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WHY SPORTSWEAR BRAND SKINS LAUNCHED WITHOUT A BUSINESS PLAN

The magazine for ambitious Australian business owners

AUGUST 2011 • $6.95 (gst inc.)

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THE HOW SKILLS TO FIND GAP THE PEOPLE YOU NEED

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Finding franchise finance New social marketing tools • New printing tricks • Enter the My Business Awards


AUGUST 2011

www.mybusiness.com.au

CONTENTS Cover Story

Regulars

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News and views Brad Sugars Peter Strong Gadget Guide BEC news Back of the envelope

Unemployment is low, baby boomers are retiring and shortages of skilled labour are a big issue for many businesses. We’ve talked to human resources professionals and business owners to learn how they have managed to hire and retain the best, so you can too.

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Features

The magic of merchandising

MARKETING Online advertising

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Get your online advertising right with these ten tips

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Twitter’s business blooms

Smart retailers are finding new ways to present their goods, with temporary ‘pop-up’ shops and clever use of in-store technology offering consumers a compelling experience that breaks wallets wide open.

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Like any growing business, Twitter is trying to find the right model … by offering you new types of marketing opportunities.

FRANCHISING Finding franchise finance

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Financiers think differently when assessing prospective franchisees. Follow our advice to get the cash you need.

Café2U’s American adventure

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Mobile café franchise Café2U is about to take on America. Learn how it approached the market.

BUSINESS TECHNOLOGY Printing’s new tricks Is your cash working hard for your business, or dribbling out the door? Get your money working harder by reading this feature.

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Catch up on recent stories from mybusiness. com.au, including a story about the CEO of Skins, Jaimie Fuller, and his attitude to business planning.

The 2011 ActionCOACH My Business awards are open! Find all you need to know to cook up a winning entry here!

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Printers are capable of all sorts of new tricks that can make you more productive and save cash.

EXPERTS Robyn Anderson Sheralyn Guy Donna Stone Phil Lee Terence Jeyaretnam Sue Hirst Ivan Misner Tony Gattari

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Facebook’s new online stores offer an intriguing new way to get to sell on the Net, but not everyone is convinced the company’s approach will work. 1


SMB SECTOR WANTS NEWS&VIEWS NEW MORE CARBON HELP Individual businesses and lobby groups feel the carbon tax's lack of any assistance package for small business is a problem. But some see upside and opportunity in changes the tax will create.

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eter Grant doesn’t understand the carbon tax. It’s not that the idea is beyond him. Instead, Grant, owner of Mackay Bakery Bushmans Bread and Regional Chair of the Chamber of Commerce and Industry Queensland, doesn’t understand why Australia will implement a tax he feels won’t change anything. “In Queensland we have had a 50% increase

in the cost of electricity over the last three years without changing consumption one iota,” he told My Business. “If you are not going to change people’s behaviour it won’t make a difference.” Grant also feels the tax will make things harder for his business. “We’re a big electricity user – power is about five percent of our cost of production and energy

EDITOR Simon Sharwood 0414 373 726 mybusinesseditor@mybusiness .com.au

EDITOR’SLETTER

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CONTRIBUTING EDITOR Nicola Card 03 8534 5036 nicola.card@mybusiness.com.au NATIONAL COMMERCIAL DIRECTOR Tony May 02 8923 8001 tony.may@mybusiness.com.au EVENT COORDINATOR Simone Benson 02 8923 8003 simone.benson@commstrat.com.au

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AUGUST 2011

Is it time for the Australian small business community to shrink dramatically? I ask because whenever I read the Australian Bureau of Statistics’ data it gets me wondering about our national definition of a small business. For the record, the definition is that an entity with an active ABN and zero to 19 employees is a small business. The inclusion of organisations with zero employees is important because it means the definition of small business includes plenty of sole traders and independent contractors and results in 1.1 million of Australia’s 1.9 million small businesses being defined as “non-employing” businesses. I think there’s a case to classify some of those non-employing businesses differently. I don’t think that having no employees is the right test: a partnership may have several people who draw income from a nonemploying business without having anyone on the payroll. Instead I wonder if there’s a line to be drawn around value creation. I offer this as a cutoff because when I worked as a sole trader, I refused to call what I did a “business” and

for transport is another five percent”. Increased energy prices will mean increased retail prices. And with the big supermarket chains recently deciding to use bread as a loss leader – Grant says they are selling well below the cost of production – he faces “costs going up and prices going down.” Peter Towers, director of

preferred to call it a “practice.” I used that distinction because if I had been hit by the proverbial bus, my sole practice would have disappeared. There was no-one else to do the work my clients hired me for and there was no chance anyone could buy the practice and resume its operations. I don’t want to downgrade sole traders. Indeed, my interest in more granular classifications is driven by a feeling that policy developed for “small business” is often a poor fit for non-employing business. And seeing as there are more of those than there are employing businesses of all sizes, surely a better definition could lead to better policy? While we’re at it, let’s settle on a single definition of small business. Fair Work Australia’s definition, for example, is a business with 15 full-time-equivalent workers. Sure, we may “lose” some small businesses if we redefine what it means to be one. But I feel we’ll also get better policy once we direct it towards more precise targets. Simon Sharwood Editor, My Business


WS&VIEWS NEWS&

business advisory company ESS Biztools also feels small business will be hit by the tax. “Whilst the advocates of the carbon tax are pointing to long-term benefits, there is certainly going to be some considerable pain for most small business operators from the introduction of the carbon tax,” he said. “There will be extreme competitive pressures which will inhibit SMEs being able to pass on extra costs relative to electricity, gas, freight, airfares, accommodation, rent and the higher input costs on product purchases made by thousands of small businesses around Australia.” Erik Bigalk of Smart Solutions PR also feels the tax could bring extra cost for small business. “Energy costs and rising costs for other carbon tax related products and services will mean higher costs for families and hence possibly less available spending dollars. For small businesses that have end-user customers, they may feel the impact of the tax.” “I think that we will see a ripple effect and as for small business operators, they will have to combat this with clever marketing, loyalty strategies and ways to win new customers. I have clients like that and that is what they are doing.”

No help Because small business has not been offered specific assistance in the carbon tax package, unlike those likely to be most affected, business groups worry that the impact on the sector won’t get the buffer it needs and deserves. “It is unfortunate that the only direct benefit that small business owners will receive will be in the reform of personal income tax,” said Institute of Public Accountants CEO Andrew Conway. “We are deeply disappointed that there will be no direct assistance provided to the small business sector.”

The CEO of the Australian Women’s Chamber of Commerce and Industry, Yolanda Vega makes a similar point. “Providing rebates for big business and for low income earners means the majority of SME’s have been ignored,” she said. Vega points out that women are overrepresented among home-based business operators, but that the compensation offered to consumers may not be adequate to meet the costs of running a business in the home. The current carbon tax package, she says, “… leads them to be totally confused as to where they stand if this legislation is passed and introduced in 2012. On one hand we are told of an expected increase of about $10 to households per week, yet on the other hand we are advised that SME’s will not be worse off … please explain!” But some businesses feel the carbon tax represents opportunity. Sam Nelson, principal environmental accountant and director of Perth environmental accounting firm Greenbase says the tax is fuelling growth at the 20-person organisation. “The carbon tax has lifted the profile for our profession, and the recent establishment of the Australian Institute of Environmental Accounting highlights that. This wouldn’t have happened now without the carbon tax coming in.” Business intelligence company IBISWorld also sees some upside. The company has released an assessment of the tax’s impact on business, The Clean Energy Plan and Australia’s economy (see http://www.ibisworld.com.au/images/marketing/ CleanEnergyPlanandtheEconomy.pdf) and says the tax’s impact will increase demand for legal, accounting, engineering and environmental sciences services. The report also predicts good times for the renewable energy sector, which it says “will continue to grow strongly over the next

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five years and beyond,” but says the resources and automotive sectors have some big challenges ahead. The report also calls into question the impact of increased transport costs on business’ supply chain, noting that transport companies spent 45% of income on fuel in 2008 when petrol hit $1.70 a litre. Today, with petrol at $1.45, that figure is just 27%, leading IBISworld to conclude that the price increase to fuel caused by the carbon tax will mean “an increase in operating costs of about one percent. A one percent increase in operating costs is mild, with most trucking companies able to introduce measures to minimise the impact, such as more fuel-efficient vehicles, new vehicle management systems, improved vehicle maintenance and better routes.” That analysis challenges the position of the Australian Retailers Association (ARA), which labelled the tax a “disaster” within minutes of its announcement, in part because of executive director Russell Zimmerman’s analysis that “Retailers are at the very end of the manufacturing and supply chain, and cost increases along the line will ultimately be caught by them.” The ARA also worries that “There are too many households that will miss out on any compensation at all as a result of an estimated $9.90 increase per week in the cost of living. Tax cuts averaging $10.10 per week for only 40 percent of households leave little margin for error and don’t go far enough to absorb other costs people will face on top of household and utility costs such as the cost of consumer goods.,” Zimmerman said.

Where do you stand on the carbon tax? Let us know at mybusinesseditor@ mybusiness.com.au 3


NEWS&VIEWS STARTUP OF THE MONTH: BIRTHDAY GORILLA Y

our Editor just had a birthday, so when news of Brisbane startup Birthday Gorilla landed in the My Business inbox it was a shoo-in for Startup of the Month. It helps that the company offers a clever marketing tactic, namely sending your customers a text message on their birthdays. You can also enter a customised offer for everyone to whom you send an SMS. We tested Birthday Gorilla’s service and it is impressively easy to use. CEO Lee Vaughan admits that “SMS marketing is a highly saturated market.” But he also believes Birthday Gorilla has a shot because, “We have developed a niche service that focuses on customer retention and engagement … which also saves businesses time and money in comparison to traditional direct marketing methods.”

GST THRESHOLD REDUCTION INVESTIGATED BEFORE INQUIRY CALLED

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he Fair Imports Alliance has uncovered documents which suggest the federal government was considering a reduction in the low value importation threshold before it ordered a Productivity Commission inquiry into the issue. The Alliance used Freedom of Information laws to uncover documents that show the federal government investigated lowering the low value importation threshold for overseas purchases from $1000 to $500 in October 2010. The documents obtained by the Alliance include correspondence between Treasury and Customs officials (see www.customs.gov.au/webdata/resources/ files/Document5.pdf), in which a reduction of the threshold to $500 is discussed, along with a possible start date of July 1, 2011. The low value importation threshold became an issue in late 2010, when prominent retailers called for its lowering in order to assist them to compete with offshore online retailers. The federal government responded to those calls by establishing a Productivity Commission inquiry into the issue. The Australian Retailers Association’s response saw it team with a number of other retail associations to create the Fair Imports Alliance, whose spokesperson Brad Kitschke said “The government has always claimed a lower threshold would be administratively infeasible but these documents reveal otherwise. They show that it could be done, that plans were in place to reduce the threshold and advice was sought as to the earliest possible start date.” “This information demonstrates the government was giving serious consideration to reducing the GST threshold on imports prior to the announcement of the Productivity Commission Inquiry. Now that we have proof a lower threshold is both administratively feasible and economically beneficial we eagerly await the Productivity Commission’s recommendations when its draft report is released in August.”

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AUGUST 2011

REGISTER NOW FOR MYBIZ EXPO SYDNEY My Business teams with Import Export Show, Women Chiefs of Enterprises International

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y Business has three great events for you to attend. The first is the Sydney MyBiz Expo, on October 6th and 7th at the Australian Technology Park. The Expo team is working hard to add to the tremendous roster of speakers. Keep your eye on the magazine and www. mybizexpo.com.au for details. My Business is also pleased to be a media partner for The Import Export Show, Australia’s only major exhibition and learning event for small and medium-sized importers and exporters. This year’s show takes place on September 15th and 16th at the Rosehill Gardens Event Centre (NSW). The 2011 learning program theme, Best Practice in International Trade, will cater for SME importers and exporters at all stages of business, from start-up to established organisations. It will includes a series of seminars, ‘How-to’ workshops, roundtables and country presentations featuring experts and successful SME case studies. The inaugural Import Export Industry Awards, which recognise supplier excellence, will also be presented at an entertaining networking event on the evening of 15 September. For more information visit www.importexportshow.com.au My Business will also have a presence at the Women Chiefs of Enterprises International (WCEI) National Conference, which will take place from September 7th to 9th at the Swissotel Sydney. Speakers and panellists will include Linda Dunkel, Chairman Emeritus of Interaction Associates; Bernie Brookes, CEO of Myer; Kate O’Reilly, Managing Director of Optimiss Consulting and LIW CEO Pia Lee, The Hon Patricia Forsythe, Executive Director of Sydney Business Chamber; Dr Dianne Jackson, Executive Director of Connect Child and Family Services and Chris Andrew, CEO of Greenlight Technology, among many others. For more information visit www.wcei.com.au


S&VIEWS NEWS&VIEWS NEWS&VIEWS NEW ARE YOU A ‘TECHNAHOLIC’?

GROUP BUYING GROWING FAST

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e take surveys with a grain of salt here at My Business, because there are a lot of them to go around and the results are often just a publicity drive for their sponsors. But this one hit a chord with us because it made us confront our own habits and re-think our priorities. See if you agree. A survey of 500 Australian office workers in May found technology is turning us into a nation of workaholics. While respondents agreed that technology, such as smartphones, laptops and Skype, makes them more productive, they also admitted to working more unpaid hours because of it. Many said they start work earlier and finish later while at home, work during their daily commute and often while on holidays. While they enjoyed the flexibility technology brought to their lives, they also felt pressured by an expectation that people should be available 24/7. We liked the clues the survey sponsor, human resources systems provider NorthgateArinso, dished out. Use them to check whether you too are a techno-workaholic: • Email is the last thing you do before sleep and the first when you wake up • You take your smartphone or laptop on holidays just in case • You feel obliged to respond to emails at all hours, especially to colleagues overseas • You expect your emails to be answered just as promptly, even outside business hours • Your work contacts on Facebook and Skype outnumber your friends and family 6

AUGUST 2011

roup buying sites will grow like topsy for the rest of the year, according to analyst firm Telsyte. The firm today announced a new study that says “the Australian online group buying market continues to go from strength to strength. The market grew from $71.8 million in Q1 2011 to $123.9 million in Q2 2011, a quarter-on-quarter increase of 72%. The market is on track to reach or exceed $400 million by the end of 2011.” “Australian consumers are spoilt for choice with group buying deals. The market has gone from publishing around 800 deals a month at the end of 2010, to currently around 4000 deals a month” said Sam Yip, a senior research manager at Telsyte, in a press release issued in July. The firm says 2.6 million group buying vouchers were sold in the second quarter of 2011, and says it expects July saw one million sales. “Although the health and beauty segment is still growing, it is beginning to show signs of saturation as hyper-growth is slowing down. In response to this, sites will need to expand into other sub categories of health and beauty beyond general hair, spa, and relaxation,” Yip said in the release. The release said the eight leading daily deals sites – which it names as Scoopon, Cudo, Living Social, Spreets, Groupon, OurDeal, Deals.com.au, and Ouffer – are responsible for 90% the industry’s revenues. But that may soon change, as a number of new deals sites are coming to market. In mid-July, for example, a new player called 123cars.com.au arrived in the market, promising to take the group buying concept and apply it to motor vehicles. “The more people who buy a particular make during each cycle, the greater the discount for everyone who jumps on board and they can watch the price fall live on the website,” said the company’s CEO Phu Dao.

FEDS LAUNCH TRADEMARKCHECKING SERVICE

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ant to register a business name? Before you fill out the paperwork you should visit TM Check (http://pericles.ipaustralia.gov.au/ols/tmcheck/), a new service from IP Australia that allows you to look up a business or product name and see if anyone else has registered it as a trademark. “TM Check helps new businesses avoid [legal] issues by identifying pending or registered trademarks that may be similar to their proposed name,” said Minister for Innovation Senator Kim Carr. “It helps take the guess work out of securing a business name and reduces the risk of a business infringing on a registered trade mark.” “Business owners need to understand, however, that business name registration doesn’t give you any legal rights. Only a registered trade mark can give you that kind of protection,” he added. Minister for Small Business, Senator Nick Sherry was relentlessly onmessage, declaring TM Check an initiative that is part of an agenda to “make interaction with all levels of government easier and more efficient, saving business time and money.”


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NEWS&VIEWS BRAD SUGARS CHARGE MORE ON THE BASIS OF THE VALUE YOU’VE ADDED TO THE EXPERIENCE OF DEALING WITH YOUR COMPANY

To build a brand, build your reputation

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always say when it comes to choosing between building a brand or getting more leads, always opt for leads, because that in turn will help you build your brand. How exactly? Leads build brands because if you can consistently deliver excellence to new and repeat customers, you’ll build your reputation as the “go to” company for your particular product or service. Winning a good reputation will be good for your brand. The key, of course, is being able to deliver what you say you’ll deliver, when you say you’ll deliver it, be it your product, service or results. Think about it for a moment: the people you know and associate with tend to live up or down to their reputation. It can be difficult for people to overcome a bad reputation and it’s also easy to ruin a good reputation with a few ill-conceived actions or decisions.

Perception is reality

Brad Sugars is Founder and Chairman of ActionCOACH, the world’s number one business coaching firm. 8

AUGUST 2011

It’s the same with business, where perception quickly becomes the reality of the marketplace, especially if the customer experience is lacking, or even if it’s incredibly good. So instead of wasting a lot of money on a branding campaign that can’t guarantee you any results, start to focus on doing what you say when you say you’ll do it. Make sure you are very consistent and do this all the time. Make excellent execution a part of everything you do. If something goes wrong, fix those things quickly and go the extra mile to rectify or remedy the situation. By being consistent in delivering excellence and in dealing with challenges quickly, you’ll discover your company will start to develop a stellar reputation that will go further in building your brand than any expensive ad campaign ever will. That’s because reputation and word-ofmouth is the least expensive and most effective advertising you could ever buy, and you can only get it when you give your customers a great experience they’ll always remember.

This approach also gives you the opportunity to charge more than your competition, simply on the basis of the value you’ve added to the experience of dealing with your company. This can be both real and perceived.

Trust wins In general, people will do business with companies they like and trust. So if you’re in an industry where no one likes the providers and there is very little trust, you’ve just found a competitive advantage if you position your company as likable and trustworthy. Maybe it’s scripting your sales people to really speak your customers’ language in every interaction with them, or being the first company to guarantee work or services in a category where people say guarantees “don’t work” or are “impossible”. Whatever it is, use it as the basis of a system to guarantee a great customer service experience that can more effectively position your company against not only your competition, but more positively in your customer’s own mind and experience. When those perceptions get locked in, your customers can become your fans for life. Plus, they’ll tell their friends about you, and getting a recommendation or a referral from a “raving fan” is like gold for your business.

Repeat yourself Repeat business is the key to long-term profitability, so the more you can focus on getting customers to come back and refer their friends to you, the fewer resources you’ll have to spend on getting first-time customers. Lead generation is expensive; brand building even more so. But if you can spend less on brand building, focus more on delivering a great customer experience and figure out ways to more profitably buy your customers with any advertising you do … the more profitable you’ll ultimately be. And ironically, by doing these things you’ll be able to “brand” your company – with a reputation for greatness – based on actual results rather than empty assertions in expensive ads.


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NEWS&VIEWS PETER STRONG WORK CHOICES AND FAIR WORK AUSTRALIA HAVE FAILED EVERYONE EXCEPT VESTED INTERESTS

Let small business have its own IR system

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ll sides of politics need to agree on a simple workplace world for small business workers. We need a system that isn’t based on philosophy and vested interests. Instead we need a system that reflects reality and the way people actually behave in the workplace. I suggest this because both Work Choices and Fair Work Australia were and are systems based on old outmoded beliefs about the workplace. One system was designed by big business to suit their beliefs about what a workplace should look like. The other system was designed and managed by the union movement to reflect its needs. In the end these two systems have failed everyone except the vested interests. We propose that we accept the reality of our working world and we have two industrial systems. One for big business and one for small business. I think this is radical but workable. The two systems will be called: ‘Fair Choices’ reflecting the fact that the system will be neither fair nor involve choice; and ‘Real World Workplaces’ reflecting the fact that people are involved and most people are fine human beings.

