Episode 18 | Kris Sits Down with Ashley to Discuss Building a Business That Lasts Through Succession, Strategy & Smarter Growth.
In this episode of the Enriched Wealth Podcast, Kris Tatt sits down with Ash Hill, Partner at Strategem, for an insightful conversation about business planning, succession, and the evolving realities of running a business in today’s economic climate.
With more than 25 years at Strategem, Ash shares the lessons he’s learned working alongside business owners across industries including farming, transport, retail, hospitality, and professional services — and why understanding your numbers has never been more important.
Together they unpack:
Why succession planning should start earlier than most people think
The difference between a fair outcome and an equal outcome in family business succession
How rising costs and shrinking margins are impacting businesses across Australia
Why strong communication and trusted advice are critical in business
The importance of planning, mentoring, and building a business that’s actually saleable
How technology, compliance, and changing regulations are reshaping the accounting industry
Ash also shares his perspective on leadership, the role of trusted advisors, and why business owners need to stop trying to do everything alone.
Whether you’re building a business, preparing for succession, or simply looking to better understand the challenges facing modern business owners — this episode is packed with practical advice and grounded insights.
Transcript
Kris Tatt
In this episode, I sit down with Ash from Stratagem to talk about all things business.
We get stuck into the importance of planning, succession planning, thinking about what it means to be a trusted advisor and how the accounting industry has evolved and what that means for helping you support you and your business.
If you're thinking about buying a business, if you're thinking about selling, or even if you just have the idea of what would succession look like, you need to listen to this episode and hear the important things that Ash discussed regarding succession planning and planning for your business for today.
Welcome to the Enriched Wealth podcast.
This episode we're excited to be joined by Ash Hill, partner at Stratagem, and we're here today to have a great conversation about all things accounting.
Welcome, Ash.
Thanks for joining us at the podcast studio today.
Ash Hill
Thanks, Chris.
Good to be here.
Kris Tatt
So, Ash, partner at Stratagem, how many years have you actually been at Stratagem now?
Ash Hill
I like to joke that I started last century.
Yeah, nice.
So I started in August 1999 at Stratagem.
So getting towards 27 years, 26 1/2 years of strategy.
Kris Tatt
That is a good.
Ash Hill
Inning it's it's more than many people in in their careers nowadays spend in the one job, yes.
Kris Tatt
Certainly probably at least 27 celebrity marriages worth of of time as well.
Ash Hill
That's correct, yes.
Kris Tatt
No, no, that's, that's good.
Well, so you, you've obviously seen a lot of, you've experienced a lot, probably seen a lot of change, dealt a lot with your clients and their change over the years as well too.
But as a starting point, why accounting?
Ash Hill
From the only the only honest the only honest answer I can give is I'm not too sure why I ended up in accounting.
It was it was a favourite subject of mine at high school.
I enjoyed the accounting, economics, law subjects at high school yes.
So I was heading down that path.
It's certainly.
Kris Tatt
You get a minor in law doing accounting anyway, don't you?
Just that element of you got to be out or interpret.
Ash Hill
Yeah.
Kris Tatt
What what government releases and and how to how to apply?
Ash Hill
That's correct, yes.
And, and I wasn't particularly interested in the sciences and those sort of things.
I'm not very good with my hands, so trade skills were not going to be something that I did.
So So yeah, I, I went down the accounting path, sort of four of my best friends all went and did accounting at Bendigo with me.
Since then I've got four brothers in law, three of whom are all accountants.
So very much my generation coming through.
Your wife my wifes an accountant also so that.
Kris Tatt
Create interesting dinner conversations.
Ash Hill
Accountants always have interesting dinner conversations, Chris.
We're well known for our interesting conversations.
But I, I will say it has been a benefit in that she understands some of the stresses involved with being a partner as an accounting firm and understanding deadlines and certain time frames and and that sort of thing.
So it has been good, yes.
Kris Tatt
Yes.
And I think, I think that is one thing that can be hard for people outside the industry to understand is that we do have really specific deadlines and if you don't get things done by those deadlines there, there is some some consequences.
That's correct.
And and so we, we carry that weight when we're dealing clients and and working for them.
So.
Ash Hill
Yeah, yeah, that's right.
Yeah, yeah.
Kris Tatt
No, that's, well, that's good.
It's good that you can have you had a bit of a network coming through uni, which helps because I think that that can be hard with you if you don't have anyone that you know.
But also to to have someone who who understands it day to day is is good as well too.
Ash Hill
And, and accounting was a popular career choice 30 odd years ago and perhaps before that, but certainly when I was coming through year 12 into university, accounting was a career that attracted a number of people.
I think Latrobe Uni when I went through started with about 200 students in the business course.
So it was a big popular course back then.
Kris Tatt
Yes.
And it's certainly, I mean it's dwindled now over the years, but I think the demand for accountants, accountants is still out there.
That hasn't changed.
So it's just, it's interesting that we, we just don't have the necessarily the supply, but we certainly do have the demand now.
You haven't had all your time at strategy and people be thinking 27 years old.
27 years of strategy must have started when you were 10.
Just a savant going through uni maybe or something like that.
But Stratagem wasn't your first place either, was it?
Ash Hill
No, so I, I spent six months at a local building firm, my first, my first job as the internal accountant there.
Yep.
And then spent just under 2 years travelling between Bendigo and Maryborough to A to an accounting firm over there.
So that was my first work in an accounting practise over there.
Kris Tatt
Yeah.
OK.
So travel each day.
Ash Hill
Travelled each day.
Commitment that was, and it probably I did only see it as a stepping stone to somewhere else.
Yep.
And I was, I was very, very lucky that that a really close family friend of ours, John Libwich, who was part of the strategy more AR sorry, Ashman Ralph back in the day, and he was the family accountant, family friend rang me up one day and said, Hey, Ashman Ralph, I've got a job open.
