Your Next Big Thing.....

Hi Everyone!

Good news! I am really feeling back to my old self these days. It is amazing, I had been so UN-me for so long (pregnancy and post partum will do that!) that I had forgotten what it is like to feel like my normal, passionate self!

Today I was spending my quiet time and came up with this question which I thought I would toss out to all you passionate people as well.

What is YOUR next big thing?

Or What is YOUR next "thing"? Doesn't HAVE to be big to be significant.

Lets talk about it, and how to inspire each other on to the next level.

With Purpose and Passion,

JULIE JORDAN SCOTT


Dare...............

Hi Julie!

> Good news! I am really feeling back to my
> old self these days. It is amazing, I had
> been so UN-me for so long (pregnancy and
> post partum will do that!) that I had
> forgotten what it is like to feel like my
> normal, passionate self!

Julie, that's great news! I'm very happy that you're back to your terrific self! :)

> Today I was spending my quiet time and came
> up with this question which I thought I
> would toss out to all you passionate people
> as well.

> What is YOUR next big thing?

> Or What is YOUR next "thing"?
> Doesn't HAVE to be big to be significant.

> Lets talk about it, and how to inspire each
> other on to the next level.

Julie, I've had an eventful week.... I think it could be one of those "turning points" that happen every now and then in your life....

The recent topics of discussion here have really stimulated me. On Wednesday, I took a drive, to a seaside suburb of Melbourne (where I live), called St. Kilda....

While I was there, I walked along the beach, then out on the pier. This pier is a nice one -- it has a cafe/restaurant at the end.... It's also next to a marina. So you can sit there, eating your food or sipping your drink, surrounded by the ocean and the boats bobbing in the water....

I brought my notebook with me. I didn't know what I was going to do with it yet, but I thought I ought to bring it just in case!

It was a glorious sunny day. (We're in the middle of winter here in Australia, but it's not that cold by North American or European standards....) I ordered a hot cup of mocha, and some french fries (or "chips" as we say downunder), and sat enjoying the sunshine and the view....

Somewhere, in my subconscious, it knew why I brought that notebook. I began to write down what I was doing.... EXACTLY what it was that I do.

I listed ALL the "jobs" I do for my various activities. I tried to list each separate job, as if what I was doing was a bigger business....

Those who have read "The E-Myth Revisited" may notice the influence here. Although I read that book perhaps a couple of years ago, I'm finally putting it into practice.... I stored the information away, and the time was now right.

I discovered the incredible number of "jobs" I am doing! I think in all, I listed almost 20 "jobs"....

What this has done is it has clarified all the definable tasks I do to run my businesses.

Having clarified this, I can now see more clearly how to get to the stage where I have employees doing some of these "jobs" for me. I can see myself employing some people, probably initially part-time, then eventually full-time, to take over many of these tasks....

What this also does is that it means my potential growth is larger. Instead of being limited by what I can do as a single person, I'm only limited by the opportunity which is out there.... (And one thing I've learned the past year is that the opportunities seem to be boundless!)

So, I no longer see myself now as a "one person show," as some put it. I see myself as a fully-fledged business, with many different jobs involved within it. At this stage, I'm doing all the jobs, but that's just a temporary stage....

One of the next steps I need to do is talk to an accountant, to see what kind of steps I need to take legally to be able to take to employ people, or even look at other possibilities for outsourcing some of my work.

However, this has been a major "mental shift" in how I view my own activities.... And it's mainly due to the discussions we've been having here!

Now I see myself as having several jobs, and looking to employ people to take some of them over from me....

I expect it could take me up to a couple years to get to the stage where I've managed to employ others to take over all the jobs I listed, but as the saying goes, the journey of a thousand miles begins with a single step!

So, that was my "mental shift" this week.... It may sound small, but in reality it's quite a big one. I'm no longer limited by my time, at least not in my mind.... Now I have to find out the necessary information I need (legal etc.) to implement the plan.... :)

Thanks, Julie, for asking! I'd love to hear about other ideas and plans too.... :)

- Dien

There's also another change I've made recently in my activities, which I wanted to share with you....

I started to "keep score" in my business.

It's hard to imagine any kind of competition or sport where nobody is keeping score! Yet, this is how many small businesses operate....

How do you keep score? I started to keep a weekly balance sheet....

I know EXACTLY, week by week, what my "net worth" is, and how it's changed week by week, due to all my activities....

Of course, the goal is to increase your net worth every week by as much as possible!

In my case, I do that through various activities....

I've been keeping my balance sheet for four weeks now. I do it every Friday night (after the markets close, to evaluate my stock market holdings).... I've found it's VERY motivating!

It really is like a score card. And if you only increase your "net worth" by a small amount one week, it makes you try harder the next week. :)

How do you do it? My balance sheets are very simple....