Fair Choices

Peter Strong is the CEO of the National Independent Retailers Association Inc (www.nira.com.au) and the owner of a Canberra bookshop. He is also a Director of the Council of Small Business of Australia. He writes a regular column for My Business on the small business perspective on political, social and economic trends and events. 10

AUGUST 2011

The industrial relations system for big business will be called Fair Choices and will involve unions, lawyers, big business, big business associations and government agencies and departments. They can have a complicated workplace relations system that requires legal interference and court cases, various formal agreements, complications at all levels, negotiations, threats, strikes, lock outs, ambit claims, political intrigue, go slows and regular award. The Fair Choices Commissioners will be appointed by either the left or right of politics with a rotation of three years for each side so that no certainty will ever be obtained and all participants will regularly justify their existence and their pay by having to fight, or support, the current commissioners. The people involved in this system can design and redesign the process and argue and debate and change and modify they system to their hearts’ (and wallets’) content. This system may look familiar. It should – it is basically a continuation of the workplace relations system of the last twenty years.

Real World Workplaces The real world is somewhat different from 'Fair Choices'. There isn't that much conflict and not as many problems in the world of small business. Our world consists of real people trying to earn some money through effort. It is more often than not a simple world where people work closely together, they respect each other, are tolerant of normal human behaviours and rarely need government or union interference. It is a world without paymasters or award experts. It is a world where family and free time is valued and the participants, the employer and the employees, seem to know what the rules are because those rules are the rules found in everyday life. Respect people, work hard, forgive minor indiscretions, tell the truth, communicate as often as possible, don't ask for the impossible, support each other in times of stress, accept reality and enjoy or put up with what is happening. But we will still need support for those that feel vulnerable – this includes both employers and employees. The majority of those that feel vulnerable will be employees because there are more of them. Employers can, and do, feel vulnerable. If you are a woman of slight build and need to confront a man much larger than you about theft in the workplace you would feel vulnerable, very vulnerable. If you are a pregnant woman and you are dismissed for being pregnant that is an appalling event that must be confronted. A simple solution is to have a helpline that is available for both employer and employee that provides definitive information on wage levels and on managing conflict and situations that are wrong. The rules of the small business workplace will be based on human rights and the reality of the workplace. Our system works, more than 99% of people will be happy. And big business, the unions, the politicians who would rather have philosophy than reality can all enjoy their moments in the sun in the “Fair Choices” system without hurting anyone but themselves. Let's have a workplace relations system that reflects people not institutions and that reflects reality not philosophy.


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COVER STORY

FILL THE SKILLS GAP Australia is short of people. Between the mining boom, generational change, demand for workers to rebuild Queensland and reduced skilled immigration intakes, many industries report it’s hard to find people with the skills and experience they need to run their business – never mind grow it. My Business has gathered opinions and experiences from employers, recruiters, human resources professionals and experts to help you find the people you need … and then keep them! 12

AUGUST 2011


COVER STORY

SWEARING BY

ENGAGEMENT STORY BY SIMON SHARWOOD

Sydney company Luxmy Furniture trains its staff, works hard to create an inclusive workplace culture and even pays school fees for workers’ kids.

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obody ever swears at Sydney company Luxmy Furniture. “Except me, of course,” says Sudhindra Rao, the company’s managing director, who excuses himself from the swearing ban because he also started the company. When he did, he tried to create a culture that would attract and retain workers. “The furniture industry was really rough,” he says. “We decided nobody is going to swear in our company,” a civilising touch he hoped would set the tone for a participatory and respectful culture. “One of my theories is that every employee wants to feel good about whatever he has done,” Rao says. “What we do is provide the right environment for them so at the end of the day they feel they have achieved something.” That environment was created consciously, with the company involving its staff in consultation sessions to learn about the kind of business they wanted to work in. Sessions were conducted frequently for three months, then less frequently as time passed. Today staff are still regularly consulted about the company’s direction and practices, which Rao says aim to recognise that “we spend the best part of our lives at work so the aim should be to make it as pleasant an experience as possible.” “That’s why we have absolutely no workplace politics and a completely flat structure.” The company also invests in equipment to make its workers’ days easier. “We don’t hold back on new machines so people don’t feel it is unsafe. For example, we have suction lifters at every machine so that people don’t have to lift heavy furniture all day.” Such machines are expensive, but Rao feels the investment in making the work day just a little easier pays off.

Projects spark innovation Another initiative the company uses to engage staff is regular projects, one of which recently resulted in the creation of a new product line. “We have projects for people every year so their creative juices are flowing,” Rao says. “Because of this we have a new

way of making furniture. We had a lot of timber wastage and wanted to reduce the number of small pieces we threw out. Someone came up with the idea to use small pieces of timber to make a big panel.” “We tried it and it was very successful. Customers like it because they have a pleasant experience putting it together.” Rao believes positive customer reaction was generated by the feeling of play required to assemble the furniture. “We said we can evoke the experience of playing with Meccano as a kid using small parts and developed a range of furniture.” That new range will soon be launched and will represent a new product line for the company.

Pay the school fees Another initiative the company uses to woo workers is paying for their children’s education. “I am from India and our social values are all about education, so we pay for school fees for all their children up to $3,000 or $4,000 a year. If their kids go to University we pay for that too. It might look like a lot of money but it is not much and definitely gives us an edge in the market.” Rao is also very open to hiring recent immigrants, in part because Luxmy struggles to find cabinet makers and machinists trained in computer aided machining but also because he feels their skills and qualifications are sometimes overlooked. “When you are a migrant people are reluctant to recognise your skills,” he says. It helps that strong English is not a pre-requisite for every job at the company. “We have a member of staff from Laos who does not speak great English but is an excellent programmer. One guy we hired from China had done his engineering degree and wanted to work with us. He started as a cleaner and we learned that he is smart, so we sent him to TAFE and how he is a top programmer for us.” “These are good young people, and that means we know the business is safe for another 10 years.” 13


COVER STORY

Retention and benefits Luxmy’s many worker-friendly initiatives have resulted in very few people leaving the company. “We have kept them in the business, which keeps costs low,” Rao says. “Because they have a more joyful experience at work, the same people who joined us 15 years ago are still here and enthusiastic. Retention keeps productivity up and shows we are very competitive.” One worker who did leave, Rao says, returned in 15 days after realising the combination of culture and benefits was better than those on offer elsewhere. “I feel our people are all quite happy,” Rao says. “They do not try to leave and that is important because business is all about teamwork. And they know that if tomorrow I am run over by a bus there is someone to take over and a second and a third line of defence is there too.”

WORKERS

READY TO MOVE Australian workers are very confident they can find a new job, according to HR service provider Randstad’s quarterly “Workmonitor”. The Workmonitor surveys only 400 people so is far from definitive, but the most recent edition of the research suggests that :

10% OF AUSTRALIAN WORKERS ARE CONSIDERING A NEW JOB AND

81% ARE CONFIDENT THEIR JOB SEARCH WILL SUCCEED. “While high mobility generates greater opportunities for organisations to attract new talent, cashing in on these opportunities is easier for some employers than others,” Randstad CEO Fred van der Tang said in a press release explaining the Workmonitor survey. “The winners in the war for talent will be the organisations that have invested in their employer brand.” 14

AUGUST 2011

LINKINGIN WITH CANDIDATES AND PARTNERS Your online friends may know the best person for you to hire … or start a business with

W

hen Andrew Campbell needed to hire a communications assistant for Tex2Get (www.text2get.com.au), his mobile marketing company, he asked his contacts on LinkedIn if they knew anyone who was a good fit for the job. “Because I am a startup, recruitment fees are something I am averse to paying,” Campbell said. “Any tool that I can use to find quality people cost effectively is something I jump on.” After Campbell used LinkedIn “one of my contacts replied, put me in touch with a candidate we ended up hiring. It worked out very successfully and that person is still with us today.” Campbell feels it was not only the power of networks that helped him to make the hire. His efforts to network online created quality connections that made the difference. “I made a conscious decision to get a lot better connected,” he said. “I’m not out there to meet as many people as I can. I wanted to meet people with a good reputation.” That approach yielded Campbell the Communications Assistant he needed and a business partner for his new venture, taxi-finding mobile application GoCatch (www.gocatchapp.com pictured above) that lets individuals find nearby taxis using the GPS facilities in smartphones. “I met the cofounder of GoCatch at a [real-world] networking event. I went home and used LinkedIn to see references, his resumé and comments on him from throughout his career.” “The ability to see the information from his business and professional network was one of the erasons I wanted to catch up with him for a coffee. That ended up in the formation of GoCatch.”


COVER STORY

FOUR WAYS

TO RECRUIT GREAT PEOPLE IN A TIGHT MARKET Trying to hire, but struggling? Try these four approaches:

1

2

Employers often look for the ‘perfect’ candidate who fits every element of the job description. However, with a low unemployment rate, finding the ‘perfect’ candidate can be an impossible task and can often lead to those who would be very capable of performing the task being overlooked. Instead, employers need to be clear on the skill set that is required and then prioritise the skills that are essential and those that can be developed or learnt. This will open the field up to a broader candidate pool and may also lead to additional skills being brought to the role that hadn’t previously been considered.

While a candidate may not present the exact skill set required, they may display the character or experience that brings them close to the mark. An organisation that is prepared to invest in training an individual that displays the necessary qualities will save a lot of time and money on the recruitment process. A perfectly capable individual will soon become fully qualified for the role with some extra support and guidance.

Be clear on criteria

Invest in training

3

Ensure you have good systems in place Employees need the support of good systems to work efficiently and effectively. Small businesses tend to overlook the implementation of business systems because they are so focused on driving the business as a whole. This can prevent new staff members from getting up to speed as quickly as they normally would.

4

Employ people with a skill set that matches the role Staff retention is largely based on ensuring people remain stimulated and challenged in their work. In their efforts to recruit the best and the brightest, many organisations fail to consider whether the job actually matches the individual’s abilities. This can lead to highly intelligent or qualified people quickly becoming bored or complacent in their role because their job simply doesn’t match their skill set.

By Scott Way, Director of PKF Organisation Development.

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COVER STORY

HOW TO MANAGE

GENERATION Y G

3. Create a positive work environment

1. Know what they want

4. Don’t forget about the other generations

eneration Y was born between 1980 and 1994, and is now becoming a huge part of the workforce. Unfortunately, Generation Y employees also have a reputation for being hard to retain. Even during the height of the GFC in late 2008, a PricewaterhouseCoopers survey found that 61% of CEOs reported attracting and retaining Generation Y candidates was an enormous challenge. Many businesses that I speak to have started to accept that members of Generation Y are less loyal than previous cohorts of workers, and feel it’s inevitable that their younger employees will job-hop every year or two. It doesn’t have to be that way – when Gen Y are engaged and motivated, they can become arguably the most loyal generation – if you follow these four tips.

Paula Maidens explains how to keep Generation Y workers happy.

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Multi-generational understanding is essential to retaining your top employees, whether they are from Generation Y, X or are Baby Boomers. Stereotypes can only take a business so far when it comes to retention – to get a real understanding of what staff really want we need to ask them directly. To find out what motivates your employees, ask the tough questions during a one-on-one conversation or group workshop. “What are the three things that will make you stay?” and “What are the three things that will make you leave?” This isn’t about using their answers as a desperate attempt to retain employees at any cost, but instead using their motivators to develop a flexible retention strategy that fits within your budget.

2. Show them where they can go Gen Y employees have a reputation for being disloyal, but their behaviour usually stems from their desire to continually develop new skills and experience. Simply put, they’ll look elsewhere if their needs aren’t being met. Energise your staff for a long-term future with your business by showing them where they can expect to go and develop if they perform well. Future opportunities shouldn’t necessarily equate to a promotion. Consider both informal and formal development/training opportunities that you can offer to staff, including lower-cost options such as on-thejob learning, job rotations, and online learning with blogs and webinars, plus formal training.

Recognition for achievements is a sticking point for most Gen Y employees. An effective recognition strategy is essentially a communication strategy that demonstrates two things to employees – that their high performance is valued and which behaviours equate to ‘success’ in the business. Gen Y’s drive for praise is often due to a desire to know if they are on track and contributing meaningfully to the business. By fostering a positive work environment where recognition of accomplishments (both individual and business-wide) is a core component of workplace culture, your business will experience dramatically improved employee satisfaction – no matter what generation staff belong to.

While each generation has its strengths, managing and motivating a multi-generational workforce can sometimes become challenging. Experienced staff can sometimes feel neglected with an influx of fresh talent, while younger workers can become frustrated by organisational structure and hierarchies. To engage all generations in your business, consider asking your experienced staff to become mentors or run group training workshops and share their knowledge. This not only shows these employees how much you value their skills but combats knowledge loss, while allowing employees of all experience levels to see each others’ strengths in action. Generation Y will be extremely productive and high performing if engaged and motivated well. However, they will also be more difficult to recruit, retain and manage than any other generation in history – so far! Managing a multi-generational workforce is a challenge but when done well, results in higher employee satisfaction and a workplace environment that excites employees of all generations.

Paula Maidens is managing director of Recruitment Coach, a coaching and consulting firm for small businesses, specialising in recruitment and retention techniques. For more information visit www.recruitmentcoach.com.au


COVER STORY

vs

MONEY: THE NEW

TIME

RECRUITMENT EQUATION

Investing your time in online activities to find new workers can be more effective than paying a recruitment consultant to find willing workers

Y

ou’ve placed an advertisement on a jobs board and another in the newspaper for good measure. To cover your bases you’ve asked your friends if they know anyone who needs a job. Now all you need to do is wait for the perfect resumé to land on your desk, right? Wrong, says Anne-Marie Orrock, Managing Director of human resources consultancy Corporate Canary. “People I see are using old methods to recruit – and that is fine – but they are not using new methods too. I guess the analogy to use was when the Internet opened up and all the social media options became available – businesses had to change their marketing strategies, they had to develop a website and figure out all these different ways to market their business.”

“Create a relationship with your future workforce, then pick and choose who you want.” “Recruitment has gone online the same way as marketing, but business has not followed it online or adopted new strategies to find employees. As a result they say it’s really hard to find employees.” Orrock therefore advocates going online because candidates, especially younger ones, “have an expectation to see a really savvy campaign from an

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employer. The campaign needs to look like what they see on the Internet everywhere else. It needs to look like YouTube and Facebook.” The content presented for the campaign, she says, needs to address candidates’ different buying psychologies and motivators. “Some people are more visual, some are emotional, social or kinaesthetic,” she says. “Your campaign needs to address those factors to reach different candidates. It’s all about shooting for quality.”

Worth the effort Orrocks acknowledges that creating this kind of campaign sounds like a lot of work. “I expect the comment from small business people would be this is all too hard,” she says, before explaining why the effort is worth it. “I feel small businesses are not tapping into the opportunities on offer today. For the first time you are able to have a dialog with your future workforce. Before, it was a one-way conversation. You would put out an ad and wait.” “Now with all the different media on offer you can create a relationship with your future workforce, then pick and choose who you want.” She also feels that this approach offers an alternative to other recruitment tactics. “From my perspective, SMBs need to accept that things have changed and they need to invest more time in recruitment, rather than more money. There are lots of ways to use the Internet and social media to recruit without spending money, but they do need to spend time.” It’s also worth investing time, she says, because recruitment consultancies now operate on higher margins. “In some ways recruiters can find employees more cheaply than they ever have, and can find a larger pool … but business people pay the same or more in fees.”


COVER STORY

CULTURE AND

COMPUTERS High-end IT consultancy Thomas Duryea uses rapid career progression, referrals and an insistence on passion to recruit the hard-to-find people it needs to grow the business.

S

ome elements of the Thomas Duryea Consulting story may sound familiar – the company was founded by four friends from university who got together in their twenties and, despite inexperience, harnessed youthful vigour to start a business they designed to be better than the places where they had spent the formative months of their careers. A decade later the company, named for two of its founders – Andrew Thomas and Evan Duryea – employs 85 people, operates in Sydney and Melbourne and is a darling of the some of the world’s biggest computer companies.

“We have a referral program. If a staff member is successful, we honour them with a $2000 referral bonus.” That’s where the story gets a little unfamiliar, because Thomas Duryea specialises in IT infrastructure, which means its people have to be familiar with the arcane data centre technologies that banks and insurance companies use to power their colossal and critical systems. The company’s stock-intrade is very technical stuff that Universities sometimes haven’t caught up on. Graduates therefore aren’t often an option and skilled and experienced people are few and far between. But the company has made a virtue of that scarcity, explains Lucy RussellSlater, the company’s People and Culture Advisor. “People who are really passionate about technology line up to work here,” Russel-Slater says, because the collegiate atmosphere the company offers technologists is hard to beat. “Passion is one of our corporate values. I would say that people come to work here because we have the brand in the market of technical excellence and have the best resources in the market. When we interview people we really need to see that passion and their drive.” Passion is so important that every final job interview is still conducted

by CEO Andrew Thomas, and the company is willing to hire staff without all the skills it needs if it feels they are the right kind of person. It’s a policy that reflects the tight market for the skills Thomas Duryea needs, but also one that recognises that the right people, as well as the right skills, are what clients demand. “If someone has a skillset, that is great. Or we can train them if they don’t,” Russel-Slater says. “It is harder to find the right cultural alignment.” “We have had quite a few engineers come in and we see their potential even though they don’t have the skills. They shadow another engineer for six months and get there in no time at all.” The right values, she says, make for a stronger workplace culture in which people are genuinely willing to help each other out. “Sure there are times when we have a lot of projects on, but we have a mateship culture – people down tools and help out.” Workers are also offered chances for rapid advancement. “Thomas Duryea is a place of career acceleration,” Russel-Slater says. “I have seen juniors come here and jump two or three levels in a year much faster than they would in another organisation. It’s a land of opportunity and we don’t have barriers to entry – put your hand up and you will be given a go. When people put up their hands and say they want to do this and learn these skills, it is rare we say you are confined to one box.”

Referrals The IT infrastructure community is small, so one method Thomas Duryea finds works well to find staff is referrals from among its own team. “We have 85 staff here and they have all come from different backgrounds. They have a massive network, so we have a referral program. If a staff member is successful, we honour them with a $2000 referral bonus.” Russel-Slater rates referrals as “the best” recruitment tactic for the company, but says that culture is critical for retention. “The Thomas Duryea culture is about knowledge sharing,” she says. “I heard an employee say everywhere else he worked they would not share knowledge. Here, people share knowledge, even help with exam preparation or take colleagues onsite to demonstrate technology so colleagues can learn.” “Another employee said I love it because people here like technology so much – they hear about things in the workplace before they read them in the news.”

19


FINANCE BANKING

SWEAT THE SMALL STUFF

Paying attention to small sources of cost in your business can add up to a surprising amount of savings. We offer some areas to target in this tale. STORY BY TIFFANY HUTTON

“L

ook after the pennies and the pounds will look after themselves.” Well, it’s unlikely that you’ll get rich trimming a few cents here and there, but there’s certainly no point spending money when you don’t need to. Here are just a few things that could be costing you and your business more than you think.

Credit cards Yes, there are times when withdrawing cash on your credit card is unavoidable — according to 20

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RBA statistics we withdrew around $11 billion in cash via credit cards in the year to March 2011, with an average withdrawal amount of around $400. When you withdraw cash from your credit card, you start paying interest straight away, instead of at the end of your billing cycle. That’s an expense you don’t really need, but may occasionally have to wear. But if you’re also paying a cash withdrawal fee on the transaction (and apparently 67% of cards charge this), the real rate you pay on

credit card cash advances could be 0.77% higher than advertised. Then you also have the privilege of paying interest on the withdrawal fee. So next time you’re making a cash withdrawal on your credit card, give it some thought. Would it be cheaper in the long-run to organise another option, like a loan or an overdraft facility? Still on the subject of credit cards, it’s also worth checking if your credit card is the best fit for your needs. If you pay it off in full each month, the interest rate probably isn’t your highest priority; if you don’t pay it off, then you need to be sure the interest rate is the best you can get. Don’t forget that you can take advantage of short-term low- or zero-interest rate offers when you transfer your balance to a new card — constantly switching is probably not a great strategy, but doing it once may give you some breathing space and save interest while you pay it off.

The cost of cash In June 2011, ePAL released a report called The Hidden Cost of Cash, comparing the costs of


FINANCE BANKING

cash and other payment forms such as cheque, EFTPOS and credit card. ‘Cost’ here includes time (the time it takes to process the transaction), point-of-sale costs, back-office processing, fees and transfer costs. According to their data (and obviously ePAL has an interest in these findings), cash is the lowest cost form of payment for transactions worth around $5. But the bigger the transaction value, the more expensive a transaction becomes; once it gets to $20, cash costs more than EFTPOS. It’s worth bearing in mind.

not. While there’s plenty to be said for forming a strong and enduring relationship with your bank, don’t succumb to complacency (or laziness). Are you getting a decent deal? Merchant fees especially can vary between banks — switching to a lower-fee product can actually save a considerable amount of money, so take a good look around.