Would you like to come in for an interview?
Kris Tatt
There you go.
And, and for those listening, John Lewich is, he's passed on now, but he, he played a significant role at Stratagem.
We even have a room named after him.
We have the Leadbridge room, which we do is, yeah, is a, is a testament to, to his, his, his time there as well, too.
So there you go.
So there is a bit of it's who you know and in developing your networks and making sure that you've got you've got people in your life that can help connect you.
Ash Hill
That's it, right?
That's it, Absolutely.
Kris Tatt
No, that that's really good.
So then you you came came stratum working there, then became a partner in.
Ash Hill
8 almost nine years ago now.
Yep, coming up to 9 years.
Kris Tatt
And you and I, I don't see any grey hair, so you've done pretty well to to keep the colour in this.
Ash Hill
I'm pleased that there's few grey hairs and there's still some hair there.
Yeah, it's not a genetic trait in the family, so I'm defying a bit of logic.
Kris Tatt
There you go.
You, you must come at it with the right attitude.
That's good.
So, so 99 years is a partner, how do you, how did you find the shift from being employee to business owner for you 'cause for those out there who may not understand accounting well, partner is essentially an owner of the business.
So you own a portion of of the business and so you've you've gone from working as an accountant to now and working with business owners, now being a business owner, but still working with other business owners.
So how was that shift for you when when that came about?
Ash Hill
Certainly with the SO Stratagem has an associate programme and I spent two or three years in that programme which gave me.
Kris Tatt
Essentially a leadership.
Ash Hill
Programme, a leadership programme, yeah, which gave me a couple of years of experience moving from being an employee into a more management leadership style role.
I was, prior to become a becoming a partner, you were potentially leading a number of clients and seeing a number of clients on your own.
You weren't reliant on partner leading those conversations with those clients.
Kris Tatt
So you were already developed.
Ash Hill
So I was doing some of that, but the actual management of Stratagem was new to me.
When I one joined the associate programme too became a partner.
So it then became while managing staffing teams as a leader, it's very different once you're a partner and an owner of the business.
So having to develop some of those skills and learn some of those those traits along the way and leaning on mentoring from the existing partnership and the skills that they had that they could impart on me.
Kris Tatt
Which I think even in the associate programme, there's still a mentor relationship that you develop as well to, isn't there?
So it is key for all of those younger people out there that might be listening that you get get mentors in your life, get people who have gone through the journey.
Yes, they might say the world will be different to you, but there is value in that, in that perspective.
Ash Hill
And the lucky thing at Stratagem was there were 8 or 9, seven or 8-9 partners at the time.
Yep.
So you got to experience some skills from 7:00 or 8-9 different people.
You weren't getting leadership skills from just one person in a small business, whether it be an accounting firm, law firm, a retail shop, anything like that.
You're only learning from one or two people.
I was learning from 7 or 8 partners, plus a CEO, plus senior accountants, senior advisors.
And yeah, it was valuable experience.
Kris Tatt
And I think too Stratagem's got a pretty obvious client base.
So you it's not, you're not locked into a specific type of clienteer that like you get to see sort of all the different things that come up.
And I know there are plenty of times during the year where we, we see different client situations and you get different people involved depending on experience.
So that that's invaluable, isn't?
Ash Hill
It yeah, that's correct.
And, and, and you've got to be able to as an accountant or as an advisor, you've got to be able to speak to the level of the person on this other side of the desk from you or the kitchen table and, and that sort of thing, or across the, across the yard.
So you're, you're dealing with professional, other professionals, you're dealing with lawyers, architects, town planners, doctors, that sort of thing you're dealing with.
So they will have a bring a different perspective to the table than what a builder will, an electrician, a plumber as opposed to then a farmer, a retail shop owner.
There's, there's a variety of levels of, of understanding on the people on the other side of the desk and you've got to be able to communicate on their level so they understand what you're trying to give, what advice you're trying to give them.
Kris Tatt
And I think that's that's one thing that's crucial is that communication piece.
And I think that's in, in a lot of jobs, your ability to communicate is the difference between you being able to get along well with people and being able to to convey ideas to wondering why no one understands what you're talking about and everyone doesn't seem to get it.
So.
Ash Hill
It is that personal relationship you develop.
I mean, we talk about the trusted advisor, but it is very important that that, that the client has, has trust in you.
Yes, because we are advising them to spend an amount of money, to invest an amount of money to do this, to save money, do this, to change your business.
So we're giving them advice, They've got to trust the advice we're giving them, so they've got to trust us.
Kris Tatt
Yes, like to talk a little bit about too.
So you are not only a partner, but you're also head up our Community Foundation.
So would like to talk about the Community Foundation for a few minutes.
You've been involved, I know you've been involved in charities and other things along the way as well too.
So for you, what, what, what's, what's Stratagem Community Foundation?
Was it meant to you?
Ash Hill
Yeah.
So the strategy, that's one of the things I'm really proud of at Stratagem is the Community Foundation.
Yeah.
And what it is been going for it's many years now.
So I'm lucky enough to be the current chair of the foundation.
Kris Tatt
I'm sorry I missed that on the intro.
I called you Parks.
Ash Hill
That's right.
Kris Tatt
Chairman of the Community Foundation.
Ash Hill
But one of the things with the Community Foundation, what we try and do is we're looking at supporting small and local organisations.
So not only Bendigo Local but potentially Melbourne Local with our Melbourne office or regionally around our client base.
So we have clients anywhere between Bengal and Melbourne, but up north past Kerang into Swan Hill, across the Shepperton, all around, let alone around Australia.
But we look at supporting local organisations, small community groups that potentially can't get government support don't get the support from bigger charitable or philanthropic organisations.
