Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 87

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.


 

Leave a Comment:

     

RELATED ARTICLES

SMSFs can lend to some relatives

banner

Most viewed in recent weeks

Lessons when a fund manager of the year is down 25%

Every successful fund manager suffers periods of underperformance, and investors who jump from fund to fund chasing results are likely to do badly. Selecting a manager is a long-term decision but what else?

2022 election survey results: disillusion and disappointment

In almost 1,000 responses, our readers differ in voting intentions versus polling of the general population, but they have little doubt who will win and there is widespread disappointment with our politics.

Welcome to Firstlinks Election Edition 458

At around 10.30pm on Saturday night, Scott Morrison called Anthony Albanese to concede defeat in the 2022 election. As voting continued the next day, it became likely that Labor would reach the magic number of 76 seats to form a majority government.   

  • 19 May 2022

Betting markets as election predictors

Believe it or not, betting agencies are in the business of making money, not predicting outcomes. Is there anything we can learn from the current odds on the election results?

Keep mandatory super pension drawdowns halved

The Transfer Balance Cap limits the tax concessions available in super pension funds, removing the need for large, compulsory drawdowns. Plus there are no requirements to draw money out of an accumulation fund.

Welcome to Firstlinks Edition 454 with weekend update

Before the last Federal election, these pages were filled with policy discussions and articles generating hundreds of comments as Labor ran a large target agenda. We all know how that ended. Most Australians distrust government and media, and this campaign will be handouts, spin and personality attacks. Will Australia emerge more divided than ever?

  • 14 April 2022

Latest Updates

In praise of our unique democracy and its sausage

For all the shortcomings of our political campaigns, our election process is the best. We are blessed with honest administrators and procedures that we all trust to hand over power peacefully, with a big snag. 

Investment strategies

Is the investing landscape really different this time?

Many market analysts argue that the pandemic has changed everything but we must judge whether the circumstances are as drastic as billed. A quick review of four major events helps decide if this time is different.

Economy

Comparing generations and the nine dimensions of our well-being

Using the nine dimensions of well-being used by the OECD, and dividing Australians into Baby Boomers, Generation Xers or Millennials, it is surprisingly easy to identify the winners and losers for most dimensions.

Retirement

When will I retire? Economic impact of an ageing population

About 39% of the labour force is aged over 45. Intergenerational reports highlight the challenges of an ageing population and the impacts on consumption patterns, dependencies, public finances and economic growth.

The real story behind the crypto crash

The recent sell-off in the crypto market and its trigger - the collapse of the Terra UST coin - has affected many institutions either holding or trading crypto assets, including crypto fund managers.

Investment strategies

Cash is the nightingale, the bird in the hand

The bird in the hand is worth two in the bush, and it's an apt metaphor for investment choices. In 2021, as investors hunted in the bush for decent returns, demand overwhelmed supply. Cash is the bird in the hand.

Strategy

Book review of 'Putin’s People' and his motivation for war

Author Catherine Belton argues Putin’s sole ambition is to hold onto power. Her book seeks to understand why Putin invaded Ukraine after he became isolated and out of touch with reality during the pandemic.

Sponsors

Alliances

© 2022 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. Any general advice or ‘regulated financial advice’ under New Zealand law has been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892) and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. For more information refer to our Financial Services Guide (AU) and Financial Advice Provider Disclosure Statement (NZ). You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.

Website Development by Master Publisher.