I have been criticised for being a bit harsh about the lack of initiatives to help Kiwi entrepreneurs get their products to the world – compared to what is available in America and other OECD countries. I stand by my previous comments, but of course there are some great initiatives here – some of which I have blogged about previously. [Read more…]
Business Owners Forum – Auckland & Whangarei
The August Business Owners’ Forum will be held on Thursday 20 August from 5:30pm to 7:00pm at level 4, 35 Robert Street, Whangarei. The Business Owners’ Forum is for Business Owners to meet and discuss issues of interest and relevance with a panel of experts – and without a sell from the supporters.
This month’s topic is “The mechanics, pros and cons of financing your company through the shareholders’ current account” – and the panel will be Stuart Spicer from Webb Ross, Geoff Grigg from BNZ Whangarei and Fraser Hurrell from Elevate CA.
The topic is big, and here are some details of what will be discussed:
- Tax treatment where shareholders finance their company through their current accounts;
- Structures to ensure maximum tax deductibility;
- Issues around unequal current accounts where there are multiple shareholders;
- Protection of shareholders’ interests in their company through means such as GSAs;
- How to deal with other parties conflicting claims over the company’s assets;
- isuues around cross-collateralisation;
- Potential issues should the company fail;
- Options around financing the company through the current account from the point of view of the bank and ways this can be structured.
Format will be a casual panel discussion over beer, wine and pizza. For more info, email forum@businessownersforum.net.nz.
The Business Owners’ Forum is held on the third Thursday of every month alternating between Auckland and Whangarei, and is supported by The Bottom Line Expense Reduction, The IceHouse, Webb Ross, Elevate CA and the BNZ. The forum is targeted to owners of businesses turning over $1million or more.
Fraser Hurrell is one of three directors of Elevate CA Limited, Chartered Accountants & Business Advisors in Whangarei, New Zealand.
You get what you reward, right?
You get what you reward, right? Give a monkey a handful of nuts every time he jumps through a hoop, and he’ll jump through hoops all day. Compliment a young child every time they say “please” and “thank you”, and pretty soon you’ll have a well mannered kid. Give people massive tax incentives for investing in residential rental property, and before you know it that’s what is happening.
I’m hot on this topic right now, having just returned from Boston and seen firsthand what the American federal and state governments reward. Yup, entrepreneurial behaviour.
I had a coffee with a Kiwi guy in Boston on Sunday. He is an Auckland University graduate and has a very cool Life Sciences venture which might just change the way some aspects of mental health are managed. Potentially a big success story within a small niche of the US$2 trillion American health market. He is located in Boston with a staff of seven techies. The city of Boston pays the rent and utility bills for his offices, because they want to keep him from relocating to Cambridge City, 30 miles to the west. The federal government has stumped up serious six figure cash as an SBIR grant (not a loan) to fund his research and development.
The US machine bends over backwards to make sure his innovation stands the best possible chance of success. Why? Because if he succeeds – and if hundreds of others like him also succeed, then that is great for the American economy. Sure, some will fail. But for the Americans, investment in guys like him is a no brainer.
So if he had stayed in New Zealand, what would the same guy need to do to get massive government support for a venture? Yup, that’s right – he would probably be more incentivised by the system to get a salaried job, and then negatively gear himself into as many residential rental properties as his salary would allow. The benefits for him personally? Government subsidised wealth creation. The positive benefits for New Zealand as a whole? Absolutely zero.
Don’t get me wrong, I’m not dissing the New Zealand political machine completely here. There are some great initiatives going on to encourage entrepreneurship – and I have blogged about some of them before here.
But what if the massive tax incentives (I don’t know what the total is, but I’m guessing in the hundreds of $millions annually) were removed from investment in residential rental property and redirected to NZTE’s budget in support of Kiwi entrepreneurial activity that stands a chance of dominating some niche out there in the wider world?
Why are we still so fixated on the old hand’s off market doctrines of “sink or swim” when even the free market Americans have long ago abandoned that ethos and seen that everyone benefits from nurturing entrepreneurial activity?
Fraser Hurrell is one of three directors of Elevate CA Limited, Chartered Accountants & Business Advisors in Whangarei, New Zealand.
$1 Million Challenge
We have all heard the rhetoric time and time again. As a nation, New Zealand lives beyond its means. We spend more than we earn internationally, with the difference being funded by borrowings from rich foreigners. It’s unsustainable – a bit like putting holidays and cars on the mortgage year in and year out. Our booms in the past have been built on domestic consumption more than export earnings. We have been hearing this for years.
But what’s to be done? Elevate CA are very interested in the answers to this question, and this is a theme that will repeat in this blog over time.
So we are excited by the University of Auckland Business School Entrepreneurs’ Challenge which will provide finance to eligible growth oriented SMEs that are seeking funding for business growth – preferably internationally. Up to one million dollars annually will be made available for investment. Entries close on 21 August, and the Challenge is open to GST registered NZ businesses that have a turnover of at least $1m per annum and have been in operation for at least two years. Preferably they will be exporting or planning to export. We will be encouraging our clients and others in this category to enter and get involved in this Challenge! Check it out at http://www.entrepreneurschallenge.co.nz
This is an exciting offering from the Business School, and we’ll be watching this closely – and commenting here. Watch this space.
Fraser Hurrell is one of three directors of Elevate CA Limited, Chartered Accountants & Business Advisors in Whangarei, New Zealand.