“Cash is the lowest cost form of payment for transactions worth around $5. At $20, cash costs more than EFTPOS.”

Risk assessment Banks calculate the risk grade of their customers using a range of measures — precisely what these are tends to be a very closely guarded secret, but the bottom line is that the better your risk grade, the more attractive the interest margins you’ll be paying. So how do you keep your risk grade as good as it can be? Well, you avoid asking for temporary limit increases, making loan payments late or overdrawing your accounts. Each time you draw negative attention to your cash flow situation like this, you risk being downgraded and therefore paying more interest in the future. Again, this is a matter of keeping your cash flow under control.

Better late than never? Late payments of any kind (not just loan repayments as referred to above) can really cost. If you get slapped with late payment fees or fines (for BAS lodgement, for instance) on a regular basis, you can end up wasting a huge amount of money — and you may have to pay interest as well. If you’re having trouble making payments on time because of cash flow issues, deal with those, rather than continuing to incur penalties. In addition to the financial cost of fees and fines, you may find that your credit rating takes a hit.

Complacency can cost How long have you been with your current bank? In that time, have you ever actually sat down and made a comparison with another bank? Probably 21


FINANCE BANKING

What about interest-bearing accounts? If you’ve got surplus cash that can be earning interest, make sure it’s in the right account. Don’t just assume that it should be with the same bank as your transaction account either — you may get a better deal elsewhere, and transferring money online is very simple. Check the details too — some high interest accounts offer ‘bonus’ interest if you deposit a certain amount per month; others cut the interest rate if you withdraw from the account during the month. Don’t forget also to check account fees and whether minimum balances apply. And while we’re on the subject of reviewing your banking arrangements, what about insurance? The insurance industry is big on

reminding us that we’re chronically underinsured, and part of the reason is that we tend to ‘set and forget’ insurance policies. That’s how you can find yourself underinsured even though you originally had sufficient cover. It’s also how you could be paying more than you need to, because your premium has crept up — or there are now better deals on the market. Next time your policies are up for renewal, do a quick comparison and make sure you’re not paying more than you should be.

“How long have you been with your current bank? In that time, have you ever actually sat down and made a comparison with another bank?”

Bank A Bank B

22

AUGUST 2011

Bank C


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MERCHANDISING

MARCH OF THE

MERCHANDISER STORY BY NATALIE APOSTOLOU

I

n the heat of the inner city Sydney summer this year a curious installation appeared in a vacant Kings Cross store. On first glance, it could have been an art gallery or perhaps storage space for a bicycle fetishist. On closer inspection the cardboard boxes were actually a makeshift counter, the bikes perched artfully on boxes were all for sale, as was the minimalist spread of riding accessories. To add to the mystery, the only signage was an old school screen projection of the words ‘Tokyo Bike’. The site was a ‘pop-up store’, a concept that has become a hot new trend in retail merchandising. Pop-up stores have been springing up as the new merchandising playthings for both emerging retailers and established brands. For the new kids on the retail block, it gives a start-up retailer, perhaps one that only sells online or at markets, the chance to try out bricks and mortar in a particular area without committing to onerous leasing arrangements and costly fit-outs. For established brands, pop-ups offer a chance to do something funky with their merchandising and attract customer attention in an inventive way. “To survive and prosper in a digital world, physical retail must deliver an ‘X’ Factor – an experience factor – something special that sets a store apart and captures a customer’s imagination,” says Jon Bird head of retail marketing agency IdeaWorks. In Tokyo Bike’s case, the company already had a fixed retail abode in Surry Hills. The pop-up store was a way to create viral buzz and extend the brand and the urban cycling concept to an area which they knew had a strong potential customer base. It worked. The minimalist approach grabbed the community’s eye and soon social 24

AUGUST 2011

networks were spreading news of the store, stepping in where Tokyo Bike’s limited marketing budget fell short. Merchandising-wise, it was a perfect fit. The global Tokyo Bike branding is all about minimalism and its merchandising aesthetic is about creating a retail space that resembles an urban art gallery. The pop-up stint in Kings Cross lasted for six weeks and now Tokyo Bike has been making appearances at pop-up stores in Paddington sharing space with other retail operatives. The company has since opened popups in Berlin and London. The company has even drawn from the look and feel of the pop-ups and made it part of its overall merchandising look, which is now so distinctive that any window display, shared installation, pop-up or permanent store is recognizably Tokyo Bike. The pop-up concept has been far more pervasive in the US, where established brands like Target and Urban Outfitters use them to freshen up their image or penetrate a younger demographic. Also in the US, where the retail economy has yet to rebound, over 12% of retail real estate remains vacant. Retail property owners have therefore warmed to the idea of short term tenants. For smaller retailers the opportunity to nest in a temporary vacant space, allows them to concentrate on the visual merchandising identity of their brand, one that will remain with the customer long after the physical shop has gone.

Concept shopping The daddy of pop-up stores is the concept store, which thanks to multi-channel retailing is making a comeback. “Customers will be moving across channels in the next five years, switching to where their needs are met,” forecasts Deloitte’s Consumer

Business national leader Andrew Griffiths. The rise of more sophisticated online and mobile applications will also drive customers to stores or alert them to specials happening within stores and visually the retail environment needs to keep pace with the change. Griffiths predicts the future of retail will be shaped by technology and as such there will also be a rise in integrated and digital concept stores. He points to the concept store launched earlier this year by Adidas and Intel as a template for the future. The concept store, spotlighted at CeBIT in Germany and retail merchandising conferences, features a video wall that incorporates the best in gaming technology to showcase Adidas’ 8,000+ shoe range. The adiVerse virtual footwear wall is made of multiple LCD touch screens, uses facial recognition to detect the customer’s gender on approach and customizes the display. It allows them to browse the entire range of products, all rendered in real-time 3D so shoppers can spin and zoom-in on the shoes and get specs from a touch-screen display. Griffiths says this just the start of a wave of merchandising concepts based on gaming and augmented reality technologies that will allow shoppers to interact with the retail environment in new ways. This includes customers getting scanned and seeing themselves in a 3D display wearing different outfits, with stock that may not even be on the shop floor. The bonus behind concepts like the adiVerse wall is that retailers can operate minimally – housing stock in a centralized location and focusing on visual merchandising as the hook to engage customers. “It produces savings on logistics and real estate costs,” Griffiths adds.


MERCHANDISING

Making the retail experience compelling is winning customers back from cut-price online competitors

Turning buying into an event Bricks and mortar retailers are already struggling with ways to compete with the online shopping experience. Simplicity, discounts, stress-free comparison shopping and goods delivered to you are taking Australian shoppers online en masse. Creative merchandising however, is the lynchpin in keeping shoppers engaged offline as well as online. Retail in the digital age is all about building an engaging experience for the customer. “It is no longer enough to rely purely on the sense of sight. Promoting an environment that invigorates all five senses and creates an experience that will create an ongoing relationship between your customers and your brand,” says Brian Walker, Managing Director of the Retail Doctor Group. Bird adds that merchandising that works depends on just how good you are at creating desire. He cites Apple as the poster child for the ‘want’ generation. Not only in the way that

Apple stage manage product releases and control supply of new gadgetry but also in the shopping experience itself – consumers want to hang out in the Apple store environment. An Apple addict genuinely loves the simplicity of the product’s design, packaging and store fit-out – all consistent wherever they are in the world. Walker notes that the recent invasion of global retailers with a high aesthetic and understanding of the power of visual merchandising means that Australians need to lift their game. “Zara, Gap and Uniqlo have all entered our shores this year and thanks to the theatricality of new Westfield developments hold the consumer’s fascination with their distinctive widow displays.” “Retailers who understand the power of visual merchandising and build consistently powerful windows enjoy the most success as they use their windows to invite, entertain, promote their message and ‘silently sell’ their product,” he says.

Research from the Retail Doctor suggests that store design and product layout can make a difference of plus or minus 40% to a retail business. “Investing in a strong merchandising and design strategy is essential to lifting sales and profits,” Walker adds. The US retail giant Urban Outfitters, which has yet to approach our stores takes experiential shopping seriously. The group has several retail brands, including Urban Outfitters, Anthropologie and Free People which are individualistically represented by their merchandising that it is hard to believe they are born from the same core. Urban Outfitters CEO Glen T. Senk boasts of the ‘sensorial experience’ of shopping at his stores and in terms of experiential merchandising he keeps raising the bar. “One of our core philosophies is that we spend the money that other companies spend on marketing to create a store experience that exceeds people’s expectations. We don’t spend money on messages – we invest in execution.” 25


MERCHANDISING Bird recently discovered an execution of this at a ‘pick and mix’ lolly shop, called Happy Pills. The concept morphs the lolly shop into a pharmacy, pushing sugar as therapy for a litany of ills. The fit-out is white and clinical with a pink cross as part of the logo – this is matched in all their stark white packaging and merchandising. Selected sweets are put in a pill bottle and a wide range of labels can be put on the bottle such as ‘for a bad hair day’ or a ‘universal remedy for everything’. Instructions on the back include the dosage advice: ‘Consume Cheerfully’. “It’s a great example of how to turn jaded consumers into salivating customers. Sweet shops have been around since God was a boy. But it’s the way a basic concept has been taken and re-packaged and re-merchandised for the smart set today that makes it noteworthy,” he says. The bold merchandising concept also translates well online and Happy Pills has a thriving online store that carries through their unique concept. “There is room for both e-tailing and bricks

“We spend the money that other companies spend on marketing to create a store experience that exceeds people’s expectations.”

and mortar. The retail businesses that have multi-presence are the ones that will thrive,” says Walker. He adds that the modern merchandising challenge extends to all consumer touch points. “It’s not just about the retail store needing to add some value to the customer’s overall purchase, it is not only about mastering online, it is also about understanding social media and keeping all channels to the consumer fresh.” The co-op concept, like the pop-up store also proves that retailers don’t necessarily need to heavily invest in conceptual designers or new technology to turn their stores into a destination. Offering food, art installations, live music and ambience can turn the habitual nature of a shopping expedition into a social excursion. “So long as companies like Urban Outfitters invest in retail experiences such as this, the physical store is far from dead. Online stores can compete transactionally, but not experientially. On sight, sound, smell and touch, real retail environments win hands down,” Bird says.

Pixel Shopping The average consumer has three seconds to be impressed by a window display. In the online shopping world, three seconds can be the difference between a sale and a click to another site. In e-tail, engagement is everything. Co-founder and marketing manager for online travel accessories site Ciao Bella Travel and etail-only group buying site Cherry Pick Me, Kirsty Keane, says that visual merchandising in the online world is just as, if not more important than back in the mall. Keane and partner Sarah Tate developed both sites in response to a perceived consumer need. Ever been too frantic to buy new luggage or an international adapter the day before a trip? Ciao Bella Travel can deliver to your door in 24 hours. Love group buying, but hate being bombarded by clutter? Cherry Pick Me is tailored to women and allows them to select the deals they want to be informed of from online stores. For both these ventures, visuals are everything. Keane says that the big first lesson in online merchandising is that high-res, beautiful images

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sell.”It’s not so much the biggest discounts but the deals with the really great images that work,” she notes. Keane says that e-tailers need to remember the aspirational nature of shopping does not stop when you are online. “The way a product’s being presented is just as crucial online as in a boutique. Consumers want to relate to what the product or online store represents, so it needs to be visually appealing.” She adds that the quality of the site, which is reflected in imagery and site design just like physical merchandising, can be the difference between creating a loyal customer and losing

one. “If the website design is not good then they start questioning the quality of the site and those behind it.” Keane adds that working hard on getting the copy on the site right is also essential. “Additional text like member reviews also adds to the credibility of the site and its products,” she adds. Use Google analytics to find out where you are losing clients in the sale process or where there is a bottleneck, and adjust accordingly. “We found that we were losing people at the check-out because we were asking too many questions, so we simplified it.” Intuitive and easy navigation is also key; make sure consumers can navigate to key categories about the product on one page rather than having to go back to the home page to look for information. “I am an impulse buyer, so if I see it and I like it visually, I’m halfway there, but others are detail oriented so we compartmentalised all the information in the right place. You don’t want users to work for the info,” Keane tips.


MARKETING ONLINE

Ten online advertising tips Small businesses accustomed to simple advertising tactics need to prepare for more work – and more reward – when advertising online

STORY BY JILL BRENNAN

O

nline advertising is an excellent way to get more customers, improve your margins and promote your business. There are no contracts, no minimum outlay – you determine the size of your advertising budget and where your ads appear. If you do it right, you will increase the number of customers clicking through to your site. You’ll also learn more about your customers and what they want. Get it wrong and you’ll have wasted your time, your advertising budget and missed an opportunity to gain an edge over the competition. How do you know if you’re getting it right? Here are 10 tips to avoid the most common mistakes:

1. Online? Offline? It’s all the same, right? Advertising online is not the same as running an advertisement in your local newspaper or putting a listing in Yellow Pages. Many companies are used to advertising in this way and automatically take the same approach online that they do offline. Running ads online is not a set and forget process – it’s a dynamic medium requiring an active approach to setting it up, managing it and optimising to get the returns you want.

2. Give me what I want There is little point in scheduling your ad to appear for a specific product and then sending visitors to a generic page hoping they’ll figure out what to do next. For example, a user enters a search term like ‘bpa free water bottles’ then clicks on an ad that seems to offer what they are looking for. Unfortunately when the page loads it’s the home page displaying an unrelated image and a list of other environmentally friendly products. The visitor has two choices – click the back button and find another company offering specifically what they want or spend 28

AUGUST 2011

time searching through the site to find the water bottles they’re looking for. A better approach would be to send those visitors to a page specifically focused on water bottles and then display other products they may be interested in at the bottom of the page. Give visitors what they’ve told you they want and you will increase your chances of making a sale.

3. What should I do? When a user is looking for a particular product or service online, your ad is not the only option for them to select; there are usually other ads as well as organic listings. A searcher is looking for the listing which most closely solves their problem. To attract attention an ad needs to reflect the search term the user has entered, provide a reason to click (do this by explaining what’s in it for them) and then encourage them to take action. That can be difficult to do in three lines of text. Action phrases help – ‘buy now’, ‘get it now’ or ‘order online’ work because they provide clear direction and a sense of urgency. This clarity and focus needs to be carried through to the web page that visitors are directed to after clicking on an ad – also known as the ‘landing page’ – so that a sale or lead is not lost at that stage. ‘Click here’ phrases are ubiquitous because they work.

4. What exactly do I want? Advertising in the search engines using a one word keyword or generic term is best avoided unless you are focused on brand building rather than triggering a direct response from your ad. Bidding on generic keywords like ‘date’ or ‘personal finance’ is expensive, highly competitive and can have users searching for a variety of topics. For example, a user entering ‘date’ into a search engine may be looking for a relationship, a calendar, birth records or the release schedule


MARKETING ONLINE

“Running ads online is not a set and forget process – it’s a dynamic medium requiring an active approach.”

for a movie or book or some dried fruit. There is no indication of the user’s intent in the term ‘date’. However, ‘date of birth’ indicates that the user is looking for information related to a birth record.

5. I’m here. Now what? The purpose of advertising is to trigger a reaction from a prospective customer. Online advertising is no different. Ideally that action is a sale but depending on the product or service you’re offering, there maybe pre-sale steps needed first. Rather than waste a visit because a prospective buyer is at a different stage in the buying cycle, it’s important to capture their details and build trust in your product or service. The best way to do this is by offering something of value – a free report, newsletter, prize for completing a survey, video presentation – that the visitor wants enough to trade their contact details for. A one percent conversion rate of visitors to customers is a respectable average, especially when a purchase is involved. Given that it’s easier to get a visitor to enter their email address than pull out their credit card, you can expect a higher rate when capturing leads. The key to turning leads into sales is through a coordinated and cohesive follow up strategy.

6. Am I worth it? Knowing the true value of a web visitor is particularly important when you’re using advertising to gather leads and not to directly make a sale. How much should you spend on acquiring each lead? How many of those leads will become customers? If you know your metrics you can confidently spend money acquiring each lead and know you can achieve an acceptable return on investment. It’s also a way to measure the effectiveness of your website and to determine if any changes to your site have made it more or less effective. To work it out, take the number of unique

visitors over a particular time period, divide by the profit generated by those visitors and you have the true value of each visitor.

conversions. Sometimes just changing a word here and there can have a big impact on your return on investment.

7. What works best?

9. It’s not all about Google

One of the biggest differences between online advertising and traditional advertisements is that you can measure everything in the digital world. You can track which keywords result in sales, which ad is more effective, which ad appeals more to a particular demographic, which headline prompts a visitor to take action and which doesn’t, which images work best, which ad position works best. However, accurate tracking is only possible if web visitors are encouraged to take a measurable action upon landing on your site.

Most of the tips in this article relate to search engine marketing and the main search engine is Google. They account for approximately 90% of search engine queries. However, they only account for 30% of total internet traffic and may not be the best advertising option for your business. Factors to take into account include your market, your service or product, how defined your ideal customer is, your geographic focus, how fast you want results and your ad spend.

8. Are you sure that’s what I want? No matter how experienced you are in your industry and your product or service, there is one important rule to remember when it comes to online advertising – the numbers never lie. Putting up your best effort based on your experience is a good starting point but be prepared to change based on what people want and respond to. The only way to really know what works and what doesn’t is to run split-tests of different alternatives and let your ad and landing page copy slug it out to determine the ‘winner’. At a minimum you should be testing two different ads at one time. Each ad should be distinctive and emphasise a different benefit – service, price, functionality, prestige, timing – in order to find an ad that produces the most conversions. Use the same approach with your landing page. Again, you should ideally test at least two different pages to see which performs better. Once you’ve found the angle that works best, and it may not be what you expected, then it’s a case of making small changes to the ad and landing page to see if you can further improve

10. It looks good but ... Flashy design and background music may look great and set the mood for your product or service but most people are interested in how your offering solves their problem, not how slick your website is. However, it isn’t about putting up the worst looking web page either. It needs to be functional and intuitive to navigate. The same applies to online ads. Often the most effective ads are those without graphics and with lots of white space and plain text. This style of ad not only stands out against other graphics on a website but the message is clear and uncluttered. It won’t work in every situation but is worth testing to see if it works for your product or service. Advertising online is a great way to control the flow of new customers to your business. It’s also an effective way to maximise your ROI and stay in front of your competitors. Are you getting the returns you want from your online advertising? What can you do to improve your results?

Jill Brennan is founder of Harbren Advertising. For more infomation visit harbren.com or twitter.com/harbren 29


MARKETING ONLINE

FACEBOOK SPAWNS F-COMMERCE Facebook has a new online retail offering. Big brands are on board. Should you be there too? STORY BY LIA TIMSON

J

une 2011 may just have seen the new dawn of online retail, the future of commerce as we know it. The event that leads us to that prediction was the advent of Facebook Commerce, or F-Commerce, which last month received a mighty push from a company notorious for discovering new mediums: the giant packaged goods manufacturer Procter & Gamble (P&G). P&G was one of the first to see potential in radio and television all those years ago, having been responsible for the creation of soap-operas just so soap could be advertised within the melodramatic programs. Fast-forward six decades and the maker of Vicks, Clearasil, Gillette and Covergirl cosmetics has now put its might behind Facebook, opening no less than six dedicated Facebook stores for individual brands such as Gillette, Olay and Tide (www.facebook.com/Tide). It has also entered into a joint-venture with an e-tail technology platform provider to make Facebook stores available to other advertisers. These are not advertisements or fan pages that redirect users to an outside merchant site. F-Commerce means customers browse and order products without leaving Facebook – the shopping cart is integrated with the page at the front-end, and with the merchant’s e-commerce site at the back-end. 30

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Eventually the F-stores will include friends’ recommendations, items they bought and suggestions you might like.

All or nothing? So should you too consider opening a Facebook store? Could it replace your own website? Steve Noble, a retail analyst at Forrester Research, says the new e-tail model must be considered with caution. “As a whole, it has something to offer e-tailers through building a customer service community, but for specific retailers in some niches.” The best value, he said, would be in collecting feedback on products, price points and consumer behaviour, rather than generating sales leads. Noble said online conversion rates on Facebook are still well below those for other online marketing channels, such as email, and were best when combined with others. “There’s eBay, there’s mobile, there’s group buying sites. Retailers must have a multi-touch view of the customer.” Australian entrepreneur Ruslan Kogan, who sells his own brand of consumer electronics exclusively online, agrees. “It’s just another platform to reach customers. We started on eBay because that is what gave us thousands of customers on day one which is very hard to do with your own website.