So we look at supporting small organisations for small projects.
We're not looking at supporting the building of a new facility, but we will look at supplying and providing support to purchase new IT systems, new air conditioning for the new building, potentially some furniture for a new building or something like that.
We've done irrigation for a local community garden market.
Righteous Pups we've supported in the past with sponsorship for, for training some, some puppies in in that organisation.
So we're looking small community, community theatre.
Yeah.
So look the small community organisations that need just a little bit of support.
Kris Tatt
And I think too, some of those smaller organisations probably struggle to get the attention of those looking for a big project to support 'cause there's a, it's a nice headline with a big project, but it doesn't always help those smaller organisations who might be really passionate about what they're doing or there's just not the attention that that might be there on some of these other things.
So.
Ash Hill
That's right, that's right.
And and we they are grants of two, three, 5007 and a half, $1000 that we look at giving out and we look to how we can make a difference for that that organisation.
Kris Tatt
That's that's great.
And how long have you been chair for?
Ash Hill
I've been chair for about four years now and the the committee for the foundation's made up of Stratagem employees.
We have representatives from our Melbourne office, we have representatives from the financial planning division, we have representatives from the tax and accounting division here in Bendigo.
And all decisions basically on where the grants go are made by that committee.
We receive submissions every year and and we all take it pretty seriously.
Everybody gets a, gets an equal say.
And yeah, we have the, we have the round table discussions, everybody comes with their 321 and we have some arguments across the table.
That one's more worthy than that one.
Yeah.
But we think we do a good result with it in the end.
Kris Tatt
And I think too, the fact that staff can be involved and it's not just this thing out there that they sort of hear about every once in a while, but they're actually engaged in that I think is is very valuable.
Ash Hill
From that and and really to a certain extent it is our staff that are driving it rather than me as chair.
A number of the the staff really do drive it and are looking at what they can do next as part of the Community Foundation.
Kris Tatt
Yeah, excellent.
That's really good.
That's sorry, that was a little segue there.
If we if we change gears a little bit, what, what clients do you sort of what, what are some of the types of clients you're seeing day in and day out as, as a partner here?
Ash Hill
So I don't have a specialty in anyone particular field, but I of all trades, bit of Jack of all trades.
Yep, I do have a large farming client base.
I probably 30 to 40% of my clients are farmers.
Yes, but I have transport businesses.
I have retail shops as clients, professionals, I've got some doctors and some lawyers as clients.
We've got, as I say, retail shops, hospitality and number of builders, plumbers, painters and the trades as well.
Kris Tatt
So quite a diverse spread of of clients.
Do you find having a bit of diversity helps bring a different perspective to when you're dealing with some clients because you you see other parts of let's say the economic cycle or the industries that are out there that are impacted by different things going on?
Ash Hill
Well, it's certainly there is some experiences and what I've learned from some clients that I can then pass on to and deliver good advice to other clients.
Things that I've learnt from 1 industry can move in, don't have to be partitioned in just that one industry.
They can't go to another industry and you can learn from that which you've learnt from potentially from farmers and their experience.
You can, you can pass that on to a transport and logistics company, a retail shop, you can pass on what they've learnt with dealing with staff and that sort of thing to potentially a hospitality business.
So yes, there's there's you can always learn something from every client.
Kris Tatt
And I think there's there is some real value and that I did hear an example, I can't remember specifically, specifically the industry, but they actually got a Formula One team in to talk about how their pit crew operates.
And it was to talk about performance and efficiency and supporting each other and things like that.
And so they were using their learnings from that, those two second pitch changes and what they need to do to coordinate for it to say, well, when we're dealing with clients in this industry, these are the kind of things that we need to be thinking about more.
So if we put our Formula One hat on.
So yeah, I think that's some way on that.
What are you, what are you seeing out there in the business space at the moment?
It's I mean we're we're well past the early twenty 20s, which makes me feel like when I say stuff like that, but it feel that all feels like a distant memory.
But we're kind of in this quite, you know, higher inflation period, we've got interest rates climbing again and things like that.
So what what are you seeing out there in the industry, industry at the moment for businesses and and some of the struggles they've got going on?
Ash Hill
So we're not seeing much of A drop in turnover for most businesses.
Most businesses are keeping a pretty decent turnover, but the big challenge they're facing is their input costs are just continually rising and have been for three or four years now.
Kris Tatt
So you might have a business that's turning over 2 mil, but their input costs are 10% higher than they were last year, which is essentially eating into margins and different things like that.
Ash Hill
That's correct.
That's correct.
So yeah.
And, and that's, that's not industry specific, that's across, yeah, that wide sector that I'm sort of talking about in my client base, so that they're experiencing those increased costs.
Farmers have had a really good three or four years in this region.
And I acknowledge that there are farmers outside of this region that are doing it really tough.
Luckily, the farmers around this region and most of my client base have had a good few years, but they're still noticing the same thing.
Their input costs are going up.
I was peaking to a farmer last week where their turnover has actually gone up 1520% this year, which is fantastic.
They've got good prices for their product that they're selling, but their input costs are following that pretty quickly.
So that 20% increase in turnover has been eaten up pretty quickly by those input costs.
And looking forward and budgeting for them, they're not expecting any further increase in turnover, but they're still budgeting for increased in cost.
So that margin, even though they're on the back of a Goodyear, that margin is going to get tinier next year the way things are heading.
Kris Tatt
And, and I think to that, that margin creep is something a lot of business owners need to be aware of in terms of when they're pricing their products a little bit harder for farmers because they've got to sort of take whatever the market's offering at that point in time.
But if you've got the ability to review your prices, I think there's a, there's an argument that you need to be doing that on a regular basis.
Otherwise you, you are going to be in this position where you are going to continue to see margin creep.
