Fifo Capital Q4 2019 Australia

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Thinking ahead for success QUARTER 4 I 2019

Alexis Ohanian: Creating the front page of the internet Use supply chain finance to prepare for the Holidays Larry Ellison – Creating the 21st century economy Manage work-life balance to boost employee retention Improve your recruitment strategy to boost growth Ben Silbermann: A social network for shoppers and doers

We’re here to help. Business finance when you need it. Working capital to support and grow your business We know that the working capital your business needs to support and grow can easily exceed what other financiers can approve. And that’s where we can help, with flexible financial options from $10,000 to $1 million. We understand, because we’re business owners like you When you talk to us, you’re talking to a business owner like you. We’re a privately held finance company, which means we can be innovative in our approach and work closely with our customers. We’re all about keeping things simple – from a single point-ofcontact who’s also the decision maker, to a 24-hours turnaround time… all with minimal paperwork. We don’t require long term contracts or property security – and it’s up to you when you choose to use our services and when to stop. All with no impact on your existing lending arrangements In fact, banks often recommend us as preferred short-term funding option. And because we work as a complementary service, there’s no need to refinance your current funding facilities. Contact Fifo Capital today for more information

1300 852 556

is a leading provider of business finance solutions, specialising in solving short term finance needs fast with purpose-fit solutions and one-on-one expert consultancy. With over ten years supporting clients across all industries, our specialists work with the unique complexities of business clients, to identify finance solutions that are appropriate for both short term needs and long term sustainability. Working alongside clients’ financial professional advisers and in harmony with their existing banking facilities, our finance solutions are very often bespoke to each client and designed to fit their specific need at that point in time. Since launching in 2004, Fifo Capital has established more than 70 offices across New Zealand, Australia, United Kingdom, and Ireland, and provided business owners $1 billion growth capital finance.


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At Fifo Capital, we love business – our own and the many customer businesses around the globe that we help with the right financial tools for growth. We work with many entrepreneurs who are cut from a different cloth. They come from vastly different backgrounds but share a certain chutzpah. Often, their original idea takes off and they become a raging success. Or they have to keep iterating until they hit the sweet spot for their customers. Sometimes they have to pivot entirely and return to the drawing board to create something altogether new. Whichever way entrepreneurs find success, they ultimately possess traits like persistence and resilience, and they maintain momentum at all costs. We are proud to support people on their journeys to success. In this issue of Headway, we look at a number of entrepreneurs who made an impact on the global stage. People like Alexis Ohanian who, with his business partner, had his first funding request denied, but returned with a bigger idea to create the front page of the internet. Mere months after receiving funding, Reddit had over 20 million visitors per month. Other than determination, Ohanian’s success was the result of listening to his audience who wanted an unfiltered environment to express their views. Another entrepreneur who listened to his customers was the founder of Pinterest, Ben Silbermann. Launching with a simple pinboard that was

slow to start, Silbermann personally reached out to 5,000 of his users, with the hopes of improving his app. Their feedback resulted in a giant social platform where people organise and share their ideas and the great products they find on the internet. This also became the perfect utility for advertisers to tap into this audience, further ensuring financial success. Instead of expecting his original idea to be perfect, Silberman was relentless in his efforts to improve his product. We also look at another giant, in the business-to-business space, Larry Ellison and his Oracle Corporation. His philosophy has always been to keep moving forward, to compete, and to win, even when there is no competitor to beat. We also dive into how off-balance sheet financing allows businesses to manage cash flow on their terms, as well as business cybersecurity, managing worklife balance, recruitment strategies and more. I hope these stories inspire you to make 2020 your best year yet. Thank you for being with us throughout 2019. I hope you have an enjoyable and safe holiday season. Merry Christmas. See you in 2020. Best regards, N igel Thomson Fifo Capital Founder and CEO



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Alexis Ohanian: Creating the front page of the internet Use supply chain finance to prepare for the Holidays I t’s time for businesses to focus on their employer brand Larry Ellison – Creating the 21st century economy Off balance sheet financing allows businesses to manage cash flow on their terms Manage work-life balance to boost employee retention It’s time for every business to implement a cybersecurity strategy Ben Silbermann: A social network for shoppers and doers Supply chain and invoice finance provide businesses with critical growth options Improve your recruitment strategy to boost growth

Published by Fifo Capital International Ltd. Headway magazine is published four times a year. Copyright © 2016 by Fifo Capital International Ltd. Email Visit All rights reserved.



