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.
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If you own a rental property or holiday home, keeping the right records is key to maximising your tax deductions and staying ATO-compliant. This week, we’re highlighting what the ATO expects you to keep when it comes to residential rental properties. Here’s a quick checklist of the documents you should hold onto: Purchase & Sale Documents – Contracts, settlement statements, and legal documents. Loan & Ownership Records – Loan statements, refinancing documents, land tax assessments. Rental Income – If you don’t have a rental statement you will need to document all rental income received, including bond money retained, insurance payouts, and any other reimbursements. Expenses & Repairs – Keep receipts and invoices for expenses like advertising for tenants, property agent fees, council rates, strata levies, repairs, maintenance, insurance, and interest on loans. Depreciation & Capital Works – Receipts for assets over $300, depreciation reports, and capital improvement records. Before and after photos of any capital works. Holiday Home Use – If your property is rented out part-time, you’ll need evidence of when it was genuinely available for rent (e.g. booking requests, advertising, availability calendars). How long to keep records: You’ll need to keep most records for at least 5 years after lodging your tax return, or longer if claiming capital works or carrying forward losses. Keeping detailed records ensures you claim everything you're entitled to—and makes things much easier in the event of an ATO audit. Need help getting your documentation in order? Reach out to our team at Clear Vision Accountancy Group—we’re here to help. To read a more detailed list of items you need to keep for your rental property visit: Records for rental properties and holiday homes | Australian Taxation Office
Running a business isn’t just about making sales — it’s about making enough sales to cover your costs and pay yourself what you deserve. But how do you figure out how much turnover (aka revenue) you actually need to make each month? Knowing this number helps you: Set realistic sales targets Price your products or services properly Know when to cut costs or increase margins Understand when your business is sustainable This isn’t just about numbers — it’s about clarity and control. Once you know your required turnover, you can stop guessing and start planning. Whether you’re a solopreneur, a growing startup, or a small business owner, this is the foundation of making your business work for you — not the other way around. We love numbers — seriously. And we get that not everyone does. If you need help breaking things down in a way that’s simple, practical, and actually makes sense (even if numbers aren’t your thing), call Clear Vision Accountancy Group today on 4688 2500.
From 1 July 2025, the Superannuation Guarantee (SG) rate in Australia will increase to 12%. This means employers will be legally required to contribute at least 12% of an eligible employee's ordinary time earnings to their superannuation fund. This increase is the final step in a legislated rise from 9.5% in 2021 to 12% by 2025, aimed at boosting retirement savings for Australian workers. If you use Xero for payroll, the SG rate should automatically update in the system. However, we recommend you double-check your payroll settings to ensure everything is correct. If you’re unsure or need assistance, please contact your bookkeeper or get in touch with us at: Clear Vision Accountancy Group (07) 4688 2500 We’re here to help you stay compliant and avoid any costly errors.
