HOW TO HARDEN UP AND STOP OFFICE FIGHTS FESTERING NOVEMBER 2011
Official publication of the SME Association of Australia
DIGITAL DISRUPTORS Winners of the 2011 ActionCOACH My Business Awards re-write the rules
Capture the crowd • Survive a tax audit • Tiny changes, big wins
NOVEMBER 2011
www.mybusiness.com.au
CONTENTS Cover Story
Regulars
PAGE 12
News and views Caroline Hong Brad Sugars Gadget Guide SMEAA news By the numbers
Meet the winners of the 2011 ActionCOACH My Business Awards and learn how they are re-writing the rules of business.
2 8 10 50 62 64
Features
Fix fights before they fester
FINANCE Survive a tax audit
24
When the tax office calls, don’t panic. Some simple preparation and a reasoned response can make an audit less painful.
PAGE 36 Workplace disputes get worse if managers and business owners don’t step up to solve them. Lean how to fix fights with these tips.
LEADERSHIP Micro behaviours
30
There’s no single thing that helps you to succeed, says Rod Matthews. Lots of little things make a difference together.
26
32
BUSINESS TECHNOLOGY Secure your website
40
Some online criminals see your website as the easiest way to steal valuable information. Fight back with our tips.
Online marketing done right
The secret of coping with change? There is no secret, writes Stuart Hayes in the first of a series on leadership.
38
Cloud computing is helping one small business to compete on the world stage without expending capital on equipment.
Crowdsourcing is a new way to hire talent and is also winning some clever Australian entrepreneurs global attention.
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42
Technology expert Paul Wallbank offers his advice on the best way to make your website a powerful sales and marketing tool.
EXPERTS Robyn Anderson 52 Michael Griffiths 53 Phil Lee 54 Tony Gattari 55 Ava Bentley 56 Ivan Misner 57 Carren Smith 58 Sheralyn Guy 59 Sue Hirst 60
Learn why the phone industry is such a confusing mess and how to get your hands on technology to make the connections you need. 1
EDITOR’SLETTER NEWS&VIEWS&VIEWS VI On page three of this issue, we report on the astounding takeup of smartphones in Australia. In case you haven’t made it that far into the issue, analyst firm Telsyte reports Australians already use 8.5 million of them and will acquire another 30 million between now and 2015, at which time 18.5 million of us will use smartphones. Telsyte suggests one industry that will be changed hardest and fastest by this shift is publishing — come 2015, you’ll pay a lot more attention to media on your phone than media like this sheaf of dead trees. I think that change will also mean big change for you, because it signals a big shift in your customers’ behaviour, too. Indeed, by 2015, I believe you’ll all market very differently. We’ll all have to figure out how to reach people in the few moments of time they devote to the personal environment of a smartphone, rather than the bigger screens and richer experiences of other devices. That may sound scary, but the good news is that businesses are
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already doing more than muddling their way through, as you’ll read from page 12 where we start our coverage of this year’s ActionCOACH My Business Awards. A majority of this year’s winners are either online businesses or do a lot of marketing online. All have built impressive businesses that follow some old rules and break others. Some have invented new rules, even while acknowledging that rules don’t last as long as they used to! Congratulations to all the winners and finalists. Decisions weren’t easy to make in most categories, and I hope the stories of the winners offer you some insight into how to cope with the changes we all know are heading our way.
Simon Sharwood Editor, My Business simon.sharwood@commstrat.com.au
AUSTRALIANS DON’T WANT TO BE HOT OR DO THE DISHES
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ore than half of Australian households now have a dishwasher, according to the Australian Bureau of Statistics’ new ‘Environmental Issues: Energy Use and Conservation, Mar 2011’ report. Released last October, the research says 42 per cent of households had dishwashers in 2005 and 45 per cent in 2008. Since then, 6 per cent of households have splashed out, taking the national dishwasher fleet into 51 per cent of homes. Here at My Business, we think that’s a bit of a milestone — many families congregated around the sink. With only 49 per cent now doing so, has a moment passed in our domestic habits? One thing that has changed is our tolerance for hot weather, as the report notes: “The proportion of households with a cooler in use (either a refrigerated air conditioner or an evaporative cooler) increased from 59 per cent in 2005 to 73 per cent in 2011.” The report also marks another shift in behaviour, noting that “Australian households with stereo systems dropped from 78 per cent in 2005, to 59 per cent in 2008, to 41 per cent in 2011.” Another change is the rise of laptops — 61 per cent of Australian households have at least one, taking the portable PCs ahead of desktops (55 per cent of households have one) for the first time.
