// Grow your business: Merendi Health and Wellness Centres

Grow your business features fitness professionals sharing their personal journeys of growing their business. Business consultant and accountant Heather Smith talks to Merendi Leverett-Bowler, founder of Merendi Health and Wellness Centres based in South-East Queensland.

By Heather Smith

Heather Smith: Can you tell me a little about your business?

Merendi Leverett-Bowler: I started my company five years ago when my boys were only a few months old. I decided that I needed to work for myself rather than go back to being employed, so I started running ‘mums and bubs’ classes along with more general fitness stuff and I also started moving back into what I was originally trained to do – injury rehab and chronic disease management. Three years ago we opened up our Merendi Health and Wellness clinic, a multi-disciplinary clinic, and in addition to personal training and exercise physiology, we started offering more services and programs to our clients, because that is what we felt was needed.

HS: It is a big decision for a small business to take on its first employee. What made you think it was the right time?

M L-B: When I was first pregnant we thought I would go back to work, but after we found out I was expecting twins I thought ‘I don’t think it is actually going to be possible to go back to work full time’, so I made a conscious decision early on to employ an extra person. The boys were only a year old and I wanted to spend as much time with them as I could, but it was hard because I was just starting up my business. I was working 10 to 12-hour days, whereas I only wanted to work three days per week. I was spreading myself thinly, covering Brisbane through to the Sunshine Coast, and I realised that I needed someone else to help cover the workload. Getting another exercise physiologist on board enabled Merendi Health and Wellness to keep serving other areas without me having to keep travelling.

HS: Who did you seek advice from about taking on your first employee?

M L-B: I looked within my own professional area of exercise physiology, within professional associations, and I spoke with other EPs. A lot of EPs run their own business, and I asked them questions about how they employed people, and whether they kept them on contract, casual or permanent.
I went to the ATO and also looked at the clauses regarding what was required. At that time I was self-employed, and so I looked at what was required to put on a contractor. I also looked at WorkCover legislation, because there is a lot of discrepancy about what constitutes a contractor or employee. If you put someone on as a contractor, but they are using your premises or equipment, they may be classed as an employee. So, I did that little bit of research, but other than that I did not do much else other than asking other professionals in the industry.

BUSINESS DEVELOPMENT TIPS

Insurance and WorkCover
Each state has its own WorkCover scheme, a compulsory insurance for workers compensation. Contact them directly as each state has different rules and regulations. Typically the insurance payment is calculated based on an estimate of annual salaries. The business may also be required to have a written workplace safety policy. Also notify existing insurers of your new recruit/s.

Employee/contractor decision tool
The ATO provides a tool for small business owners, to determine if the individual worker is an employee or a contractor. This will assist in complying with PAYG tax and superannuation obligations.Find out more at
www.ato.gov.au/businesses/content.asp?doc=/content/00095062.htm

HS: Was the process easier or harder than you expected?

M L-B: I think it was easy in terms of finding someone; I did not have to actively advertise in the newspaper or on a job site, I found her through word-of-mouth. When it came to setting up the contract, though, I found that quite hard. I had worked as a contractor previously and I used that experience to help me initially write up a contract or employee agreement, because I had no idea. You can go to lawyers to do it, which I considered doing, but I couldn’t afford it, so I just developed my own ad hoc thing.
It was not until I was starting to put my staff on permanently that I spoke with Michael Cullen from Biz 2 Biz Coaching. He helped me write all my contracts and set up my HR system, and I have that in place now, which is really fantastic. I just need to change it depending on what the employees’ roles are.

HS: How did it affect your cashflow?

M L-B: Early on, it was not so bad, because my ‘employee’ was a contractor and she only got paid for the hours she worked – I don’t remember having any issues paying invoices back then. It was more when I put her on as a permanent employee, about two years ago, that cashflow became an issue because I had to make sure I had her fortnightly wages. As a contractor it did not matter as much, because she was only working so many hours per week. With an employee, however, you have to think about superannuation, holiday leave and that sort of thing.

HS: What do you know now that you wish you had then?

M L-B: I wish I knew how much was involved in putting on permanent staff; I did not think about things like superannuation and PAYG withholding tax. If I had known all of that, I would not have put on permanent staff as soon as I did. I would have kept them on as a contractor as long as I could, because within our industry we have a lot of peaks and lows, so you seldom have constant cashflow coming in.

HS: What advice would you give to other small business owners?

M L-B: Try and put your first employee on as a contractor, and keep them as a contractor until you really know that they are beneficial to the company.
Secondly, plan by preparing a cashflow forecast. If you want to put a person on as a permanent staff member, can you sustain paying them? You may be really busy now, but what happens in three months time if the work dries up?

Lessons learnt

Merendi Health and Wellness now covers five sites across South East Queensland, with eight team members serving over 1,000 customers. As Merendi has learnt, growth is something that requires careful management, planning and budgeting. It is critical to understand the full ongoing cost of recruiting staff (superannuation, WorkCover, insurance, administrative time, entitlement pay, etc.), and weigh this up against the return on investment. Successful businesses rely on consistently making the correct decisions. Clearly identify how your business will benefit financially from new staff, and prepare a cashflow forecast allowing for economic fluctuations.Time spent planning and researching at the outset will minimise growing pains.

Heather Smith
Heather is on a mission to improve the financial literacy of business by empowering business owners to produce accurate and meaningful management reports in a timely manner. She is a commerce graduate, an ambassador and fellow of the ACCA, a MYOB Certified Consultant, a writer and keen advocate of technology and social media. For more information, visit www.aniseconsulting.com, e-mail info@aniseconsulting.com or tweet T:@ANISEConsulting