Benefits of networking for businesses (part 2)

Networking for small business

In my previous article, I shared some of my thoughts on the power of word of mouth marketing and personal referrals for businesses. As I’ve said, I’m not an expert in business networking, but I’ve experienced what it’s done for my business and I’ve witnessed how it’s benefited other businesses too. If anything, I hope that this series of article swill shed light on some of those experiences to give you something to think about in terms of whether it can benefit your business as well.

Small business is unique

Big brand businesses allocate a lot of resources into their marketing and public relations to ensure that you (the consumer) is aware of their brand. For big brands, brand awareness means being front of mind all the time. You’ll see them on television, on the radio, in newspapers and magazines, on billboards and of course, over the internet. They’ll be sponsoring sporting teams, community activities, and major events. Big brands are everywhere and in every aspect of our lives.

If you’re a small business, then (like me) you probably wouldn’t have the resources to maintain the same level of marketing as big brand businesses. So what can you do as a small business? Even without exploring any other part of your business, I already know you’ve got something that the big brands. You’ve got something that’s unique to your business and it’s something that will give you an edge over those larger competitors. That something unique is YOU!

Business networking requires you

We’ve all got social networks of some sort or other. These various networks exist through family or friends at all different levels and through different forms of association. You might know people from school, from university, through work, through church, over the internet, or even through whatever your normal daily activity might be (ie, your local postman, the checkout girl at the supermarket, your favourite barista etc). Regardless of the network that you may belong to or how it came into existence, the next question is whether that network adds value into your business.

Sometimes some networks are totally distinct and separate from business and sometimes other networks are fully integrated into business. Understanding the dynamics of each network will allow you to navigate them successfully, and more importantly, appropriately. Have you even been invited by a ‘friend’ to a multilevel marketing seminar? I’m sure they probably told you that it was about something other than multilevel marketing and they never asked whether you’re actually interested (assuming correctly that you’re not)? You’ll know what I mean, it’s not just what you do, but how you do it – especially if you value and want to maintain the relationships with those people in your networks.

Formal Business Networking

Aside from the various social networks that we all belong to, there are other networking groups that are focused purely on business networking, or networking for business. When joining this kind of group, there’s no question or uncertainty about what the main goal is – it’s all about business.

You’ll find that there are many different networking groups for businesses and they all go about their networking in different ways. Some groups are very structured while others might be more casual. Some meet weekly while other meet less frequently. Some meet in specific venues while others may meet online only. At the end of the day, you should find a business networking group that suits you and meets your needs because that’s where you’ll be at your best and be able to do your best.

I started formal business networking several years ago, and my first experience was a real eye-opener. I had been invited by a business associate and didn’t know what to expect. While the returns were not immediate, with commitment and dedication I found the rewards to be much more than just the immediate network.

Up next…

In the next part in this series of articles, I will be sharing some of what my team of lawyers and I have done in terms of formal business networking and what it has meant for us.

ATO urges caution with SMSF property investments

The ATO has warned trustees of self-managed superannuation funds (SMSFs) to be cautious when investing in property.

The ATO is concerned that people are using their SMSFs to invest in property without fully understanding their obligations under the law, or that some people are seeking to take advantage of certain types of arrangements.

The ATO is primarily concerned with arrangements where:

  • an SMSF invests in a related unit trust by acquiring units in the trust, and the unit trust acquires property, but the arrangement breaches the superannuation compliance rules in some way, such as where the property is subjected to a mortgage, or is acquired from or rented to a related party, when it would otherwise be prohibited; and
  •  an SMSF enters into a Limited Recourse Borrowing Arrangement (LRBA) to acquire an asset, and the arrangement does not comply with the strict conditions that must be met for SMSFs that borrow.

In particular, these borrowings must generally be used to acquire a single asset (that the fund is not otherwise prohibited from acquiring; e.g., SMSFs are prohibited from acquiring residential property from a related party), and the asset acquired cannot be held directly by the SMSF but must be held by a separate ‘holding trustee’ (or ‘custodian’), solely for the benefit of the SMSF.

The ATO has also stated that:

  • the trustee of the holding trust must be in existence, and the holding trust must be established, by the time the contract to acquire the asset is signed; and
  • the SMSF cannot borrow to acquire a vacant block of land and then use the same borrowing to construct a house on the land.

According to the ATO:

“The fine details are important and trustees need to be sure that property is the right investment for their SMSF and that the arrangement is legal.”

“Some of these arrangements, if structured incorrectly, cannot simply be restructured or rectified.  The only option may be to unwind the arrangement which could involve forced sale of assets at an inconvenient time.  This could be very expensive for the fund with potential stamp duty and tax consequences.”

SMSFs that do not comply with the superannuation laws may also become ‘non-complying’ for tax purposes and, if the SMSF or the unit trust needs to dispose of the relevant property, they may incur a CGT liability, or the SMSF (and any other unitholders) may be required to include a capital gain in their assessable income if they need to redeem their units in the unit trust.

In addition, the ATO states that where arrangements are deliberately entered into to get around the law, the fund’s trustees may be disqualified, face civil penalties or even face criminal charges.