MARKETING ONLINE

“Facebook is going to work in the same way. The beauty is that it is the world’s number one website. But it is the least engaged – users are not interested in buying, they are interested in checking out their friends’ posts,” Kogan says. “I don’t think people should use it as a single strategy, but to complement the rest of the business.” Facebook Australia and NZ boss, Paul Borrud, says businesses need to have their F-store – whether with integrated cart or external referral – developed by a third-party. Hosting is free. “It’s a really cost-effective tool, businesses only pay for the (ads) that are clicked,” he says. Borrud recommends small businesses ‘like’ the Facebook + Commerce (www.facebook. com/commerce) page to share insights with their peers. Eugene Tan, photographer and founder of the Bondi art gallery Aquabumps, uses Facebook (www.facebook.com/aquabumps) to redirect traffic to his own e-commerce site where he sells daily photos of Bondi. He told My Business an F-store has lots of upside.“There’s potential. But the engine would be quite complex to integrate with my site. It’d need to be easy like a plug-in. But then it would depend on the click rate as well. I’m paying two per cent (commission) now on clicks, if it was comparable I would consider,” Tan said. IBRS e-commerce analyst, Guy Cranswick,

believes F-Commerce will work best for fast moving consumer goods (FMCG), entertainment and gaming due to Facebook’s young audience. He says the majority of the social networking members in Australia were aged between 16 and 24, unlike in the United States where they tended to be older and better educated. “It’s mostly for teenagers and young adults. After that it drops off and as users get older, the duration of the engagement will drop off as well. It’s inevitable,” Cranswick said. There was not enough independent research data available on Facebook-led retail. Nevertheless retailers should watch P&G closely, he said. “It will work for them because they have 60 years of research behind them. Look at what they and Unilever do online and that will tell you a lot about the health of the medium, the advertising and the consumer behaviour.” But Kogan won’t be the first to join P&G in F-Commerce. “Maybe we will the 100th to make sure it’s working properly and they’ve got it right and the way they present the shopping experience is aligned with our brand – and after they’ve educated users about shopping on Facebook.”

The author, Lia Timson, is on Twitter. Follow her at www.twitter.com/LiaTimson 31


MARKETING

PIMP MY TWeeTs Twitter is about to offer new marketing options, but Andrew Grill is not sure that the premise of brands interrupting conversations can work.

T

witter has been talking about plans to push a new advertising product for over a year and this month it is poised to roll it out. At the Cannes Lions advertising festival in June, Twitter executives were tipped to be shopping the idea to marketers which is rumoured to have gotten a mixed reception. For marketers ‘Promoted Tweets To Followers,’ is a concept that gives them a chance to dangle their messages in front of users following particular brands, via ads that pop up when they login to twitter.com. Twitter has been testing the new promoted tweets concept inside the Hootsuite third-party client – you may have spotted companies like MailChip trying out the Beta service – but this new product will work on twitter.com and eventually move out to other official Twitter clients as well. In many ways this is not new. Twitter has been promoting a range of advertising products for some time namely: • Promoted Tweets appearing as content in search results, not alongside them; • Promoted Trends artificially promote a particular brand or keyword as a trend; • Promoted Accounts are a paid for placement in the “who to follow” area. Twitter has also experimented and failed. Earlier this year, it added QuickBar in its trending topics which had ads permanently at the top of the timeline. It quickly retreated, in response to user backlash. It is widely assumed that the new “Promoted Tweets To Followers” will merge through the timeline just like other tweets,so as not to disrupt the flow. As many commentators have pointed out, Twitter’s ad revenue, rumored to be around 32

AUGUST 2011

US$100 million in 2011, doesn’t compare that favorably to Facebook’s estimated US$4 billion revenue number for 2011. Twitter has shied away from what may have seemed to be an obvious route – that of banner ads or display ads on the site, but five years in and millions of dollars of investment later the company needs to increase the revenue from advertising. It’s a tough call for Twitter to generate significant ad revenue from a “conversation service” without really annoying their users. Twitter’s dilemma – “social media advertising” is an oxymoron. One of the inherent issues for Twitter is that you can’t buy space in a conversation. It also points to the problem with trying to apply the same advertising buying metrics to social media. To be clear, you cannot advertise on social media in the same way as you can with TV, you need a different approach to buying “space” in a conversation (just as you can’t buy space in a conversation at the pub, or a conference, or anywhere for that matter). And here lies Twitter’s greatest challenge. If they insert promoted tweets in a user’s timeline, I am assuming that they will be selling them on a cost/per basis (whether this stays as cost per engagement, cost per mille etc we will soon see). The problem they will face is that the advertising world is used to buying advertising in bulk so an ad planner will say “I want my Twitter ad to appear to 50,000 Twitter users” The poor old Twitter ad sales exec will explain that it is not so simple, and it needs to be relevant, must resonate and be able to be re-tweeted. A possible response from a non-social media savvy planner or a business owner might just be “I want my Twitter ad to appear to 50,000 Twitter users”…… sigh.


MARKETING

“You cannot advertise on social media. You need a different approach to buying ‘space’ in a conversation.”

Will Twitter choose the nuclear option?

Old advertising rules no longer apply

Could Twitter bite the bullet and start to push promoted tweets in a big way to a wider audience than they are currently serving, to increase ad revenue and keep its backers happy? Whichever way they ramp up their advertising business, the one thing I really hope they are working on is an ad relevance engine. You see, I am quite happy to see more promoted tweets in my timeline, as long as the tweets are relevant. This is a huge deal for me (and will probably also be for thousands of other Twitter users) and I really hope that Twitter uses my previous 13,000+ tweets as a way of ensuring that the ads I see are relevant. What I don’t want Twitter to do is make the same mistakes that the mobile advertising industry made a few years ago, trying to transplant banner ads from the web to the mobile. To interrupt a social media conversation in a non-relevant way (we call this broadcast advertising) would be classified as butting into a conversation.

What I advise clients over and over again is that they can no longer simply take a TV campaign or concept and retro-fit it to Twitter. You have to be much smarter at this, just as when you approach a group of people you have never met at a conference and hover, waiting for the right moment to inject your view into the conversation, you are waiting for the moment when you will be the most relevant. Twitter needs to get this balance right, and if they do they stand to make a lot of money. I’m a huge fan of Twitter, and I hope they figure out the ad model I want Twitter to figure this out and I know they are capable of this because they are a smart bunch (flock?). But they possibly need to ignore some of the feedback they received from their meetings at the Cannes Lions advertising festival in June and instead go with their gut instincts and develop commercial communications (read relevant and wanted ads) that Twitter users are willing to not only receive, but also click on and engage with. Ad agencies are probably not the best people to advise on how to advertise on social media, because they are so used to the reach and frequency broadcast model we have been using for the last 50 years.

Based in London, Australian digital thought leader Andrew Grill is the CEO of social analytics company PeopleBrowsr UK.

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G N I D N I F HISE

C N FRA NCE

A N I F

Y

ou’d think that getting finance for a business venture with a proven track record would be simple. Think again. Buying a franchise has plenty of appeal: much of the preliminary work of turning a business idea into reality has already been done for you. Franchises come complete with business systems, branding and marketing, cash-flow models, etc, and if you pick the right franchise, you also benefit from plenty of support and extra buying power. So long as you don’t have a problem doing business in a very structured way — mavericks and eccentrics need not apply — a franchise can be a great way to get into business. Let’s say you’ve found a franchise that you think can work for you, in an industry that you understand and believe has growth potential. We’ll assume that you’ve done your due diligence, looked carefully at all the numbers, and worked out that the returns will be worth the investment of your time and money. Yes, money. Setting up your franchise can be a costly business. So is it easier to finance a franchise than any other type of small business?

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Financing for franchises is surprisingly hard to find. Finance Editor Tiffany Hutton explains why.

“A start up (non-franchise) business has next to no chance of obtaining finance from a bank,” says Nathan Keating, General Manager of Pearl Financial Services, which specialises in, as he puts it, helping businesses become more attractive to banks. “A franchise, however, is a different type of beast. By their nature, a franchise has a higher probability of success, as a good franchise system has established a successful model for operation and each franchisee is guided into replicating this success — banks recognise this and as such are more inclined to lend to a franchisee than they would to a start-up business.”

Big is best? So, yes, banks are an option. All the big banks have franchise ‘specialists’ and programs whereby franchisors can get accredited. Accreditation means the bank familiarises itself with the franchise’s business model, reviews its performance (including both franchisor and existing franchisee network) and then, if it is satisfied, puts the franchise ‘on its books’, as it were.

Any franchisee then applying for finance for the accredited franchise should, in theory, find the process faster, easier and less painful. in practice, plenty of franchisees may still find the process long, onerous and not always successful. If you’re looking to a bank for franchise finance, do your homework first. You really do need to work with franchise specialists to make sure you get an appropriate deal. If the franchisor you want to buy from isn’t accredited with the bank you’re dealing with, you may find it difficult and expensive. Nathan Keating again: “I am currently dealing with an example where the bank requires a mortgage over the lease of the franchisee’s premises but the bank requirements are so onerous that no landlord would be willing to agree.” If the deal doesn’t look good to you, shop around — or get help (see ‘Helping hand’ below). Franchisors obviously play a role in helping potential franchisees find finance. As Nick Avgerinos, Franchise Development Manager at The Cheesecake Shop, explains:


FRANCHISING

“You really do need to work with franchise specialists to make sure you get an appropriate deal.”

“Most potential franchisees have not owned a business before and consequently have not applied for business finance before. From the finance provider’s perspective, they may not have funded one of our franchises before. Typically then, if we don’t help in the finance process, the result will be a business novice applying for a substantial loan from a lender who knows nothing about the business. The end result inevitably will be some potential

franchisees will find the process of applying for business finance too difficult and they will not proceed to purchase. “So from the perspective of the franchisor, helping franchisees to find finance makes sense — not much point going through the process of finding the ideal franchisee, only for the deal to fall through because they can’t get the cash. “Another issue facing franchisees and franchisors is that accreditation for franchisors in

Australia tends to be only for those that are very well-established and follow a particular model. If a franchise is just growing, for example, it may find that it cannot meet accreditation requirements — it’s a bit of a Catch 22.” In most cases, franchisors don’t offer finance to potential franchisees, although it may happen in exceptional circumstances. Avgerinos says, “Occasionally, where a prospect has not been able to raise the finance from a bank due primarily

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FRANCHISING

to a lack of collateral, we may consider providing vendor finance. Commercially this is a sensible exception for us as we are intimately acquainted with the key collateral asset — the business — and therefore may apply a higher security backing to the asset than a bank would.”

Helping hand There are plenty of financial services companies ready and willing to help franchisees (and franchisors) solve their finance woes. If you’re having no joy finding finance by yourself, it may be worth your while to seek help. Nathan Keating describes what he does: “I assist franchisors to develop standardised lending processes for franchisees, including developing bank submissions for accreditation. We also assist individual franchisees with credit applications, introducing them to the right people in the right bank and ensuring that they tell the bank the right things to maximise the likelihood of gaining financial support.”

Letters from America Anthony Sullivan, Director of Lawler Partners Chartered Accountants, has spent time in the US studying franchise systems, and believes Australia has a lot to learn. For starters, the US has a government agency, the Small Business Administration (SBA), dedicated to providing support to small businesses, including those trying to access finance. “The franchising community in the US has been a significant beneficiary of SBA loans. It has facilitated growth amongst very successful networks that otherwise might not have had the opportunity to grow.” Sullivan argues that the Australian government needs to get serious about supporting small

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business. “Small business is the backbone of the Australian economy. Franchising is a big part of it. Australia is the most franchised country in the world on a per capita basis. There is a simple reason for this and that is it works! “If you study the US system they have provided access to finance to millions of people who would never have been able to access finance. The key reason is because they have taken away the collateral barrier — if the loan makes sense, the borrower can meet the repayments and the business looks likely to be successful the loan is approved, even with no

When in doubt, DIY?

collateral. Yet their default rates on these loans are very low. The Australian economy is missing out big time. I would estimate that every franchise system in Australia would have at least five worthy candidates that cannot secure finance. 1,000 franchise systems x 5 x $200,000 in average borrowings = $1,000,000,000. And I think that estimate would be conservative, as with franchise industry turnover at $125 billion that is less than 1%. It could easily be $10 billion in missed opportunity– We should consider our own Small Business Act, and pick up some of the billions of dollars we are missing out on.”

Franchise system Snap-on Tools has taken matters into its own hands, launching its own credit program for franchisees. While Snap-on is accredited by the franchise lending programs of the major banks, franchisees have nevertheless found the loan process increasingly difficult. The advantages of the franchisor finance program are that the process is much faster, the lending and payment plans are specifically designed to work with Snap-on’s business plan and cash-flow model, plus — and this is probably the most attractive feature to prospective franchisees — security for loans is limited to the assets of the franchise. As this is a new initiative, it’s too early to assess its success, but it will be interesting to see whether other franchisors follow suit.


Our Small Business Banking team is available 7 days a week. Because who knows when the work week ends. No wonder we’re unpopular with the other banks.

Visit nab.com.au/breakup or talk to a NAB Business Banker on 13 30 86 Š 2011 National Australia Bank Limited ABN 12 004 044 937 AFSL 230686 TBNAB1767_MB


FRANCHISING

CAFÉ2U’S USA ADVENTURE Café-in-a-van franchise Café2U embarked on expansion to the USA to diversify and grow. Managing Director Derek Black shares the experience with Simon Sharwood.

W

hen Derek Black tried to buy a van in America, he learned that everything is bigger in the USA, but that bigger is not always better. “In Australia we call a van a Toyota Hiace or a Combi,” he says. “There’s nothing that small in America. When we went shopping for a van they turned up with something you could hold a party in.” Black was shopping for vans in his capacity as managing director of Café2U, a mobile coffee van franchise with more than 100 franchisees in Australia, a further 50 in Europe and an ambition to keep growing. “There is limited growth capacity in Australia,” Black says. “Going offshore means we will have less reliance on one country’s royalty stream.” The USA appealed because of its sheer size and also because Black perceived a gap in its coffee culture. “We found in our pilot that Starbucks had done a lot of work for us because their coffee requires flavours to give it some body. We recently won a bronze medal at the Golden Bean Awards. The USA also has a lot of business parks that are a great distance from the nearest Starbucks.” Those characteristics fit well with Café2U’s model of only operating more than 200 metres away from a bricks-and mortar café, however, the USA is already served by mobile food vendors. “America also has long experience of food vans bringing takeaway food to businesses but they use very large vehicles that take up space and stay for a long time,” he says. “I was told by 38

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one employer that they ‘turned a coffee break into a lunch hour and a lunch hour into a vacation.’ Our model is to be there for ten minutes, then we’re out and back tomorrow.” Black also felt that, despite America’s economic woes, the nation was ready for mobile coffee in the workplace. “The interesting thing about our business model is that coffee is not recession-proof, but it is recession-resistant,” he says. “In the UK and Australia we have seen increased sales per van.”

franchises would work as well as those it carves out in Australia and elsewhere. These tests allowed the company to fine-tune its offering so it was ready for a master franchisor, which Café2U sought by joining the International Franchise Association to meet locals with experience of bringing franchise systems to America. “We were pleasantly surprised by the volume of interest from the franchising community in our business and Australian business in general,” Black says. “They [Americans] see Australia as an

“They turned a coffee break into a lunch hour and a lunch hour into a vacation.” Tasting the market Convinced that the Café2U’s model of franchisees making daily visits to workplaces with around 20 staff would work in the USA, Black set about conducting a pilot scheme. The city of San Diego was chosen for this test, which involved finding and fitting out a suitable van (the company found a suitable vehicle), tests of the company’s coffee blend and the size of the cups customers expected. The company also re-tested its assumptions about customer demographics, to ensure the territories it offered American

innovative country.” One hiccup came in negotiations where Black perceived politeness as positive sentiment. “Americans are a positive people,” he says. “We would get a neutral to positive answer when the sentiment was negative.” The company overcame those incidents, found a master franchiser and has since started negotiations with sub-masters to handle individual states. “The sub-masters will spearhead the growth,” Black says. “We hope to have 200 units on the ground in four years.”


SPONSORED CONTENT

FINDING FINANCE FOR FRANCHISE EASE

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hen approaching a bank to obtain funding, there are certain steps a franchisee can take to give themselves the best chance for approval. These are: • Demonstrate that due diligence has been undertaken; • Develop a comprehensive, professionally presented business plan; and • Provide all requested information in a concise and professional manner. Business fundamentals will drive the appetite of any financier. However, the more competent and professional franchisees are in their dealings with a bank the more likely the application is to progress – missing details on applications will cause more challenges or potential delays for you in obtaining what is required. It is also important to determine what funds franchisees can contribute to the business and how much they can afford to borrow. Franchisees need to establish how they will service any borrowing and what level of risk they are comfortable with. Because cash flow fluctuates do some forecasts on how you would cope if incoming cash was to decrease by 20 per cent.

Do your research The majority of the strong franchise systems will have arrangements with banks that make the basic process of getting finance to buy your business easier through streamlined lending processes. A bank with a specialist franchise banking division will only look to establish packages for franchise systems that are well developed, financially sound, provide people support and training, processes, marketing, operational support, and importantly, allow franchisees to

make enough profit from the business. Choose a bank that specialises in the franchising sector. You need business bankers with franchising knowledge that will understand the current economic climate and the dynamics that will affect your franchise as well as sector-specific experience to make the process smoother. There could be other start up bonuses for dealing with franchise specialists too. For example, NAB can fund accredited franchise systems for up to 70 per cent of the business purchase cost without franchisees having to necessarily borrow against personal assets (subject to credit approval). If a banker does not have specialist franchise experience, they will find it harder to understand the business and ultimately approve any application for finance.

Pricing and fees The cheapest price should not be the only criteria in determining which bank is right for you. Getting the right capital structure, business insight and finding a bank who understand your goals should also be important considerations.

Plan your success from day one All successful businesses, no matter how big or small, need a good business plan, yet many Australian business owners do not have one. A business plan is essentially the blue print for growth, taking into account all the variables and external factors which affect your business to help owners make the best long-term decisions. When setting your business goals, make them clear, measurable and time specific. Consider current market conditions and who you are competing with for your customers’ attention. This is where speaking to a local professional with

an understanding of your business environment can really be beneficial.

Remember it is not just about the loan Whilst finance may be an essential ingredient to making your dream come true, ask your banker about other essential business services such as superannuation plans for staff, business insurance and financial planning advice as well. You want your banker to work closely with you to give you financial, business and personal wealth advice, not just assistance with loans.

Consider personal aspirations as well It is also important that you choose a bank that can help you achieve both your business and personal aspirations and establish an ongoing relationship with that in mind. Wealth creation should be looked at on a holistic level. Business and personal financial goals shouldn’t be separated as it’s likely you can make them work for each other. Ideally your franchise business banker will have access to other specialists within the bank and deliver the right advice for you in the areas of wealth management and financial planning.

By Darryn McAuliffe, National Manager NAB Franchise Banking. Darryn McAuliffe is National Manger, NAB Franchise Banking. He is responsible for the NAB team of accredited franchise bankers and for the ongoing accreditation of franchise systems across Australia. NAB Franchise Bankers understand franchising and can offer you a flexible and competitive finance solution to help your business prosper. You can contact Darryn at Darryn.R.McAuliffe@nab.com.au or 0412 789 027.

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Entries are open FOR THE 2011 ActionCOACH MY BUSINESS AWARDS Has your business had a good year? Are you proud of your achievements? Do you feel like you’re on a winner? If you answered ‘yes’ to any of these questions, we want you to enter the 2011 ActionCOACH My Business Awards.

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Enter now at www.mybusinessawards.com.au

Awards for everyone

A big night out

In 2011, My Business is determined that any business, no matter how big, small, old or young, feels like it is in with a chance to win. To prove it, entries from organisations that we find have won other business awards — including our own — will be marked down by five per cent. We’re also offering a bonus five per cent for truly outstanding entries, especially those that make use of multimedia and social media to prove they really will go the extra mile to win.

Another reason to enter is our gala awards ceremony, to be staged in Sydney in October. Always a big night, the awards ceremony offers the chance to network with other entrants, meet sponsors and share the joy as winners take to the stage.