At this point, astute readers may be wondering if we’ll ever get onto the topic of the report, namely ‘Energy Use’. The report found mains electricity is our favorite energy source and that households are keen to control use by buying more energyefficient appliances such as front-loading washing machines (present in 13 per cent of households in 2005 compared to 31 per cent now). We’re also keener to insulate our homes. The report states: “Homes with insulation have also increased with over two-thirds (69 per cent) having some form of insulation, an eight percentage point increase since 2008. The states showing the largest increase were Queensland and New South Wales (15 and 10 percentage points, respectively). Over one in 10 households (11 per cent) installed insulation because of a rebate offered.” Could it be the government’s insulation program wasn’t a total loss?
IEWS&VIEWS NEWS&VIEWS&VIEWS VIEWS& COUNCIL HELPS SMES COMPETE WITH WIRELESS SMART CARD Sydney’s Parramatta City Council will help local small businesses by offering them access to a wireless commerce scheme.
S
ydney’s Parramatta City Council has hatched a radical plan to help local small businesses: a smartcard scheme designed to attract shoppers to retailers in its central business district. Parramatta’s shopping landscape has come to be dominated by Westfield and retailers beyond the mall have, over the years, become a less natural destination for shoppers. The Council hopes to reverse that trend with the Para Connect project, which will see it issue a smartcard equipped with near field communications (NFC) technology to its citizens. NFC enables cardholders to swipe their cards to make payments. Google is backing NFC technology, making it a part of its Android operating system. Some mobile phone manufacturers have already used NFC in handsets, with the idea being that the mobile phones replace credit and debit cards. Parramatta wants to tap into that idea by giving its citizens cards in which they can store value they use to pay for things like parking in the Council’s parking stations. The Council will also offer local merchants card readers and software to integrate those readers with their cash registers and point-of-sale software. Council is even considering integration with a cloud-
hosted inventory management application or similar software, to ensure the system offers more value for local retailers and helps them to improve their operations. All participating merchants will be listed on a Website to promote the scheme. Integration with merchants could also mean shoppers who buy goods at local stores outside the mall can have their parking paid for by the retailers where they shop, an idea it is hoped will make local stores more attractive by matching Westfield’s free parking offer. Another possible use the Council is contemplating would see the cards used as building access keys. Council would host the applications needed to make this possible and promote the service to businesses considering the area as an office location, as electronic entry to premises is usually complex to acquire and implement. The Council has kicked off the scheme by selecting its most active library users between the age of 18 and 25, and upgrading their library cards to NFC cards. Council plans to distribute cards to other citizens after the scheme’s launch in November 2011.
SMARTPHONES BOOMING
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nalyst outfit Telsyte has just published its ‘Australian Smartphone Market Study 2011-2015’ and predicts that by 2015 Australia will have 18.5 million smartphone users — up by nearly 10 million from today’s smartphone user population. Getting Australia to a smartphone population of 18.5 million will see a staggering 30 million units shifted between now and 2015. Telsyte expects Apple’s iPhone “will continue to have installed market leadership until around 2014,” at which point Android devices will take the lead. Telsyte “ ... predicts Nokia to be a dark horse with its adoption of Windows Phone 7” and says Blackberry “will maintain a niche following with consumers”.
Smartphone adoption will mean a need to rethink marketing strategies, as Telsyte called out publishing as an industry likely to be strongly impacted by the increased adoption of smartphones. “Many online publishers in Australia will have a larger smartphone audience than the computer-based online audience by 2015. The inflection point will occur sometime during 2014 and could result in more traffic and revenue generated by smartphones than online, depending on the nature of their offerings.” That will mean lots more consumer attention focused on smartphones, a trend that will require a change in thinking about advertising and marketing.