“ The great thing about the Internet is, it's the freest marketplace of ideas that there is� Alexis Ohanian

Alexis Ohanian: Creating the front page of the internet In 2005 Alexis Ohanian and Steve Huffman approached Y-Combinator with the idea for a website called MyMobileMenu, and were turned down. The seed accelerator, though, encouraged them to come back with other potential ideas. Soon, they returned with greater ambitions; to create the front page of the internet. Just months later, their project, Reddit, would turn into a major success. Forbes magazine. Moreover, Ohanian has amassed an estimated personal net worth of over $70 million,


despite leaving Reddit in 2010. His success with Reddit, and his later ventures, is attributable both to his entrepreneurial approach, and his ability to relate to and capitalise on the needs of internet users.

The rise of Reddit Even when it was founded in 2005, Reddit looked relatively low-tech on its face. The design of the website is simple, and all content is shared or created by users. Since then, little has changed. Unlike Facebook, Twitter, and other major social media

This prominence has allowed it to post annual revenues as high as $100 million, despite its lack of aggressive monetisation, and the fact that it does not collect personal user data.

The centre of a political internet

platforms, Reddit has remained largely the same in terms of its design and function. Fundamentally, it’s designed to allow users to form interest-based communities and to interact with one another on their own terms. Its largely laissez-faire attitude with regard to its content allowed it to become the central hub for communities and content centred around a wide variety of issues, ranging from major political issues to relatively meaningless internet memes. The most immediate effect of this was that Reddit grew incredibly fast. Just five months after going online, Reddit began to receive over a million views per day. Since then, it has continued to grow, establishing itself as a household name on the web, and becoming the source of shareable content for other major websites like Buzzfeed, Tumblr, and occasionally even major news sites.

Reddit refers to itself as the “front page of the internet”, and in some ways this is true. The Reddit community, with the encouragement and participation of Ohanian, is a centre of political activism for internet-related issues. Reddit doesn’t require users to use a personal email address to create an account, and doesn’t collect personal information from its users. This allows users to remain anonymous, and has made Reddit a major centre of advocacy for an open internet, for net neutrality, and for internet privacy. Besides this, activists for a wide variety of political and social causes organise on the site. This tolerance for controversy is a major part of Reddit’s appeal to its users, and is ultimately what makes it unique and irreplaceable to them. Ironically, it’s also what has made the site relatively difficult to monetise, as advertisers ultimately can’t allow their brands to be associated with overly controversial content. The business success of Reddit lies in balancing the interests of its user base and its advertisers.

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Sticking to entrepreneurship

What we can learn

Unlike many entrepreneurs, Ohanian did not stick with his big success in the long term. Instead, he left Reddit in 2010 to pursue other projects. In 2007, even before he left Reddit, he founded another business, Breadpig, which produced geek-focused merchandise. After leaving Reddit, he founded Das Kapital Capital, a startup investment and consulting firm. Since then, he has made numerous seed investments, helping other entrepreneurs get on their feet.

Ohanian’s approach to business has allowed him to focus on leveraging his own talents and interests as much as possible. Reddit allowed him to create something that reflected his own personal values, as well as those of many internet users. Moreover, it created a platform that he himself has also used to engage with and advocate for his personal and political interests, such as paternity leave and net neutrality. After Reddit was established, he went on to pursue his passion for entrepreneurship by getting involved in investing in other new businesses. This allowed him to continue to do the work that he was experienced in, and that he was passionate about.

His success with Reddit, and his later ventures, is attributable both to his entrepreneurial approach, and his ability to relate to and capitalise on the needs of internet users.


This provides an important lesson to other entrepreneurs. While it’s tempting to stick with our greatest successes, it’s not always what’s best for our business, or ourselves as entrepreneurs. Running a business is not the same job as founding a startup, and great entrepreneurs often don’t make great CEOs. By moving on, Ohanian ensured that he could continue doing what he was best at.

When expertise counts Not all business finance needs can be solved with vanilla solutions. When an expert sounding-board is needed, Fifo Capital can help: • One-on-one consultancy (complimentary) with a business finance specialist • Fast response and approval of finance (24 hours) to meet changing business needs • Consultancy in partnership with your financial advisers and with banking facilities • Solution-solvers for short term needs, and long term sustainability. When your business finance needs demand expert thinking and purpose-fit solutions, call Fifo Capital on 1300 852 556

Use supply chain finance For consumers, the holiday season typically begins with Black Friday, which is the day following Thanksgiving Day in the United States. Businesses, on the other hand, start thinking about the holidays much sooner. After all, they need to prepare well in advance to ensure that they can make the most of their most important time of the year. For a large portion of the economy, the holidays are a make-or-break event during which they generate a disproportionate amount of their annual revenues. To take advantage of—and profit from—such a predictable spike in demand, though, businesses need to ensure that they have the products that consumers are looking for, and the staff to sell them. Moreover, they need to advertise to ensure that their prospective customers actually show up, rather than spending their holiday budgets on competitors. This can quickly become problematic, because not every business can afford to ramp up supplier purchases


while also funding a marketing campaign. To ensure that they can maximise their revenues, businesses need to access additional funding. Supply chain finance, along with other alternative financing tools, such as invoice finance, gives them access to both the time and money they need to make this year the best Christmas ever.