Why enter? The team at My Business are in awe of business owners: having the courage to put yourself on the line and test your vision and passion in the market is a praiseworthy effort. If you’ve already gone to that effort, popping in an award entry won’t be hard. It may also help you to achieve your other business goals, like growth and better profits. Past winners have certainly reported that the publicity they won through the awards, and the confidence that came with success, helped them to take their businesses to another level. So, why not enter your business? You may not win, but just compiling an entry will remind you of how far you’ve come and how much you have already achieved.

A new judging process This year’s awards will have a new, more detailed judging process. The first step will see the My Business team work with a panel of three business experts to develop a shortlist of five finalists for each category. Those experts will include My Business columnists, representatives of industry associations and people with special experience relevant to the award. An example of how this will work is our Best Corporate Social Responsibility award, for which we have already been in contact with local representatives of one of the world’s most visible charities. A member of that organisation will join us in the preliminary judging of that award. Round two of judging will see the finalists assessed by a panel comprising five new business experts, a representative of each category’s sponsor and the Editor of My Business. This panel will vote for the winners of each category. We’ll name some of the judges in the next two issues of My Business, so you’ll start to learn the identities of those you need to impress as the year progresses. Keep reading My Business to make sure you can craft just the right entry to catch their eye!

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2011 ActionCOACH MY BUSINESS AWARDS

Categories Award for Best Medium Business

Award for Best use of Technology

Award for Best Start-up Business

The Best Medium Business will need to demonstrate innovation, growth and entrepreneurial flair, in a business with between 20 and 200 full-time-equivalent employees. What the judges will look for The Best Medium Business of 2011 will stand out by: • Demonstrating measurable growth; • Showing how it delights customers; • Proving that it stands out in its field ... or even represents something entirely novel; and •D  emonstrating how its larger scale translates into more sophisticated systems, processes and execution.

The Best use of Technology award will go to the business that can best show how technology improves its business efficiency. What the judges will look for The Best user of Technology for 2011 will stand out by: • Measurable improvements in either profitability, process efficiency and customer service — or all three — as a result of recent investments in technology; • Demonstrating the formulation and execution of a technology strategy; and • Innovating with technology.

For new businesses, the Best Start-up category will celebrate the best beginners, based on creativity, growth and overall business execution What the judges will look for The Best Start-up for 2011 will stand out by: • Impressing judges with a strong business concept; • Proving early success; and • Demonstrating solid growth plans.

Award for Best Employer

Award for Best Employee

Also new for 2011, this category will reward an organisation that makes the most significant investment in people, as shown by the business outcomes those investments produce. What the judges will look for The winner of the Best Employer award for 2011 will stand out by: •P  roviding employee testimonials; and •D  emonstrating measurable business outcomes that result from their workplace practices.

The Best Employee award can be won by a self-nominated, peer-nominated or managernominated employee whose contributions to a business are demonstrably beyond the call of duty, while also producing outstanding results. What the judges will look for The winner of the Best Employee award for 2011 will stand out by: • Providing testimonials from colleagues and customers describing their achievements; • Demonstrating substantial achievements in the workplace; and • Sharing a personal development plan that illustrates commitment to their employer.

The GIO Award for Best Small Business

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The Best Small Business will need to demonstrate innovation, growth and entrepreneurial flair, in a business with between one and 19 full-timeequivalent employees. What the judges will look for The Best Small Business of 2011 will stand out by: • Demonstrating measurable growth; • Showing how it delights customers; • Proving that it stands out in its field ... or even represents something entirely novel; and • Surprising judges with clever execution, cunning marketing and strong products.


Award for Best Growth Strategy

Award for Best Corporate Social Responsibility

Award for Best Business Leader

This category celebrates the success of a business’s plans and strategies, by measuring the results generated by new strategic initiatives. Winner selection will be based on innovation and results. What the judges will look for • The winner of the Best Growth Strategy award for 2011 will stand out by: • Demonstrating strategic thinking; • Achieving measurable business outcomes as a result of the strategy’s execution; and • Demonstrating the novelty of their strategy.

A new category for 2011, the Best Corporate Social Responsibility category will reward the business that best gives back to the community and/or the environment. What the judges will look for The winner of the Best Corporate Responsibility award for 2011 will stand out by: • Proving positive change has resulted from its Corporate Responsibility efforts; and • Demonstrating organisational commitment to its chosen cause.

Another new category for 2011, the Best Business Leader will be an entrepreneur or manager who has demonstrated outstanding leadership that has measurably improved the business they work at or own. What the judges will look for The winner of the Best Business Leader award for 2011 will stand out through: • Acknowledgement of their leadership role from colleagues and peers; • Demonstrating the results of their leadership; and • Articulating an inspiring leadership philosophy and style.

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BUSINESS TECHNOLOGY

PRINTING’S

NEW TRICKS STORY BY LIA TIMSON

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he humble office printer can sometimes be overlooked as a source of innovation, but manufacturers are packing in new features that can save you money or give you more productive ways to work. Let’s have a look at some of them.

Wireless printing Wireless printing has two advantages. One is that laptop computers using wireless networks can print without having to hook up to a wired network. The second is that you avoid running unsightly cables through the office. Wireless printers can work well for small volumes of printed documents and in very small and home offices, although some sales people refer to them as a gimmick. If your demands for printing are such that you have a large multi-function printer/copier or a fleet of them, no matter how elegant, a wireless connection will not be stable enough for your needs. Larger machines demand connection by network cable for a reason, namely that once you start sending lots of files or big files to a printer they need a more reliable connection. Happily, plenty of printers offer wired and wireless connections, so you can mix and match as needed.

Cloud printing Cloud printing promises to change office dynamics because it unshackles the direct computer-printer connection normally needed for document output. It is now possible to send a document to a printer without being near it. But you’ll need an internet-enabled printer for this or one with its own email address. HP was the first to come up with an e-print product last year. It means you send the document via email from your PC to HP’s ePrint server in the cloud and from there it goes to the HP printer you’ve addressed the email to. Documents are sent as email attachments. While it may be difficult to send a last minute document to a client’s or supplier’s office if their printer is not compatible, you can at least ask them to drop into your office to pick up some pages. Richard Bailey, Vice President, Imaging and Printing Group, HP South Pacific, would not disclose the number of businesses already using ePrint in Australia. “However from a global perspective, we can confirm HP has had more than two million ePrint jobs to date and we only see this figure increasing with the growth in the mobile workforce and the rise in the usage of smartphones and tablets for business and consumers,” Bailey said. 44

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BUSINESS TECHNOLOGY

Printers may seem pretty simple. But clever vendors have loaded their devices with plenty of new tricks that bring benefits to your business.

Gwenyth Taylor, Project Manager at law firm Allens Arthur Robinson (AAR), said printing remotely would help the law firm’s travelling lawyers to print documents to their destination. “Often travelling partners will press print but will print back to their offices, not to where they are, so this has immediate security and confidentiality implications,” she said. Taylor said it could also help visiting clients to print a document on one of the firm’s machines without having to grant them access to the private network. Canon also has a new take on cloud printing. Its Cloud Connect for the imageRunner Advance hardware range allows users to scan documents on a multifunction device and store them directly on Microsoft SharePoint Online or on Google Docs without the need for a PC. Documents are then available to share online, view from a mobile device or to print again. There are also web-connected printers with built-in and downloadable apps (visible on the LCD touch-screen) that make documents stored in the cloud available for printing on the machine, again without the need for a connected computer. Google, Canadian legal document template provider BizTree and Yahoo!7 released apps for HP machines last year. This means any user can walk up to the printer and select documents such as invoices and forms from the screen to print on the spot. This would be handy for offices, warehouses and other paper-intensive environments where pro-forma items need to be printed on demand.

Follow-me printing Also known as release-to-print or swipe-and-release, follow-me printing sees multifunction devices create a document only when the person who ordered it walks up to the printer and inputs a PIN or swipes an ID card. This function saves paper and toner by printing only what people are prepared to wait for. It is designed to avoid those mountains of unclaimed printouts forming near your printers.

App printing A variation on cloud printing, app printing sees printer manufacturers offer dedicated apps that allow users to print documents from their mobile devices to a remote printer. People using a Konica Minolta device can download the PageScope Mobile App from the Apple App Store to browse, read and print from their iPhone, iPad and iPod touch. It claims to work for documents, emails, photos and for items scanned with the app. HP’s version is AirPrint which allows BlackBerry users to send documents from their device to ePrint (see above) and then on to a printer via email. There is a version for the iPhone as well. The Apple App Store is full of printing apps that cater for multiple printers, eliminating the need to have an app per brand of machine. But try free versions before you buy, as user reviews for most of the apps range from ‘terrible’ to ‘perfect’.

Photo: the web-connected HP Color LaserJet CM1415fnw Multifunction Printer 45


BUSINESS TECHNOLOGY

It also protects confidentiality since documents are not left lying around for others to read. AAR’s Taylor said she was experimenting with swipe cards and wanted to see if there would be any aggravation from users having to wait for their documents. But with 78 per cent of the firm’s documents being three pages or less, she did not anticipate many complaints from users. Neil Tilley, CEO of Upstream, a managed print services provider, said followme printing could have a positive impact on printing costs and on a company’s carbon footprint. “Not many people realise that more than 80 per cent of the carbon footprint associated with laser printing and copying is associated with the paper. Much of the carbon footprint debate in our industry has been focused on reducing power consumption. Power is an important but much less significant factor,” Tilley said.

Workflow software We tend to think of printers as output devices when they are in fact two-way machines that can improve our business processes greatly if set up and networked properly. With the right workflow software a printer can scan documents or receive faxes and send them straight to the right person and/or file in your network or content management system, by-passing printing altogether. It can be used to organise filled-in forms, for example or send content directly to a website. A club or association can simply scan all enrolment forms and have them classified and filed under the correct process. Coupled with a good optical character recognition software (OCR), workflow systems can also find documents by word search, rather than just document name, making scanning and electronically filing very convenient for busy offices such as law firms. Some convert scans to PDF documents and back again into editable Word, Excel and PowerPoint. The correct software can also force economic options such as double-sided printing and draft-mode printing on your employees by setting those up as default. That way, workers have to personally change the settings if they need something printed in best quality (more toner) or single page (more paper). Some software packages, such as Canon’s uniFlow, can even redirect certain jobs to the most appropriate and cost-effective printer – say sending a multipage booklet to the black and white inkjet printer, for example, rather than the colour laser printer nearest to the person.

This option suits offices with multiple machines or busy offices with one multifunction device but high printing volumes. It may include handing over machines you already own to be managed by the provider and can include leasing new devices if needed. Some in the industry claim MPS benefits the vendor more than it benefits the customer because, if not careful, contracts based on projected volumes might turn out disadvantageous if the business’ situation changes and fewer copies are produced on an annual basis. However, if your printing costs are getting out of control, it may be a good idea to obtain ‘an opinion’ from two or three MPS providers to see if you could do better than manage it internally. Remember that paper is not usually part of MPS deals – so factor that in – and do build flexibility into any contract. Most providers – whether a vendor directly or third party – will suggest a printing audit before making a recommendation. This is a good idea as it gives you a better understanding of where your costs and your needs are heading as well. Gartner analyst Ken Weilerstein says a fair and complete assessment can be performed by your own staff or by a vendor: “There is no one right way for all customers.” An assessment should result in a plan to reduce your printing spending, make the right equipment purchase decisions and better manage printing on an on-going basis. He says not to embark on an MPS contract or a major printer fleet overhaul without a comprehensive assessment.

Managed print services Managed Print Services (MPS) refer to a contract that allows you to hand over responsibility for your printer and copier fleet to a third party that handles the service and maintenance of the machine as well as toner supply in return for a fixed price per printed copy. Costs can be as low as two or three cents per black and white page, depending on how many pages you print. 46

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Photo: Epson’s Workforce 840 multifunction device


Document Scanners

Helping you keep an eye on where the money goes Whether it be big jobs or small, the range of Kodak document scanners deliver powerful benefits and real value to any business function... NEW i2000 Series

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$549

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Including 3 Year Advanced Replacement Warranty!* Orders

Business Tax Cards Receipts

Invoices

Reports

Misc

Consider the productivity benefits of a dedicated Kodak document scanner over non-specific multifunction systems;  Productivity Gains - centralise or decentralise scanning to remove bottlenecks. Electronic documents are easier to access  Save Time & Space - save office space and time searching for paper documents by eliminating large disorganised filing systems  Robust Mechanisms - ability to handle various paper sizes, thicknesses and types day in day out with ease and reliability  Superior Image Quality - advanced image enhancement technologies to automatically produce a perfect scan, every time  Seamless Software Integration - includiing OCR, scan direct to Print, Email, PDF, TIFF, JPG, RTF, Searchable PDF or MS SharePoint  Superior Performance - dedicated scanners offer greater software functionality, better accuracy and un-matchable scan speeds.

ACAPacific For more information please contact our Australian Distributor - ACA Pacific Call: 1300 761 199 Email: sales@acapacific.com.au Web: www.acapacific.com.au © 2011. ACA Pacific Pty Ltd. All rights reserved. All product and brand names are the property of their respective owners. *Selected models only. Price and AUR Warranty stated is for Kodak i920.

www.acapacific.com.au/kodak Visit the above website to register your interest & discover valuable information that can help your business maximise its productivity and profitability.


SPONSORED CONTENT

CUT YOUR PRINT COSTS (AND MAKE YOUR STAFF HAPPY) It’s easy to mentally file printers under ‘necessary but dull’ and never spend a moment thinking about how they can improve your business. But a little thinking about printing can pay off, says Jeremy Plint.

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f someone said to me five years ago that printing technologies had the potential to save my business money and improve the productivity of my employees, I would have choked on the coffee I was drinking and spluttered disbelief at the very notion. Printing and copying were expenses – albeit necessary to keep the devices running and make sure we had an ample stock of toners and inks so that we don’t get caught out. The promise of printers, scanners or photocopiers doing anything beyond what their literal purposes were, let alone save my business money, would have been baffling to say the least.

Data = insights Imagine if you had the data available to tell you how much your business is spending each month on printing or which department and user contribute the biggest volume. Data enables you to develop insights and understanding on

Jeremy Plint is Assistant General Manager Business Product Marketing, at Canon Australia.

Many businesses maintain a variety of printers at their premises. Bubblejet, inkjet, and laser printers generally all do the same thing, and your staff won’t be too fussed which one they print from as long as it’s close and most convenient to where they sit. But since these printers all offer different levels of functionalities and features – one may only print black and white single-sided, another may be able to produce colour, as well as doublesided prints – it may not be obvious just how changing printing habits can potentially save the business thousands of dollars each year. Old printers generally cost more to run and maintain, but are also less efficient in the number of pages they can output. You can upgrade your business’s print fleet for less money than you thought by taking advantage of leases, all-inone multi-function devices (MFDs) and managed print services. When it’s time to upgrade in a few years, you won’t be stuck with a bunch of old print hardware that has since become obsolete. Another important benefit is of course an improvement to your business’s cash flow and bottom line.

AUGUST 2011

Never lose another document, ever again Paper documents are notoriously difficult to keep track of and retrieve when you need them. But saving them in your Outlook or computer folders isn’t that great either – who sent you the document, and when was it sent? Was it saved under proposals, or new business? Precious time is wasted whenever you need to pause to look for the document you need. Document management systems (DMS) can put an end to all of the above, so there’s a good reason why they are becoming very popular with SMBs. For example, the Canon Therefore DMS gives you the ability to create automated workflows. For example: every time a new invoice arrives via email, it can be automatically flagged for the attention of the accounts persons, while it is simultaneously scanned and saved in a repository with the appropriate metadata keywords, for ease of search and retrieval at a later date. If it has been a while since you evaluated your business’s print environment, perhaps the time is right to do so. When adapted according to your business needs, a combination of the latest print technologies can have the potential to reduce your costs while encouraging positive changes to the way your business looks at printing and document management.

Throw out your old printers

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what your business spends on printing and how these costs are distributed across the business. uniFLOW software from Canon even allows businesses to issue print usage reports and attribute the associated cost to a department or user level. Awareness of the financial impact of printing increases dramatically, while simple options such as setting all printers to black and white and duplex by default will also help to significantly reduce paper and ink usage to help further lower costs across the business.


SPONSORED CONTENT

NUANCE ANNOUNCES NEW OMNIPAGE PROFESSIONAL 18 Contact your preferred software reseller for pricing and availability. Or call Nuance on 1300 550 716 for more information or for a reseller nearest you.

T

he new release of Nuance’s flagship document conversion and scanning application – OmniPage Professional 18 – promises to transform documents, not just convert them. It is faster, easier to use, and more accurate than ever. And it is now also fully compatible with Cloud services and mobile devices. OmniPage® Professional 18 is designed to handle high volumes of documents from multiple devices, document archiving to popular ECM (Enterprise Content Management) systems and document conversion in Cloud storage. OmniPage Professional allows you to turn paper, forms, digital camera images and PDF files into electronic files you can edit, search and share. OmniPage Professional 18 comes with PaperPort 12 and PDF Create 7. This powerful suite delivers extra features that lift productivity to a whole new level: • Batch convert paper and PDF files in one go. • Create fillable forms for distribution, and then extract their content to a spreadsheet or database. • Redact or black out confidential text or quickly locate information with highlights. • Attach content to existing PDF files, and create signed, tagged or encrypted PDFs. • Fully integrated with Sharepoint. • Create industry-standard PDF files with PDF Create 7. • Organise and find documents fast with PaperPort 12 • Network installable.

A powerful all-in-one product suite OmniPage Professional 18 comes with PaperPort 12 and PDF Create 7. This powerful suite delivers extra features that lift productivity to a whole new level: • Batch convert paper and PDF files in one go. • Create fillable forms for distribution, and then extract their content to a spreadsheet or database. • Redact or black out confidential text or quickly locate information with highlights. • Attach content to existing PDF files, and create signed, tagged or encrypted PDFs. • Fully integrated with Sharepoint. • Create industry-standard PDF files with PDF Create 7. • Organise and find documents fast with PaperPort 12 • Network installable.

Special Launch Offer To mark the launch of OmniPage Professional 18, Nuance is offering a saving of 15% on Nuance Volume Licensing Programs. This special offer is valid until 30th September 2011. A minimum of 5 licences is required. 12-month’s Maintenance and Support is available.