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AFFORDABLE PROTECTION FROM THE ATO: A LIFESAVER FOR SMALL BUSINESS
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ax audits of all types are increasing in number and scope every year. It’s almost a case of when you will be audited rather than if. It could start with a BAS, Super or Workers Compensation inquiry and spread to your whole business. You could be left with a bill for thousands from your accountant — the current average is now over $3,600 per audit. Specialist accountants and lawyers could be involved, your business could face serious cashflow problems and the inquiry could even spread to your customers. It’s a potential nightmare. And it’s not just the ATO, but a whole range of state and federal agencies. Sophisticated computer cross checking is making additional inquiries more likely. Tax audit insurance isn’t new, but with a new product called TaxBreak the game has now irreversibly changed. TaxBreak is significantly more affordable, because it can be purchased direct. You simply pass the government inquiry or audit request onto your accountant and, when you receive their invoice, you lodge a TaxBreak claim and the insurer then pays you directly. Payment is quick and easy and TaxBreak is able cover the widest range of audits and investigations for less. It’s also transportable, meaning you are free to change accountants and engage expert assistance. You’ve seen the headlines and probably heard the hard luck stories — even from businesses that had not done a thing wrong. Business tax returns are underway, BAS is due this month and the ATO recently released their 2011/12 compliance program. Check out www.taxbreak.net.au — right now would be a good time. 3
STARTUP OF THE MONTH: NEWS&VIEW NEWS&VIEWS NEWS& NEW GOOGLE RECRUITLOOP CHANGES SEARCH T MARKETING RULES G oogle says it has made its search services more secure, but some are worried the changes will also make it harder to measure traffic driven by the search giant. Google detailed the changes last October, explaining that if you have a Google account and are logged into it when you conduct a Google search, your searches will be encrypted. That is a good thing, because it will be harder for dodgy people to figure out what you are searching for. But another change Google made means that online marketers, who typically spend a lot of time analysing the traffic they get from Google, won’t get as much information to work with unless they pay Google by using some of its other products including AdWords. Online marketers aren’t sure that change is beneficial. “It seems to me that making the Internet as a whole a more secure experience is definitely a valid concern,” said Mikel Kew, Founder of business-to-business group buying company Bargains4Business. “However, for businesses with an online presence, it has furtherreaching consequences. It appears that for those already using AdWords advertising, there will be little difference in the reporting and analytics that they are used to. For everyday users though, the ability to monitor Web traffic to your site and measure the results of various different search engine optimisation strategies may be significantly impeded.” But e-tailer Gim Loe of Hip Industries is unconcerned. “We do not use AdWords, so the new changes do not affect us,” she said. “However, if we did, I doubt that I would see any significant changes in terms of finding effective keywords etc for an AdWords campaign. The format of one’s results will be different, but the information that you will receive from Google will still be very effective. This is ultimately a security upgrade only. I can see how this would benefit Internet users for privacy purposes.” 4
NOVEMBER 2011
he Sydney MyBiz Expo featured a ‘Pitchfest’ in which startups had five minutes to strut their stuff before a panel of judges. At stake was a $5,000 investment, provided by My Business, in the form of advertising and direct mail services. The winner of the Pitchfest, and this month’s Startup of the Month, is RecruitLoop.com, a new Web business that links employers to professional recruiters and candidates. The site offers employers the chance to list jobs they need to fill. RecruitLoop’s panel of experienced recruitment professionals then offer their services to employers, who can pick whomever they think is best for the job. Your chosen recruitment consultant then starts looking for candidates and can provide you with a shortlist or even arrange for video interviews with candidates. RecruitLoop Founder Michael Overell was especially enthusiastic about the video interviews, saying they can save employers the drag of going through the polite motions of an interview with a candidate who is clearly unsuitable for a role. Employers pay their chosen recruitment consultant an hourly rate, rather than the usual flat fee, and can then rate the consultant so that other users of the site can assess their performance. No success fees or trailing commissions are required.
THE VIRTUAL MYBIZ EXPO My Business editor Simon Sharwood conducted a series of video interviews with exhibitors at the 2011 Sydney My Biz Expo. If you’d like to learn more about the exhibitors and what they offer your business, visit www.mybusiness.com.au/ mybiz-expo/blog
Overell expects that many of the recruitment consultants the site works with will be women looking to return to the industry after starting families, and that clever identification of a neglected talent pool, plus the disruptive and innovative nature of the business, impressed the judges sufficiently to see him win the Pitchfest and take out the Startup of the Month crown.
Online pitchfests My Business will shortly commence online Pitchfests with startups battling in a Webinar to be named Startup of the Month in these pages. To learn more, sign up for our e-newsletter at www.mybusiness. com.au/subscribe-enewsletter
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GENERATION NEXT – NEWS&VIEWS HOW SCHOOLS ARE SIMULATING BUSINESS FOR BUDDING ENTREPRENEURS
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ne criticism often leveled at our school system is the lack of ‘real-world’ experience it offers students. Business-minded pupils or those with an entrepreneurial bent in particular are simply not being given the tools they need. Australian Business Week (ABW) aims to address some of these concerns by offering pupils the chance to run their own business through a series of simulations in the manufacturing, IT, retail or hospitality sectors. The students make real business decisions and track the share value of their company as a gauge of their success.