Businesses need the Holidays The fourth quarter, sometimes called the “holiday quarter,” can make up for a host of economic problems faced by businesses during the first three quarters of the year. This is particularly important for retail businesses, which have been struggling and going into administration in record numbers for years. Many retailers earn more than 30 per cent of their annual revenues during the holidays, giving them the chance to recover from what has been a difficult year. Similarly, businesses that manufacture consumer goods, like Apple or

Supply chain finance allows businesses to get the funds they need up front, without taking out any loans. Instead of giving the business any additional capital, as with a loan, it helps them to ensure that suppliers are paid, while extending their payment terms until after the holiday season.

to prepare for the Holidays Samsung, rely heavily on fourth quarter sales. While the holidays translate to a spike in sales for most businesses, it takes a lot of work to maximise the benefits that the holiday season has to offer. Running out of stock, or being understaffed, can limit the amount of revenue that businesses can generate. Worse, failing to advertise appropriately can leave an otherwise prepared business standing idle as holiday crowds wander past. Coming up with the necessary capital to prepare fully is essential.

Using supply chain finance to pay for holiday investments Supply chain finance allows businesses to get the funds they need up front, without taking out any loans. Instead of giving the business any additional capital, as with a loan, it helps them to ensure that suppliers are paid, while extending their payment terms until after the holiday season. The result is that businesses

can hold on to their existing working capital longer, and put it to other uses in the meantime. Specifically, the business works together with a financial institution like Fifo Capital to pay suppliers. The financial institution extends payment on the business’ behalf whenever a payment is due, while the business itself isn’t required to make payment to the financial institution until up to 90 days from date of invoice. This means the business can make supplier purchases of all kinds before the holidays, knowing that payment for those purchases won’t be due until 90 days after the actual supplier invoice issue date. Paying suppliers early While B2C businesses see the most direct benefits from the holiday season, their B2B suppliers need to be ready to support their clients. Like their clients, these businesses will often also need funds to boost output during this time. Fortunately, Fifo Capital’s supply chain finance allows these businesses to negotiate for earlier payment.

To receive funds before payment is actually due, the supplier simply offers a discount to the business in exchange, which the business can then choose to accept or not. If it accepts, the payment is issued by the financial institution. The business, on the other hand, can still defer its own payment to the financial institution by up to 90 days, so that both the supplier and the business benefit. Of course, supply chain finance isn’t always enough. Funding advertising campaigns and hiring and training casual workers requires significant up-front investment, after all. For this, businesses can take advantage of other financing options, such as invoice finance, to get the funding that they need. Invoice finance, for example, allows businesses to work with their financial institution to receive an advance on their outstanding revenues. You can learn about this and other financing options by getting in touch with your financial representative at Fifo Capital.

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It’s time for businesses to focus on their employer brand


As the skill shortage in the developed world continues, businesses need to change the way they hire if they want to ensure that they can compete for the best talent on the market. This means engaging in more active recruitment, and building an attractive and eye-catching employer brand to appeal to workers. By developing a strong employer brand, businesses can better catch the attention of potential candidates, attract talent from other companies, and become more competitive. Gaining this crucial edge in recruitment allows businesses to not only access more and better candidates, but also to reduce training costs, and to grow faster and more reliably by relying on the skills and experience of high-value recruits.

What makes a strong employer brand A business’ employer brand is simply the reputation that a business has as a place of work. Employer branding is the process of actively shaping that reputation through messaging and policies. A great employer brand is built through the combined efforts of a business’ leaders, and its employees. To achieve this support, though, businesses need to ensure that their culture and current workplace policies create conditions that encourage employees to support their employer branding goals.

Crafting a strong message In order to stand out from the crowd of potential employers that high-value candidates are typically faced with, businesses need to craft a concise and impactful message to catch the eye of their desired prospects. This message illustrates the fundamental culture of a company, and the relationship between employer and employee. This employee value proposition (EVP), is designed not so much to fully explain the business’ mission or values, but rather to provide a clear and concise image of what employee life is like, and what each party is expected to do for the other. Creating an EVP In order to develop a good EVP, businesses need to combine their own aspirational goals of who they are as a workplace, with the lived experience of actual employees. This means that employees should be consulted to help craft an EVP that is both inspiring, and accurate. Also, an EVP should be kept relatively short, ranging in length from just a few words, to perhaps a short statement of 150 words. This is to ensure that the target audience actually reads the entire statement, rather than moving on after scanning the first two sentences. To keep the EVP concise, businesses often rely on imagery and metaphor to communicate more with fewer words.

