8 Mistakes to Avoid when Naming a New Business #8

Article by Phillip Davis. Reprinted with permission.

Mistake 8: Sit On It. (When in doubt, make no change at all)

Many business owners know they have a problem with their name and just hope it will somehow magically resolve itself. The original name for one of my clients was "Portables," which reminded some people of the outdoor restrooms or the portable classrooms - neither one a good association. This added to the confusion when phone operators tried to explain their new concept of moving and storage. After some careful tweaking, we came up with the name PODS, an acronym for Portable On Demand Storage. The rest is quickly becoming history as they expand both nationally and internationally. Peter Warhust, President and one of the original founders states, "For the record, changing our name to PODS was one of the best moves we ever made."

Exercise Experience, a former Florida-based company, was frequently confused with a health club. In reality, they sold very high-end fitness equipment. This brings up a very key point - it's better to have a name that gives no impression than a name that gives a wrong impression. Much of the ad budget we spent on Exercise Experience was used to clarify that they sold fitness equipment. This was valuable airtime that could have been put to better use selling the equipment rather than explaining the business. Ultimately, the company folded. It's not to say it was solely because of the name, but I believe it was a factor.

Mike Harper of Huntington Beach, CA, bought a thirty-year-old janitorial and building maintenance company named Regency. We both agreed it sounded more like a downtown movie theatre than a progressive facilities management firm. After a thorough naming search, we developed the name Spruce Facilities Management. Spruce not only conveyed the environmentally friendly image of a spruce tree (something important to the client), it also meant, "to clean up." The new tag line fell right in place Spruce "The Everclean Company."

It's only a matter of time before Southwest Airlines and Burlington Coat Factory and others who have successfully outgrown their original markets begin to question their positioning. Much like 3M and KFC, they may need to make a change to keep pace with their growth and image.
In the fever to start your new business or expand a current one, take time to think through some of these issues. According to the late Henry Ford, "Thinking is the hardest work there is, which is probably the reason why so few engage in it." Albert Einstein took it one step further claiming, "Imagination is more important than knowledge." By tapping into your creativity and avoiding these potential pitfalls, you'll be able to create a name that works both short and long term � one that allows for future growth. Like the original cornerstone of a building, it will support upward expansion as your company reaches new heights.

About the author: Phil Davis President Tungsten Brilliant Brand Marketing Phil’s life goal of “creating environments where people thrive” reflects his desire to assist in personal, professional and business growth. Phil founded and ran a full service ad agency for over 17 years and now works full time as a business naming and branding consultant. Phil resides with wife Michelle and four energetic offspring outside Asheville, North Carolina Website: http://puretungsten.com/ Email: Phil@PureTungsten.com

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Mistake #1, Mistake #2, Mistake #3, Mistake #4, Mistake #5, Mistake #6, Mistake #7, Mistake #8.

8 Mistakes to Avoid when Naming a New Business #7

Article by Phillip Davis. Reprinted with permission.

Mistake 7: The Campbell's Approach (Using alphabet soup to name your firm)

This is a trend that is thankfully wearing off. Driven by the need for a matching domain name, many companies have resorted to awkwardly constructed or purposefully misspelled names. The results are company names that sound more like prescription drugs than real life businesses. Mistake 2 sometimes gets combined with this one and results in a name like KwaliTronix (or worse - mistakes 2, 4 ... 7, resulting in KwalTronixUSA). It's amazing how good some names begin to sound after searching for available domain names all night. But resist the urge. Avoid using a "K" in place of a "Q" or a "Ph" in place of an "F." This makes spelling the name and locating you on the Internet all that much harder.

It's not that coined or invented names cannot work; they often do. Take for example, Xerox or Kodak. But keep it mind, names like these have no intrinsic or linguistic meaning, so they rely heavily on advertising � and that gets expensive. Many of the companies that use this approach were either first in category or had large marketing budgets. Verizon spent millions on their rebranding effort. So did Accenture. So check your pocketbook before you check into these types of names.