options— hospitality and retail — are not large end-points for Scots graduates. Manufacturing is also very visual, which engages our students quite strongly,” says Inches. The teams are allowed to consult with a business mentor, who can advise them on some of their key decisions. In the case of Scots, the mentors are often former pupils or employees of program sponsor Investec. “Past students from The Scots College volunteer to be mentors and guest speakers, and come from many different industry sectors and entrepreneurial profiles. Investec has been very helpful by providing several volunteers from their staff who become business mentors. Investec also provides us with an award for the most innovative new product,” says Inches. The Scots College also offer prizes for the best trade display, the best written company report, the best 30-second TV commercial, the best oral presentation of the annual report and, of course, for the team that is crowned Grand Champion. The school is committed to running the program in 2012, which will also see some changes introduced to the simulation itself. Starting with the manufacturing version, ABW coordinators will be able to make changes to the demand curve, adjust the currency exchange rates, vary wages and include news flashes. These changes will give individuals the opportunity to create their own, unique market environment. The 2012 program will also see the introduction of a single-player version of the online simulations that will pit individuals against three cyber opponents.
The students make real business decisions and track the share value of their company as a gauge of their success. Among other things, the program requires small teams of schoolchildren to produce a trade display, a TV commercial, a shareholder briefing and a written company report. Team members choose their own roles and appoint a CEO. In the past 12 months, over 10,000 schoolkids have taken part. Sydney’s The Scots College is one of the schools to have made the program a compulsory part of the Year 10 curriculum. According to David Inches, the College’s Director of Vocation and Enterprise, “With the real-life simulations being a central aspect of the program, the boys can tap into their many skills, including financial analysis, public speaking, managing teams, video production and creativity. Many Scots graduates enter the world of business and finance, so giving them an early taste of the complexities and challenges was a key aspect of our decision to get involved with ABW.” Depending on which simulation their school has chosen, the students make decisions about how many factories or hotels to open and how best to configure them; all marketing inputs such as price, sales force and advertising; as well as having to manage their financial resources. The Scots College even requires its students to wear business attire for the duration of the program to help get them into the right frame of mind. The most popular simulation is manufacturing, and indeed this was the simulation chosen by The Scots College in both 2010 and 2011. “Manufacturing was chosen because of its similarity to the boys’ possible future careers. The other 6
NOVEMBER 2011
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NEWS&VIEWS CAROLINE HONG Welcome to the fast lane
ECONOMISTS TELL ME THE CURRENT LEVEL OF INVESTMENT IN AUSTRALIA IS UNPRECEDENTED IN THE HISTORY OF ALMOST ANY NATION IN ANY ERA.
8
NOVEMBER 2011
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ll year, I’ve heard talk of low business confidence and a two-speed economy. While recognising that some industries are not enjoying the best trading conditions, I feel there are two reasons this talk is less than helpful. The first is that when I talk to small and medium enterprises, I nearly always hear about exciting plans for the future. Entrepreneurs who embrace change and seek opportunity tell me that they feel there is lots of room for growth in Australia today. They tell me about opportunities to serve the mining boom, to innovate online or to bring entirely new services to market in all sorts of industries. Even in the industries facing the toughest challenges, I hear of plans to shake things up. Retailers talk about new concepts to entice and delight customers. Transport companies are doing clever things to improve productivity and reduce energy use. Digital companies nearly always have extraordinary plans that straddle the line between innovation and disruption. My point here is that change is a constant. Right now, a big set of changes means very big challenges for some industries. But let’s not assume that just because we are living at a time of accelerated change that brings pain to many that the whole economy is in crisis. It’s not true, which is the second reason talking down confidence and economic performance isn’t helpful. It’s just not borne out by economic data. The National Australia Bank’s September Business Survey, for example, reported likely economic growth of 3 per cent for the December quarter and 3.5 per cent growth when you exclude the coal sector from the numbers. You did read that right. Growth is higher without coal in the data! Unemployment remains at impressively low levels and Australia’s terms of trade are exceptional. Our national debt is very moderate compared to most other nations. There are plenty of other data points I could use to illustrate the fact that the economy is actually doing pretty well. I have read several business indices lately that report increased intentions to hire staff and expectations of higher revenues in the next few months. I also recently attended an event at which economists outlined how the current level of investment in Australia — much of it driven by the resources industry — is