Involving employees in your branding efforts A strong employer brand isn’t just built through messaging, but through the grassroots efforts of current employees. Of course businesses do attempt to control their employer brand entirely through advertising and messaging that reflect their aspirational goals rather than their employees’ lived workplace experience. This is dangerous, because contradictory accounts by current employees, often easily accessible via online employer-review portals like Glassdoor, can severely undermine these efforts. Moreover, candidates who are initially attracted by such messaging may quickly become disillusioned, leading to poor morale and increased turnover. Instead, businesses should work to incorporate their workforce into their branding efforts. Before that can happen, though, businesses need to make sure that the employment experience they offer actually inspires support from their workers. Find and troubleshoot cultural problems The first step in identifying and addressing cultural problems within the company is simply to open lines of communication with employees. Consult with workers about what they like most about coming to work, and how their work-lives could be improved. Once armed with the appropriate knowledge, changes can be made to make sure that your business will actually be the type of workplace that your branding efforts will describe. Incentivise employees to aid in recruitment Employees are a powerful networking tool for an employer. Workers who love their job will happily recommend their employer to friends and acquaintances. To reliably boost this effect further, businesses can provide financial incentives to employees responsible for referring new hires, or offer them recognition for their efforts in another way. Additionally, potential recruits can be referred by recruiters to speak privately with current employees about their experience in the name of transparency, and to further emphasise the role that employee engagement plays in the business. Finding the talent that businesses need is becoming more difficult year by year, as populations age and the demand for specialised talent increases. Because of this, it’s imperative for businesses to find ways to attract more top quality talent. Besides simply helping them to get the workers they need to grow, this translates to shorter training periods, and more qualified workers. Most importantly, because these workers are in short supply, every trained and experienced employee a business can recruit is one that competitors no longer have access to.

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“ Great achievers are driven not so much by the pursuit of success but by the fear of failure” Larry Ellison

Larry Ellison: Creating the 21st century economy While Larry Ellison’s name may sound familiar to many, it doesn’t come with the kind of recognition enjoyed by Bill Gates, Steve Jobs, Elon Musk or other top 20th and 21st century tech entrepreneurs. Despite this, Ellison, currently the 7th richest person in the world, played an important role in fundamentally transforming how businesses operate in the modern world. creating consumer products.


This means that, while everyone has seen an Oracle logo at some point (if only at work) Ellison’s business activities have rarely made for exciting headlines for the general public. Since its founding, Oracle Corporation has pioneered database technology, cloud computing, and enterprise resource planning (ERP), customer relationship management (CRM), human capital management (HCL), and supply chain management (SCM) software.

The disadvantages necessary for success When asked about the secret to his success, Ellison likes to say that he had “all the disadvantages necessary for success.” Ellison grew up on the south side of Chicago in an economically declining neighborhood. According to him, this provided him with the personal drive to pursue a better life, which ultimately led him to move to California. After dropping out of college, he pursued his growing passion for programming, which he then turned from a part-time job into a career. Within a few years, this led him to a position at Ampex, where he worked on a database named “Oracle” for the CIA. After leaving Ampex, he launched Software Development Laboratories in 1977, which would eventually become Oracle.

Computing for the 21st century Oracle Corporation was a pioneer in database technology from its inception, and it has never backed away from the cutting edge since. In layman’s terms, Oracle transformed how big businesses capture and manage data, and how they are able to use that data to

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optimise their operations and their supply chains. Along with a few of its competitors, Oracle effectively invented the modern big data driven economy. Over time, they improved this technology and built upon it to pioneer the development of cloud computing, software-as-a-service (SaaS), and secure cloud database technology. Oracle’s innovative philosophy In the past 4 decades, Oracle has dominated and bought up its smaller competitors, and held its ground against IBM and Microsoft. Today, Oracle is competing against Amazon to dominate cloud database technology.

The secret to the company’s success, according to Ellison, is non-stop innovation, with no room for complacency. This approach ensures that Oracle always has the world’s best technology, with an innovative lead that their nearest competitors can never hope to close. More than simply helping to establish and maintain the company’s dominance, this approach has also helped to shape and launch many of Silicon Valley’s most successful entrepreneurs.


Oracle is an incubator for entrepreneurs Oracle has a notable pattern of creating billionaire entrepreneurs. Marc Benioff, Tony Hsieh, Dave DeWalt, Thomas Siebel and many other household names in California’s tech sector launched their careers at Oracle before moving on to found or lead extremely successful businesses themselves. This shows perfectly how Oracle’s push for non-stop innovation and endless improvement has kept it at the top of its industry for decades, and how learning from this type of attitude can empower others to succeed.