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TECHNOLOGY

GUIDE

GADGET TAKEAWAY TABLET

If someone told you that their new iPad clone tablet computer included a battery, you’d probably give them an odd look and ask just how the blessed thing operates without one. So why is Toshiba trumpeting the inclusion of a battery in its $579 AT100 tablet? The answer lies in the fact that it is a removable battery. That’s not a common feature in the tablet market, where Apple has convinced most manufacturers that a hermetically sealed device is the way to go because it cuts down on complications that reduce reliability. That’s a nice argument but also a flawed one, because batteries become less efficient after many recharges. Toshiba’s decision to make its battery removable is therefore a potential cost saver. It may also boost reliability – whipping out a battery and depriving a gadget of power is sometimes the fastest way to recover from a system crash. www.mytoshiba.com.au/products/computers/tablet

BLUETOOTH BOOSTER Your editor was fortunate enough to acquire a new car with built-in Bluetooth, and now spends less time grinding his teeth to the sounds of talkback radio and more time making useful phone calls. If your ride doesn’t have Bluetooth but you like the idea of some in-car chats, Uniden’s $129 BTS200 Bluetooth Portable Teleconference and Music Speakerphone could be just what you’re after. The gadget hooks up wirelessly to your phone so it behaves as a speakerphone in the car or elsewhere. It also packs a decent battery and a USB port so you can charge your phone with the device. www.uniden.com.au

CHAUFFEURED PHONE Taxis are an industry in which simple innovation makes a surprisingly large difference. Hence our interest in DELUX, a new app for the iPhone (with BlackBerry and Android versions coming soon) that can hook you up with chauffeured cars instead of leaving you reliant on the variable experience of a conventional cab. The app lets you see your fare before the car arrives, and even lets you pay on your phone, avoiding the lastminute pen-and-credit card mess at your destination. www.deluxapp.com 50

AUGUST 2011


CLOUDY PROTECTION My Business has a certain fondness for network attached storage (NAS) devices. We’ve mentioned a few on these pages over the years, but the new Iomega StorCenter px4-300d Network Storage, Cloud Edition, is worth a look because it updates the category a bit. For the uninitiated, NAS devices are wee boxes that hold a few hard disks and connect to your network. They behave a lot like a server inasmuch as they give you a shared place on your network to store data. But they are a lot

easier to manage than a server, have greater storage capacity, often cost less and do various things to protect data low-end servers cannot. The px4-300d also has built-in smarts that let you automatically upload your data into a cloud storage service, a nice idea because it means your data is replicated in a nice secure data centre somewhere. If your office suffers a disaster, that extra copy will come in handy! http://go.iomega.com/en/products/networkattached-storage-nas/px4-px6/px4-300d/

MY BUSINESS REVIEWS …. Motorola’s XOOM Motorola’s XOOM is yet another iPad competitor, but distinguished itself from the chasing pack by being the first to ship with the very latest version of the Android operating system. The unit we tested had just received an upgrade to version 3.1 and came equipped with a Telstra NextG account. It’s hard to review this kind of device without comparing it to the iPad, because it doesn’t really try to do any more than Apple’s device. One thing the XOOM has that the iPad doesn’t is Flash, Abode’s popular software used by many online video services. We found that Flash performance was generally tepid – movies were slow to download and jittered as they played. The XOOM is not alone with poor online video performance, but the experience fell a little short of being an improvement on other gadgets we’ve assessed. You may also find the Android experience a little confronting. In our experience the iPad has almost no learning curve. The XOOM takes a little getting used to, as it is not immediately apparent where your apps are stored or how to access the device’s settings. The device’s volume toggles are so small we spent several frustrating minutes trying to find volume controls in software, a process that required navigating four or five menus deep. On the upside, the XOOM’s email client is better than the iPad’s. But the on-screen keyboard makes some jarring choices that make it a little tricky to enter numerals. The screen is fine and when we tested it using Amazon’s Kindle e-reading software was easy to read and produced no eye strain. It also handled video files with ease and produced decent sound. Battery life was a big disappointment – left in a drawer for a weekend the device went from 100% to zero charge, without any use whatsoever. Overall the XOOM is a very fine product, but not a delightfully slick one. Unless it undercuts its rivals on price or you have a big commitment to the Android ecosystem, you may find better alternatives. www.motorola.com/Consumers/AU-EN/Home

Review by Simon Sharwood

QUALITY KIT The AirStation Nfiniti Wireless-N High Power Router & Access Point WZR-HP-G450H does everything a wireless router should do – it shunts data around your office over wires or through the air. So why are we featuring it here? There are a couple of things to learn from in this device. One is it’s lovely big antennae. It’s possible to make WiFi go a little faster by using multiple antennae,

and this unit does so to achieve a claimed speed of 450Mbps. That’s about 100Mbps beyond many rivals. The other is its claim to prioritise multimedia traffic. This is a nifty trick because if you are watching a movie, the last thing you want is stuttering vision. Prioritising traffic is something heavyweight networking vendors have done for ages in their more expensive kit, so seeing it in a $199 device is a nice breakthrough. www.buffalo.com.au 51


BUSINESS SYSTEMS

WHAT’S YOUR RECIPE FOR BUSINESS SUCCESS?

Stop reinventing the wheel, says Dale Mercer, and educate your staff so they can do their jobs without constant questions. 52

AUGUST 2011

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ne of my favourite recipes is for New York baked cheesecake. I’ve literally made this cake dozens of times. So much so that I can easily replicate it without referring to the recipe. As a matter of fact I’ve lost the original handwritten recipe given to me by my father. Although I would happily take credit for my extraordinary culinary skills, at the end of the day, all I do is follow a ‘proven recipe’ for a delectable result. Regardless of who follows the recipe, be they a teenager or a middle aged balding man, the outcome would be the same, a beautiful cheesecake. The biggest problem for me is nobody else in my household knows the recipe; therefore the baking is always left up to me.

Who bakes in your business? A similar problem occurs with entrepreneurs today. In reality, your business is one giant set of recipes, better known as ‘business systems’ or processes. All the recipes for a successful business lie deep inside the reservoir of the business owner or the team member’s minds. This is your intellectual property that should never be undervalued. However, left in the minds of people this intellectual property can walk out your door anytime, leaving you without your recipe. Most businesses try to prevent this exodus of intellectual property by writing a systems manual, only to have it sit on a shelf gathering dust where nobody ever reads it or refers to it. Staff then unconsciously make up their own systems or


BUSINESS SYSTEMS

constantly bombard the owner with repetitious questions, wasting valuable time. What if you could extract this valuable information from your own mind and the minds of your workers in a way that would be easily accessible to everyone, easily understood, clear and concise? What if you didn’t need to constantly answer your phone to put fires out or repeat instructions to people who should know better? What if your business could run smoothly, without the need for you to be constantly present or contactable with the comfortable knowledge that everything is being run to your exact specifications? For most business owners this would mean being able to step back and work on the business rather than in the business. That would mean more free time to concentrate on important aspects that will make the business grow such as advertising, marketing, promotions and sales … not to mention being able to duplicate your business to open up other branches, franchise it or perhaps getting the business ready for sale. It could mean the chance of a long desired but never realised relaxing holiday, comfortable in the knowledge that it’s all running smoothly like clockwork.

What’s your human capital worth? In the corporate world, the term known as ROE is referred to as Return On Equity. The operations of a company are analysed to see how financial capital could be better allocated in order to get a better financial return. I view human capital in a similar way; instead of receiving a better Return On Equity, I look at how business owners can get a better Return On Energy – your human capital. Your human capital is the mental, emotional and physical energy that you invest every day in your business. The big question is “How much of your time is spent intelligently taking action that will produce a long term result?” Many business owners waste valuable time due to a lack of structured systems in the business. One distinct area I have observed repeatedly that has a poor Return On Energy is staff training. Business owners spend weeks and sometime months training new and existing staff how to perform their jobs only to have that person leave and have to start the recruitment and training process all over again.

Growing pains I recently consulted with an entrepreneur who owns a very successful horticultural and tree planting business. He was talking with excitement of the extreme growth (no pun intended) in his business due to new planting contracts. He also knew that this meant the headaches of hiring and training new people to his exact standards that his 25 years of experience have taught him. This was not only going to be a long and laborious process but his experience taught him that some of the people he has trained for months in the correct way of planting will leave the business and he’ll have to start the training process all over again.

Your business is one giant set of recipes better known as ‘business systems’ or processes. You see, planting a tree is not just about digging a hole in the ground and sticking a plant in it. There is a whole process for preparation of the soil, fertilisation, using the right tree species, planting the correct way and aftercare just to mention a few steps. All of which takes a long time to train a new person. Of course my entrepreneur has his 25 years experience to guide him and he is brilliant at his job which makes his company a leader in the field. His intellectual property is invaluable to the company. But his constant need to train and re-train his workers is slowing the growth of the company as he is wasting his valuable time in training instead of acquiring new contracts. What would help him free up his time and capture his 25 years of priceless knowledge and experience? The answer is systems. However it is systems for the 21st century. Not the outdated systems manuals that everyone is so good at ignoring but rather a video-based, bite-sized training tool that is accessible to staff at any location, anytime, anywhere! If they have

a question about soil conditions – instead of ringing the owner to explain, they simply look up the relevant video in a few seconds, watch the precise training and get on with the job. Even more importantly they’ll do the job exactly as you want them to perform the task without the need for personal interpretation as they can watch the process and replicate it. Why is this important? Consistency in your organisation is fundamental to business growth. Without consistency in productivity, quality assurance and customer service your business is destined to at best flounder or die a slow death as your customers look for alternative businesses they can count on for consistent service and satisfaction.

Your recipe The need to develop tested and user-friendly systems for a business is crucial if a business owner wants to have more time available to manage the business. In the case of my cheesecake, I will have to keep baking it until I teach someone else exactly how I do it. If you as the business owner are the only one who knows how to do a certain task or you think that you’re the only one who can perform it perfectly than you have a choice. Either keep doing it for the rest of your business life or leverage yourself by creating systems that teach someone else how to do it to your specifications even when you’re not present. It’s simply a smarter use of your most valued commodity – your time. Just like a recipe, business systems direct and govern all activity within a business. Once this recipe has been tested and perfected the business will not only run more smoothly and autonomously but will be more stable and profitable. After all, isn’t that what all businesses strive towards?

Dale Mercer is Co-Founder and President at iSystemize International. He is a recognized authority on business systemisation using visual media and presents to business people and franchise groups about the importance of user friendly business systems. For more information visit www.isystemize.com 53


SPONSORED CONTENT

NEED CAPITAL? LOOK TO YOUR FLEET

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btaining and managing a line of credit to finance your core business operation is a major challenge for most small and medium-sized enterprises (SMEs). As a business owner you may not know you are sitting on a reliable source of capital – your vehicle fleet. Leasing is an effective way to unlock capital tied up in your fleet, as well as offering potential balance sheet and tax benefits. There are a number of fleet financing options available, each offering benefits depending on the needs of your company. Choices range from credit lines and bank loans through to operating leases. The following table outlines three vehicle finance options popular with SMEs.

Comparing vehicle finance choices

Operating Lease (FMOL)

Hire Purchase

Chattel Mortgage

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AUGUST 2011

Ownership

Deposit Balloon payment

Tax Benefits

Details

At the end of the term you can return the vehicle or extend the lease

Not required

Not required

Rental payments are fully tax deductable

• Improve your balance sheet position by freeing up the capital in your fleet assets • No exposure to car value movements • All vehicle running costs are included in the monthly charge, saving you time and administration • GST is not required upfront; it is part of the monthly payment and fully claimable

You own the vehicle once the final balloon payment is made

Yes

Yes

Interest and depreciation is tax deductable only if the vehicle is used for business purposes

• Risk of the resale value decreasing • Fixed balloon payment • Reduction of the monthly payment requires deposit

You take ownership of the vehicle upon delivery

Yes

Yes

Potential tax benefits if a vehicle is used to generate taxable income

• • • •

The asset is displayed on the balance sheet GST payable upfront on the purchase price Discharge and release fees apply Risk of the car value decreasing


SPONSORED CONTENT

Boosting your balance sheet with an operating lease

Fleet management tailored to your needs

Specialists in small fleet management

Incorporating a vehicle and fleet management under an operating lease arrangement allows your business to keep vehicles off the balance sheet and free up vital capital for core business activity. For example under a FleetPartners’ fully maintained operating lease (FMOL), a new Toyota Camry Altitse 2.4L auto sedan could cost $766* including GST per month with full scheduled servicing, replacement tyres, 24-hours roadside assist, registration, purchase stamp duty and fuel management.

Outsourcing the management of your fleet reduces administration costs and time, improves management of your costs and removes residual and maintenance risk. Another important advantage is the purchasing power FleetPartners can provide an SME or small fleet business. A unique feature of the FleetPartners’ FMOL is our free OneCall service. With just one telephone call you can arrange maintenance and servicing for your vehicle, with valet pick up and delivery^, plus the convenience of SMS and email reminders.

At FleetPartners we understand the unique challenges facing SMEs. As part of our commitment to building genuine partnerships with our SME customers, FleetPartners has an exclusive small fleet team. This team is dedicated to servicing the SME sector and developing a close relationship with each customer to ensure unparalleled management for their fleet. To find out more about how a fully maintained operating lease from FleetPartners can help your business call the dedicated sales line on 13 17 39 or visit www.fleetpartners.com.au.

*All figures are for a FMOL including four replacement tyres, fuelcard, scheduled servicing and registration renewals. All figures are based on general fleet pricing or the equivalent for Toyota for a VIC delivery as at 01/04/11. No current bonuses have been allowed for in the figures. Metallic paint is the only accessory included. Calculations have been based on an average lease term 48 months & 100,000km. ^OneCall services are subject to availability and location

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MYBUSINESS.COM.AU

WHAT YOU’VE MISSED AT

MYBUSINESS.COM.AU

My Business’ re-vamped website features daily updates of news, opinions and profiles of prominent business people. Here’s a sample of some of the stories you missed in the last month.

HOW MCDONALDS FAILED IN FIJI – THEN FIXED IT Merrill Pereyra I spent 23 years with McDonald’s as a senior executive responsible for expanding the company’s operations into local and international markets. In his new book, Expand Your Brand, Pereyra explains why it is critical to understand the culture of any new export market you target.

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t might sound really obvious, but many people simply do not think about which language they would like to conduct business in. Of course the day-to-day store business is conducted in the local language and trades in the local currency. But often business meetings and management training is carried out in another language. In McDonald’s case, it’s English. Straight away you have identified that you will need a bilingual assistant. Trust me it really helps. In the early days always check every translation even for the smallest memo; sometimes what we say is not what we mean. By way of illustration, when an order is taken with a slight irregularity, say for example, a Big Mac with no cheese, we call this a ‘grill order’. On the opening day in Samoa it was hot and really busy. I was running around lubricating the wheels of industry and closing gaps when I noticed one customer who was waiting a long time and it transpired that he was waiting for a ‘grill order’. I started shouting, ‘Come on, get the grill out. I want the grill out now!’ or words to that effect. After some time, I noticed that everything was slowing down. Like really slow. So I went into the kitchen and found four chefs trying to get the grill out. No, I mean the big apparatus for cooking the food. There were four strong Samoan guys about to pull the grill up from the floor and out of the wall. I screamed, ‘Stop! What are you doing?’ They looked at me in disbelief, ‘We are getting the grill out just like you asked!’ Never assume that just because you are an established brand, everyone will be familiar with the way you present or operate your business. It’s essential to conduct surveys and do research to find out what they know or what they assume about your brand.

Humans are very good at adding two and two and getting seven. We made a grave assumption in Fiji – somehow we missed the fact that half the Fijian population were Fijian Indians and a large percentage of them, due to religious reasons, do not eat beef. On the first day we were met with countless complaints about the cheeseburger. I tasted a few and they were great. As the manager slowed down and I became present enough to hear what he was actually saying, I could not believe my ears. The complaint was about false advertising and misrepresentation.

“When they ordered a cheeseburger they did not expect it to come with beef.” When they ordered a cheeseburger they did not expect it to come with beef but only cheese. It was obvious to us, and equally obvious to them, what ingredients a cheeseburger contained – right? We had to act extremely quickly and have all the menu boards and signage updated to say, ‘contains beef’. I remember on the morning of the opening of the first restaurant in Fiji we had all been working like crazy to get ready. With about one hour to go before the opening an employee came up to me and asked me what I wanted him to do for the day as he was on the staff roster, but without a job description. I did not have the time to sort it out there and then so I improvised. I looked around and spotted a garbage bin on wheels that


MYBUSINESS.COM.AU

CONSCIOUS STYLING:

THE SECRET THAT SORTS OUT YOUR WARDROBE TO HELP YOU DRESS FOR SUCCESS

McDonald’s use for their car park and immediate surrounds. I asked him to make sure that he got all the litter from around the area. The day was chaotic but it went relatively well. Later on that evening around 5pm, when I was heading back to my hotel for a fresh change of clothes, I saw the same employee picking up the garbage some six kilometres away from the restaurant. I could not believe my eyes. I asked him what he was doing and he said, ‘Cleaning up the area boss!’ I commended him on his initiative and dedication, gave him the money for a taxi home and told him we’d deal with the bin in the morning. Key Points • Be clear, be specific, be simple. • Ensure that you have a bilingual partner or assistant in foreign countries. • Ask for some instructions to be repeated back to you. • Assume your team are hearing something for the first time until you find a clear communication channel and a frequency that everyone understands. • Always recap your meetings and conversations in 24 to 48 hours of the event happening. Write things on memos in large print for the staff locker rooms. • Learn some local common phrases and have fun with communication. Never assume that just because you are an established brand, everyone will be familiar with the way you present or operate your business. To learn more about the book visit www. expandyourbrand.com.au. All profits from the book go to Ronald McDonald House.

“Keeping a current and fresh image matters”

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ave you ever wondered why some people look styled and ‘put together’ from their hair and accessories to their clothing choice and colours? It’s no fluke that some people have style and others just don’t. Some people tell me that style kings and queens are just born like that. I’m not buying it. What I know for sure is that this stuff is modelled from a very young age. If you’ve had great role models who have shown you the value of a good education, how to communicate and how to get yourself organised, congratulations! Our parents and teachers do their best to model what they can. Some of us are well skilled in some areas and leave the rest to chance. Same thing happens with an effective visual image and some sense of style. No one is born with it. It’s modelled and coached, for sure!

Conscious styling is about being seriously conscious about how you are building your wardrobe to set yourself up for success. If you are in business, and more particularly if you are in a service-based profession this is crucial as the first impression a prospective client has of you forms a perception that will communicate a very strong impression of WHO you are. Your ability to look like the brand of your business/organisation will let the client know if you are the one they want to be doing business with. Elements of your grooming, choice of colour and accessories will send warning bells to your client as to the level of detail you will take in your dealings with them. If you are looking groomed and styled it will send the message that you will attend to the same level of detail with them in business. If you are running late, forgot your pen and neglected to press your shirt it will alert your 57


MYBUSINESS.COM.AU

You don’t get a second chance to make a first impression, so dressing well is important for anyone in business. Helen Robinett from consultancy Image Quest shows how to do it well with ‘conscious styling’, a method that will see you shop smarter to present better. prospective client to Google someone else who might care a bit more than you do. A recent client gave me a gift of awareness this year. She very clearly communicated that she has ‘too much stuff’ in the wardrobe and was feeling quite overwhelmed about why she had made some purchases. This got me to thinking about why on earth this happens because over the past eight years I have discovered that most of us are wearing about 20 per cent of our wardrobe. We wear those clothes over and over again. Why? Because it works, that’s why. So what’s happening with the other clothes? And how much of your hard-earned cash is sitting there not earning its rent in your wardrobe? Anyway, I reckon we evolve as style queens and kings for our business and personal lives. I see just as many women who are successful in their business attire and have no idea how to dress for a hot date. The biggest wardrobe issue for men and women is to discover how to do ‘smart casual’ well. They can present well for business and do the ‘real’ casual thing at home on the weekend but they lack the knack of the smart or business casual for dinner with friends, a work conference or casual Friday.

The conscious styling model All this lead to the development of the ‘conscious styling evolution model’ which describes zones that start at ‘Trapped’ and move through ‘Discovery’ and ‘Overhwhelm’ to ‘Freedom’. Where do you think you are? Are you feeling uncomfortable or are you in sheer delight because you recognise that you have already reached the freedom zone? Is your current wardrobe in alignment with the goals you have set for yourself for 2011? If not, now is a very good time to take stock and re-assess the action you need to take to step up a level. 58

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Most people are hovering in Discovery and some have found their way into Overwhelm where they are absolutely and utterly confused. The goal is to move you into the Freedom zone and this can be achieved in a relatively short pain-free period of time. Oh, you will experience a little discomfort as you become conscious of how much you have been sabotaging yourself, but this will pass very quickly as you journey on to the freedom zone. Jane has recently completed a wardrobe session. Her last session was a few years ago and the purchases made were great for where she was at then. She is now in a senior position for a training company and about to take on a role where she will have quite a public profile. Her life has changed and the wardrobe is no longer reflective of who she is. Jane admitted that she just kept going back to the same shop because it was ‘easy’. I get it! The thing is that we evolve as human beings and our needs change. Keeping a current and fresh image matters. It matters quite a lot. I built a list for Jane. Some of what she had in that wardrobe is still quite good. Some of it just had to be retired. She got busy with life and just kept going back to the same store to buy more of the same stuff she was buying before. Not a bad idea initially. It’s easy isn’t it? No need to think too much or put in the legwork to find the pieces to compliment the wardrobe more effectively and make the other pieces work a bit harder. Now you might be thinking, seriously how could she not have got that handled on her own? Easy, most of us are just too darn close to our own stuff. Hence the reason I hire an image professional to check out my wardrobe each year in line with my goals of who I want my clients to be and where I see my business heading. Someone else always sees the stuff that you don’t. Even better when you hire a professional to

get this stuff handled for you. Besides that, you can probably claim it as a tax deduction depending on your work. Where is Jane at now? I set her up with the right boutiques to bridge the gaps for exactly the pieces she was missing in her wardrobe. I gave the boutique owners the heads-up on what Jane needed and then I checked in to see that she was happy. She knows where to go now for the perfect pair of jeans and a summer sandal that will fit with her lifestyle. Her hair colour has just been changed to a deeper shade and she has refreshed her make-up with the Image Quest make-up stylist. In a nutshell, Jane feels great. She was fine before, but she has stepped up a level now and her confidence has soared. She got really clear that a wardrobe refresh needs to be an annual event and has asked me to diarise to call her to re-book at the end of 2011. Too much money wasted on stuff that was not serving her as she progressed professionally. Any of this sounding familiar? How can you step yourself up a level as we head beyond the autumn/winter season? An easy place to start the process is with a professional styling portfolio for $130 at www.image-quest.myprofessionalstylist.com


MYBUSINESS.COM.AU

SKINS CEO: WE DIDN’T NEED A BUSINESS PLAN Jaimie Fuller led sportswear brand Skins to global success and says starting without a business plan was an important part of his success.