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8 Mistakes to Avoid When Naming a New Business #6

Article by Phillip Davis. Reprinted with permission.

Mistake 6: Hide the Meaning (Make it so obscure, the customer will never know!)

It's great for a name to have a special meaning or significance. It sets up a story that can be used to tell the company message. But if the reference is too obscure and too hard to spell and pronounce, you may never have the opportunity to speak to that customer. They will simply pass you by as irrelevant. So resist the urge to name your company after the mythical Greek god of fast service or the Latin phrase for "We're number one!" If a name has a natural, intuitive sound and a special meaning, it can work. If it's too complex and puzzling, it will remain a mystery to your customers. This is especially true if you are reaching out to a mass audience.
I pushed the envelope a little on this one myself, naming my branding firm Tungsten, after the metal that Thomas Edison used to create brilliant light. However, my clientele consists of knowledgeable professionals who appreciate a good metaphor and expect a branding firm to have a story behind its name. It's also a way to differentiate my services (illuminated, bright, brilliant). So while it works for a branding firm, it would not do well as an ice cream parlor.

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8 Mistakes to Avoid When Naming a New Business #5

Article by Phillip Davis. Reprinted with permission.

Mistake 5: Cliche' You Say? (A good name is worth a thousand words)

Once past the literal, descriptive stage, the thought process usually turns to metaphors. These can be great if they are not overly used to the point of trite. Since many companies think of themselves as the top in their industry, the world is full of names like Summit, Apex, Pinnacle, Peak, etc. While there is nothing inherently wrong with these names, they are just overworked. Look for combinations of positive words and metaphors and you will be much better served. A good example is the Fortune 1000 data storage company Iron Mountain, which conveys strength and security without sounding commonplace.

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8 Mistakes to Avoid When Naming a New Business #4

Article by Phillip Davis. Reprinted with permission.

Mistake 4: The Atlas Approach (Using a map to name your company)

In the zeal to start a new company, many businesses choose to use their city, state or region as part of their name. While this may actually help in the beginning, it often becomes a hindrance as a company grows. One client came to me with complaints he was serving more of the market than his name implied. He had aptly called it St. Pete Plumbing since he hailed from St. Petersburg, Florida. But yellow page shoppers assumed that was also his entire service area. With a little creative tinkering we changed the image of St. Pete from a city to the image of St. Pete himself, complete with wings and a plumber's wrench. The new tag line? "We work miracles!"
Other companies have struggled with the same issue. Minnesota Manufacturing and Mining was growing beyond their industry and their state. To avoid limiting their growth they became 3M, a company now known for innovation. Kentucky Fried Chicken is now KFC, de-emphasizing the regional nature of the original name. Both of these companies made strategic moves to avoid stifling their growth. Learn from them and you can avoid this potential bottleneck.

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8 Mistakes to Avoid When Naming a New Business #3

Article by Phillip Davis. Reprinted with permission.

Mistake 3: Where's Waldo? (Names so plain they'll never stand out in a crowd)

The first company in a category can get away with this one. Hence, you have General Motors, General Electric, etc. But once you have competition, it requires differentiation. Imagine if Yahoo! had come out as GeneralInternetDirectory.com? It would be much more descriptive, but hardly memorable. And with the onslaught of new media and advertising channels, it's more important than ever to carve out your niche by displaying your uniqueness. Nothing does that better than a well-conceived name.


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8 Mistakes to Avoid When Naming a New Business #2

Article by Phillip Davis. Reprinted with permission.

Mistake 2: The Train Wreck (Taking two words and colliding them head on)

When forced to come up with a creative name, many aspiring entrepreneurs will simply take part of an adjective and weld it onto a noun. The results are names that have a certain twisted rationale to them, but look and sound awful. Someone starting a high-end service franchise then becomes QualiServe. It's a bit like mixing chocolate syrup with ketchup - nothing wrong with either, but they just don't go together. Other common truncations include Ameri, Tech, Corp, Tron, etc. The problem with this approach is that it's simply forced � and it sounds that way.