What we can learn Oracle isn’t just any major tech company, it’s an enormous enterprise that has stood the test of time, maintaining its dominant position as an industry leader since its founding in 1977. Throughout that time, it has continued to develop and implement new technologies, effectively acting as the innovative disruptor in the industry it already dominated. For other entrepreneurs, there is an important lesson here. Attitude is everything Instead of just consolidating its position in its industry and fending off potential rivals, Oracle has also continuously improved, reinvented, and diversified its products over time.

At the core of this philosophy is the drive to keep moving forward, to compete, and to win even when there is no competitor to beat. This powerful drive and urgency for progress is what made, and continues to make Larry Ellison so successful. Witnessing and participating in this is what has given so many of Ellison’s employees, particularly those who worked most closely with him, the drive to become breathtakingly successful entrepreneurs themselves. For most entrepreneurs, success just means creating a profitable business. For Ellison, it meant taking charge of an entire industry. In doing so, he didn’t just become wealthy or build a business empire. He fundamentally changed the role of data in business, and how big businesses use it to manage their resources. This more comprehensive and ambitious approach allowed him to amass a fortune that overshadowed even other billionaire entrepreneurs by an order of magnitude.

Trust Fifo Capital to sort your seasonal cash flows A standby working capital facility ready to access when you need it most.

Simple preapproved facility sitting alongside existing finance arrangements. • Pay only if you use it • Fast and simple to activate • Peace of mind for unexpected cash flow interruptions • Small and large exposures • Treated on a case by case basis, and tailored to your needs

Contact Fifo Capital today for more information. 1300 852 556

Off balance sheet financing allows businesses to manage cash flow on their terms Money is a constant headache for business owners, regardless of how successful your business is. That’s because business is competitive, and nobody can afford to let working capital sit around unused when it could be driving growth. Excess funds can always be used to expand production, expand marketing efforts, or develop new and more innovative products. This means that cash flow issues, whether they arrive in the form of late payments, customer attrition, or unexpected expenses, will always arrive at a bad time. By the time a business needs to come up with additional cash, there usually isn’t time to submit a loan application, which can take weeks or months to process. While a traditional business loan makes perfect sense for funding a growth plan or other deliberate project, emergency short-term financing is better handled using off-balance sheet (OBS) financing. OBS tools like invoice financing and supply chain finance allow you to take the stress out of everyday cash flow management by getting you the cash you need quickly and easily. More importantly, they can also boost growth, while keeping your business’ balance sheet clean. 13

What is off-balance sheet financing? OBS financing is technically any kind of financing that doesn’t need to be listed on a balance sheet. All this means is that it doesn’t create any new liabilities. The best way to do this is to liquefy an existing asset, or to work with a financial institution to help defer payments on an existing liability. This allows businesses to cover costs without borrowing any funds. Understanding why OBS financing sometimes gets bad press As with lending, some forms of OBS financing are more reputable, and better for your business than others. For example, in the famous Enron scandal, the company hid its liabilities by creating partnerships, which borrowed funds on the company’s behalf. While that’s technically a type of OBS financing, it’s also clearly unwise in the same way that borrowing from a loan shark would be. Rather actually not taking on any liabilities, these kinds of unethical behaviours involve hiding liabilities that actually do exist.

payment to a supplier on the business’ behalf. That same payment, now payable to the financier, then becomes due 90 days later. In this way, the payment on an existing liability is simply deferred by 90 days. The funds that would have been used for that payment can then be repurposed to deal with other costs during that time frame.

Using OBS financing to manage cash flow and boost growth Invoice financing and supply chain finance are two extremely useful types of OBS financing that independently allow businesses to cover short-term costs. Combined, they can be used to fully finance a business’ operations, greatly reducing the amount of dedicated working capital your business needs to invest in itself to sustain production. Invoice financing To finance an invoice, a business exchanges an outstanding invoice to a financier for an up front payment, effectively getting an advance on a payment that it is already owed by a client. The financier then collects the payment from the client, before issuing any remaining funds to the business. In this way, the business can convert its non-liquid asset (the invoice) into cash that it can use to deal with its immediate needs. Supply chain finance Another way to free up working capital is to use supply chain finance, in which a financier issues an outstanding

Either of these financing tools can be applied to free up short term funds to manage a cash flow issue, but together they can be used to finance the entire production process. Instead of investing existing working capital into supplies for production, businesses can instead use supply chain finance to defer supplier payments by up to 90 days. During that time, supplies can be processed into products and sold, and the resulting revenues can then be used for the original supplier payments. Of course, revenues can’t always be collected at the point of sale. To avoid lengthy customer payment terms, the business can then simply use invoice finance to collect revenues immediately, ensuring that funds are always on hand when supplier payments are due. This allows businesses to free up the working capital that was previously tied up in their cash conversion cycle. Those funds can then be put to better use driving further growth for the business.