unprecedented in the history of almost any nation in any era. The world wants what we have — resources, lifestyle, business opportunities, skilled people and more — and is coming here to get it in numbers we’ve never seen before. It’s also important to point out that while spending trends look slow in some industries, others are going very well. Personal services, for example, are growing strongly and today, people go to shopping malls to experience them. That’s not traditional retail, but it means the same number of people or more visit retail precincts and spend the same (or more) money. They just don’t spend it on the same things they used to, because they have more choices and different desires. Changes in consumer behaviour will always mean there are winners and losers. One such behaviour is a reluctance to acquire debt. Myer CEO Bernie Brookes recently told My Business that past strong retail performance was fuelled partly by many Australians spending more than they earned. I personally find it hard not to applaud that financial prudence, but also worry that it indicates Australians are less willing to bet on their futures. But who wouldn’t be cautious when appraising the magnitude of overseas events? In summary, I feel Australia has a lot to celebrate, but I recognise that many businesses face big challenges. That’s one reason why we founded the Small to Medium Enterprise Association of Australia (SMEAA). We know that change is constant and that smaller businesses do best when they have access to strong advice and insight from professionals and peers. Our mission is to help SMEs prosper, and to give them a forum to look for assistance that has no geographical or industry ties. And if we succeed, we hope to help lots of businesses get into the fast lane. We won’t do this alone, of course, and will work with many other organisations to achieve our goals. One of those I hope to work with is the Australian Women’s Chamber of Commerce (AWCC), which is conducting its first national poll on women in business and hoping to find 30,000 women to participate. You can find the poll at www.awcci.org.au. And you can find the SMEAA at www.smeaustralia.asn.au
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NEWS&VIEWS BRAD SUGARS A great application
WHAT SET THE APPLIANCES ONLINE STORY APART WAS A COMBINATION OF FANTASTIC NUMBERS, EXCEPTIONAL SERVICE AND THE EFFECTIVE USE OF SOCIAL MEDIA.
Brad Sugars is Founder and Chairman of ActionCOACH, the world’s number one business coaching firm. 10
NOVEMBER 2011
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ow, what a great year it’s been! And not only are we into a change of seasons once again, it’s also one of my favourite times of year, as we recognise the winner of this year’s ActionCOACH My Business Award for Outstanding Excellence. This year, the award was given to a business in a category that many people thought could never work in an online space. But the team at Appliances Online proved the naysayers wrong (even, at first, some inside the company), and has created an amazing business story and case study, built around the goal to ‘Impress Every Customer’. Appliances Online CEO John Winning and his team should be very proud of their accomplishments, especially as they’ve redefined a category, and favourably outrank multinationals such as Apple, eBay, Amazon and Shopping Square in terms of ‘Best Consumer Shopping Experience’. What set Appliances Online apart from the other great entries we received was a combination of fantastic numbers, exceptional service, the effective use of social media and committed community involvement. All worked together to create a thriving, customer-centric company poised to grow even larger in the years to come. Let’s take a look at just some of the highlights from the Appliances Online entry: • A ‘best price’ guarantee — key to helping people get used to the idea of ‘riskless’ buying online; • An average dollar sale of $900, with some customers spending upwards of $10,000 on a single purchase; • Same-day delivery in selected areas; next day delivery to more than 80 per cent of the population; • Free delivery, with connection and removal of old appliances, which are then recycled at no additional cost; • A customer-oriented USP and point of difference to ‘Impress Every Customer’, no matter what form of communication (including over the phone, Facebook, Twitter and email); • 100 per cent year-on-year sales growth for the past six years; and • 150,000 unique online customers, with an increase of 50 per cent in 2010.
Appliances Online also embraced and leveraged social media, especially Facebook. By creating a coherent social media strategy and having clear objectives (the company aimed for everyone here in Oz to be connected to Appliances Online through at least one friend), the company was able to track the effectiveness of its efforts, and was even able to monetise its results and create a significant boost to the outfit’s annual turnover. But one of the best ideas the company had was to ‘test and measure’ its foray into the online space first, before going all in with resources that would have been wasted if a market didn’t exist. To his credit, John was careful with his startup resources, and launched the company with a single laptop, a rented truck and a 1300 number diverted to a mobile phone. Not only did this approach make sure there was a market and demand for his type of service, it also helped John and the team innovate as they grew, getting valuable feedback from their customers every step of the way. Appliances Online shows us that success is really about getting a handle on sound business principles, no matter what medium you use or space you may be competing in. From selling what your customers want to buy, to an exceptional customer experience, to engaging communication at every level, to asking for customer feedback and actually implementing suggestions, the real lesson of the Appliances Online story is that the general principles work — you only need to apply them. Thanks again to everyone who entered this year’s awards competition. Each year, the bar is raised by extremely talented, creative and entrepreneurial people and companies who are willing to not only see things in new ways, but to act on that vision. So, if you entered this year and got close to the top prize, or if you want to see how your company stacks up against the best our country has to offer, I challenge you to start thinking about your entry for next year’s competition. Keep up all the fantastic work you’re doing, and remember, when in doubt, go back to the fundamentals. They’ll never steer you wrong — and just might guide you to incredible success.