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8 Mistakes to Avoid When Naming a New Business #1

Article by Phillip Davis. Reprinted with permission.

Naming a business is like laying the cornerstone of a building. Once it's in place, the entire foundation and structure is aligned to that original stone. If it's off, the rest of the building is off, and the misalignment becomes amplified. So if you have that gnawing sense that choosing a name for your new business is vitally important - you're right. With 18 years in the naming and branding business, I've witnessed the good, the bad, and the really bad. Here's how you can avoid the worst of the mistakes and get off to a good start.

Mistake 1: The Committee (Getting all your clients, employees and family members involved)

We live in a democratic society and it seems like the right thing to do - involving everyone in an important decision. This approach, however, presents a few problems. The first and most obvious fact is that you will end up choosing only one name - so you risk alienating the very people you are trying to involve. Second, you often end up with a consensus decision, resulting in a very safe and very vanilla name. A better method is to involve only the key decision makers, the fewer the better, and select only the people you feel have the company's best interests at heart. The need for personal recognition can skew results - so you are best served by those who can park their egos at the door. Also, make sure you have some right brain types in the mix. Too many left brains and the name often ends up too literal and descriptive.


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Terms of endearment # 5

PAYG Withholding: Pay As You Go Withholding is what was once called Group Tax and is the amount that must be withheld from employee's wages or salaries and sent to the ATO via the BAS.

At the end of the financial year what were once called Group Certificates have now been replaced by PAYG Payment Summaries. Each employee's gross income, and the amount withheld in tax, is recorded along with other information such as allowances, Reportable FBT amounts and Lump Sum Payments.

PAYG Instalments: Pay As You Go Instalments are amounts of tax payable for individuals who are not on wages or salaries and for companies or superannuation funds. It allows payment of tax ahead of time to be credited on a person or entity's tax return.

MYOB Tip: Tracking More Than Salesperson Data

The majority of small business owners do not need nor use the Salesperson field to track employee sales. Did you know you can use this feature to track all kinds of other useful information such as which methods of advertising are paying off?

Example: Assume I want to track my marketing efforts. I use the Yellow pages, newspaper advertisements and my website for promotion. To do this, I would create an employee card for each item I want to track. I simply go to 'lists' in the top menu and scroll down to 'cards.' Click the employee tab and "add new."

You can see above I have added a cards for Newspaper Ad, Website and Yellow Pages. When you create a sale, simply use the salesperson field to begin tracking. In my example, I am tracking marketing. If my buyer heard about my products from the Yellow Pages, I would enter this into the salesperson field as shown below.

Now I can generate reports such as Analyze Sales [Salesperson] to see information at a glance on the new data I am collecting.

This is a handy little feature and can easily be adapted to track information of interest to you and your business.

Possibilities include easy monitoring of:

• Referrers
• Payment methods
• Preferred appointment times
• Geographic location of customers

If you are not tracking the sales prowess of your employees, it makes sense to put this feature to good use elsewhere.

If you would like to see more MYOB tips and tricks in the blog, please leave your feedback in the comments field or contact me at christie@lewistaxation.com.au.

Your thoughts and suggestions are always very welcome.

Changes to Super for Employers

From 1 July 2007:

• you must give your employees' tax file numbers to their super fund when you are given a Tax File Number (TFN) Declaration.

• you will be bale to claim a full income tax deduction for all super contributions you make on behalf of your employees provided certain conditions are met, and

• 'eligible termination payments' will become 'employment termination payments' and can no longer be rolled over into super funds.

Other new rules also apply.

Visit www.ato.gov.au/bettersuper or give us a call to find out more.

Source: Activity Statement Update - Quarter 4 2006-07

Tax Concessions for Small Business

From 1 July 2007, small businesses with turnover of less than $2 million a year will be eligible for a range of tax concessions under the Government's proposed changes to the law. Small businesses will also be able to pick and choose which tax concessions best suit their business.