Off-balance sheet financing offers a variety of invaluable tools that allows businesses to manage cash flow on their own terms. This allows business owners to focus more of their time and capital on growth, while also making their business more attractive to investors and lenders. Fifo Capital Headway


Manage work-life balance to boost employee retention The issue of employee retention is becoming increasingly important for businesses in Australia, New Zealand, and the rest of the developed world.


Typical working conditions for employees have evolved over the past several decades to become more punishing for workers, even as the number of skilled workers relative to available jobs has declined. For businesses who rely on these workers, recruiting and training new personnel is time consuming and expensive, and can limit their ability to grow and to operate at their full potential. The most important way for businesses to manage these costs, besides improving recruitment and onboarding methods, is to reduce the rate of employee turnover. To do this, it’s important to understand why employees quit their jobs, and what to do about it.

One leading cause of employee attrition is also a symptom of the skill shortage, and evolving working conditions: the lack of work-life balance, and the effects this has on people’s relationships, health, and ability to manage other responsibilities. Work life balance is becoming more difficult for workers and businesses Improvements in technology over the past two decades, globalisation, and the skill shortage itself are making it more difficult than ever for employees to balance their work and private lives. Email and high speed internet mean that many employees are expected to be available at all hours, and to take work home with them as needed. This is particularly problematic as businesses become more globalised, and employees find themselves getting up in the middle

of the night to digitally join meetings with far-away business partners. Not only are workers increasingly losing access to neat and predictable 9 to 5 workdays, those workdays are also becoming much longer. Most Australians work at least 5 hours of overtime per week, with approximately 28 per cent working 10 or more hours of overtime. The resulting work schedules are both bloated and irregular, leaving employees overworked, stressed, and unable to make time for their personal lives.

Fight to prevent excessive overtime A limited amount of paid overtime has always been the norm in many industries, but the current situation is relatively new. Too much overtime, particularly unpaid overtime, can overtax employees mentally and physically, and ultimately reduce productivity. This, in turn, can prompt businesses to push employees for even more of their time. Ultimately, workers will become resentful of their working conditions, and leave. In order to avoid this, businesses need to limit the amount of time employees spend working, and ensure that their workloads can actually be managed without overtime. After all, telling an employee not to work excessive hours is not going to be effective if the employee is still held responsible for an excessive workload. Instead, businesses need to ensure that they have enough personnel to keep the business running on a normal schedule. That, in turn, is easiest when worker attrition is low.

Making work more flexible Irregular schedules are difficult for employees to plan around, so long as they don’t control those schedules. Flexible working solves this problem by giving workers a measure of control over when and how they meet their professional responsibilities. This allows them to better tackle

their other responsibilities, and to help carve out the personal time they need to manage stress. Flexible work isn’t just for women Most often, flexible working arrangements are seen as a way for parents, specifically mothers, to care for children while working. This has damagingly typecast flexible work, and undermined its usefulness. Businesses who view flexible work in this way often restrict access to this type of working arrangement for fathers, or for employees who have other reasons to gain greater control over their work lives. By extending flexible work options to fathers, for example, businesses can help to keep more skilled women in the workforce, which makes recruitment easier for everyone. This is because it’s much easier for two parents with flexible work arrangements to manage their careers and childcare together, than to place the entire burden on one parent—the mother. Flexible work isn’t just about making time for children, either. Rather, it’s a way to help workers deal with modern stressors, and to provide them with the control they need over their lives. An employee who is expected to rise at 2:00 in the morning for a meeting needs a way to reclaim that time later, whether that means coming to work later the next day, or moving their working hours (or location) around in another way. This, along with properly controlled working hours, ensures that employees can still get the personal time they need to stay healthy and productive, and to deal with their other responsibilities despite the added and irregular responsibilities associated with modern work.

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It’s time for every business to imple Cybersecurity is quickly becoming an issue that businesses across all industries are forced to contend with. While most online businesses, financial institutions, tech companies, and large corporations have systems and policies to protect their sensitive data, these often aren’t sufficient to cope with more sophisticated modern cybersecurity threats. Worse yet, many other businesses still don’t take cybersecurity seriously, and don’t take any meaningful steps to prevent potential threats. Nearly all businesses in the developed world are at some risk of falling victim to cybercrime, and Australia and New Zealand are no exception. This is because virtually all businesses store sensitive information, and do so on improperly secured systems that are connected to the internet.