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COVER STORY
GENERATIONAL CHANGE Winner of the PricewaterhouseCoopers Award for Best Medium Business and the ActionCOACH Award for Outstanding Excellence: Appliances Online Appliances Online has taken an existing bricks and mortar business online in a stunningly successful fashion, bridging generations of technology and family.
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s a young man, John Winning thought going into the family business was a soft option. “In the back of my head, I did not want to be the one who was seen to just come in and take it over,” he says. “Your peers think you had it easy because you took over the family business.” Winning’s family business is Winning Appliances, a Sydney outfit that derives much of its business from customers who need a handful of appliances to outfit a new kitchen or laundry. Much of Winning Appliances’ business comes from architects and builders, who refer their clients to the company as it stocks a multitude of products in its showroom and has mastered the knack of assembling large and complex orders. Customers get the chance to look at more products in one place, while architects and builders get the confidence that comes with an expert supplier. The Winning family knew online would be a potential competitor for its traditional business, but John’s vision was to do more than just take the existing business online. “We saw a whole bunch of competitors entering the space. The big players wanted to get better at what we were doing — they liked the big orders with big dollar values. So we decided to attack them with single order purchases. “We did not want to take away from the traditional business,” John says. “One reason was because if it went bad, we did not want to be seen as having failed with Winning online. Another reason was that if we succeeded, we would get a very different business,” making online an aggressive expansion opportunity rather than a more defensive extension.
“We didn’t look at it as an offshoot and we didn’t just dip the toe in,” he says. “We saw it as a new business and made a full commitment to servicing the whole of Australia.” Six years since making that commitment, Appliances Online (www.appliancesonline.com.au) is now a thriving independent company with 35 staff in its customer service unit alone. The site carries more than 2,000 products from 52 suppliers and has gathered over 160,000 Facebook friends. Customer satisfaction runs at 98 per cent. A crucial part of Appliances Online’s initial strategy was catering to people who don’t have the time or inclination to visit a bricks-and-mortar store. “If your fridge dies, you just want a new fridge,” John says. “It’s not convenient to go shopping when that happens. But you can go online.” John also decided that while convenience was important, customer service would be a critical online differentiator. “It doesn’t matter what business we are in, we try to run them two ways,” John says. “One is to make sure we find out what the customers want. The second is to do it. If customers want a certain product, we find a way to source it. If they want us to open at a different time, we do it. With the online store, if they want next-day delivery in Perth, we’ll find a way to do it.” The company has also made a big commitment to a customer experience that goes beyond price and convenience, offering free delivery, free connection services for new appliances and free removal of old products. All of those services are included in the price published on the company’s Website, an offering John says is deliberately simple and 13
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“We did not want to take away from the traditional business because if it went bad we did not want to be seen as failing online.” therefore a point of difference compared to the bricks-and-mortar shopping experience, in which haggling over price and delivery fees is common. “We try to educate shoppers that there is more to a price than the price,” he says. The simplicity of the company’s pricing is also appreciated by suppliers, who John says like doing business with Appliances Online because predictable pricing helps them to protect their brands. Appliances Online also tries to foster open and interactive relationships with suppliers. “Transparent relationships are important because if a supplier feels a product is not represented well, we make a change to explain a product better in a few minutes. They know exactly what we are doing and are comfortable with how we operate.” John admits that those relationships were easier to establish than would have been the case if Appliances Online was a completely new business, but he is also proud of the fact his business has devised most of its own processes and practices. “Everything I have been doing in the last six years I did for the first time, and every time I learn something I feel lucky I did not know it before. I did not have preconceptions — I look at the best way to do something and this is our best advantage. Whenever we speak to other businesses, they tell me they do things one way because that is the way everyone does it in that business.” As the conversation rolls on and John explains how Appliances Online tackles a problem, “they often see that the way we do things is smart.” One thing John feels is smart — and important for any online business — is to listen to customers. “Use whatever tools you can,” he advises. Grab a relative or a friend or 10 random people. Get them to do something on your site and watch them go through the process. I know the site well, so it is easy for me. But if you get others to test it, you learn so much.” Another piece of advice he offers is to reduce reliance on external suppliers. 14
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What the judges liked about Appliances Online: Judges of the ActionCOACH Award for Outstanding Excellence felt it was hard to think of another example of an existing business making such a positive and successful transition to the online world. Judges of the PricewaterhouseCoopers Award for Best Medium Business felt likewise, praising the company’s growth and the strong strategy fuelling it. What Appliances Online wins: $5,000 in products and services from PricewaterhouseCoopers and $5,000 in products and services from ActionCOACH.