It's important to find out more about the new tax concessions now if you are currently registered for GST because the proposed changes may affect the way you report and account for GST early in the 2007-08 income year.

Visit www.ato.gov.au/SBconcessions or give us a call to find out more.

Source: Activity Statement Update - Quarter 4 2006-07

Terms of endearment # 4

Something that often causes confusion with taxpayers are the accounts that the ATO maintain in each taxpayer's name. There are sometimes more than two, but for the moment we will cover the two most common.

Integrated Client Account (ICA): This account is active if you receive a BAS or IAS and is a kind of dump account for all the obligations that you have in regard to your BAS. If you are registered for GST, PAYG Withholding and are asked to pay PAYG instalments, then all three components are debited to this account and your payments are credited against them.

Taxation Account: This account is active if you have ever lodged a tax return in Australia. It holds each year's income tax result (whether refund or payment) and credits any payments made to clear outstanding amounts. If you have paid PAYG instalments, these are credited across at the same time as lodgement.

What catches a lot of people is why they are having to pay two different accounts. If you have not made all of the payments to the ICA account and part of your obligation was PAYG Instalments, the ATO will still credit the instalments to the Taxation Account despite you not paying them. The result of this is that you still need to pay the ICA account. If there is still an amount payable even after the PAYG Instalments are credited then that residual amount will be payable on the Taxation Account.

If there is a credit in either the Taxation Account or the ICA, the ATO will transfer any credit against any existing payment liability.

And remember, if you are operating as a partnership then the partnership will have an ICA account which will deal with GST and/or PAYG Withholding but each partner will have their own Tax Account in their own name (a partnership doesn't pay income tax, only the partners do).

Tax Help for NSW Flood Victims

ATO Media Release:

The Tax Office has assured people affected by the floods in New South Wales that they do not need to worry about their tax at this time.

Tax Commissioner Michael D’Ascenzo said this is a very difficult time for residents of the central coast and Hunter region, especially those who have suffered damage to their home or business.

“We understand that people have other priorities to sort out now and it may be some time before they are able to focus on tax matters.

“People who are having problems meeting their tax obligations because of the flood can call us on 13 11 42 to make arrangements that suit their individual circumstances,” Mr D’Ascenzo said.

Your tax agent can also talk to the Tax Office on your behalf.

The Tax Office can help by:

• fast tracking refunds for people impacted by the flood
  
• giving extra time to pay debts - without interest charges
  
• giving more time to meet BAS and other lodgement obligations – without penalties
  
• helping reconstruct tax records where documents have been destroyed, and
  
• offering personal visits from field officers to help reconcile lost records.

Ye gads! My BAS is late!

It's a week past the BAS deadline and the form is still sitting on the kitchen counter... uncompleted!

What are you going to do?!!

Don't do what many tax payers do and stick your head in the sand. It won't go away!

The BAS has to be done, but don't make the situation worse or more expensive. The first thing that you need to do is contact the ATO and let them know that you are running late. If you make the first move, generally the ATO is fairly considerate and they will probably give you an extension of two weeks without hitting you with fines.

Make sure that you get it in within that time. Whether it's sitting at the kitchen table with a calculator and receipts completing the form yourself or getting a BAS provider or Accountant to do the BAS for you, the form must be lodged.

If this is an issue that tends to occur each quarter, consider nominating the GST instalment option. That way the actual calculation of the GST is not required until the lodgement of your tax return.

One common reason that I hear in regard to not lodging a BAS is that the return is complete but the client didn't have the money to pay it. My advice is always the same. Lodge the return, even if you don't have the money.

By not lodging you attract $110 fines every 28 days up to a maximum of $550... and this is an expense you can not claim against your business income. Even if you are charged interest in regard to the outstanding amount it will most probably be far less than the fines... and the interest is tax deductible!

If you find yourself in this situation, lodge the return and then contact the ATO to organise a payment arrangement. As I said before, if the ATO don't have to do the chasing then they are very reasonable in working with you to payoff the amount.

