The Global Financial Crisis may have been the first major lurch in the carbon based economy. Rapid carbon based global economic growth triggered an oil spike that saw oil pass US at $140/barrel. The financial fuel was cheap credit that spewed out of the US, helping to ignite the final blow off and ultimately burned the financial markets.

Today, with an aging first world population licking their financial wounds and staring into a debt ridden future, the information age is well and truly alive and well. While the GFC saw industrial production plummet, the growth of information flowing on the digital super highway never missed a beat.

Carbon based life is proving to be awfully expensive at the end of the industrial age. Carbon based life not only requires other carbon based life to support its' existence; it also needs water. As both carbon based energy & water become scarcer and therefore more expensive, expect to see changes in consumer behaviour. Here are some that we can expect :

• Use of energy saving appliances such as electric cars
• Smaller more energy efficient residences
• Renewed focus on the environment
• Thrift as a new social standard
• Remote work or working from home instead of travelling to the office will be become the norm rather than the exception
• We'll rely more on communication technologies and we?ll spend more time in virtual environments and on the internet
• A return to home grown food & vegetables

How you prepare your business for this future is critical to your success.

For small business owners, collecting receivable monies from customers can be a time consuming & frustrating process. Unfortunately, all too often debt collection is relegated to a secondary task behind every day service or supply operations and given that cash is the lifeblood of a business, neglecting to collect your rightful dues from your customers is akin to not feeding yourself.

Here are some processes & strategies to ensure that you collect your receivables on time every time -

Put in place a credit check process for new customers. People & businesses invariably develop patterns of behaviour and not paying debts or paying debts late is a reoccurring trait that should be picked up with a simple credit check. Use a company like Dun & Bradstreet to run your credit check through plus request contact details of two suppliers who will vouch for the new potential customer.

Send a copy of your terms & conditions to new customers for them to sign off on prior to delivering goods or service on credit.

Resend copies of outstanding invoices along with the monthly statement. Invoices are better for jogging customer's minds as to the product or service that they received from your business.

Develop & implement a system for collecting receivables. Every Monday, you or your accounts person should run through a checklist for chasing down outstanding monies. Send copies of invoices where due dates have been exceeded. Call customers who have had a copy of an outstanding invoice. For debts that are more than two weeks overdue, call daily. For debts that exceed your usual terms plus a certain number of days over term, immediately refer the collection process to a debt collection specialist.

Learn from experience. Bad payers generally continue their habitual behaviour so it is good policy to insist that bad payers lose access to your credit.

Remember that the receivable monies are yours. You've provided the service or goods & are entitled to payment. You don't need to beg and should ensure that whoever is tasked with the collection process is forward, demanding & insistent. This does not need to equate to being rude though.

Don't let customers see that you have +60 days or +90 days on your statements. This provides a subconscious signal that you accept long due accounts as part of your business process.

If you are a micro business & too small to have a bookkeeper, outsource your collection process to a company that specialises in debtor handling.

Remember, debtors or receivables belong to you & your business. The sooner you collect the sooner you can use the money to retire interest bearing debt.

The life of a small business owner is incredibly tough. Small businesses are often under-resourced especially when it comes to the array of skill sets and time required to improve the business. Information systems need upgrading, marketing plans need to be developed & implemented, staff need to be trained and a huge range of other tasks have to be considered, usually all by the business owner or owners. All of these business upgrade & improvement projects have to be performed alongside whatever service is offered or goods sold by that small business.

All too often the enormity of the task set leaves the small business owner in a state of paralysis or simply promising him or herself that the business improvement projects will be attended to at some later date.

These task sets ultimately have to be scheduled and then performed in parallel with usual business routines. Once the decision is made to implement a project, nothing should be allowed to derail the implementation of that project. Discipline in implementation is critical even under the most trying of circumstances. Disciplined project implementation becomes habit forming allowing the small business owner to engage in a never ending series of business upgrade projects always in parallel.

