Business Decision Making – Are you asking the right question?

Business Decision making needs to be made with the right information in play.

“If shares are issued at a time when they have no cost base and sold when they have a value of $1, why is that not a CGT event attracting CGT on the increased value of the shares?”

This is the question I received from one of my clients recently. The simple answer:

“It is a CGT event and you will pay CGT on the increased value of the shares when you sell them.

But the question they asked wasn’t really the question that needed to be answered. So, I got to thinking, are you asking the right question?

If not, you are most likely getting the right answer to the wrong question.

Another client recently received proposals from two different financial planners. They chose the planner whose fees were less than the other. Totally understandable until you take into account service levels and historical performance. Perhaps the focus should have been on value for money, rather than the money itself? “Why does it cost so much?” might have been a good business decision question to ask.

So, my thoughts are these:

• Always think before you ask – what is it that I really need to know?
• If you’re not getting the right response, do you need to ask a second, third and fourth question to really get to the heart of the matter?
• Always involve your advisers in your business. That way, they have the right amount of context to know when you’re asking the wrong question (and if they’re interested in your business, they’ll probably be able to suggest some good stuff to improve your business too).

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Neil Parker

MANAGING DIRECTOR

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