Business by design Part 5: The more you sell the more you make…not always!
Clear Vision • March 2, 2017
The ASIC publication about factors that influence the success or failure of a business that I’ve been referring to in recent articles makes particular mention of trading losses. 34% of businesses cite this as a reason for why they didn’t succeed.
Now you might be thinking, well that’s pretty obvious, if you don’t make a profit you won’t survive…but really it raises a number of issues about why was the business not trading profitably?
The first of these I’d like to address is profit margin. Or understanding how much profit is actually involved in each product or service you sell.
Getting a handle on this is critical for your business. Here are some quick tips and ideas for you to think about.
- Don’t assume the more you sell the more you make. Many businesses fail to appreciate that some of their products or services cost more to produce or supply as than they return in sales.
- Understand how much profit you make for each product or service. With the help of a good accountant you should be able to work through the input costs and overall share of business costs that each product or service requires. Compare this to the sales price of the product or service and you might be surprised
- Compare your products and services to each other and you might find that selling 100 of a particular profit won’t do nearly as much as selling 10 of something else. You can then use this information to inform how your marketing and sales time and money is spent.
- If a core product or service doesn’t turn much of a profit but is still critical to your overall business volume its time to look at input costs.
- What costs are involved in each of your products and services? Can suppliers be renegotiated for better pricing? Are your processes too inefficient? Could the same work be done by less people or less expensive staff? Is the creation of the product or service overly complicated? Can you sell a similar product or service for a similar price but for a lower input cost?
These are just a few ideas that you might consider to improve your trading profit or loss. We invite you to contact Clear Vision for more ideas that are specific to your business. You might also wish to consider our recently CFONow.com.au service and the incredible benefits your business can enjoy when you harness the power of a Chief Financial Officer without the overheads of a full-time employee.
The post Business by design Part 5: The more you sell the more you make…not always! appeared first on Clear Vision Accountancy Group.
July is already kicking along, and if your budget is still sitting on your to-do list, now is the perfect time to get it finalised. Remember, a budget that's 90% complete is far more valuable than a perfect budget that never gets finished. Once it's entered into your accounting system, you'll be able to compare your actual results against your budget and gain valuable insights into how your business is performing throughout the year. Don't forget to review and update your budget whenever your business undergoes significant or permanent changes to its cost structure. This could include implementing a new IT system, engaging a marketing agency, hiring additional staff, moving premises, or making other strategic investments. Keeping your budget current ensures it remains a useful tool for making informed business decisions rather than just another document on the shelf.
More data doesn’t mean better decisions. Many business owners are drowning in numbers but starving for direction, tracking everything and understanding nothing. The result? Decisions based on gut feel, cash flow surprises, and growth that looks good on paper but doesn’t actually strengthen the business. Vanity metrics can be misleading. Total revenue, website traffic, or social media likes might feel positive, but they don’t always reflect real performance or profitability. Real KPIs tell a different story. They give you clarity, control, and confidence in your decisions. While every business is different and the right KPIs will vary, here are some examples of powerful KPIs businesses often track: • Profit Margin – Are you actually making money? • Cash Flow – Do you have enough cash to operate and grow? • Customer Acquisition Cost (CAC) – What does it cost to win a new customer? • Debtor Days – How quickly are you getting paid? • Customer Lifetime Value (CLV) – How much is each customer worth over time? If you’re not tracking the right numbers for your business, you’re essentially flying blind. Because success isn’t about more data—it’s about the right data.
From 1 July 2026, the Federal Government will introduce one of the most significant changes to superannuation administration in recent years: “Payday Super.” These reforms fundamentally shift how and when employers meet their Superannuation Guarantee (SG) obligations. What’s Changing? Under the new rules, SG contributions must be paid at the same time as salary and wages and received by the employee’s super fund within seven business days of payday. This replaces the current quarterly payment system. The changes apply to all eligible employees, including those captured under the expanded definition of “employee,” and extend to salary sacrifice amounts and other qualifying earnings (QE). Employers will calculate SG at the legislated 12% rate on QE, which includes ordinary time earnings and relevant additional payments. Contributions remain subject to the Maximum Contribution Base, limiting employer liability to approximately $30,000 per employee per financial year. Employers will also be required to report QE and SG liabilities through Single Touch Payroll (STP), enabling the ATO to monitor compliance more closely and identify underpayments earlier. Operational Impact for Employers The shift to payday reporting and payment means payroll systems must be updated to calculate, process, and remit super contributions each pay cycle. Businesses will need to ensure their software can manage QE calculations and facilitate timely electronic payments to super funds. Cash flow management will also require attention, particularly for small businesses accustomed to quarterly payments. Super will become a real-time obligation rather than a periodic liability. Importantly, failure to meet the new deadlines will trigger the revised Superannuation Guarantee Charge (SGC), including penalties and interest. While late contributions and SGC amounts remain tax deductible, interest and penalties do not. Employers currently using the Small Business Superannuation Clearing House must transition to alternative payment solutions before its closure on 30 June 2026. Preparing Now Although implementation begins in 2026, early preparation is essential. Reviewing payroll systems, assessing cash flow impact, and updating internal processes will help ensure a smooth transition and minimise compliance risk. Payday Super represents a move toward greater transparency and timeliness, but it also demands proactive planning from employers. If you would like assistance preparing your business for Payday Super, our team at Clear Vision Accountancy Group is here to help. Please contact us on 4688 2500 to discuss how we can support your transition and ensure you remain compliant. We drew inspiration for this article from the ATO