“For anything you pay someone external to do, try to learn it yourself or you will never get better. Whether it be Web design or e-marketing, if you rely on suppliers and don’t understand it, you will always be reliant and never have control.” A third tip he offers is being hyper-committed to the customer experience. “We find it easy to grow and scale by always over-servicing customers. The higher percentage of happy customers you get, the easier it is to get more customers. We have 98 per cent customer
satisfaction and we go out there and fix the 2 per cent of unhappy customers to get to 100 per cent.” “We are happy to be out there on Facebook and Twitter, because we know there is no-one with harsh words for us.” Nor does John have harsh words for himself, as he now sees his role in growing the family business to be anything but a soft option. “I saw the opportunity to have the new business and I feel I have the respect of my peers,” he says. “I took it to the next level.”
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DIGGING A NEW NICHE The Inscriptions Media Award for Best Growth Strategy and the My Business Award for best startup: Machines4u.com.au
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uys who sell specialist machinery aren’t that good at sales,” says Luke Bruce. “They are more about the engineering mindset.” Bruce should know — he spent several years selling industrial machinery and came to know the industry inside out. One of the things he came to realise was that sellers’ technical focus meant buyers — who are typically business owners rather than technical specialists — didn’t have access to a lot of information about products they could or should buy. Information about what machines are worth was even harder to find.
“The Internet as we know it — as a computer on a desk — is dead. Things are going completely mobile.” “We saw the same machine sold to customers within a week and a $20,000 or $30,000 price disparity, just because it was possible to do,” Bruce says. “People were getting ripped off purely, because some people are better at negotiating than others.” Machines4u.com.au, the site Bruce founded with partner Steve Krebs, aims to address those two issues. For vendors, the site offers a way to market their products widely without having to focus on engineering-led features and functions. For buyers, the site offers a chance to compare prices in a transparent market and find second-hand equipment. Bruce feels the site also means a chance for buyers to get more information than sales people can impart, which means the chance to make better purchasing decisions. “For a business that moves earth, the way to grow is get a bigger digger,” Bruce says. “But if you cannot sell the old digger or you buy the wrong machine, you can go backwards,” and take a nasty cashflow hit into the bargain. “We thought there was an opening to give buyers and sellers the quickest and easiest way to link up.” Machines4u.com.au is that link and now racks up more than 150,000 page views a month, with over 5,000 companies signed up for its services. Bruce says that machinery dealers are among that number, 16
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because even though the site challenges the way they do business, they see value in the new route to market it offers. “They rapidly realised that we could produce results from day one,” Bruce says. “Right from the launch of the site, we have been able to produce results.” The company is now planning a growth strategy to ensure it continues to deliver in the face of different customer behaviour. “The Internet as we know it — as a computer on a desk — is dead,” Bruce says. “Things are going completely mobile. Apps are the way to go and we are already producing those.” The company is also investing heavily in customer support. “Our goal is to give everyone the best experience possible and to become the world’s best place to buy machinery,” Bruce says. A New Zealand version of the site is therefore close to launch and the company is starting to forge alliances around the world to take the site international. Bruce and Krebs, meanwhile, are already preparing for the changes that growth will mean. “Everyone here is under 35 today,” and most are yet to start families. “It’s easy to do the hard yards now. But it won’t be like that forever.”
Machines4u. com.au has changed the way industrial machinery is bought and sold, disrupting some established practices while also making a difference for the industry it serves.
What the judges liked about machines4u.com.au: Judges were impressed by the site’s clear growth strategy — moving to a mobile Website and international growth were seen as far-sighted activities for a company that has achieved so much so quickly. What machines4u.com.au wins: $5,000 in services from Inscriptions Media and a $5,000 advertising package from My Business.