Keep in mind that from 1 July 2007 the compulsory income threshhold for BAS registration has risen from $50,000 to $75,000. So if your revenue (what you receive before any expenses) is less than $75,000 you may want to consider deregistering for GST.

Contact your Accountant or Tax Agent to discuss whether you may benefit from this.

So you want to start a business?

You've got a great idea! No-one else appears to be doing it at the moment. The people you have told have said that they think it would be a winner!

It's a sure fire business success... right?

Well, it all depends on what you do right now.

Interestingly enough, one of the last people that anyone in this situation talks to is an accountant. Yet they should be the first! There are probably two reasons why this is so: fear of the cost of seeking advice and fear that what they will hear will be negative.

Afterall, no-one likes to have it rain on their idea.

However, 1 in 3 of all small businesses started fail in the first year, 2 in 4 fail by the second year and 3 in 4 fail by the fifth year (CPA Australia). Within those statistics you can pretty much guarantee that there were quite a few businesses that believed they had a 'sure fire' concept that would be successful.

The reality is that the success of any business venture is not directly related to the concept... it is related to the planning. The problem is that when you are fresh with a huge marketing idea, planning is the last thing you are wanting to do!

This is where you need to ask yourself "do I want a great idea or do I want a great business?" If the answer is the latter then you need to start being serious about how this great business is going to occur.

One of the earliest things that you need to do is work out a business plan followed by a marketing plan (a little hint: if you can complete both these plans and still have room at the bottom of an A4 page then you've not really done a business or marketing plan!!!)

I will be writing blogs on developing both business and marketing plans in the future.

In the mean time if you are looking at starting a new business you can get get some great resources at http://www.business.gov.au/. A comprehensive business plan template is available at nt.gov.au and an extensive example of a marketing plan is available at business.vic.gov.au.

An interactive New To Business checklist by business.gov.au is available from our site.

MYOB How To: Account Names Instead of Numbers

An important MYOB preference you can change is the choice of listing and selecting accounts by either the name of the account or the account number.

Altering the default settings and listing your accounts by name is a quick and simple procedure.

From the top menu click set up and then scroll to preferences. The preference settings will open and you should select the "windows" tab.

As you can see above, the fourth option is "Select and Display Account Name, Not Account Number."

To activite this preference simply place a tick in the box. When the tick is removed, the accounts will be listed by account number.

Terms of endearment # 3

The ATO can send two different forms to certain taxpayers each quarter, both of which can cause confusion to those who receive them.

Business Activity Statement (BAS): The BAS is a composite form collecting figures on a variety of different taxes and rebates. This form is sent to companies, trusts, partnerships and individuals who operate a business in Australia.

The return obtains details regarding:

• Goods and Service Tax (GST)
• Pay As You Go Withholding Tax (PAYGW) - this is employee group tax
• Pay As You Go Tax (PAYG) - this is personal or company tax instalments
• Fringe Benefits Tax (FBT)
• Wine Equalisation Tax
• Luxury Car Tax
• Fuel Tax Credits

As you can see it covers a wide assortment of taxes primarily related to business activities of which an entity may have three or four at any one time.

Income Activity Statement (IAS): The IAS is sent to anyone receiving taxable income that does not have tax withdrawn through the year (either through PAYGW amounts from wages or PAYG instalments on BAS statements).

IAS statements are primarily sent to individual partners of a partnership, trust beneficiaries, sole traders who aren't registered for GST or employ anyone, self managed superannuation funds and individuals who receive income such as dividends, interest or positively-geared rental receipts.

Therefore partners of a partnership may receive a BAS in regard to the partnership if they are registered for GST or employ someone, and also each receive an IAS to obtain PAYG instalments for themselves personally.

Terms of endearment # 2

Let's see if we can unravel another one of those 'not-so-clear' terminologies that the ATO love to throw at us. These two sound the same but are vastly different.

Imputation credits: These are credits that are raised from franked dividends that a person or entity may receive.