Understanding the potential cost of a cyberattack Businesses often under-prepare for cyber threats because they seem ethereal and somehow unreal. They also underestimate the potential damage of a data breach, because they underestimate the value of their data. If they’re properly insured, they may even assume that they’ll simply be reimbursed for any potential damages. This often isn’t how things work out, though, because cyber insurance doesn’t usually cover losses due to mistakes made by the business or its employees. The global average cost of a data breach is nearly $4 million, but that figure is inflated due to the sheer size of some major breaches. A more useful figure shows that each record stolen comes with an average cost of approximately $150. Larger data breaches involve hundreds of thousands, or millions of such records, while a very small business might only lose a few. Most businesses, though, have far more sensitive data than they realise. Criminals can profit from any kind of breach, and almost any kind of data The most obvious goal for a criminal might be to hold a system hostage with ransomware, or to steal credit card data, but cybercrime isn’t limited to simple fraud or extortion. Names, birth dates, contact information, and other personal information can be used for identity theft, or can simply be sold to other parties as part of a larger criminal supply chain. For example, a 21 year-old Australian was arrested on September 17 for using stolen personal data to funnel millions of dollars out of the superannuation and ASX sharetrading accounts of multiple victims as part of an international cybercrime syndicate. The data used was purchased from other cybercriminals on the dark web. At first glance, the idea that an attack might target 17

customers, rather than the business itself, might seem reassuring to some. However, it’s important to consider the long term consequences of being a business that can’t protect its customers’ data.

Good cybersecurity is about building trust Businesses rely on data. They need customer information to be able to market their products and services effectively, and to store even more sensitive information, such as credit card numbers, in order to manage returns or to process recurring payments. By neglecting the responsibility of protecting that data, businesses also risk losing the customers who supply both it and the revenues they rely on. Consumers are becoming increasingly aware of the risks associated with sharing any kind of personal data, and are wary of trusting their information to businesses that are considered “unsafe”. According to a study by the Ponemon institute, 36 per cent of the cost of any data breach comes from the loss of trust in the business.

How to take control of your business’ cybersecurity The first step in creating an effective cybersecurity strategy is to identify all potential vulnerabilities. While large corporations might maintain their own IT security professionals, most businesses will do this with the help of a professional, who will conduct a comprehensive IT security audit for their business, and provide them with recommendations on how to protect themselves going forward. Often this means adopting both technological and procedural tools to protect data. For example, high quality software might be helpful in keeping out digital intruders, but it won’t work if a cybercriminal can manipulate an employee into giving them access, whether that’s by tricking them into clicking on a dodgy link, or by personally conning them into telling them a password. To secure their data, the business needs to protect themselves from both sophisticated digital attacks, and more traditional scams. Unfortunately, there is no way to make any business 100 percent secure. However, businesses can make themselves into difficult targets, and they can mitigate the potential damage of any particular breach. For example, a simple way to limit the scope of any potential attack is to simply purge unused data regularly, rather than allowing years of customer data to accumulate over time. By recognising the risks posed by cybercriminals to both themselves and their customers, businesses can better mitigate and head off any potential losses.

lement a cybersecurity strategy By neglecting the responsibility of protecting that data, businesses also risk losing the customers who supply both it and the revenues they rely on.

Fifo Capital Headway



“I was obsessed with this idea that these things that you collect, they just say so much about who you are. I can't say it came from hard-nosed business analysis... It was just something I really want to see built.” Ben Silbermann

Ben Silbermann: A social network for shoppers and doers Pinterest was originally billed as a visual “catalogue of ideas”, designed to allow people to discover and share what they found on the Internet. In practice, the social platform enabled us to organise and share not just ideas, but also the products that we found. Shopping has always been a social activity. We like to have people around us to provide feedback and to help us make future purchasing decisions. That’s why it’s relatively rare to find lone shoppers wandering around the local shopping mall. Similarly, when we visit each others’ homes, we admire what they have, and use what we see as an inspiration for our own future purchases. Ben Silbermann recognised this, and combined the idea of social shopping with an increasingly consumer-friendly Internet.


Today, Silbermann has a personal net worth of over $1.5 billion, and his company, Pinterest, is valued at $12.3 billion. Pinterest has 291 million active users, and generates more than $1.5 billion dollars in revenue per year.

Early career Silbermann attended MIT and Yale before launching his career at Google’s online advertising group. While the experience he gained there was important, he moved on relatively quickly in pursuit of his own entrepreneurial ambitions. He, along with his friend and co-founder Paul Sciarra, began developing iPhone apps. Their first attempt, Tote, failed to gain traction, leading them to design a pinboard app in 2009.