I have four sections. "Current Assets", "Non-Current Assets," "Current Liabilities," and "Non-Current Liabilities."

Current Assets are liquid assets I have now, or which I expect will be liquid soon. That is, CASH and things which will soon become cash. Things like cash in the bank, and chattel items I'm expecting to sell in the near future.

Non-Current Assets are assets I have, which I don't expect to turn into cash soon. I count my stock holdings as non-current assets, since I'm a long-term investor. If you hold property, it would probably go here....

Current Liabilities are things like bills I have to pay soon, or short term loans I need to pay off soon.

Non-Current Liabilities are, in my case, some long-term loans....

To calculate your net worth, you just add up your assets, and subtract your liabilities. This will give you a number -- hopefully a positive one! -- on what your "net worth" is....

I do this every week. It's fascinating to see how this number -- my net worth -- changes every week. Of course, the goal every week is to make it increase by as much as possible.... :)

Once you start doing this, as well as motivating you, it does become more like a game, with a score.

THIS must be what they mean when they say that MONEY IS JUST A WAY OF KEEPING SCORE.

Start your own business score card today, if you're not doing it already!

By the way, this is different from a salary.... A salary is usually calculated BEFORE expenses. However, your increase in NET WORTH comes after expenses. If you're just standing still, just making enough to pay your bills, your increase in net worth will be zero -- you'll have the same net worth from week to week, and month to month. If your net worth goes up, though, it means your WEALTH has gone up. That's the difference....

Another thing you can do is a Cash Flow Analysis.... To find out how to do this, see the book "Low Risk, High Reward" by Bob Reiss. Chapter 2 is all about this topic (and how it's important for small business).... Many consider that this chapter alone is worth the price of the book.... :)

One thing I'm not sure how to do yet is how to evaluate intellectual property rights on my balance sheet. For example, I have some rights to certain intellectual property (reprint rights for example), and I'd like to include that on my balance sheet, but I don't know how to do that yet....

- Dien Rice

The tax man.

> One of the next steps I need to do is talk
> to an accountant, to see what kind of steps
> I need to take legally to be able to take to
> employ people, or even look at other
> possibilities for outsourcing some of my
> work.

I'm not accountant or lawyer, okay. So anything written here is not to be taken as legal advice.

If at all possible, do not employ anyone as an employee, even if it's part time. You'll have to contribute to their SuperFund. Face all the PAYG tax things. And a whole bunch of feldacarb.

As for outsourcing... good call. But even here you NOW have to watch your step. Outsource to someone with an ABN, so they pay their own taxes, etc., and if you give them too much work the tax man will consider them as your employee - thanks to our new stupid rules. And you'll both be back in the employer/employee boat.

To get around it you'll have to outsource in small amounts - when outsourcing to individuals, sole proprietors, home-based business, etc. - or pay on a commission only basis (the tax man has left the self-employed commission only person alone), or outsource only to established companies with employees.

In other words... when outsourcing: spread it around in small doses to many smaller operators, or have larger operators do it who also have many other clients.

And, if outsourcing to the smaller operators, make sure they also do work for others in a similar fashion to what you provide. If you outsource to someone who has a job, this small business income won't be considered business income and you're back in the employee/employer boat.

Hope this helps.

Michael Ross.

P.S. The above only applies to Australia.

Hi Michael,

Thanks for your advice, it sounds like very good advice to follow....

Regarding outsourcing, I've been wondering if I can outsource some work to a temp agency.... I was thinking maybe I could outsource some work kind of as a "trial" to see how it went....

I know very little about this, so at the moment I'm kind of feeling around in the dark....

Anyhow, this is an avenue I'll have to find out more about!

- Dien

> Regarding outsourcing, I've been wondering
> if I can outsource some work to a temp
> agency.... I was thinking maybe I could
> outsource some work kind of as a
> "trial" to see how it went....

In the past, you could have used PPS - a very simple tax deducting system used by subbies.

BUT PPS is now gone and replaced with self-paid tax and ABNs.

Now the ATO has passed a new ruling - and back dated it to last July. The new ruling is aimed at the self-employed Service Provider.

Realise that pretty well everything in our economy depends on Services - plumber, electrician, truck driver, brickie, etc., etc.

This "rule" says in effect, that if 80% of your income comes from a single source you are not a business or subbie, you are an employee. And as an employee you have the standard employee tax deductions (ZERO).

Now imagine a self-employed tiler. He runs his little ads looking or home-owners who want their bathroom retiled or whatever. And he also does a lot of work for builders. And, like a lot of Trade guys, he longs for the big contract.

Now imagine someone like Trump builds another Trump Tower and needs a tiler to tile all the apartments. Our guys get this large contract and for the next 12 months he's set up.

