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

Stop treating the family home as a retirement sacred cow

The way home ownership relates to retirement income is rated a 'D', as in Distortion, Decumulation and Denial. For many, their home is their largest asset but it's least likely to be used for retirement income.

Two strong themes and companies that will benefit

There are reasons to believe inflation will stay under control, and although we may see a slowing in the global economy, two companies should benefit from the themes of 'Stable Compounders' and 'Structural Winners'.

Welcome to Firstlinks Edition 433 with weekend update

There’s this story about a group of US Air Force generals in World War II who try to figure out ways to protect fighter bombers (and their crew) by examining the location of bullet holes on returning planes. Mapping the location of these holes, the generals quickly come to the conclusion that the areas with the most holes should be prioritised for additional armour.

  • 11 November 2021

Reducing the $5,300 upfront cost of financial advice

Many financial advisers have left the industry because it costs more to produce advice than is charged as an up-front fee. Advisers are valued by those who use them while the unadvised don’t see the need to pay.

Welcome to Firstlinks Edition 431 with weekend update

House prices have risen at the fastest pace for 33 years, but what actually happened in 1988, and why is 2021 different? Here's a clue: the stockmarket crashed 50% between September and November 1987. Looking ahead, where did house prices head in the following years, 1989 to 1991?

  • 28 October 2021

Why has Australia slipped down the global super ranks?

Australia appears to be slipping from the pantheon of global superstar pension systems, with a recent report placing us sixth. A review of an earlier report, which had Australia in bronze position, points to some reasons why, and what might need to happen to regain our former glory.

Latest Updates

Investment strategies

Maybe not the four most-costly words in investing

A surprisingly high percentage of respondents believe 'This Time is Different'. They may be in for a tough time if history repeats as we have seen plenty of asset bubbles before. Do we have new rules for investing?

Investment strategies

Firstlinks survey: the first 100 tips for young investors

From the hundreds of survey responses, we have compiled a sample of 100 and will publish more next week. There are consistent themes in here from decades of mistakes and successes.

Strategy

What should the next generation's Australia look like?

An unwanted fiscal drain will fall on generations of Australians who have seen their incomes and wealth stagnate, having missed the property boom and entered the workforce during a period of flatlining real wages.

Shares

Bank results scorecard: who deserves the gold stars?

The forecasts were wrong. In COVID, banks were expected to face falling house prices, high unemployment and a lending downturn. In the recovery, which banks are awarded gold stars based on the better performance?

Exchange traded products

In the beginning, there were LICs. Where are they now?

While the competing structure, ETFs, has increased in size far quicker in recent years, LICs remain an important part of the listed trust sector. There are differences between Traditional and Trading LICs.

Shares

Should you bank on the Westpac buy-back?

Westpac has sent out details of its buy-back and readers have asked for an explanation. It is not beneficial for all investors and whether this one works for some depends on where the bank sets the final price.

Investment strategies

Understanding the benefits of rebalancing

Whether they know it or not, most investors use of version of a Strategic Asset Allocation (SAA) to create an efficient portfolio mix of different asset classes, but the benefits of rebalancing are often overlooked.

Shares

Six stocks positioned well for a solid but volatile recovery

The rotation to economic recovery favouring value stocks continues but risks loom on the horizon. What lessons can be drawn from reporting season and what are the trends as inflation appears in parts of business?

Sponsors

Alliances

© 2021 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.