Western Sydney is an example where the economy has expanded to become the third largest in Australia, contributing $100b to Australia’s GDP (8 per cent of total GDP). There is more potential to unlock in Western Sydney, with future growth anchored by landmark infrastructure projects like the International Airport nearing completion this year.
According to NSW Government data, there is $14.4b of planned developments and 11,200 hectares of land at the centre of NSW’s transport networks, projected to create 200,000 jobs in the region.
This evolution provides opportunities for both existing and new businesses to scale. For business owners, while growth is a primary goal, uncontrolled growth and rapid change can expose vulnerabilities. Below we explore key considerations for business owners to successfully navigate the challenges associated with scaling a business:
Building a robust business plan
As businesses grow and continually adapt to their environment, it’s important for business owners to have a point of reference as a guide through periods of disruption. Creating a robust business plan is an opportunity to document your strategy and can be an effective navigation tool that evolves over time. Broadly speaking, a business plan outlines why the business exists, the short-term and long-term financial and non-financial targets, and the key drivers that will influence the achievement of those targets.
A business plan can help to:
- Provide business owners with direction
- Support informed decision-making
- Encourage effective financial management
- Identify risks and opportunities proactively
- Improve operational efficiency
During rapid growth, it’s crucial to focus time and energy on the most impactful priorities. Setting clear action plans to address strategic priorities ensures the business remains on course, and a business plan can assist to manage changing priorities over time.
Asset protection
In most circumstances when businesses grow, the assets of both the business and the owners grow simultaneously. An effective asset protection plan is like an insurance policy – it can shield assets from unforeseen circumstances and protect the work invested in accumulating those assets.
Asset protection can provide the following benefits:
- Safeguard personal assets of business owners
- Safeguard business assets
- Protect the brand and reputation of the business
- Facilitate succession planning
A robust business structure is fundamental to an effective asset protection plan. A considered structure can help protect assets as the business scales, and can also provide a level of tax efficiency and flexibility to adapt to changes in the business environment.
Tax governance
The ATO has recently intensified its focus on compliance of privately owned groups through programs like the Next 5,000 reviews. From these reviews, business owners have been encouraged to approach tax governance proactively and improve analysis and documentation of tax related issues. Recent cases highlight the financial impact of neglecting key tax issues and the need for the broader business community to take action.
A sound tax governance framework can help with:
- Reducing regulatory risk: By ensuring accurate and timely reporting, and adherence to complex tax laws, reducing regulatory risks reduces exposure to tax audits, penalties and reputational damage.
- Supporting investment: A sophisticated tax governance framework provides transparency and confidence to lenders and potential investors as these businesses will be seen as lower-risk and more attractive for investment and funding.
- Planning for future business growth: As part of a plan for growth, businesses may consider commencing operations abroad, acquiring a complimentary business in their local market, or launching a new product or service. A proactive tax governance approach, whilst necessary from a compliance perspective, will also increase the likelihood of achieving a level of tax efficiency when pursuing an expansion strategy.
- Unlocking access to incentives: There are multiple incentives offered by different levels of government that support business growth and innovation. Being aware of the incentives on offer significantly bolsters the funding available for growth.
We’re here to help
If you feel like your experiencing rapid growth and are struggling to navigate this change, please reach out to our team of experts today who will be able to help you with your business needs.
Article contributed to by Raffaele Bellucci– Private Enterprise
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