BUT, according to the ATO, 80% or more of his income is from this one contract. And by their new rule that makes him an employee and not a tradesman who got a large contract. As an employee with zero deductions he can't even deduct materials. Can you see where that leads?

Now think of the same tiler who opts to hook up with Drake. Over the course of the next 12 months Drake sends him to 12 different locations to tile the buildings of 12 different builders.

The way companies like Drake work is, they bill the builders and pay the tradesman. So even though our tiler worked at 12 different sites all the money he received came from Drake.

That means, over 80% of his income came to him from Drake. And under the new law, Drake is therefore his employer and he is an employee.

In effect, this law will put an end to companies like Drake from operating like they do.

But this is more widespread. Some franchises work in a similar fashion - head office bills the Franchisee's clients and pays the Franchisee. This new law means the Franchisee is now an employee of the Franchise. (Couriers Please franchisees fall under this, for example)

Or how about builders who contract to companies like Jennings? Suddenly they are considered employees (from last year) and not entitled to any deductions (note: there's a 12 month grace period in the building industry only, at this stage).

How about the IT field? If you get your work through companies like Drake but in the IT field, you're sunk. And if you are contracted to do a large job... or many small jobs because the company is pleased with you... you will not be considered a self-employed person under contract, you'll be considered an employee.

In effect, those who get work through Temp Agencies won't be able to any more (the temp agencies won't exist). And if their business is small, such as just an add-on to their Job, and you are the sole "client" then all their business income comes from you and they will be considered your employee.

As they don't want that... and you shouldn't want that either under our stupid "once you hire you can't fire" labour laws... they are effectively out of business. And you are forced to deal with large companies if you want something done.

You can speak to an accountant about this. But make sure they've done the ATO course which teaches them about this new rule. And then go to another accountant and see what they say. Chances are you'll hear two different versions of what can be done.

OR, wait a while until the dust has settled - and after Howard is voted out (is their any doubt now?) - and see how it all stands.

Hope this gives you something to think about and figure ways around.

Michael Ross.

Hi Michael,

Thanks for the feedback.... It sure sounds (here in Australia) that contractors are getting screwed with our new tax system....

And if the Temp agencies disappear, that would thwart my plans.... But maybe I can still do this while they are still around? I really want to try giving someone some work for a couple weeks or so, then stop and evaluate....

But you're right, I don't want a fully-fledged employee. Not until I've tested it out temporarily.... If I can't just outsource work out, I might try going with a fixed contract.... I could probably hire a university student or something like that. I know that many uni students are always looking for part-time work, and universities usually have their own student employment offices which you can call directly to advertise the work you have available....

Our new tax system sure sounds like a big mess....

In my opinion, Australia is WAY over-regulated. It's a very nice place to live, but it can be tough if you want to be in business.... Hopefully things will improve....

By the way, I just got myself a new book the other day (surprise surprise! :) ), it's called "Making Delegation Happen: A simple and effective guide to implementing successful delegation." Wow, it's a great book so far -- just on the topic I need. :)

- Dien

Michael wrote -

> This "rule" says in effect, that
> if 80% of your income comes from a single
> source you are not a business or subbie, you
> are an employee. And as an employee you have
> the standard employee tax deductions (ZERO).

Oh YUCK!!! And I thought the US tax laws were bad on this issue. This would really stink for me with my current contract with Harley-Davidson. I hope our lawmakers and taxmen don't get any funny ideas watching you folks Down Under.

Rick Smith, "The Net Guerrilla"


Product Development Should Still Allow Deductions!

Once you are declared an employee and not a business, you can't split your income with your wife (or husband if you're a woman).

So all the income is thus yours and will most likely be taxed at the highest tax rate of 50 cents in the dollar.

And to think... Australia is called "The lucky country".

Deadliest critters. Over governed. Over taxed. Weak currency. Constant long-term droughts. Draconian gun laws. Six national free-to-air TV channels. $5 an hour internet access fees. $4 for a gallon of gas.

Gee... good thing we're lucky eh? HA! :o)

Michael (I'd rather be in Connecticut) Ross.

> And to think... Australia is called
> "The lucky country".

> Deadliest critters. Over governed. Over
> taxed. Weak currency. Constant long-term
> droughts. Draconian gun laws. Six national
> free-to-air TV channels. $5 an hour internet
> access fees. $4 for a gallon of gas.

> Gee... good thing we're lucky eh? HA! :o)

> Michael (I'd rather be in Connecticut) Ross.

Michael,

And I thought all you guys did down under was carry a big blade, wrestle crocodiles, and rescue pretty women ala "Crocodile Dundee". Maybe I'm "lucky" to be "Up Over" instead of "Down Under".

JDB


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