And it's hard to get out of once you start losing too much margin to go well now I've got to put up prices 20% when if I had of been on this a little bit.
Ash Hill
More and and my better commercial business clients are the more successful those business of those businesses.
They are right on top of their margin.
They know exactly what their margin is.
They know exactly what they want to earn from each job and they don't go under that.
They will submit the tender at that price to earn their margin.
And if they don't win that tender, they just move on to the next tender.
So they they are not risking their margin by lowering their price and trying to essentially we use the term buy work.
Yes, no, they are rigid on those those margins and that is really successful for them.
Kris Tatt
And I think too, there's, there's probably quite a few examples of people being burned if we go back a couple of years where they were maybe just buying work, but then but then prices went through the roof.
And so all of a sudden that work is now costing them rather than, you know, supplementing all the cash flow they need to.
Ash Hill
That's correct.
That's right, yeah.
Kris Tatt
Which is, which is to say sometimes you've got to, you've got to stick to your guns and and know, know your numbers in terms of what are you seeing.
We've seen a lot around staffing pressures as well.
Are you seeing that it's still hard to find staff in this environment for different businesses?
Are they still struggling to find people?
I know we've talked before about there's been some places that are actually looking at reducing and just going back to themselves working because it's just it's just too hard to find the staff, keep the staff, train the staff.
So are you seeing those pressures still floating around out there?
Ash Hill
Still out there and it's still across pretty much every industry.
The farmers are still looking for farm hands and labourers on their farms.
Being completely selfish.
Accounting firms are still looking for financial planners and and accounting staff.
They're looking for those professional staff.
But hospitality, I had a a major hospitality client sort of say to me there at the end of last year.
They advertised up at Latrobe University here at Bendigo for some part time.
Hospitality staff didn't get one applicant.
That's where they used to get ten staff every six months for their for their serving as waitresses, waiters, gaming staff, bar staff, drive, drive through staff.
Kris Tatt
And, and so, yeah, when we, when you can't get stuff from you, the normal places, where do you, where do you find them?
How do you get them to support, you know, those kind of things.
It changes the model sometimes as well too.
Ash Hill
And I'm seeing some of my my clients actually paying above award wages and above competition wages to keep the one or two staff that they've got because they're really happy with those staff and don't want to risk losing those staff.
Yep.
Kris Tatt
In terms of you've, obviously we talked about your, your length of 10 years ship with Stratagem, you would have seen it over the years, people, people buying and selling businesses and things like that.
Are you having many succession discussions at the moment?
Ash Hill
It feels like that's the only discussion I'm having at the moment and again, across every industry it is an ongoing discussion with farmers and it needs to be an undergoing discussion with farmers because they are unique in their circumstances.
Kris Tatt
And I think too just using farmers an example for a minute there, the, the property values have changed significantly over the last five to 10 years say.
And So what what we're looking at is potentially a much larger asset base than we were, but it's still going to, it's only producing, we're talking about turnover.
It's not producing at the same exponential rate that the that the value has drawn up.
So all of a sudden you've got this expensive piece of land that you've got to hand off in a succession plan, but not everyone's going to be inheriting that land.
So how do, how do we, how do we give you that up?
It's it it it starts creating some really complicated conversations.
Ash Hill
Yeah, they are difficult conversations and it's making all the parties involved at the start aware that this is going to be a difficult process and there's going to have to be some give and take.
Not everybody's going to get what is an equal share, but it can still be a fair share and and that's what you've got to work on is what is fair to everybody.
But yeah, certainly farmers succession planning, it's a discussion every time I meet with a farmer, even if it's the casual question of what are the kids up to, what do you think they're going, what are you thinking of doing in the next 5 years?
So it doesn't have to be a specific conversation, but can just be a general keeping it front of mind for them.
Kris Tatt
But I think it's important too because at some point they will need to hand it on.
And if they're not having that conversation now, it's a lot harder to sort it all out.
If you've had an accident, you let up in hospital, you wake up 1 morning and say I don't want to do this anymore or, or I need to hand this over or, or even worse, if if the unexpected happens and something passes away, all those conversations if they had now make all that time a lot easier.
And it's a lot better in terms of there's not the fights and and the transitions a lot easier as well.
Ash Hill
That's right.
That's right.
Yeah.
No, absolutely, absolutely.
It's it's, it has got to be and, and not just for farmers, but for every, every business owner.
They need to always keep in mind what is their, I call it the escape plan.
Yeah.
But what is their exit strategy out of the business?
Kris Tatt
Where am I in five years and am I, am I still doing this?
Ash Hill
And how am I getting out of this business?
How am I selling it?
Who am I selling it to?
Can I sell it?
Is it currently saleable?
And that's where you can't decide today that I'm going to put the business on the market if you haven't got the structures in place to make it of a saleable asset.
Kris Tatt
And and haven't done the groundwork too, I'd imagine because there is, there's probably a lot of things people don't always think about when they're in that process.
And as the trusted advisor, people come to you and say, ask what should I do?
And it's like, well, we need to get, correct me if I'm wrong, you start pulling up, pulling in other professionals as well.
So get lawyers involved because we'll start looking at what we're handing over, how we're selling it.
We're going to get a business valuation down the banks get involved.
You're you're dealing with the banks Feb at the moment.
How are you finding that at the moment?
Ash Hill
I think the banks.
Kris Tatt
We're here.
Ash Hill
To no banks, no.
Kris Tatt
There's plenty of people who can do that for us.
But yeah, just in terms of day to day, because I think too, that's changing, isn't it?
Ash Hill
Well, I think we spoke about resourcing before.
Well, I think the banks are experiencing A resourcing issue.
So the same thing for them.
