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The five stages of small business growth

Posted on April 12, 2016 by admin

Categorising the problems and growth patterns of small businesses in a systematic way can increase owners’ understanding of the nature, characteristics and challenges of business.

While small businesses vary widely in size and capacity for growth, they do experience common problems that arise at similar stages in their development.

For owners and managers of small businesses, an understanding of these common problems can aid in assessing current challenges and help anticipate the key requirements at various points.

Stage 1: Existence
At this stage, the main challenges of the business are obtaining customers and delivering their product or service. The owner usually does everything and directly supervises everyone. Systems and formal planning are minimal to nonexistent and the overall strategy is simply to remain alive.

Stage 2: Survival
Reaching this stage means the business is a workable business entity. It has attracted enough customers and satisfied them sufficiently with products or services to keep them. The key problem has shifted from mere existence to the relationship between revenues and expenses. Systems development is minimal and the major goal is still survival.

Stage 3: Success
At this stage, owners usually face the decision on whether to exploit the company’s success and expand or remain the same and keep the company stable and profitable. A key issue to arise is whether to use the company as a platform for growth or as a means of support for the owners.

Stage 4: Take off
In this stage the key problems are how to grow rapidly and how to finance that growth. In regards to cash flow, owners must determine whether there will be enough to satisfy the great demands growth brings. This is a pivotal period in a business’s life. If the owner rises to the challenges of a growing company, both financially and managerially, it can become a big business. If not, it can usually be sold at a profit provided the owner recognises their limitations. Often those who reach Stage 3 are are unsuccessful in Stage 4 because they either try to grow too fast and run out of cash or are unable to delegate effectively enough to make the business work.

Stage 5: Resource maturity
The greatest concerns of a business entering this stage are controlling financial gains brought on by rapid growth and retaining the advantages of small size. Businesses who reach this stage have the resources to engage in detailed operational and strategic planning. The business’s systems are extensive and well developed. The company has the advantages of size and financial resources, and if it can preserve its entrepreneurial spirit, will be a formidable force in its market.

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Avoiding mortgage default

Posted on August 26, 2020 by admin

As individuals struggle with cash flow through the coronavirus, the Australian Bankers Association records that repayments on almost 500,000 mortgages have been deferred for six months. While repayments can be delayed, they cannot be avoided altogether.

Lenders can send you a default notice the day your repayment is overdue. However, they could also wait until your repayment is overdue by 90 or more days. When you receive a default notice, you are given 30 days to repay the amounts you have missed in addition to the regular repayment on your loan. Individuals who are struggling with their home loan repayments can avoid mortgage default by considering the following.

Contact your lender
Lenders are generally willing to work with you through financial hardship. Don’t be afraid to contact your lender to discuss your situation and find out what options are available for you. Lenders are often willing to negotiate short-term variations to repayment schedules that both parties can agree to. However, make sure that you do not agree to unrealistic repayment conditions that cannot be met.

Many Australian banks are offering a six-month deferral on mortgage repayments (including interest) for customers who are experiencing financial hardship as a result of COVID-19. If this is you, contact your bank to see if this is an option.

Apply for a hardship variation
Mortgage holders may be able to change the terms of their loan or temporarily pause or reduce their repayments under a hardship variation. A hardship variation can still be requested after you receive a mortgage default. To apply for one, contact your lender’s “hardship officer” and tell them that you wish to change your loan repayments due to financial hardship. This will usually require you to explain why you are struggling to make payments and to estimate how long your financial problems will continue to determine how much you can afford to repay.

After submitting a hardship variation request, your lender must contact you within 21 days with the outcome of your request. They may ask you for more details regarding your request; in this case, they must contact you again within 21 days from when you provide the additional information.

Consider selling your home
Selling your home is a tough decision, but in some cases this may be the better option if your circumstances are unlikely to improve. If you get to the point where your lender takes possession of your home and sells it, it’s likely that you won’t make as much as if you sold it yourself. When you sell your house on your own terms, chances are you will get a better price and avoid having to pay the legal fees passed on by your lender. Inform your lender if you decide to sell your home; they may ask for proof, such as a copy of the contract with your real estate agent or property advertisements.

Renting out your home until you can afford to make repayments again may also be an option if you are able to live somewhere else during this period.

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