
return was due 31 October 2020. suffered. Consider whether a more lenient returns
If your package is not delivered on time, respond policy will be worth the costs of processing returns
quickly, provide an apology or an explanation and if it will secure you more customers.
This publication is for guidance only, and professional advice should be obtained before acting on any information contained herein. Neither the publishers nor the distributors can accept any
responsibility for loss occasioned to any person as a result of action taken or refrained from in consequence of the contents of this publication. Publication date 20 October 2020You can also read