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hen you start a business, conventional wisdom suggests that without a business plan you are courting disaster and might as well not bother getting out of bed. Jaimie Fuller begs to differ. And Fuller has the success story to prove it – he’s the CEO of sportswear company Skins, which has gone from zero to 80 employees in under a decade, while creating a global market for compression garments that improve athletic performance. Fuller says that early in the company’s history “It was clever to start without a business plan.” His logic is that Skins was such a far-out idea that conventional planning was a waste of time. “We created a category,” Fuller says. “We pioneered this stuff.” In the early days, that meant “walking into a retailer and saying ‘Hi. You don’t know who I am but I want you to sell tights for $140. I know you are selling Nike and adidas for $70’.” The unpredictable outcomes on offer when pioneering a market with little proven demand means Fuller believes “If I had a conventional business plan that made me forecast, I would have shut it down after two years. Forecasting accurately is hard for us even now.” Fuller also believes that the freewheeling style of the company’s early years was important, because without it the company would not have been able to experiment with its products and ways to get them to market. “It just didn’t seem to me to be a natural thing to put in strict processes and controls up front,” he says. “I felt I needed a period of flexibility and looseness.” Fuller’s approach worked – Skins is now a global concern and in 2007 attracted private equity investment.

Fuller is still with the company and still CEO, but now foresees a time when his services will no longer be required. “Culturally, one of the big challenges is that you have people who are great at taking you from zero to ‘x’, but you need different people to get from ‘x’ to ‘y’,” Fuller says. “People like me play a big part early on, but there comes a time where you have to put in place more professional management.” “There is no doubt I may be out at some point. I am cognisant this will happen and I hope it will happen at the right time.” Fuller thinks it will, because he is “good at recognising my shortcomings”. For the time being, he’s working hard to grow Skins while building a culture that encourages openness and honesty. “I try to encourage my people to tell me to shut up,” he says. “We don’t have a ‘You can’t talk to me like that’ routine. I recently had a punch-up with the head of the product team, she said I am doing a lousy job of managing her.” Fuller agreed.“I try to be as self-critical as I can,” he says. “I try to be as open as I can with that kind of stuff – it breaks down barriers and makes things easier.” Another thing that makes his work easier is the company’s success. My Business told Fuller that the editor’s then eight-year-old son insisted on using many weeks’ pocket money to buy Skins, which the boy believed were an essential accessory for success in under-nines football. “You’ve got a smart kid,” was Fuller’s response. “It’s an awesome feeling to know we’ve made that kind of impact.” “I can’t create – I don’t paint or write. This company and this brand is my creative outlet. I can say: “We have done that, isn’t it great?” 59


EXPERTS ROBYN ANDERSON

"Casuals employed on a 'regular and systematic'' basis may receive unfair dismissal regime protection."

Robyn Anderson is a fellow of Australian Human Resources Institute and the Managing Director of HR Navigation Australia, an HR/ Workplace Relations Consultancy specialising in providing Outsourced HR Manager Services to Small and Medium Businesses. To contact HR Navigation call 1300 669 747 or visit www. hrnavigation.com.au 60

AUGUST 2011

DON’T BE CASUAL WITH YOUR CASUALS

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asual work is just that – casual, with no guarantee of hours or continued work. Many employers therefore feel that it cannot be possible for a casual to claim unfair dismissal. Recent decisions at Fair Work Australia (FWA) have shown that casuals employed on a “regular and systematic” basis and who have a “reasonable expectation of continuing employment” may receive unfair dismissal regime protection.

Building up a regular pattern One example of such an employee is a casual employee who said he was dismissed for refusing to pay for tools and equipment that were stolen from a worksite he was guarding. He had worked as a casual for at least 84 weeks over a 20 month period. The employee worked night shift for 33 of those weeks over two separate periods, during which time FWA found he worked as part of a regular crew, had a reasonable expectation that he would work from Sunday to Thursday, almost always started between 6.30PM and 8:00PM and finished between 3:00AM and 7:00AM, and had little day-to-day contact with managers. FWA found this constituted regular and systematic employment, as the employer offered the employee work almost every week, on average four days work on day shift and close to five days work on night shift. This meant the employee had a reasonable expectation the work would continue and FWA therefore granted the employee access to unfair dismissal. A casual employee who works a clear pattern of hours or who is on a regular roster or has an agreed arrangement with an employer may be found to be engaged on a regular and systematic basis.

Are your casuals protected? Some key indicators that your casual employee may have access to unfair dismissal are: • It is the employment that must be regular and systematic, rather than the hours or days of work; • If there is a clear pattern or roster, this is strong evidence of regular and systematic employment; • If the employer regularly offers work when available and the employee generally makes themselves available for work, the employee is more likely to be found to be engaged on a regular and systematic basis; • If work is offered and accepted sufficiently often the employee is more likely to be found to be engaged on a regular and systematic basis;

• If the hours of a casual employee meet or exceed 38 hours a week, the employee is more likely to be found to be engaged on a regular and systematic basis. Another thing to note is that you don’t need to actually terminate to be at risk. Many business owners will avoid the actual termination of a casual employee simply by not calling them for work anymore. This can constitute a dismissal if a regular and systematic casual can argue that they had a reasonable expectation of ongoing work. An example of this situation can be found in the case of two casual motel cleaners who were compensated for unfair dismissal after their employer stopped calling them in for work. The cleaners had worked for over one year, averaging 20 hours of work each week. They were also the only cleaners at the motel. When the motel was acquired by new owners their shifts were altered and they were sent text messages saying they weren’t required for various shifts and then all contact ceased. While the two cleaners were never told that their employment had been terminated, FWA found it was “natural” for them to assume that termination had taken place. Commissioner Connor relied upon s384 of the Fair Work Act 2009, which affords protection to casual employees if their employment was “regular and systematic” and they had a “reasonable expectation” of continued employment and found the cleaners were entitled to protection under the Small Business Fair Dismissal Code and were unfairly dismissed, as no reason or notice for the end of their employment, or opportunity to respond, was given to them. Compensation was awarded with one cleaner awarded $2500 and the other cleaner awarded $1050. Casual employees can no longer be treated casually. If you are considering terminating or ceasing to use a casual employee it is important to consider any access the employee may have to the unfair dismissal regime: • The fact that an employee works more hours in one week or one month than another, and might have variable start and finish times, is not conclusive evidence of irregular, occasional or non-systematic employment. • If the number of hours worked is small and the gaps between days and times worked is long and irregular, other evidence that the employment is regular and systematic will need to be provided. If you are at risk then tread carefully, consider your obligations to follow the Small Business Fair Dismissal Code or seek professional advice before acting.


EXPERTS SHERALYN GUY

NEW TOOLS TO ATTRACT TALENT

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ave you heard about the “war for talent”? According to Wikipedia, the war for talent refers to the increasingly competitive landscape for recruiting and retaining talented employees. Winning the war means having the best people achieving the best outcomes for your business. To win you will need to equip yourself with the best HR “weaponry” – to attract the best and brightest people you need to understand and implement at least some of the following HR practices.

Daily scrums Otherwise known as “daily huddles” or “stand-ups” these are meetings in which the members of your operational or project team hold a quick stand-up meeting each day. Daily scrums are usually held first thing in the morning and last between five and 15 minutes. The team uses the scrum to review how it is tracking towards its goal, discuss obstacles and plan how to overcome them. This type of meeting is gaining popularity for its effectiveness. It allows for timely feedback and interaction, keeps the team focused, and allows for almost instant problem solving, preventing anything from getting in the way of the team achieving its goals.

Virtual team space The virtual team space is a shared online space where team members can find information, upload or download documents, send and receive messages, discuss topics in forums, post updates and answer questions. A virtual team space allows for online collaboration and, for certain topics, can be more effective than a meeting. To be successful, however, team spaces must be used effectively. Set clear guidelines for acceptable content and response times, and ensure your online space stays “live” by keeping it up to date.

Social media recruitment manager This is the new “must have” role on every recruitment team. Most job seekers have a LinkedIn profile and spend time keeping it up-to-date, especially when they are about to seek new employment. The role of the social media recruitment manager is to utilise social media to find the best talent and attract it to your business. They might begin by creating an online HR presence for your business, if you don’t have one, attracting people to it, and then begin their own fishing trips for good talent. In that way, when you have a role that needs to be filled, your social media recruitment manager should have a pool of potential talent, ready to dive into.

The hub A dedicated team space provides a focus for your project and its goals. It should be a place where people feel relaxed, free to communicate and, ultimately, be more productive. Team spaces can include comfortable couches, quiet zones, a tea and coffee making area and other amenities that make it an enjoyable place to be. While some of the team might have dedicated workspaces within the hub, others may only visit as needed, at peak project times for example, or for face-to-face meetings when necessary. Perhaps some team members will be consultants, while others will work from home, or simply at their traditional workspace elsewhere within the business. Think of it as the beating heart of your project – the place where goals are set and strategies devised, even if some of the work happens elsewhere.

“To attract the best and brightest people you need the latest HR practices.”

Satellite workers Many modern businesses are making it easier for people to work away from their main business location – in their own home, from a car, or even based in the office of a client. There are HR challenges to working this way; there must be trust. There must be clear guidelines, clear targets and a system for feedback and performance monitoring. Yet despite the work involved in the initial setup, it all sounds positive from where I’m sitting.

Holistic HR Human resources practitioners are becoming increasingly focused on the whole person, rather than expecting someone to divorce their personal life from their work. Strategies to make it easier for your team members to manage the balance between work and life can make your organisation highly attractive to today’s talented workers. Strategies such as offering membership to health programs, allowing flexible working arrangements and providing onsite childcare, are all good examples of holistic HR policies.

Social responsibility People who feel emotionally connected to a project are inspired to perform at their best. When an organisation demonstrates a commitment to supporting causes that are aligned to the team’s values it can help create a positive connection with the workers, motivating them to stay loyal to the business because it is something they are proud to be part of. This is one good way to hang on to talented people once you’ve found them.

Sheralyn Guy is Director of HRhelp, a company dedicated to providing affordable, practical and effective HR services to small to medium-sized businesses. For further great HR ideas, call 02 8006 1280, email gethelp@hrhelp.com.au or go online at www.hrhelp.com.au 61


EXPERTS DONNA STONE

MAKE IT EASY TO GET PAID “Customise the due date field in your invoices. Make it bold and large.”

Donna Stone is the founder of the multi award winning Consulting & Bookkeeping business Stone Consulting. They service clients on MYOB, Cashflow Manager, BankLink & QuickBooks. From her 25 years experience with over 300 clients, 16 staff and a decade in business, she has written a book of 200 tips on how to succeed in business, titled “Stepping Stones to Business Success”. Learn more at www. stoneconsulting.com.au.

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ands up who wants to be paid? May I suggest you make it as easy as possible for your clients and customers to pay. Try thinking about this from your payer’s perspective and consider how you can make payments as simple, easy and quick as possible. Here are my tips: • Send your invoice. I know this sounds silly, but seriously, I see so many businesses which don’t invoice promptly, and then wonder why cash-flow is ‘up the creek’. If you don’t invoice your client, how do you expect them to pay? • Have lots of payment methods. If you only accept cheque, then you limit yourself. By accepting, BPAY, cheque, cash, credit card (over the phone or a completed slip) or direct payment, you give lots of options. Some people only like cash – others love to earn their points by using credit, others like the efficiency of internet banking. Don’t limit the options to your preferences – it’s not all about you. • Show the options. Show clearly on your invoice how people can pay. If you accept direct deposit, have your bank details there. Don’t force your customers to ring you to chase the details. • Clearly show the due date. In programs like MYOB you can clearly show the due date for payment. Customise this field, so that it’s bold and large. • Have contact details on invoices. And speaking of forcing customers to ring you, make sure both your postal address AND your phone and email are on your invoices. People regularly have queries about their invoices, so wouldn’t you prefer they ask, you answer and, then they pay promptly, rather than them becoming a bad debt because it was all just too hard? • Use mobile EFTPOS. For around $20 a month rental you can have a mobile EFTPOS machine. Imagine you do a job onsite at your client’s office or premises. They are there, see the great job you have done, are happy. Wouldn’t that be the perfect time to swipe their debit or credit card and get payment? For the small cost of the rental and possible credit card fees, it’s a far cheaper option than having to chase, chase and chase for payment down the track. You might never worry about bad debts ever again. • Prevent excuses. If you have a process to ensure that (a) goods are received and (b) the customer is happy and

(c) the invoice is received, then you are halfway there. Those excuses like “I didn’t get your invoice” are voided. The excuses have been eliminated, leaving only the act of payment. Offer credit card options when collecting. When you (or your team) are on the phone collecting, saying to the person “if you like, I can get your credit card details and we can fix this up for you now?”. You might even add a comment like “and you can earn some frequent fiyer points too.” Have retail checkouts attended. I don’t know how many times lately I’ve gone into a large department store, gone to make a purchase and there is no-one at the counter to take my money. I’ve found I’m better walking around to the cosmetics section, which are actually staffed. I wonder how many people simply just give up, leave the goods and leave the store? Statements work for volume transactions. If you are a very small business, then issuing statements may not be as relevant, but if you are supplying multiple invoices to the majority of your customers, then statements are good opportunities for them to identify missing invoices and to know the total amount due for payment. The carrot or the stick. I’m not a fan of discounting, but it might be an option worth considering. Of course, it’s likely you will build this into your price structure. If a client pays before the due date, they pay the smaller amount (clearly shown). Personally it’s been an incentive for me. Alternatively there is the stick angle – where if they don’t pay there is interest, admin fees or penalties. I’d go with the carrot myself, it’s always more effective using honey, rather than vinegar. (No, this is not a salad article J ) Hospitality cheque splitting. Seriously, why is it that hard to allow cheque splitting? However, one restaurant had a nice alternative. They offered a pad, pen and calculator, to make the task easier. Internet sales. Is your shopping cart quick and easy to assess? Or is it cumbersome, slow and hard to navigate? Again, if you make the process hard, slow and painful – customers will just drop off. Finally, provide an awesome service! If your product or service and customer service is awesome and amazing, do you think people will want to pay you? You bet! They love you and paying you is agreeable, because doing business with you is an absolute pleasure.


EXPERTS PHIL LEE

THE ‘SECRET’ TO SELLING

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e’ve all seen books, emails and videos that promise to expose the one secret aspect of an endeavour that will set off a light bulb in our head, spontaneously cause angels to burst out in full blown chorus of “Hallelujah”, and forever change our lives for the better. Likewise, I am often asked by friends and casual acquaintances, “So Phil...what is the secret to sales?” with the belief that my answer can somehow be provided in a concise 30 seconds or less. I usually brush them off as politely as possible or inquire as to why they might be interested. As many of you know, advanced selling skills take many months or even years to master so I have to be careful not to be offended by their innocent question insinuating that sales mastery can be summed up in just a few words. Notwithstanding the above, advanced selling skills can arguably be summarised in one short phrase. Stop selling and trying to convince your prospect and yourself that they need, can afford or should have what you are selling. That’s right. It’s the exact opposite of what most salespeople are actually doing. In other words it could be summed up as, instead of going for a yes, go for a no!

Important questions To achieve this just ask the questions that will disqualify your prospect as quickly as possible. “Shock, horror” I hear you say. Studies have shown that the number one reason salespeople fail is related to the quality of the prospects they pursue. Weak salespeople call on the same prospects over and over again “hoping” they will eventually become customers, rather than starting the relationship building process with new prospects. This, of course, means that they are very busy and active. But are they being productive? And there is a major difference. One of my clients who went from being a mediocre performer for years to the best salesperson in a team of 400 admitted that it wasn’t until he started to believe that his time was as valuable as any of the CEO’s he was calling on that his sales results began to dramatically improve! He only then started to implement what I was teaching him and what doctors and plumbers have been doing for years.

Disqualification Doctors and plumbers tend to be very good at disqualification which is one of the main reasons why these professions never seem to have a lack of business (and is the reason I don’t train any surgeons or plumbers). You don’t really care how they fix your problem, you just want the problem to go away quickly. They simply determine if the prospect has a problem they are uniquely qualified to fix. If a specific problem isn’t present they don’t keep trying to convince you that you need them, they happily move along to the next prospect. They don’t ask questions like: • Would you be interested in receiving more information? • Who else are you talking to? • What are you looking for in a plumber? • What are your top three challenges? • Would you like me to make the surgical incision horizontally or vertically? • Can I call you in a month just to touch base? Instead, they ask incisive (excuse the pun) questions like: • Are you feeling tightness in your chest or a shooting sensation in your left arm? • Is there much water on the floor around the dishwasher? • Have any of your family members had symptoms of high fever recently? • How bad is the smell coming from the drain?

“Stop selling and trying to convince your prospect and yourself that they need, can afford or should have what you are selling.”

Take your time Contrary to what many believe, selling doesn’t need to take a long time. You just need to have the conviction to ask the tough questions that might disqualify your prospect and result in a “no”. Become emotionally okay with a “no” and you’ll be pleasantly surprised with the responses you get. Remember, if you are prospecting as you should be, you’ll hear “no” a lot more than “yes”. The key is to get them early and move on. After all, if they say no, you can always ask another question. As long as you know the criteria to disqualify your prospect, you’re more likely to get decisions from them. And a well qualified “no” early on in the sales process is as acceptable a decision as a “yes”. Once you get used to this idea you will find that it will free up much of your valuable time so that you can spend it with prospects who genuinely need and appreciate what you have to offer. The added benefit to you is a dramatic increase in sales and maybe you’ll even have some time left over to do some of the things you really love to do.

For a free copy of our comprehensive white paper on Why Salespeople Fail, email plee@sandler.com Phil Lee is a sales performance expert, personal growth coach and sought after speaker. He can be contacted on 02 93006001.

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EXPERTS BRIAN WALKER

THE GOOD OLD DAYS “Some retailers lament the good old days rather than innovating and refining their offer”

To get ‘Fit for Business’ today, contact us by phone on 02 9460 2882, on email at businessfitness@retaildoctor .com.au, or visit us online at www.retaildoctor.com.au 64

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isit many formats of retail today and you will see some good design elements and product and well thought out integration between these two elements. In some cases, we see all the elements of ‘fit’ retail including sharply differentiated branded retail offers coupled with impressive in store experiences. Alas, we also see some retailers lamenting about the good old days rather than innovating and constantly refining their offer. These businesses fall into the habit of passing the blame and out trots the typical “we are in the retail doldrums at present it’s super tough out there and a real struggle.” And for these businesses, this comment is absolutely correct. It is a real struggle out there! These businesses typically: • Are under capitalized; • Haven’t recognised the increasing levels of competition both domestically and globally; • Haven’t brought real innovation to their offer in a long time; • Have not embraced the changes to the way their customers want to know and communicate with them, such as through online, social and digital media; • Aren’t brilliant at the retail basics, delivering inconsistency to their merchandise mix, pricing, range depth; • Have underinvested in customer research, brand and truly understanding world’s best practice in their category; • Simply bring the same offer, season after season, year after year, to their dwindling customer base. Please allow me to provide two examples of ‘fit’ retailers in this country who are setting a high standard in this country and helping bring the Australian retail scene to a world class standard. Recently, Zara opened in Central Sydney. Zara’s offer, positioning and delivery is well known across the world. This store opened to “rock star” queues of customers wanting to buy their product and well aware of the brilliance of their retail offer, super fast merchandise turnaround and their innovative and entertaining in store experience. There has been much discussion around this brand entering the country and the impact it will have. If the estimates are accurate, the Sydney store alone will comfortably make $50 million+. Apple is also well known, equally well documented and estimated to do similar numbers from its Sydney City store alone. Some would dismiss Apple’s performance as being

indicative of the “technology” revolution although this is just too simplistic. The Apple brand personality is all about enriching and simplifying people’s lives through innovative technology. This brand shines through consistently in all their communications to market. Look at both examples and you soon see the following elements are evident: • “Dominance & Power” in the category – they both own the space which is a fundamental of category leadership; • Trend leaders/forward thinking – these retailers are spelling out the future; • Absolute relevance to their target market; • Strong use of all the channels to reach their target audience; • Use turnover of product – consistently inventing new stories in product and category to excite and refresh interest for their customers. “What’s new” at these retailers underpins their offer; • They are true “power brands” that understand the importance and role of a well executed branding strategy. Both brands are in the top 50 most recognised worldwide in 2010, Apple at number 17 with a 37% increase on the previous year and Zara at 48 (www.interbrand.com); • Excellence in execution. They understand that retail is also about being brilliant in the basics; • Understand pricing architecture such that they target deep and cater wide. The simplest international example of innovation in retail is Tesco supermarkets in the UK. These supermarkets are known to create three separate pre-prepared food ranges for their busy target market of singles, working couples and generally time-poor consumers. The ranges on display change for each time segment (breakfast, lunch and dinner) as do the supporting displays. So here we have a rapidly fast moving retailer, recognising changes in consumer trends and catering to new lifestyle needs. We were delighted to see many great examples of retail innovation and excellence as a judge at the recent Oracle Retail World awards and we would be delighted to hear of more Australian examples that show customer offer relevance to such a refined degree. Some learn from leaders and some lament “the good old days.” To those of us who wish for the good old days where customers shopped in an orderly and predictable way, between set hours, being very loyal and not shopping your competitors, we suggest that you keep looking, while you can.