There are a limited amount of people available to dot the IS and cross the T's and do the tick box exercise to grant loans to grant an overdraft facility and that type of thing.
They are pulled from pillar to post.
So I'll stick up for the banks a little bit.
And there you go.
I'm I'm on my own there, but.
Kris Tatt
And I think when you say you stick up for the bank, you probably stick up for the people working in the banks.
I think as an entity, love or hate them, that's that's here or there.
I think day to day you're still dealing with a human being and those human beings have got stretched resources.
Ash Hill
That's right, that's right there.
There's too few doing too much so So it is challenging with the banks, it is challenging dealing with a number of government organisations for the same thing of.
There is a level of compliance, you may call it red tape if you like bureaucracy in there that the the tick box exercise from 10 years ago was 3 questions.
It's now 10 pages of questions that need to be ticked off on.
So there's a level of compliance in there with sales of business, with just ongoing business, running a business even.
Kris Tatt
Even ongoing finance, there's just more and more, isn't there?
Ash Hill
Yeah, yeah.
So to get finance, you need to provide more documentation today than we've ever had to in the past with banks.
And that's.
Kris Tatt
The wait times are longer the wait.
Ash Hill
Times are longer, so there's a level of patience that you require when dealing with the banks, dealing with the tax office, dealing with state revenue offices, dealing with councils to understand that there is you might want something done today.
The expectation should be it's not going to be done until next week.
Kris Tatt
And, and that's, and that's probably the, that forward planning is one thing that if you're out there and you're having discussions, have them with your account and have them with Ashley Fashes, you're looking after you, but have them early.
Because I think that's, that, that is more and more of a issue is that you might need the funds in three weeks time.
Doesn't mean you're able to get them in three weeks time.
And even when the bank says you've got pre approval, that's, that's, that's basically saying we're happy to have a conversation with you.
There's still many steps in the process.
Ash Hill
Do your budgeting, do your cash flows, have a look and say, Gee, we're going to run short of cash leading into Christmas when we buy all our Christmas stock.
So we need a large influx of cash in July, August, September to buy our Christmas supplies.
It's Christmas stock, but we potentially won't have the money in the bank in July, August, September.
Have the conversation with with the bank in March to say I need some money in June, July, August to buy my stock for Christmas and the banks will understand that you present the figures, they will help you out where they can.
But don't go to them in July and say, can I have tomorrow?
Kris Tatt
Yeah, next, next week.
Can you send me this?
Yep.
Ash Hill
Exactly.
Kris Tatt
No, that's, that's really good.
In terms of some of these succession discussions that you're having, do you, do you see is there a trend of handing off businesses and farms to the next generation or are they looking to sell?
What's what's the general consensus out there?
Is it is it more of the I want to get this ready and I want to sell it, the kids aren't interested?
Or is it more this is a legacy I want to continue to hand off to the next generation?
Ash Hill
The majority of them at the moment in the farming sector are passing on to the next generation.
I'm not seeing at the moment many that are walking off the farm and selling the farm.
I do expect that to happen over the next 5 to 10 years with a few of my clients.
There's not.
In a couple of circumstances there's no kids.
But in a couple of circumstances the kids have moved off farm and are successful elsewhere, are not going to return to the farm.
Mum and dad are aware of that.
So they're they're perhaps slowly winding down the farm, continuing the farm, but slowly winding it down with the expectation of our farming operation will cease and will sell the farm rather than pass it on to the next generation.
But more so, it's it's family succession at this stage.
Kris Tatt
Yeah, OK.
And that's, that's interesting because I think that's a different conversation sometimes than a sale, isn't it?
Because it's, well, how do I, how do I hand this off?
Well, how do I make sure they're set up with everything they need, you know, as opposed to thinking of selling it to an outside party where it there's, there's probably some different processes you would go through as part of that.
Ash Hill
That's right.
And essentially when you sell a farm, you're not selling a business, you're selling a piece of real estate, yes.
So that that is different to selling a business.
With a business, you are selling the intellectual property of that business, you're selling the customer base of that business.
And so there's, there's, it needs to keep operating as a business.
The day after it sold.
Yes, the farm, if you're selling the farm, they might take the new owners, might take a couple of years to get the farm up and running.
It could be the farmer next door has gone and bought your farm because it's the first bit of land that's become available in the region.
Yes, for X number of years I've had clients by the farm next door when it became available, not so much for the land but for the farmhouse because of the next generation could live still out on the farm.
There you go.
Yes, they will farm the land, but the enticing part of the whole deer was it's the first time a farmhouse has become available in the region for a number of years there.
Kris Tatt
You go.
Ash Hill
Yep.
So different perspective there.
For farmers, yes, but certainly for business you're looking at getting the business into a shape that you can sell it.
So you need to have potentially, what are your long term contracts with clients and with suppliers?
What are your premises?
What's the situation with your premises?
Do you have a long term lease or does the lease run out next year?
And if the lease runs out next year, you probably need to renegotiate that before trying to sell a business.
Kris Tatt
Yeah.
And, and I think some people can get caught with that thinking, well, it's, it's there, it'll be there forever.
No, no, it's, there's usually a lease, lease agreement.
How long is that lease agreement?
Can I actually keep operating in here under the similar terms or do I have to renegotiate them and, and all those kind of things?
Yeah.
Ash Hill
What's the quality of the equipment I'm passing on?
If it's a manufacturing style business where there is $1,000,000, five million dollars, $10 million worth of plants and equipment, is it actually worth that?
Yes.
Or you're passing on $1,000,000 worth of plant and equipment that needs to be replaced in two years time for potentially $10 million.
So that's a less attractive buy for a purchaser coming in well.
Kris Tatt
Especially when you then have to go and spend that money, not to make anything more, just to just continue business as usual.
Ash Hill
That's correct.
