Business owners: Are you keeping your eye on the ball, or the scoreboard?
The principles behind winning in business and winning in sport are similar in many ways.
Take tennis, for example. If you’ve ever watched a match on television, you’ll know that along with all the hitting, running and grunting there are a lot of numbers involved.
And we’re not just talking about the score here. Each player’s performance can be measured in other ways—percentage of first serves in, points won at the net, number of unforced errors on forehand versus backhand, and so on.
But while the statisticians may love all those details, everyone else is just interested in the score, right?
You might not be interested. But the players certainly are.
Admittedly they may not know the percentages down to the decimal place. But they’ll know if they’re making too many mistakes at the net or wasting their first serves. And they’ll change their game accordingly—by staying at the baseline or slowing down their first serves a bit—to fix the problem.
Yes, the score is important. After all, the players obviously want to win. But the only way the players can actually change their winning percentage is to change how they play.
And it’s the same when you’re a business owner. You business may actually have several scores—number of sales, profit made, etc. But while they’re a great way to keep track of how your business is doing, you can’t do much about them once they’re available.
They are—quite literally—history.
They’re what we call “lag indicators” (or sometimes “results KPIs”). And apart from putting them in your reports and sharing them with your stakeholders, there’s not much else you can do with them. They’re done.
What you should be more interested in are the things you can change. These are what we call “lead indicators” (or sometimes “activity KPIs”), and can lead to improved results for your lag indicators (your score).
For example, if you want to increase the number of sales your business makes, you might want to measure things such as:
- Your website traffic
- Your website’s conversion of visitors to buyers or email opt-ins
- The size of your marketing database of contacts
- Email campaign open rates and click-through rates
- How many sales telephone calls you make each week
- How many sales meetings you have each week
- Your conversion rate of enquiries to quotes/proposals or sales (depending on your business model)
And for profits, you might want to measure:
- How much it costs you in materials to produce each unit (or service)
- How much time and labour cost it takes to produce each unit (or service)
- How many units are being returned by the customer, and so on.
Once you know what your lead indicators are, you can tweak them to see how much they affect your lag indicators.
For example… Improve your site’s SEO to improve website traffic. Increase the number of sales calls you make each month. Give your existing customers an incentive to tell their friends about your business. Look for efficiencies in your production line so you can produce your items more quickly.
The beauty of focusing on your lead indicators is that when you improve them, then your lag indicators—the scoreboard—will improve as a natural flow-on effect.
And lead indicators are things you can control this month. This week. Today. With measurement of your performance in these areas you can refine your activities and feel a greater sense of control in ‘improving the scoreboard’.
Lead and lag indicators are both vital measures of how your business is doing. But by looking after the lead indicators you’ll be keeping your eye on the ball when it really matters, rather than looking at the scoreboard of what has already happened.
Ask yourself, what lead indicators are you focusing on improving this month? How are you looking at that data? Do you have real-time dashboards and weekly or even daily reports on these lead indicators?
If not, we should talk. We can set up lead indicator tracking for you which is the surest way we know to improve your business’ scoreboard.
Need help with your accounting?
If your business provides a car to an employee (or you’re the business owner/employee using it), there’s a good chance the Fringe Benefits Tax (FBT) rules apply. A car fringe benefit arises when a car owned or leased by an employer is made available for the private use of the business owner, an employee or their associate (such as a family member). “Private use” doesn’t just mean weekend road trips — it can include everyday commuting and even cases where the car is parked at an employee’s home, making it available for personal trips. Understanding how FBT is calculated and what records to keep is essential for compliance — and for avoiding paying more tax than necessary. What counts as a “car” for FBT purposes? The FBT law defines a car as a motor vehicle (except a motorcycle or similar) designed to carry less than one tonne and fewer than nine passengers. From 1 July 2022, some zero or low-emission vehicles are exempt from FBT, provided they meet certain criteria — for example, they must be first held and used after 1 July 2022 and must not have attracted Luxury Car Tax. Electric vehicle running costs, such as charging, are also exempt when the vehicle itself qualifies. Two main methods for calculating FBT on cars There are two ways to calculate the taxable value of a car fringe benefit. 1. Statutory formula method This method applies a flat 20% statutory rate to the base value of the car, adjusted for the number of days in the FBT year the car was available for private use. The formula is: (A × B × C ÷ D) − E A = Base value of the car (cost price plus GST and certain accessories, less registration, stamp duty and eligible reductions) B = Statutory fraction (generally 20%) C = Days available for private use D = Total days in FBT year (365) E = Employee contributions If the car has been owned for at least four full FBT years, the base value can be reduced by one-third. 2. Operating cost method This method calculates the taxable value by applying the private use percentage to the total operating costs of the car (actual and deemed costs). The formula is: Taxable value = [Operating costs × (100% − Business use %)] − Employee contributions Operating costs include: Fuel, oil, repairs, maintenance, registration and insurance Lease costs (for leased cars) Deemed depreciation (25% diminishing value) and deemed interest for owned cars Certain costs, such as tolls, car parking and insurance-funded repairs, are excluded. The business use percentage is determined by odometer readings, logbook records, and a reasonable estimate based on usage patterns. The three-month logbook requirement (operating cost method only). If you use the operating cost method, you must keep a logbook for at least 12 continuous weeks (roughly three months) to record: The date of each trip Odometer readings at the start and end Total kilometres travelled Whether the trip was for business or private purposes The purpose of each business trip This logbook is generally valid for five years, but you must start a new one if usage patterns change significantly (e.g., a role change, relocation or different duties). You also need to record odometer readings at the start and end of each FBT year. Why record-keeping matters. Keeping accurate records can support a higher business use percentage (and therefore a lower FBT bill). They also ensure you claim only legitimate business kilometres and help you provide evidence if the ATO reviews your FBT calculation. Finally, your records help you decide which calculation method (statutory or operating cost) is more tax-effective. Key takeaways for businesses and employees. If a car is available for private use, FBT may apply — even if the car isn’t driven often for personal trips. Electric cars may be FBT-exempt if they meet eligibility criteria, but you may still need to calculate their taxable value for reporting purposes. The operating cost method often works better if business use is high — but only if you have a compliant logbook. Keep odometer readings, expense records and a valid logbook to support your claims. Need help with your FBT obligations? Get it at Ascent Accountants. We guide business owners through every step of FBT compliance — from choosing the right valuation method to maintaining the right records for ATO peace of mind. If you provide cars to employees or use a company vehicle yourself, now is the time to review your FBT position before the next FBT year rolls over. Let’s talk .
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