Basically, a dividend is a distribution of profits held within a company to the shareholders (the owners of the company). If the dividend is paid from profits that have not been taxed, it will be an unfranked dividend which is simply added to the person/entity's income (much the same as interest).

If the dividend is paid from profits that have been taxed, it will be a franked dividend. Franked dividends have imputation credits attached that allow a tax credit of 30% of the dividend amount to be used. The reason for this is as the company has already paid tax on the profit at the 30% company tax rate, it would be unfair that the shareholder be slugged with tax again on the same amount. Therefore the imputation credit allows the shareholder to claw back the company tax amount in their own return.

Input tax credits: When calculating a person's Goods and Service Tax (GST) position, input tax credits are the amount of GST paid on goods and services that have been purchased by the client in relation to the business they are operating. Therefore they can claim those amounts as credits against the GST they have collected from the business income.

Sometimes a person/entity may have more input tax credits than GST collected which will generate a refund for that period.

More definitions coming soon!

Business Boo-Boo: Competing on Price

According to customer service consultant Paul Levesque in this month's CEO Refresher journal, competing on price makes the list of The Five Biggest Customer Service Blunders of all Time.

If "cheapest price" is not your market niche, competing on price can actually be damaging to your business. Market research confirms time and again that price is typically not even in the top three things a customer is looking for - in fact, quality is number one.

Paul Levenesque explains:

"It's one of the most common (and most costly) mistakes in business. Price becomes the deciding factor in purchasing decisions only when everything else is equal - and everything else is almost never equal.

Businesses compete on the perception of value, and this includes more than price. It's shaped by the total customer experience - and aspects such as "helpfulness," "friendliness," and "the personal touch" often give the competitive advantage to businesses that actually charge slightly more for their basic goods and services.

Those businesses that deliver a superior total experience from the inside out (that is, as a product of a strongly customer-focused culture) are typically those that enjoy a long-term competitive advantage - along with virtual immunity from the kinds of headaches that plague everybody else."

The bottom line is this: customers go elsewhere when you don't satisfy them. The solution to customer retention is not always to drop your prices. The secret is to deliver better service than your competitors.

MYOB Tip: Unsure of Tax Code

Most business transactions recorded in MYOB will use either a GST tax code or the N-T tax code.

If you are entering data yourself there may be times when you are unsure of the exact tax code to use. It is a good idea to have a specific tax code set up just for such an occassion. In the following example I have used a tax code called QUE (to represent question mark).

Here's how it is done:

1. With your MYOB data file open, select 'Lists' from the top menu and scroll down to 'tax codes.' The tax code list will display on your screen with all the tax codes listed.

2. From the bottom of the page select "new" to add your unique tax code.

3. You can call it anything you like but be sure it is something you will remember or recognise when you need it. I suggest you use your usual linked accounts but set the tax rate at 0% for this code, although ultimately the accountant will fix it up when they apply the correct codes.

4. Save the new code and your screen should something like this.

The next time you are unsure of the correct tax code to use when recording a transaction, you can use your new (question mark) code. This can be assigned correctly by you or the accountant at BAS time.

Knowing your business

During my searching the web recently I stumbled upon several small business sites. I was struck by the realisation that many of these businesses do not know what their business is.

A fine example of this was the 'bookkeeping specialist' offering secretarial services, web design and maintenance, resume writing, marketing advice, business analysis and yoga training! I'm serious.

While there is something to be said for offering a variety of services and having multiple income streams, tossing random services on a single webpage together is clearly not the way to convince prospects you are a 'specialist' in anything.

If you don't have a clear business niche, you risk standing for nothing. This makes you vulnerable to competitors. Give serious thought to what it is you want your business known for. Whatever that may be, be sure you KNOW IT and that you clearly COMMUNICATE IT.

June Lodgement Dates

14 June:

Reasonable benefit limits (RBL) reporting – all RBL reportable benefits paid in May 2007 must be reported to the Tax Office on or before this date.

21 June:

May 2007 monthly activity statements: final date for lodgment and payment.

30 June:

End of financial year.