CNS Partners Blog

I met with a client recently whose business was not going very well. For years the business has not made enough money to justify its existence and it was clear that the owner was worn down and very much over it. The client has been with CNS Partners for only a couple of years but had been in business for over 20 years in total.

Real Estate prices continue to climb in Australian capital cities.  This, coupled with a staggering number of reality TV shows, has seen an explosion in home renovations.  I was speaking to a client this week who conducted a major renovation less than 5 years ago and is already considering selling because the home no longer suits their family needs.  With the benefit of hindsight, they probably would have embarked on a vastly different renovation, or even removed the original house and started again.

Both improving and moving come with considerable expense and stress for the whole family.  Stories of overspending with renovations are common, as well as overcapitalisation.  While the family home is essentially a dwelling, a roof over heads – it is also a unique opportunity to generate wealth in a tax advantaged environment.  For the majority of us, it is the most expensive asset we will ever purchase and requires a large portion of the family budget to achieve ultimate ownership, so why not make smart financial decisions as well as emotional ones?

As always with money, it is important to consider the big picture.  What are you trying to achieve, now and in 5, 10 and 20 years' time?  How does this fit in with the big picture?  What is the overall plan?  Is the family size or space/functionality requirements likely to change in the near future?

The financial merits of spending money on existing homes or selling to move to a new home is a matter that is unique to every situation.  Each alternative must be reviewed on every occasion, weighing up the pros and cons each time.  But don't stop there.  Just because a renovation is a cheaper alternative now, will count for little if in 2 years' time another child means selling anyway, because the cost of upgrading may not be repaid by capital growth in that short time frame.

At CNS Financial Solutions, we work with our clients to map out the overall picture, considering current circumstances as well as potential future variations.  Once the plan is in place, steps are established to achieve the smaller goals.  Most importantly, regular reviews are required to make sure the progress is being monitored and changes are factored in.  After all, hindsight can be an expensive teacher!

As we get closer to the start of a new calendar year and attempt to take a break over the Christmas period it is a great time to stop and contemplate what the year ahead will look like. It is also a great time to reflect and determine whether you are getting what you want from your business. In particular are you spending too much time in your business and not enough time on your business?

Generally the HOW uncovers the fact that owners are spending too much time working IN the business (DOERS / MANAGERS) and not enough time ON the business. Well thought out role descriptions and having the right people in the rights jobs is critical and may just allow you the time to get more strategic and spend more time ON the business.

This time last year, one of my favourite clients called me a Grinch.  She asked if she could have extra money from her super fund over Christmas and I said no – keep in mind that this is her money!  The key is that right back on day one, she admitted to not being good with handling money and gave me the responsibility of keeping her on track.  I am thinking ahead 5,10, even 20 years, factoring in the cost of a new car when needed, improvements to her home and other major expenses that come along in life.  I didn't feel bad about saying no and she eventually thanked me because ultimately it was for her own long term benefit.

I recently listened to a presenter who challenged her clients to have all of their Christmas shopping completed before 30 November – why?  Studies show that planning ahead leads to a reduction in overspending of up to 30%.  I liked the concept of setting a target, planning ahead, sticking to the budget, reducing financial stress etc. 

Both of these examples are great, we need to be sensible and not let the intended joy of giving become a source of family stress.  Of course it is important to monitor spending, celebrate sensibly and live within our means.  But rather than lecture people, be a Grinch or dampen everyone's spirits, let me pose a challenge from a more positive angle. 

- Find more money

Finding more money may mean cutting down on less important expenditure, which requires planned budgeting.  Or, it may mean generating surplus income, preferably passive.  Either way, why not aim higher, identify and set goals, push yourself to work towards them and enjoy the rewards.  We are all capable of much more than we allow ourselves to believe.

If you need help identifying, targeting and reaching your dreams, let the team at CNS Financial Solutions guide you.  Contact me at alan@cnsfinancial.com.au or on (07) 3188 0234 

I hope that you all have an enjoyable Christmas.  Take the financial stress away and then you can focus your energy on important decisions, like what to eat for lunch on Christmas Day!

2017 seems to be flying by with on a couple of months to go until Christmas. It is this time of year that a lot of my business clients take a moment and plan their time off over the Christmas period.

For many in small business not only does this mean time with family and friends but it also means a stop to invoicing and sales which means that cash flow can become tight until the world comes out of holiday mode in January.