EXPERTS TERENCE JEYARETNAM

ENVIROPERATORS AND ENVIROPRENEURS

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uthor James Bradford Moody, Executive Director Development at CSIRO, in his latest book, The Sixth Wave, talks about the next wave of innovation, being the sixth wave, “…driven by resource efficiency, enabled through the pricing of waste and natural resources, and turbo-charged by clean technologies”. The Russian economist Nikolai Kondratiev was the first to bring the so-called Kondratiev waves to international attention in his book The Major Economic Cycles (1925). Kondratiev waves are described as sine-wave-like cycles. Averaging fifty and ranging from approximately forty to sixty years in length, the cycles consist of alternating periods between high sectoral growth and periods of relatively slow growth. The cycles Kondratiev identified are: • The Industrial Revolution – 1771 • The Age of Steam and Railways – 1829 • The Age of Steel, Electricity and Heavy Engineering – 1875 • The Age of Oil, the Automobile and Mass Production – 1908 • The Age of Information and Telecommunications – 1971 • The hypothetical wave of the post-informational technological revolution (2015-2035?). Moody predicts the sixth wave to be driven by resource efficiency and clean technology. “Over the 200 years since the Industrial Revolution, we have seen economic growth strongly coupled with the consumption of more and more resources. The more we grew, the more we consumed. If the next wave of innovation really will be tied to resource efficiency, this equation is about to be turned on its head….In a world that is ‘decarbonised’ or ‘deresourced’, we will have decoupled resource use from economic growth. The world economy will no longer be based on the transformation of inputs into outputs. This will not happen overnight – if resource efficiency really is at the heart of Kondratiev’s sixth wave, it will be a journey of some thirty to forty years,” say Moody and co-author Bianca Nogrady. I can see two key areas of growth riding this sixth wave over the next three decades.

The resource-efficient Enviroperator Natural resource consumption by humans has increased to 125% of global carrying capacity, and could rise to 170% by 2040. We are crunching through our resources at a rapid rate – for example, we burn in one year fossil fuels that took approximately 450 years to form. Another example is phosphorus, best known as a fertilizer. Recent reports

suggest that production of phosphorus may have peaked, leading to the possibility of global shortages by 2040. Other current resource constraint priorities include carbon reduction, waste management, water conservation and energy efficiency. The “post informational technological revolution” may deliver the technological solutions for resource conservation and efficiency. Resource efficiency will be underpinned by price signals – such as a price on carbon – and those businesses that are resource-smart will be the winners.

The future-focused enviroprenuer It is said that an enviropreneur is a person who finds creative or insightful ways to turn environmental problems into assets. A local enviroprenuer ahead of his time was Richard Pratt, who became one of Australia’s richest people by focusing on recycling (Visy Industries). China’s richest female, Ms Zhang Yin, who made her fortunes from recycling, and “China’s richest man, Shi Zhengrong, the founder and CEO of Suntech Power, are two other prime examples. There are enviroprenuers everywhere, once you start looking. I argue that the sixth wave is already well and truly taking shape. These areas include (according to The Sixth Wave): • Waste equals opportunity. Anything that reduces or eliminates waste is likely to do well. • The shift towards service. The distinction between the things we consume and the things we use is a fundamental one for the sixth wave. The pattern will be to move from consumption to service. • Digital and natural worlds converge. There are now more transistors produced in a single year than there are ants on the planet – roughly the same as the number of rice grains produced globally each year. This is how we will innovate in a resource-limited world. • Businesses that sell products would be focused locally, while internet-based businesses will be more global in their reach, crossing the bridge of logistics and associated costs. • Natural processes balance competition, cooperation and coordination, on the one hand, and elimination of waste, on the other. This means that processes that look to nature to innovate are likely to succeed. The opportunities are endless once you cast your mind to it, whether you are an existing business owner or manager or an aspiring entrepreneur – the question is, how would you create greater returns by adding the prefix “envo”.

“There are now more transistors produced in a single year than there are ants on the planet”

Terence Jeyaretnam is a Director of Net Balance (terence@netbalance.com), one of the world’s leading sustainability advisory firms. Terence is based in Melbourne. 65


EXPERTS SUE HIRST

HOW TO BE SURE YOU’RE MAKING MONEY AND KEEP SOME FOR YOURSELF “Think of stock as dollars piled up on the stock room floor”

CFO On-Call would like to offer a FREE book ‘The Seven Key Numbers that Drive Profit and Cash Flow’ to readers of this article. Call us for your copy on: 1300 36 24 36 or visit www.CFOonCall.com.au (AU), 0800 180 400 or visit www.CFOonCall.co.nz (NZ) 66

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simple way to ensure business profitability and healthy cash flow is to focus on what drives both. To do so, you need to understand what drives revenue, by considering the following: • How saleable is the product or service and what’s the market? • What marketing is working and how much is it costing to acquire a customer? • Is it profitable revenue? • How does the true cost of delivering the product or service compare with the price? • Are customers returning and if not why not? One of the biggest missed opportunities we see in business reports is lumping all revenue into one account and not breaking it down into categories. Breaking down revenue and also the costs associated with each revenue source enables you to see clearly where you’re making and losing money. Doing so is important because to be profitable it’s vital to know the true cost of a product or service and keep an eye on it to avoid ‘margin squeeze’ – a phenomenon that happens when costs rise, you don’t increase price and absorb the extra cost. It’s not viable to continually absorb cost increases without price increases. But it’s also not always necessary to increase everything. Here’s an example - a client recently told us they hadn’t increased prices for years. We did some analysis to find out their best selling products. On each of these we agreed to a small increase with no resistance from customers. Most customers expect increases in line with the consumer price index and if it’s written into contracts, it’s much easier to achieve. Costing of products and services is vital knowledge to work out gross profit. Gross profit is the difference between revenue and costs and is an important benchmark. Cost of jobs may include labour, materials, out of pocket expenses etc. If gross profit is below expectations it may be necessary to assess how products and services are costed and acquired. Here’s another example. A client in a wholesale business found packaging was a large portion of costs. When we questioned their ability to negotiate a better price with the supplier, they said it wasn’t possible. We did some shopping around and found a supplier who offered a 10% reduction.

The regular supplier soon agreed to a similar reduction. Labour is another example of cost management on jobs. It’s often the case where chargeable labour spends time doing non-chargeable work such as administration. If you take the number of people, and calculate the total hours spent on administration multiplied by their hourly charge out rate, it’s often the case that the cost of employing someone else to do it is less than the missed income. Overheads can get out of hand where there is no budgetary control. Owners don’t always have time to keep an eye on what everyone is spending, or shop around for the best deal. A budget can be a saver as well as keeping your banker happy. One overhead that can get out of hand is wages. Often in a growing business, staff are employed to meet demand, without proper job descriptions. An organisational chart can be useful for a growing business. Begin by listing all tasks in the business, then list who currently does them. Any overlaps and gaps should become obvious and job descriptions can be realigned to suit. Debt collection is an area that has blown out recently. Dunn & Bradstreet recently reported that average collection time is 55.6 days. Compare this to your seven day terms to see what impact this is having on cash flow. Start with Terms of Trade so your customers understand the expectation. Invoice as soon as the product/service has been delivered or get a deposit or progress payments. Then follow up smartly. Email follow ups for small amounts and phone calls for large amounts. Agree to outstanding amounts being paid off in instalments over a period. Stock and projects can be a huge drain on cash flow. Think of stock as dollars piled up on the stock room floor and jobs in progress as dollars on the work room floor. It really pays to reduce the time stock sits in store and jobs wait to be finished and invoiced. Good records and planning are vital to management of both. There are some cost effective online systems available that can save thousands of dollars in working capital requirement to fund stock and jobs. Examples are Unleashed Inventory and WorkflowMax Job Management. Slowing down payment to suppliers is often the last resort where there are cash flow problems. Often we see suppliers being paid too quickly or worse, being overpaid. A close eye on this area can provide much needed cash.


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EXPERTS IVAN MISNER

“How many times have you seen an entrepreneur go to a networking event, meet people, then leave and never talk to them again?”

Called the “father of modern networking” by CNN, Dr. Ivan Misner is a New York Times bestselling author. He is the Founder and Chairman of BNI, the world’s largest business networking organisation. For more writing by Dr. Misner, visit his blog at www. BusinessNetworking.com. 68

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FOUR WAYS TO BUILD SOCIAL CAPITAL

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ocial capital works for everybody, not just people who set out purposefully to become networkers. A colleague of mine works in a profession—writing and editing—that entails a minimum of day-to-day interaction with others. He handles a limited number of projects, usually no more than two or three books at a time, and works long hours and days in isolation, surfacing occasionally to communicate with an author or publisher about details. You might say he works in a cave with only a few air holes. How does a cave dweller build social capital? This particular editor, feeling the isolation, crawled out of his cave one day and went looking for company. He joined a small band of writers who were forming a professional organisation. Energised, he joined their efforts to build the organisation, attract new members, publish a newsletter, schedule presentations and speakers, arrange conferences with editors and agents, and even throw a few parties to lure other writers out of their caves. All of this work was done by volunteers who got a kick out of building a service organisation that would help writers network with one another and achieve success. The organisation grew and became the largest writers’ networking organisation in the nation. While this was happening, my friend the editor made several new friends among the organisation’s founding members. One of them told him of a job opening that turned into a 12-year-long position; this gave him the steady income he needed to support his family. Another friend, a low-volume publisher of high-quality books, gave him several editing projects and, after his salaried job ended, giving him a full schedule of freelance work. Many of the authors this publisher referred to the editor returned again and again with other projects for other publishers. One of these writers was … me, an author of over a dozen books, on most of which I have worked on with the same cave-dwelling editor. Although the editor didn’t know it when he began this low-key form of networking, he was building social capital when he thought he was only having fun. Over the years, the interest on this social capital began flowing back to him in many different forms, with no direct connection to the benefits he had helped provide to other writers.

Relationships are currency How many times have you seen an entrepreneur (maybe even yourself) go to a networking event, meet a bunch of good people, then leave and never talk to them again? Too often, right? And it’s not because he doesn’t like them

or ever want to see them again, but because he’s a busy, busy person with so much going on that he can’t even remember what he had for breakfast, let alone reconnect with individuals he just met. It’s a shame, because such new contacts are where future business is born. Don’t be misled; it’s not the number of contacts you make that’s important—it’s the ones you turn into lasting relationships. There’s quite a difference. Try making ten cold calls and introducing yourself. Okay, how well did that go? Now call five people you already know and tell them you’re putting together a marketing plan for the coming year and you would appreciate any help they could provide, in the form of either a referral or new business. Better results behind door two, right? Of course. You already had a relationship with these folks, and depending on how deep it was, most of them would be glad to help you. So here’s the question: How can you deepen the relationships with people you already know to the point where they might be willing to help you out in the future? Here are four quick steps to get you moving in the right direction. Give your clients a personal call. Find out how things went with the project you were involved in. Ask if there’s anything else you can do to help. Important: do not ask for a referral at this point. Make personal calls to all the people who have helped you or referred business to you. Ask them how things are going. Try to learn more about their current activities so you can refer business to them. Put together a hit list of 50 people you’d like to stay in touch with this year. Include anyone who has given you business in the last 12 months (from steps 1 and 2) as well as any other prospects you’ve connected with recently. Send them cards on the next holiday . Two weeks after you’ve sent them cards, call them and see what’s going on. If they’re past clients or people you’ve talked to before, now is the perfect time to ask for a referral. If they’re prospects, perhaps you can set up an appointment to have coffee and find out if their plans might include using your services. See how easy that was? After a few weeks, you’ll have more than enough social capital to tap into the rest of the year. Social capital is the international currency of networking. If you take as much care in raising and investing your social capital as you do your financial capital, you’ll find that the benefits that flow from these intangible investments not only will be rewarding in themselves but will multiply your material returns many times over.


EXPERTS TONY GATTARI

FIVE COMPONENTS TO MAKE YOUR BUSINESS FLY

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hen we first start working with clients they have a fair idea of where they want their business to be over the next few years, however there is a lack of clarity as to how each component drives the business. There are the five key components that need to be combined if you really want your business to fly and for your business to give you what you want: 1. Key Objectives What your business must achieve at the end of two to three years so it grows and prospers and provides you the business owner(s) with the lifestyle of your choice. If you do not have this clearly defined then your business might simply have you doing what it wants - on more hours, more time away from you family and more personal cash. Your key objectives should be exciting, specific and give you a feeling of extreme accomplishment. 2. Killer mission The ongoing achievement of your mission will propel you toward the attainment of your key objectives. Most mission statements are ‘feel happy’ useless statements that achieve nothing for your business - let your mission statement be a map toward your Key Objectives. Your mission does not need to be seen by your clients and does not need to be on the wall in plain view of all ... it does need to be a strong statement of how you are going to get your goal, by when and by what methods you are going to achieve this. Management uses your mission to assess your businesses performance with regard to marketing, sales, operation, human resources and finance. If each area is focused on performance in line with your mission then your business will achieve its Key Objectives. 3. A-class clients propel your business to new heights Most business owners expand their business without taking into account how their client base will affect their business and its ability to achieve their Key Objectives. Clients can destroy your business if they are the wrong type. Imagine for a moment that you expand your business with clients that always complain about what you do, expect the lowest price for the best service and are always pestering you with no real benefit. These are D-Class clients. A-class clients are the answer. Your A-class clients will support you and your business in achieving your Key Objectives if you know who they are and how to find them. 4. Purpose gives you heart A major reason behind employees not working the best they

can or not working toward the achievement of the owner’s Key Objectives is because they don’t feel any heart in the business. The purpose of the business is either sterile, does not exist or does not inspire any emotion. As such the employee can only work for money and treat you like all the other businesses they have worked for - and let’s face it; some of the businesses out there are not good. 5. Your powerful exit from your business A statement from one of the biggest business brokers reported that 65% of all businesses listed for sale do not sell and either go broke or simply close the doors. Your exit from your business needs to be defined now in order for you to get the most from your business and to add to your life. Here are a few options: Sell the business - If you are going to sell your business then you will need to make sure that your business shows a healthy profit, has clients (a, b, c, or d class does not matter) and can be operated by the new owner and there is opportunity for growth. Sell the business to family - This strategy requires more thought and requires that you systemise the business to a higher degree as the normal status of ‘sell to family’ requires an ongoing payment back to you, so you will need to be sure they will be open every year and can pay and are happy. Management - This is where you sell to yourself every day, where you get a manager into run the business. The business will need to be highly systemised, reporting back to you highly systemised and the direction and ongoing mission of the business clear. The business will not rely on your relationship with clients as the dynamic of the manager will most likely be different. Sell the business to a multinational - Most likely the multinational will want your client base and or a cut of the market you are in. They will be less likely concerned with systems and the on-going nature of the business and will pay against the number of clients and cash inflow from sales (market share).In some cases they will want your business as a going concern - however this is not the norm. Merge with another business - The merger will be for either strategic benefits or to create a larger and stronger business. Systemisation may not be an issue if the other firm is strong in this area, however that will depend on who has the clients and who has the systems. Some exit strategies will take more time than others and will deliver a greater return at the end of the day ... the choice is yours, but you need to start now.

“Clients can destroy your business if they are the wrong type”

ABOUT ACHIEVERS GROUP The author is founder and Chief Energy Officer of Achievers group. He is a much in demand passionate professional speaker, business educator, author and corporate, business advisor. He has worked with over 140 businesses around the world. Website: www. achieversgroup.com.au Email: tony@achieversgroup. com.au Phone: 02 9025 3716 69


BEC NEWS

COMMUNITY-BASED ORGANISATIONS HELPING SMALL BUSINESSES

BUSINESS BUILDING BLOCKS: A NEW ONLINE LEARNING EXPERIENCE FOR SMALL BUSINESS

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usiness owners looking for training can now benefit from a new program, Business Building Blocks (BBB), that uses leading-edge online learning techniques to help anyone study for a Certificate III level qualification in Micro-business Operations. Developed in partnership between the Council of Small Business of Australia (COSBOA), Business Enterprise Centres Australia (BECA) and University of Western Sydney (UWS), the program is online now at www.businessbuilding.com.au and offers seven modules on the following topics: • Investigate business opportunities; • Develop a business proposal; • Managing finances and accounts; • Determine resource requirements; • Comply with regulatory, taxation and insurance requirements; • Marketing, selling and customer service; • Review and maintain a website. All of the modules can be accessed for free, but if you pay $200 per unit (or $1000 for all seven) you become eligible for the Certificate III.

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Students receive a Statement of Attainment on completion of each unit and, after submitting a business plan, are assessed for the Certificate III. Anyone is welcome to use the modules at any time, as the BBB program aims to be a resource that increases the level of business education in the community, rather than a revenue-raised.

made it very simple and made sure we don’t have things that are de-motivating factors, like things not working.” The site also uses lots of video. “It’s all about improving engagement – this is not just e-reading,” Wright says. “We’ve used educational theories about e-learning online to keep people engaged.”

Designed for ease of use

Practical examples

Don Wright, an academic at UWS and one of the developers of the program, says BBB was designed from the ground up to be easy to use for busy business people. “We did three years of research into online learning before we created BBB,” he says. “Then we did new things to make it an excellent experience.” The result is an e-learning experience designed to engage students, instead of confusing or boring them. “A couple of the things we have done are quite simple,” Wright explains. “For example we have

The site also emphasises practical examples and exercises so participants learn through their actions and by observing other businesses in action. “We present concepts and theories and show how they are related to the real world with authentic case studies and examples,” Wright says. “Then we get people to undertake an exercise. We punctuate e-learning with experiences so participants do not get bored.”

Support for learners Another important part of the BBB experience is support for learners.


“Many people in business are not digital natives so we recognise that they need support,” Wright says. “For many it will be their first experience of e-learning and they are coming from a classroom environment in which a teacher engages and prompts.” “We realise that when you put people with that experience in front of a computer and say ‘learn by yourself’ it may not work. So the program lets you take notes, lets you bookmark things.” “ There are lots of little things we do to support online learners.”

Keeping track BBB even keeps track of where you are in its lessons, without needing to save progress. “Wherever you get to in the program, the system records your progress,” Wright says. “We did this because our research showed that business people are busy. Many will do half an hour of learning at home in the evening, or during a lunch break. That means learning needs to be available in small pieces.”

“Our aim is to make education simple. You don’t have to go to a classroom and there’s no lengthy process of engaging with an institution.”

The system also ensures that students can link lessons together, even if they are doing them infrequently, by showing indicators of progress. “The site tracks your progress with a colourcoded display – you can see the chapters you have read because they turn green.” The system also encourages students by prompting them about their progress. “It will let you know you have done 30% of the requirement for the Certificate III and that if you register you can work towards the qualification,” Wright says.

All welcome “BBB is trying to promote and prompt people to engage with formal learning,” Wright says. “If a hundred people do the course and ninety take the free version, we’re not unhappy.” “Our aim is to make education simple. You don’t have to go to a classroom and there’s no lengthy process of engaging with an institution. The system is flexible so you can jump in and out of e-learning at any time.”

For further information, contact Business Enterprise Centres in Australia on 1300 363 551 or visit www.becaustralia.org.au 71


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My Business Magazine August 2011-07-27  

My Business’ August issue features a cover story on recruitment, sharing experiences and opinions from employers, recruiters and consultants...

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