COVER STORY
GREEN IS GOOD FOR BUSINESS The 2UE Award for Best Corporate Social Responsibility: Longwarry Food Park
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fter taking out the Best Medium Business and ActionCOACH Award for Outstanding Excellence in 2011, Longwarry Food Park backed up to take out 2011’s Best Corporate Social Responsibility Award for its efforts to reduce energy consumption and pollution. Reducing energy use is not only socially responsible, says Managing Director Rakesh Aggarwal, it is also a good investment. “The view we have taken is that energy conservation projects should have a three-year payback,” he says. “It turns out to be less than that because energy prices go up every year.” The company also re-uses water whenever possible. “We generate water when we dehydrate milk,” Aggarwal explains. “Then we
What the judges liked about Longwarry Food Park: All the finalists in this category had extraordinary stories to tell about their efforts to improve the community and the environment, but the judges felt the scale of Longwarry Food Park’s operations made its efforts more likely to have a positive impact. What Longwarry Food Park wins: $5,000 in advertising from 2UE.
re-use the water whenever we can. We also try to recover products before they touch the floor so we can re-use water rather than treat effluent.” Another corporate social responsibility effort sees the company train longterm unemployed workers. “Finding skilled people has not been easy in regional Victoria,” Aggarwal says. “We employ long-term employed people and train them into really good operators. The state government and Longwarry Food Park work quite regularly on training.”
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BE HER GUEST The GIO Award for Best Small Business: Segenhoe Inn A brush with one of Australia’s “most flamboyant swindlers” led Segenhoe Inn Owner Cherie Donavan to a new career in hospitality.
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n 2003, things went pear-shaped for Cherie Donavan. “I quit my job,” she recalls, having tired of the antics of her then-boss, Bradley Cooper, whom the ABC described as “one of the corporate world’s most flamboyant swindlers”. Just how Donavan came to work with Cooper is a long story, but the short version starts with a career in the exhibitions industry. Donavan ran a bridal show in Sydney, but once it hit trouble after the recession we had to have, she found herself demonstrating products at other trade shows. At one such event, Cooper spotted her demonstrating a high-end steam iron and decided he had to get into the business. Protracted negotiations in odd locations ensued before Donavan became the only woman reporting to Cooper, with responsibility to create a steam irons business. The effort never quite made it into high gear and Donavan did not get on with or trust Cooper, eventually quitting her job. At which point, reality struck. “I became aware that it was hard to be a mature woman returning to the workforce,” she says. “I was being interviewed by 24 year olds,” and the encounters weren’t pretty. Donavan decided she should go into business again. “I knew I wanted to create a bed and breakfast,” she says, but had no experience in the industry. She did, however, have plenty of experience renovating Victorian-era homes, so figured a property of that nature was a safe place to start. Eventually, she found the property of her dreams in the Hunter Valley, north of Sydney, and set about transforming it. “I am passionate about manners, politeness and old-fashioned values,” Donavan says. “And I am a people person. I decided that I could create a B&B with a difference that transplanted my own lifestyle into the property.” That idea has paid off. “When people get here, they are very pleasantly surprised by things like the sherry before dinner and the candlelight,” she says. “When people come here, they are staying in my home. It is like inviting more friends to come and stay.” Donavan says those experiences reflect her philosophy of always treating her guests the way she likes to be treated herself. “I also go the extra mile,” she says. “If someone asks me to pick them up at the station, I’ll do it. Doing the fundamentals and the basics pays off.” The result of this attitude is plenty of repeat visitors, but Donavan has also embraced many proactive marketing techniques. An early adopter of group buying, she has already successfully run two such promotions. Online marketing is another activity, while Donavan also uses the local public
speaking circuit to share her business experiences and promote the business. Donavan does all this while employing just one other staffer — a part-time cleaner. She says she stays on top of things by always keeping a very close eye on her financials, including doing her BAS monthly and building those payments into her cashflow assumptions. “A monthly bill is smaller than a quarterly bill, and you don’t know what is coming down the track,” she says. Another practice is keeping a tidy office. “It is too easy to forget the invoicing or to remember that you have not been credited for something,” she says. Donavan also feels that entering awards helps business. “Creating an entry is time consuming, however, it makes you reflect on what you have done right and wrong in the last year. When you dissect your business as much as you do when you write a submission, you learn a lot about your business.” .
What the judges liked about Segenhoe Inn: Judges felt they could not think of any marketing or hospitality tactics Cherie Donavan is not already using. Combined with her charm and passion, she was a clear winner. What Segenhoe Inn wins: $5000 in cash from GIO.
We thought we’d make a big deal of this small business.
SECTION HEADER
At GIO is our business to support Australia’s small businesses. We were so impressed with Segenhoe Inn Luxury Boutique Hotel and B&B, we presented the owner Cherie Donovan, with the award for Best Small Business 2011. This win celebrates the strong entrepreneurial spirit and a commitment demonstrated by Cherie to running a successful business. Congratulations. The GIO Team
13 10 10 Insurance is issued by GIO General LTD 22 002 861 583.
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