So how do we plan and budget for this time of year? This question provides the answer – we plan and budget.

The above two steps allow us to work out how much cash flow we will generate and how much cash will be leaving the business. By ensuring the estimates are conservative the business owner can holiday knowing that the cash flow side of the business is taken care of.

The real question I ask myself is why this is only done once per year at Christmas. My best clients follow this routine every month (some do it weekly even daily). They have the following sorted and are constantly reviewing and improving on these items:

I personally do not have any real interest in Halloween and I doubt if anyone is overly scared by the customised pumpkins on sale in the supermarkets.  But it does provide me with a really lame excuse to tie in to another topic, something that does keep me awake at night – superannuation.

Before anyone recommends professional medical assistance for my condition, let me explain.  I talk to so many people who have no engagement with super, no understanding of what their balance is, which fund they are a member of, or even how super works.  For most it is just some extra bit of money that may be available in retirement to supplement the Government Age Pension.

For those entering the workforce in the last decade or so, they have the luxury of generous employer contributions made to super on every dollar they earn.  Over a 40+ year working life, these contributions plus earnings can really have a powerful impact on your lifestyle in retirement.  Around the country our super is generally our second biggest asset behind the family home.  For the younger generation who have lost hope of ever owning the family home, super is the biggest asset.

It is time to take super seriously as an important part of a retirement strategy.  Whenever I set up new Self-Managed Super Funds for people, the decision is often around fees, ability to buy property, choose their own investments and so on.  What always results however, is an immediate engagement with their money, a desire to actively grow their wealth and treat it as an asset they identify with.  We need to reach a point where all Australians are enthusiastic about growing their super, not just those with their own funds.

Australian Bureau of Statistics figures from 2014 show that 60% of men and 71% of women at retirement age have super balances of less than $100,000.  That frightens me.  With access to the Age Pension diminishing and costs of living rising, how are future retirees planning to fund their retirement?  The sooner we act, the more chance we have of a good outcome.

Father's Day was on Sunday, did we get presents? Breakfast? A nice card?  

Cynics amongst us will dismiss days like this as an excuse for retailers to improve their profits.  I like to embrace the family aspect, the opportunity to spend time with loved ones and for the kids to pump up my tyres with stories of how much they appreciate me – who doesn't love a bit of flattery!  My 19 year old cleared his busy social calendar and spent the entire weekend with me, which was pretty special now that my kids are older and busy with their own lives.

It seems a little bit cruel to bring the mood down on joyous occasions, but these moments invite reflection and we need to think about all aspects of family life.  I love Father's Day because it is all about me, but Mother's Day is a bit hollow for me because my own Mother died when I was a teenager.  Her biggest concern towards the end was whether she had done enough to make sure I would be alright.  I think about this a lot in relation to my own children – how will they cope if I am not there to guide them and provide for them?  What can I do to soften the blow?

There is no way to compensate for serious illness, injury or loss of a loved one.  All we can do is to put things in place to lessen the stress and impact on others around us.  Insurance is a topic no-one likes to discuss, but we all need to look at our circumstances and make sure we are doing the best we can for our families.  Understand what is at stake, how you are protected and is it sufficient?  

Finally, if you are in a position to do so, I urge you to consider donating to worthy causes for those less fortunate than yourself.  Think about those who have lost a family member to disease, or whose financial circumstances prevent them celebrating special days.  Any way we can share some goodwill, we should take the opportunity to do so.

If you would like to discuss protecting your family in greater detail, contact me at alan@cnsfinancial.com.au or on (07) 3188 0234.

As we enter September and Spring has finally arrived it is a great time of year to tidy up your business.

CNS Partners specialises in advising dentists in private practice and we have access to the most up-to-date dental practice research and benchmarking information.  The 2016/17 Dental Practice Research Report features detailed insights into:

Where do you want to go? How are you going to get there? Yes, you can invest online. Yes, you can buy insurance online. Yes, you can buy a DIY Will kit online. But in purchasing these, do you actually know what you have bought? If things go wrong or if your circumstances change, is there someone you can contact? Have you thought about the whole picture, or just one part of it?

In an era where everything can be done sitting on your couch we at CNS are hoping to bring you back to the village. With our CNS Financial Solutions division we can help you with:

Our process for these services includes:

Our mission is to work with you to achieve your financial and personal dreams. We assist you to identify what your goals are, help develop a plan to realise them, and then continue to work with you along the journey to ensure success.