Steve Jobs is a master at innovation. His early association with Apple gave us the GUI or graphical user interface and his more recent association with Apple has given us the I-pod, I-phone and other unique, highly recognised technology tools and applications. The question is how does Steve Jobs keep coming up with these masterful inventions?

Innovative entrepreneurs have a particular type of intelligence called creative intelligence that enables discovery yet differs from other types of intelligence. (per Howard Gardner's theory of multiple intelligences)

Innovators are able to leverage both the left & right sides of the brain that yield structured thought & the ability to imagine. In using both modes of thought, innovators naturally leverage the five discovery skills to generate their concepts & ideas.

Innovation starts with connecting the dots. The dots we are talking about here, are potentially different tools, applications, ideas, objects, business processes, physical processes, laws, modes of travel, modes of life, in fact everything that it is possible to encounter in real & imaginary worlds. Strange & unrelated connections can yield amazingly creative insights that yield innovation. Obviously, connecting the dots can only happen in the mind of a person who has exposed themselves to a huge range of dots. Connecting the dots is a backward process that falls into place only after a significant number of dots have been sampled. Steve Jobs dropped out of structured University only to drop back in on the topics that interested him. He also spent time learning calligraphy and attending an Indian Ashram.

Questions have to be asked in order to build structure around the dots. It is of limited value to know that all small vehicles running on four wheels are called cars. To derive innovation potential, it is necessary to ask how cars work, what powers them, how are they constructed, why are some cars more popular than others? Learn to ask, why, why not & what if.

It can also be useful to imagine opposites without confusion or emotion. Hold the thought of Perth with a huge abundance of water or with very little water. Completely different alternatives can lead to valuable insights and allow for synthesis to occur.

Try to embrace constraints too. Limit the freedom of an imagined project or put constraints into your ideas and then see what emerges as an opportunity. In business we have to live with constraints every day. We are regularly under resourced and technology fails. Sometimes we have to be creative in the face of limitations.

Common phenomena go unnoticed by the majority of the population. The everyday mundane is exactly that to most people but to the innovator, the everyday mundane is there to be inspected, examined and picked apart.

Innovators are always on the lookout for the small details in the lives of their customers, suppliers and employees. It is in the mundane that opportunities lie like rough diamonds in the dirt. Learn to observe and don't close yourself off from the world. Flick through the junk mail, read widely, visit lots of websites covering different topics.

Life is one big experiment. Charles Darwin proved that. The evolutionary machine churns out experiment after experiment and in the wild, as in business; lots of failures are required to deliver a survivor. Innovators are constantly experimenting by constructing interactive experiences and then looking for unorthodox responses. It is from the unorthodox responses that insights emerge. Innovative companies are always testing and experimenting. Failure should not be frowned upon but celebrated. Experimentation does not need to be expensive and projects that fail can be killed early or morphed into another project.

Wide networks supply the individuals and groups that are necessary for testing out the ideas of an innovator. Innovators want to sample the experiences of people and groups as they come into contact with them. Most business people seek out networks purely for the opportunity to find markets while innovators seek out different people to tap their unique perspectives in often totally unrelated fields as it is often these encounters that generate a new idea or insight.

As with other skills, innovation requires practice and those that practice will gain a degree of mastery in this most valuable of skills.

Every leader, regardless of their organisational position, owes it to themselves, their employees & their company to practice the skills that deliver an innovative, creative mindset.

Many small business owners are excessively fixated on indirect cost reductions and penny pinching in order to improve the cash flow and profitability of their businesses.

Often cost reductions come about by reducing marketing, advertising, staff amenities and depreciation associated with capital improvement and/or replacement. There is an old business adage that applies here, "you have to spend money to make money". Without appropriate spending in these areas a business will achieve suboptimal growth. Obviously, this is not to say that a business owner should not attempt to find more cost effective alternative goods and services.