Kris Tatt
Yeah, it is a tougher conversation to have, which does complicate things for some people.
What are you seeing out there in terms of support for businesses who might be going through a tough time at the moment?
We've talked a bit about, you know, if you need cash get to the bank earlier.
Is there anything else that you're seeing out there that you're helping clients with or that that there's support out there for?
Ash Hill
I think the biggest issue with clients is, is planning and understanding your business.
Yep.
And the reason I say that is, as I said before about the cash flow and being aware of cash flow might become tight later in the year because of certain reasons.
If you know that upfront, you can then put actions in place to stop that from happening or ease ease the stress at that time of the year.
If you know that sales are dropping and costs are increasing, what are you doing about it?
Are you just sitting on your hands and waiting for it to magically turn around or have you investigated a marketing campaign, updating some of your product listing or something like that?
Going out and cold calling potential clients?
And there's, I've seen a number of businesses sold post Covad where the business owners got so worn out through COVID, they pretty much for the year or two after COVID.
So 222324, they pretty much sat on their hands because they're exhausted.
They were rundown, they're exhausted.
That was the reason they were selling.
But the business had really just floated along for a couple of years because they, they didn't spend a lot of time on the business.
So it's it's understanding your business, understanding the market that it's in and then making educated decisions.
It's no good guessing.
Kris Tatt
No.
And I think I think too, one of the important things for people to think about is planning is a tool and a process.
It doesn't necessarily mean that you will end up following all that plan 100%.
But without the plan in place, what happens is, is that you don't start to think about or what if this happens, what levers do I pull if this happens?
What can I do to get out of that situation until you're there, which then becomes a lot more stressful Where if, if you've, and there's a bit of psychology behind it too, that if you've already gone through that process in your head when you are presented with that problem, you are much better equipped to deal with that or to pivot based off what's going on.
So I think that is that is great advice and so crucial for businesses.
Ash Hill
I think it's, it's people often forget and we spoke about it at the start about the mentorship at Stratagem with becoming a partner.
So many people when they buy a business, they lose that business mentor or they they don't get a business mentor.
So whether it's your accountant, whether it's the guy next door that you've got friends with that we've.
Kris Tatt
All been young once and think we can do it all ourselves.
Absolutely better than everyone else.
Absolutely.
And I, as I get older, I realised that, you know, I'm, I'm not always right when I have that assessment on things.
So, you know, you do appreciate that those other perspectives.
Ash Hill
And some businesses, the husband and wife business, the mum and dad business, they can bounce ideas off one another.
So potentially there's a bit of an option mentorship within that.
But go outside of that.
If the next door neighbours are really successful businessman, they may not be in the same industry, but go and ask him what's or them what's.
What is successful in your business?
What do you do and how does it look and, and that type of thing?
Speak to the accountant, speak to your professional advisors, speak to the staff.
Maybe the staff can give you some insights into what potentially you're doing wrong.
If you're doing anything wrong, they might turn around and say, well I'll never drink at this pub because of this reason, yes, but I'll work here because you pay me, but I'm not going to come here and bring the family here because it's dirty and whatever.
You just need to continually seek answers, seek advice and never settle for I know everything.
Kris Tatt
That feedback's invaluable.
And I know we, we have a bit of a process, it's part of our meeting bookings to actually collect data front or feedback, I should say, from clients after a meeting that they've had with us to sort of go, well, what, what can we do differently?
What can we do better?
So we use that data to help make better decisions.
And if you don't have something like that built into what you do, and there are plenty of programmes out there now that automate it so you don't have to worry about thinking about it too much.
Could be a bit more on autopilot.
But it just means that you're able to be have your finger on the pulse a bit more and really understand why people come, maybe come back to the business or, or why they haven't come back to the business, why they don't like it as well too, which can be hard to hear sometimes.
But it's, it's all you've got to I guess you've got to approach it with an open mind and say, if I want to get better, I've got to hear some of the hard beats as well too.
Yeah.
Ash Hill
We strategy from last year underwent a major IT redevelopment.
We changed a number of our software systems.
We didn't just listen to the salesman from the software companies and and we are buying the best possible piece of software.
We actually spoke to other accounting firms and said, what's your experience with this piece of software?
Kris Tatt
Shines more not for you.
Tell us.
Tell us what you really think.
Ash Hill
Now I I I like it.
Kris Tatt
No, no, that's what that's the question to the other business.
Ash Hill
Owners.
Yeah, Yeah.
Sorry.
Yes.
Kris Tatt
You you're through the honeymoon period.
Yeah.
Is it as good as you thought it was?
And what do you think?
It's still good.
Ash Hill
What mistakes did you make in the implementation?
Or what did you get right in the implementation?
It doesn't have to be a mistake.
What did you put in place that made this work so well?
Kris Tatt
And I think we actually took a lot of that on because the feedback from the software was that we were actually one of the, our best prepared organisations had seen from a transition perspective.
We've taken our time, we've done our research, we put in that, we put in the groundwork.
And yes, it meant that we delayed probably bringing on that software as quickly as we would have liked.
But it also meant that we did we, it was a such a smooth transition that when we got in, yes, there's been some hiccups and issues.
There always is going to be.
If you think there's a tech solution that doesn't, you know, I'll, I'll go and implement it and find out.
But it was it was pretty seamless.
So yeah.
On the yes, yeah.
Ash Hill
But it's, it's again, it's not sitting back and just trusting that you know everything.
It's it's going out and getting other advice.
Kris Tatt
Yeah, which I think is is invaluable.
While we're talking about tech, obviously when you started Stratagem 27 years ago, the technology looked a little bit different.
And, and in some ways it doesn't because if anyone doesn't realise, we still use spreadsheets and spreadsheets have been around for for a very long time.
