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Making your SMSF business a saleable practice

With the advent of new licencing rules and the focus on the rapid growth of SMSF’s, many accounting and planning firms are considering what their involvement should be in the SMSF space. Making your business more efficient and perhaps saleable does not necessarily mean you want to, or will, sell it. The area is rapidly changing and staying still and doing nothing may be detrimental to the business value.

Where are you in the value chain?

Before starting to make changes, the first step is to consider where in the SMSF value chain you are, and where you want to be. To me there are three core parts of the value chain for SMSF businesses (ignoring the investing and funds management components):

1.  Advice (financial, tax and structural) and information

Do you want your business to offer advice and if so to what extent and what type, who will be your clients and what will they pay for it?

2.  Administrative process

This is not tax work, it is the process of keeping details on all transactions as they occur, managing the paperwork, producing minutes, monitoring investment strategies, receiving pension payment contributions as well as receipt of income that is due to the fund etc etc. This includes assisting the trustees with adhering to the SIS Act regulations and rules, and ensuring deeds are updated and the fund complies.

3.  Taxation and trustee services

This is the standard BAS and tax work and other ancillary services necessary for the ATO lodgement requirements, plus trustee responsibilities including compliance.

Obviously there are significantly more items in each of these areas, but the key issue is to decide where you want to be in the chain and be true to it and build the practice solution around it. Not being true to it is the biggest mistake that affects the profit of your business.

Understand what ‘best practice’ is and make that your goal, even if you wish to be in the entire value chain. Determine what works for your business and ask how you will profit from the chosen position. Then build the practices, processes and people around the solution you want, not the other way around.

Let your clients know. If you are a trustee, you should ask your provider what they specialise in and what they don’t. Presumption often leads to disappointment.

Some simple steps to take

There are some actions to consider to position the business appropriately:

  • identify the part or parts of the value chain you want to be in
  • write a divisional plan for all sections of your business
  • determine what success means
  • work out your marketing plan
  • decide what a ‘client’ is and how many you need
  • determine how you are going to sell and then deliver the service to clients
  • work out the billing process and the collection of revenues
  • calculate the profit you are targeting
  • report against all of the above regularly.

Is it better to outsource or even sell?

Once you have determined what you are involved in, you should ensure you have referral or outsource partners to deliver the areas you are not involved in. Even if you are not the supplier, every part of the value chain is important to the SMSF trustee.

Outsourcing is not a dirty word. If you want to be in a part of the value chain but do not want to build the internal capability then many firms will white label their service for you. Outsourcing should be an arrangement where the firm delivers to you what you need to deliver to your clients – not the other way around. If an outsourcing arrangements means you end up doing all their work, then you did not get the framework right when contracting the outsourcer. It should be your service, not theirs, so set the parameters to ensure that your business is not burdened by outsourcing.

If you do want to sell your business or a part of your business, put yourself in the shoes of an acquirer and relook at it. Acquirers will pay the most for quality, organised, value chain-orientated businesses. Selling does not necessarily mean you want to get out of this area of business. It may just mean the part of the value chain that you prefer not to do can be sold which frees up cash for other things.

Take a good look at your business and be objective about the skills of your people and what drives you and them. Focussing on the things you don’t do well often means you are taking time away from the things you do do well. Better to concentrate your energies on what you are best at.


Andrew Bloore is Chief Executive Officer at SuperIQ, a leading SMSF administration provider. This article is for general information purposes and does not constitute personal financial advice.


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