Riolife on My Business TV

Açai is a palm berry which grows wild in the Amazon and is hand picked by natives.  Long a staple food of Brazil, it is now gaining popularity around the world as an energy food, particularly in surfing communities.  It was discovered by three young Sydneysiders during their travels and they formed RioLife with grand plans to get Australians hooked on Açai.

Our Entrepreneur at Large, Tim Pethick, is the founder of Nudie and launched one of the first Açai-based products in Australia.  He believes the primary focus for RioLife should be on building a powerful brand.  The RioLife name has been trademarked so the boys are on the right track in terms of protecting their intellectual property.  But Tim’s concerned that in all the marketing to date, the focus has been on the açai fruit itself, as opposed to the RioLife brand.  The problem with this is if the business wants to expand into other products it will be difficult because consumers will know açai, but not RioLife.

Tim believes the health benefits of açai and how it supports sustainable industry in the Amazon make it a great topic for local newspapers.  He suggests targeting suburban papers and believes if the story gets picked up by those it will feed into the metropolitan and possibly national press across all media.

Andrew, Andrew and Jeremy have been friends for years... but as many have learned the hard way being mates doesn't necessarily mean being good business partners. One of the big problems of working with friends is that it can become hard to be honest with one another for fear that feelings will get hurt. We asked business coach Richard Hewson, from Hewsons International to work with the boys on identifying areas of weakness in their business relationships and implement a structure to address them. Read Richard's tips by clicking here.

RioLife is currently set up as a partnership but the boys want some advice on whether they should become a company.  Finance expert Julia Bickerstaff has some tips:

Becoming a company is not as hard as most people think and there are several reasons for choosing to go down that path. Firstly it limits liability in the unlikely scenario that things go wrong.  For example if the business is sued a company structure will protect the personal assets of the individual business owners.  Secondly, some businesses would prefer to trade with companies, often there’s no real reason for it except that they feel more comfortable because companies seem “bigger”.

The first thing to do when starting up a company is to check the company name is available. A company name is different to a business name and you need to check all the States to ensure it’s unregistered in all of them.

The boys have already put some equity into the company, some of which is a loan and some to buy shares.  Under a change of business structure it’s simply a matter of transferring everything, basically moving the balance sheet from a partnership to a company.  During this period it’s also a good time to ensure records are up to date.

As owners and shareholders in RioLife, there are a number of ways the boys can pay themselves.  The first is by becoming employees and taking a wage, which will be taxed at their personal tax rate.  Another way is to receive income by drawing dividends, which will be part taxed at the company rate and part at the individual rate.  Remember though, dividends can only be paid out of profit, so if RioLife isn’t making substantial profit it may be better to become employees.

Despite the fact the boys are young, don’t neglect superannuation payments!

http://www.mybusinesstv.com.au/index.php?itemid=74

Published: 02/07/2006
Source: Channel 7's My Business TV

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