You, you, you were using a computer when you first started trading me was yes, good, good, good.
Just checking.
But obviously you've seen a lot of the technology transition over the years.
Is accounting dead?
Ash Hill
No.
Kris Tatt
No, no, OK, good that that's all right, because I I, you know, there's always these industry pundits out there that say this industry's dead or that interested.
I've heard, you know that people have written obituaries over the compliance for accounting and saying that this is this is accounting.
You know, compliance is Peck for accounting.
And then every year there's there's new legislation, there's new issues to, to navigate, There's more problems, there's more red tape, There's more like, in fact, we've probably said it's almost a bit the reverse.
Yes, some things are easier, but there's a whole lot of other things that we now have to think of.
Are you, are you seeing, what are you seeing in terms of technology shift?
Are you becoming irrelevant?
Do you feel or is it even more important than it's it's been in the past?
Ash Hill
So I think I'll go back to the start.
Kris Tatt
That was a really long question.
I'll go back.
Ash Hill
So this is going to be a really long answer.
I'm going to go back to in these seven years, Yep, but I started pre GST, Yep.
So my first nine months at Stratagem, so much of my work was based on physical check butts, physical bank statements.
Kris Tatt
For all younger listeners out there, a cheque is a piece of paper you used to take to the bank and they would they would do a transaction.
It's kind of like a bank transfer these days, but in paper form.
Ash Hill
In paper form.
Kris Tatt
I said they just don't exist much.
Ash Hill
Anymore.
No, no, no.
SO that was how I did my first jobs at Stratagem was basically purely paper based.
Kris Tatt
Yep.
Now do you have the paper ledges as well Would.
Ash Hill
Be yes, yeah, yeah.
So both of them, July 2020, sorry, July 2000, GST was introduced in Australia and all of a sudden all those clients that were doing paper based bookkeeping went on to software programmes such as my of such such as QuickBooks back in the day.
And so they moved to an electronic digital accounting software package.
And that for the most part, look, it kept getting updated every six months there were new releases, but for 20 years it probably didn't change an awful lot.
15 years didn't change a lot.
It moved from desktops to the cloud perhaps 10 years ago, yes.
And so there was a, there was a significant change there again.
Kris Tatt
But and the cloud sort of opened up the ability to connect other things into the software where when it's a desktop based thing, it's kind of this stand alone, it's a lot more clunky.
Ash Hill
Well, I'm going to use an ancient term here, but we used to get floppy discs, so we used to get.
Kris Tatt
3.5 inch put it in.
Yep.
Ash Hill
Yep.
And then ring the client and say you haven't saved it or the disc is corrupted and it hasn't worked.
And we've evolved to memory sticks along the way.
And now majority of clients are cloud based.
And so I can just log in at my end sitting at my desk while they're logged in at home or at the office and look at the same piece of software and the same accounting transaction that they're looking at, at their end.
Yes, so that has been the evolution of accounting software at the client level.
So essentially.
Kris Tatt
The the access to data has become a lot more readily available.
You can get it a lot sooner than you could by getting the book at the end of the year or going through the check butts, but it's actually almost more relevancy and more need to be on top of what's going on than less, hasn't it?
Ash Hill
That's it because there's as we've spoken about, there's compliance and there's more and more compliance and there's there's forms that we need to complete for the Ato today that we didn't need to complete five years ago, 10 years ago.
And that's going to become more burdens burdensome as as time comes on got.
Kris Tatt
Some new ones, payday supers coming up, like if you went back even five years superannuation in terms of what the employers obligations were, how they paid, it looks a lot different than it does.
Ash Hill
Very much so, very much so.
And, and so that is, and a lot of our next three months leading up to June 30 is going to be transitioning clients from quarterly or monthly superannuation returns to payday super every week on their payroll every fortnight, every month, depending on what their payroll payroll cycle is, they're going to have to pay super at basically that same time.
So it's there's an education process and an informing process with the clients there.
There's been an enormous amount of discussion just recently in the last couple of weeks about changes to the CGT discount.
I think I've had a dozen phone calls and meetings in the last two weeks discussing CGT discount and what the changes may be.
And at the moment all I can say is I'm not sure.
Kris Tatt
And there's, and the hard thing is like we talked about technology, yes, if if we had the technology today and we only had to do what we did 20 years ago, we'd probably need less people.
But the problem is now we have more complexity.
We've added, there's been more things added in.
So without the technology costs would probably be a lot higher for the client and and there'd be a lot more that they would need to be doing pulling their hair out with and things like that as well too.
That's it.
Do you think, do you think it is, it is getting, it's almost becoming untenable for that small business owner with one or two employees in terms of the compliance red tape, just all different things they need to go through because we're only talking about accounting, we're not talking about H&S and and all the other areas that they they need to be thinking about as well too.
Ash Hill
It's certainly something that is weighing on a lot of my, my smaller clients minds.
And it is one of those burnout factors that I'm hearing about is, oh, I've got to complete this form.
I've got to do this.
I've got to jump through that hat, that hoop with council, with government, whatever.
You speak to any builder and they'll complain about getting building permits and and that type of thing.
So there's, there's a lot of roadblocks in the way or speed bumps in the way that are slowing down the process and making office work and and the office work of a business, yes, much more tiresome for those that potentially aren't skilled at office work.
Kris Tatt
And I think I think the hard thing is, is if you've maybe brought the business off of of a family member or you've been in the business and there's been a succession plan and you've taken over the business from the previous owner.
What it looked like when they were the owner probably looks a little different to now too.
Like you probably saw them on the tools more.
They were able to, you know, get involved in what was going on day to day a bit more, where now there's there's there's almost more pool for them to be in front of a computer or things like that, isn't there?
That that actually makes it harder operating the business because you are not there day to day like, like you maybe want to.