In relation to direct costs it is obviously critical to achieve as great a differential between sales and the direct costs as possible in order to optimise gross profit. Gross profit should not be optimised at the expense of product or service quality. Service quality can suffer if insufficient human resources are available to carry out tasks in an efficient and timely manner. Additionally, the potential for sales growth may be limited by long term labour under resourcing.

For long run growth businesses it can actually be beneficial to carry excess labour costs especially if the excess labour can be fully employed with 'value add' tasks such as business development and systems improvement.

Focusing on cutting costs shifts focus away from growing revenue. Revenue growth with good margin discipline will ultimately lead to far higher profitability rather than focusing on cost cutting.

There is a common sales pitch that is used by business coaches to secure work from business owners and it runs along the lines of, "if you do what we tell you, you can get your business into a position where you'll only need to work 40 hours per week and you'll be able to take 6 weeks holiday per year". Well this may be true for the business owner approaching retirement and looking to wind down but for the hungry business owner who is looking to build his business, 40 hour work weeks & 6 weeks annual holidays is probably a pipe dream.

Here is a great example of what it takes to get to the top. Bill Gross, CEO of Pimco, the world's largest bond investment firm maintains a punishing schedule, arriving at work daily at 5.00am and working through into the evening and on weekends takes home hundreds of pages of reading material that he filters down into something more manageable for his team.

It is worth remembering that every business has competitors and if those competitors are able to work harder, longer and smarter than you are they will win market share.

There are a number of ways to value a business with most specialists regarding discounted net present value of the future cash flows as being the most realistic method. This method estimates what free cash is available to the business owner each year for five years, adds a terminal value (a discounted value from the following five years) at the end of five years & then discounts all the five years worth of cash back to a dollar value in today's terms. After all, a business owner is really only interested in what he can take from the business.

Given that we want the value of the business as a stand-alone cash-generating machine, we must incorporate a reasonable value for salaries of the operator into the normalised and adjusted earnings. An easy comparison of a cash generating machine for a business owner is to put his or her money into a term deposit and earn interest at the prevailing rate and not have to work, therefore in order to compare apples with apples a stand alone business would have salaries associated with managers.

Now as you can imagine, knowing what those future available cash flows is going to be is difficult so we model out various growth/decay scenarios for the business into the future and include expected capital replacement requirements. If we model future growth, then we also need to incorporate growing working capital requirements. Growing businesses divert cash away from the owner and into larger stock & debtor carries. Less cash coming out the tap makes the business less appealing.

Finally, to get these future cash flows back into a dollar value in today's terms we need to use a discount rate. This rate is associated with the riskiness of the business and the reward expectations of a buyer. For example, an investor may buy a term deposit for $100,000 from a bank for 1 year with an iron clad guarantee that he will earn $7,000 from that deposit and get all his money back at the end the life of the deposit. A business purchaser faces many more risks and therefore would want much more than $7,000 from 1 year of owning a business that he/she paid $100,000 for; how much more is the big question. This question can be answered by considering the riskiness of the business. For a low risk business, an investor may be satisfied with merely two or three times what is paid by a term deposit. For a high risk business the expected return could be many times the rate paid by a term deposit.

By now you can see that valuation is a hazy non-precise endeavour that requires many assumptions about the future of the business and expectations associated with rates of return. For this reason, a valuation should take into account many different scenarios associated with these variables to build out a whole range of possible values.

Another method of business valuation that is used quite frequently is to assess the future maintainable earnings of a business based on past earnings and then apply some multiple to those future maintainable earnings to derive a valuation. If this method is used, it is important that the business has a relatively stable earnings history. To suggest that the future earnings of a business will be like they were in the past is very naive especially if the past was unstable. Stability in the past provides some small confidence that there may be stability in the future.

