Small Business Challenges
20 Nov 12
Over the past few months, several new laws have come into force that will have an effect on Australia’s small businesses. At the same time, the global downturn has led to a rise in business risks, including exploitation by business scammers and questionable franchise arrangements.
The Australian competition and Consumer Commission (ACCC) recognizes the important role accountants play in assisting small business.
Three areas you may be asked about over the coming moths are:
- The risks of buying into a franchise
- New rules for component pricing
- A variety of business scams
1. Know the risks
Franchises businesses turn over billion of dollars each year and represent a substantial slice of the small-business market. In times of economic downturn, it’s tempting for many to see a franchise with an established business model, marketing support and assistance at start-up as an easy and risk-free option to becoming their own boss.
Many prospective franchisees may not know about the Franchising code of Conduct, a mandatory code within the Trade Practices Act, and enforced by the ACCC. The code spell out legal obligations that all franchisors must abide by, including: minimum levels of disclosure to would-be purchasers of a franchise, a mechanism for resolving disputes in existing franchises, and guidelines on disclosures of conflicts of interest.
Most importantly, prospective franchisees must find out the facts –many of which are provided into the mandatory disclosure document- before they sign on the dotted line.
2. New component pricing rules
Many industries have long used a system of “cost plus” advertising instead of disclosing the full price of a service or goods, they only state part of the cost. Other fees, such as mandatory postage and handling, are left out. This practice is common in industries such as motor vehicle hire and travel. As from 25 May 2009, a business will need to provide a prominent single (total) price for goods of services. In other words, customers must be able to know what the full and final price of the product will be.
The new rules specifically indentify a number of components that must be included in the single price, such as fees or charges that must be paid by the consumer to obtain the goods or services advertised.
3. Scams target Small Business
Scammers target more than 300,000 small-business operator across the country each week, by mail, email, telephone and direct contact.
Although scams that target consumers are well known, it has become apparent that scam conduct is also a prevalent business-related problem.
Scammers rely on the fact that many small businesses lack time and resources and are focused on making sales in tough financial times rather than double or triple checking invoices or emails. The ACCC encourages businesses to take these practical measures to protect themselves from scams:
- Read everything carefully and don’t be afraid to ask for explanations
- Seek professional advice if the request involves significant money, time or commitment
- Check that goods have actually been both ordered and received before paying an invoice
- Ensure all computers have up-to-date software protection
- Check the Scam Watch website -www.scamwatch.gov.au- for updates and further information about protectioning your business against scams.
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