Yeah.
Ash Hill
And one of the challenging things with some of the succession planning I've seen is mum and dad did all the books themselves and they'd sit down each week and they'd they'd enter it in onto the computer or they'd fill in the green Ledger.
Kris Tatt
Books or whatever fun Sunday afternoon afternoon activity.
Ash Hill
But they're looking at passing on the business to the next generation and potentially the son, the daughter, their spouse.
They don't want to do the bookkeeping.
They don't have any bookkeeping skills and are not interested in doing it.
They've, they've got what they want to do and it it is challenging for that is part of that succession planning as well.
Kris Tatt
And that bookkeeping is nearly more integral these days than ever, especially with how quickly things are moving in terms of, you know, payments reporting and all those kind of things.
If you don't have your finger on the pulse with what's going on, trends, what's going on with sales data, what's going on with your expenses, six months, 12 months, it can be too long to actually be looking at some of these things, can't it?
Ash Hill
Well, we spoke about the banks and the information the banks ask for when you're looking for finance.
Yes, one of the things they will undoubtedly ask for.
The only time they don't ask for it is is July, August, September.
Is do you have your tax returns done?
They accept that most businesses won't, but can you provide us with an up to date profit loss?
Yes.
Now if the client has a really good 0 file myop file then click of a button they can get that information to the bank and again speed up that process.
That could be a long drawn out hassle for them.
Kris Tatt
Creates quite a few issues.
Yeah, that's that's really good.
Thank you for those insights, Ash conscious of time and I don't wanna, I mean, we could spend all day talking about this.
I don't think as many people probably appreciate how complicated it can be doing the accounting, doing this, giving the support, doing running a business, all those kind of things until you've you've been in it a bit.
Have you got any advice for any businesses out there who may be in those final phases of, of success or thinking about succession or thinking what do I do next?
Or I'm, I'm operating, is this something I want to keep doing?
Is there any advice for, for you to that for people to really think about?
How do I how do I maybe get out of this rut?
Or how do I plan for that next step?
Ash Hill
So it's it, it is one, it's planning.
Yep, it's having the discussion potentially with family and friends.
Kris Tatt
And that's probably needs to happen sooner than people realise.
Ash Hill
Absolutely.
And that's that's why I have the discussion, although just even raise the question every year with so many of my business clients is what are the plans, what are you thinking of doing in the next couple of years?
Kris Tatt
Facilitate a few meetings with the parents and the kids as well.
Haven't.
Ash Hill
You, that's it, that's it.
So you you start having those conversations.
And as I say, it's one I'm thinking of at the moment of sort of saying it's probably 10 years before we're getting getting out 10 years.
Kris Tatt
Goes quick though.
Ash Hill
But the plan is potentially that the kids will take over the business, Yes.
So one, do the kids know this?
What are the kids plans?
What ages are the kids?
Yep.
What skills do the kids perhaps need to take over that business?
Yes, between now and then, what do we need to do?
Kris Tatt
But if that falls through mentoring as well too, it's not just go get the ticket.
Yeah, I need to show you how this.
Ash Hill
Works.
Yeah.
If, I mean, heaven forbid we go back to somebody trying to sell a business that still operates on cheques.
And I know there's very few of them, but there's something where you need to get that up to date because you're really going to struggle to sell a business that operates still that way.
Kris Tatt
But I think there's that argument across.
If you're running a business, cheques is probably a great example that we can use, but there's probably other things that you're doing that people might do in their business that is outdated, that hasn't changed, that hasn't kept up with the times, hasn't hasn't been conscious of there's a there's a whole bit of way of doing things.
Ash Hill
Yeah, yeah.
So it's, it's as I said before, it's have I got a saleable asset?
What do I need to make this become a saleable asset?
Kris Tatt
And how much is actually worth?
That's it.
Ash Hill
We went we had said the example about the outdated plants and equipment.
Yep.
Do I need to spend money on plants and equipment now or do I just accept I'm going to have to take a lot less for the sale of this business in three years time Now that might be a reasonable decision to make.
I'll accept less for a sale price by not having to update my plants and equipment today, but it's.
Kris Tatt
Been conscious.
Ash Hill
But it's it's, it's making an educated decision.
Yeah, absolutely.
Have I got the right product mix?
Have I got the right client base?
Who if I've got 20% of my sales going to two clients and the other 80% of my sales going to 1000 clients, how safe are those two clients?
Do I need to put things in place or do I need to diversify my business a bit more to reduce the risk of those two high value clients disappearing and going upon transition of a business?
Because I think the expectation is that I'm going to keep all the customers that I've just bought.
Kris Tatt
Yes.
Ash Hill
That's probably not going to happen.
Kris Tatt
And, but, and I think that's the big thing with anyone thinking about buying or selling is there's a risk reward trade off here.
And, and what you might not say is risky could actually be interpreted by the person coming in to buy the businesses.
Actually, I, I actually say, yes, that's been a long term client for you, but that I say that as a risk for me because if I lose that, well, that's right.
That's a lot of the revenue that that I'm I'm buying.
Ash Hill
Well, that, that 8020 split is if I lose those two clients with the 20% of the turnover, Yep, that's dramatic issue from a business.
If I keep them but lose 2 clients that are part of the 80% different, it's a different conversation, yeah.
Kris Tatt
Nope, that's really good.
Well, Ash, thank you, appreciate your insights, appreciate your experience that you bring to the table.
If anyone would like to talk to Ash about business, would like to get a bit more of an understanding what's involved, what, what they could be doing better or having a roundtable succession planning discussion, please reach out to Ash.
But thank you, Ash, appreciate your.
Ash Hill
Time.
It's Chris.
Been a pleasure.
Kris Tatt
We'll see you all in the next episode.
Thank you very much.