Where do you then get your earnings multiple to multiply your calculated maintainable earnings by in order to derive a value? Well as it so happens, share prices for listed companies are readily available together with those companies earnings. With the enterprise value of a listed company and its EBITDA (Earnings Before Interest Tax Depreciation & Amortization) it is a simple matter of deriving an earnings multiple that is backed by the marketplace.

If you can find a listed company that operates a business that is the same as yours or similar then you might consider applying the earnings multiple from the listed company to yours in order to derive a value. Given that a listed company is probably orders of magnitude larger than a small privately owned business with more opportunity for growth and more economies of scale it is worth reducing the earnings multiple of the publicly listed company to apply to the earnings associated with the privately owned business in order to derive a value. Here again, it is worth ranging the discount of the publicly listed companies' earning multiple.

There are two more very important points to consider when using the earnings multiple of a publicly listed company. Firstly, use the appropriate earnings multiple. Earnings to market capitalisation gives a ratio that associates earnings to equity. An earnings to enterprise value gives a ratio that associates earnings to the value of the actual enterprise or business. Market capitalisation of a business is different to the enterprise value of a business by the debt carried by that business. After all, equity or market cap is equal to assets less liabilities. It is equity plus debt that supports the assets of a business and enables the business to generate future maintainable earnings. Secondly, this method of calculating a business value is really more useful in comparing values of like for like businesses rather than providing a true value. After all, market caps are a moving target on stock exchanges and can shift dramatically in even a few days as markets twist & turn.

From 1 March 2010 the Australian Federal Government has put in place a new set of legislation that will ensure that within two years, all bookkeepers who engage in preparing the books or the BAS reports for businesses must be BAS registered. BAS Registration entails meeting certain training criteria under the direction of a registered training organisation.

The government are implementing this legislation to improve the reliability of the data that is used to populate the BAS forms.

Fair work Info line 13 13 94

Overview of the Fair Work Act July 1, 2009 for small business

The Fair Work Act applies to National Systems employers and has replaced Workchoices.

Small business refers to a business with less than 15 fulltime or equivalent employees.

The following information is a summary only, further information may be obtained by contacting Fair Work on 13 13 94 or via the website at www.fairworkforsmallbusiness.com.au

National Employment standards

1. Maximum weekly hours

The maximum number of ordinary hours an employee may work in a week is set at 38. An employee may be requested to work additional hours but may refuse if the hours are unreasonable.

1. Employee requests for flexible working arrangements

To be eligible the employee must have:

• 12 months continuous service with the employer
• Be responsible for the care of a child under school age or a disabled child under 18. Such requests may only be refused by an employer on reasonable business grounds.

1. Parental leave and related entitlements

Allows eligible employees up to 24 months unpaid leave in relation to the birth or adoption of a child. To be eligible the employee must have 12 months of continuous service.

4. Annual leave

Paid annual leave entitlement is set at a minimum of 4 weeks per year. Shift workers are entitled to 5 weeks a year. Agreements and awards may enable a 'cashing out' of these entitlements.

5. Personal sick, carers leave and compassionate leave

All employees, except casuals are entitled to a minimum of 10 personal or carers leave days per year. Employees are also entitled to 2 days unpaid personal/carer leave and 2 days of paid compassionate leave per occasion. Agreements and awards may permit the 'cashing out' of these leave entitlements.

6. Community service leave

Employees are entitled to take 10 days paid leave per year to perform jury duty and unlimited unpaid leave to perform emergency management activities.

7. Long service leave

The Commonwealth government is currently working to establish a uniform long service leave entitlement, until such time, current existing entitlements under state law continue to apply.

8. Public holidays

All employees are entitled to 8 paid public holidays per year.

• New years day- January 1^st
• Australia day- January 26^th
• Good Friday
• Easter Monday
• Anzac Day- April 25^th
• Queens birthday holiday
• Christmas Day- December 25^th
• Boxing day ?December 26^th

9. Notice of termination and redundancy pay

Employers must provide employees with written notice on the day of termination. Depending on the years of service different levels of termination pay is required. Employees are to receive redundancy payments dependant on the years of service.

Note: redundancy pay entitlement does not apply where the employer is a small business, that is, where the business employs less than 15 full time equivalent employees.

10. Fair work information statement

All new employees must be given a copy of the Commonwealth Governments Fair Work Information Statement prior to beginning work or as soon as is practical after commencing work.

Unfair dismissal

A change in the law now enables an employee who has been dismissed to file a claim for unfair dismissal.

An employee may file a claim if he or she:

• Has completed the minimum employment period, which is 12 months of continuous service for a small business and 6 months in all other cases
• Is covered by an award or agreement
• Earns less than the high income threshold, which is currently set at $108,300

An employee must lodge a claim within 14 days of the dismissal taking effect.

If a dismissal is found to be unfair, the preferred remedy is to reinstate the employee, if not possible, the employer may be required to pay compensation up to a maximum of the lesser of 26 weeks pay or $54,150.

Modern awards

The existing state and federal awards have been replaced with 130 new Modern awards. Awards are tailored to the needs of specific industries. For further information and to find out if your business is covered by a Modern award contact the info line on 13 13 94.

Modern awards also include a flexibility clause, which enables employers and employees to agree to new arrangements, which meet their specific needs, known as 'Individual Flexibility Agreements'.

Under the Modern Awards system, employees are not permitted to take home less pay than they did prior to the introduction of the modern Awards system.

Enterprise agreements and the collective bargaining framework

All employees and employers may appoint a 'bargaining representative' to negotiate on their behalf. Almost anyone may be appointed a 'bargaining representative' and employers must advise employees on commencement of work that they have a right to appoint a 'bargaining representative'.

From January 1^st 2010 it is no longer possible to create new registered individual agreements with employees. The only form of individual employment agreement available will be common law agreements.There are now different agreements for different industries.

1. The single enterprise agreement-which cover a single employer and a group of employees

2. The multi enterprise agreement-which cover two or more separate employers who have decided voluntarily to join under one agreement.

3. Greenfields agreement- rare and can only be made for a genuinely new workplace before any employees have been hired and generally made between the employer and union.

Only 'permitted matters' may be included in new Enterprise Agreements and all agreements must contain a 'Flexibility term', 'Dispute resolution term' and 'Consultation term'.

Agreements must be approved by Fair Work Australia in order to commence operation.

General protections

Protection for employees include:

• Freedom from discrimination
• The right to join- or not join a trade union
• Sham contracting
• Adverse action against an employee who seeks to exercise a ?workplace right?

Changes to Industrial action

Industrial action must still be endorsed by a majority of employees by a secret ballot. The results of secret ballots held before July 2009 are no longer valid.

Employers must allow  Protected Action Ballot Agents ie: officers from the Australian Electoral Commission, access to the workplace to provide information to the employees regarding the ballot.

For a secret ballot to be valid, at least 50% of those eligible to vote MUST cast a vote and of those, more than 50% of the valid votes cast must support the proposed industrial action.

In most cases, it is illegal for an employer to pay employees who are engaged in industrial action.

If an employee refuses to work due to concerns regarding their immediate health or safety, the refusal is not deemed industrial action.

Right of entry

Refers to the right of properly authorized trade union officials to enter a workplace to investigate suspected breaches of the law or hold discussion with employees.

If a union official is entering the workplace

1. The official must have a reasonable suspicion that the breach is occurring

2. The breach must relate to a member of that official's union who is employed at that workplace.

3. The union officials union must be entitled to represent that employee.

Union officials must

1. Provide 24 hours notice

2. Show their permit on arrival

3. Only enter during normal business hours

4. Comply with all reasonable requests in relation to health and safety and the location of discussion with employees.

Transfer of business (change of ownership in business)

An agreement or award that applied to employees prior to transfer will, in most case, still apply once transfer is complete. This ensures employees receive the same entitlements after transfer as they received before.