Developing Pinterest Like Tote, Pinterest also failed to catch a significant amount of user interest. However, Silbermann reportedly felt too embarrassed to admit defeat again, and decided to continue working on it. In March 2010, the site launched as a closed beta, building up a user base of just 10,000 people within the first 9 months. In hopes of improving the app, Silbermann personally got into contact with over 5,000 of these users, going so far as to share his personal phone number, and sometimes arranging personal face-to-face meetings. In the end, his efforts paid off.

consumer products. Sponsored pins fit seamlessly into regular product content, and other advertisements can provide products that perfectly complement other content, such as DIY projects. Unlike most other businesses, Pinterest can incorporate ads in a way that doesn’t disrupt the user’s experience, but rather adds value.

Building an optimised user base Approximately two-thirds of Pinterest’s user base is made up of women, and more than 90 per cent of all pins are made by women. It’s unclear whether this was Silbermann

that disproportionately appeals to female users can expect significantly more referral traffic to advertisers. Combined with the presentation of those ads, it’s no surprise that Pinterest is one of the most successful advertising platforms on the web today.

What we can learn While Silbermann and his cofounders started with a relatively simple pinboard, the product they ultimately created optimises both the experience of users, and utility for the advertisers who provide their revenues. It’s the combination of both that has made Pinterest so successful. Silbermann didn’t just blunder into a billion-dollar idea, though. The value of persistence The key to achieving this success was not just blind luck, but Silbermann’s relentless effort to improve the product. Instead of expecting his original idea to make him successful, Silbermann listened and incorporated the ideas of thousands of users over the course of years. Silbermann’s willingness to reexamine and improve his app, together with his

In 2011, Pinterest launched for iPad and non-Apple mobile users, and began to grow in earnest. By the end of the year, it was already one of the world’s top 10 social networks, with more than 11 million visits per week. In 2012, the social network began accepting new users without an invitation, and began to grow explosively.

A social network designed to be monetised Pinterest isn’t just a platform for sharing products, but it certainly is a platform that’s uniquely well adapted for monetisation. Users might also share DIY projects, travel aspirations, information, recipes, and other ideas with each other, but many of these are directly related to

and his co-founders’ intention from the start, but the business has leaned into this aspect of its business since. As it turns out, a female-dominated user base is a feature, not a bug. Studies show that women make approximately 70-80 per cent of all consumer purchasing decisions. In light of this, a platform

unwillingness to give up, ultimately allowed him to turn it into a household name. The difference between only moderately successful startups, and fast-growing giants like Pinterest can often be traced to something as simple as a business owner’s persistence in creating something perfect.

Fifo Capital Headway


Supply chain and invoice finance provide businesses with critical growth options

Before it can sell a product, a business first needs labour, supplies, work space, tools, energy, and all of the other small things that make that business run. In short, it costs money to make more money. Initially, businesses normally deal with this issue by financing their operations with a bank loan, their personal savings, or investor support. Once a business is up and running, however, every further attempt to grow requires a similar investment. Growth opportunities come in many different flavours; some are sudden and require a fast response, while others are entirely predictable, or even strategically engineered by the business. In all of these cases, though, businesses need to find a way to fund those growth efforts. At this stage, finding additional investors can become more difficult, and bank loans might either be 21

inaccessible, or simply take too long to process. Instead, businesses rely on alternative tools such as supply chain and invoice finance to come up with the capital they need without taking on any additional liabilities.

Off-balance sheet financing allows businesses to fund themselves Rather than taking funds from an outside source, off-balance sheet financing allows businesses to finance themselves. The best ways to do this is, instead of taking on debt, to modify the times at which payments are issued with supply chain finance, and when revenues are received with invoice finance. Invoice finance allows a business to get paid as soon as an invoice is issued, rather than when the associated payment is actually due. This is done by trading the invoice to

Off-balance sheet tools like invoice finance and supply chain finance, on the other hand, provide businesses with the funds they need right away, and without impacting their balance sheets.

effective financing tool in this type of situation. Moreover, taking on new liabilities for short term gain can lead to a messy balance sheet, which can impact the business’ ability to finance future growth through traditional means. Off-balance sheet tools like invoice finance and supply chain finance, on the other hand, provide businesses with the funds they need right away, and without impacting their balance sheets.

a financier in exchange for an up-front payment. The financial institution then collects the payment on its own, after which any remaining funds are paid out. Supply chain finance, on the other hand, works by extending payment terms. Rather than paying directly, a business’ supplier payments are handled by a third party financier, who then extends a longer payment term of up to 90 days to the business. Used in conjunction, this allows businesses to fund short term growth efforts without any additional investment of capital.

Making the most of growth opportunities Supply chain finance allows a business to finance payments to suppliers and workers 90 days before any actual payment needs to be made. This gives them the critical time they need to begin generating revenue from a growth opportunity. Of course, 90

days isn’t always enough time for this, considering that a large client might take 90 days just to pay an outstanding invoice. This, though, is where invoice finance comes in. Instead of waiting for a client to pay, the business can simply finance its invoice as soon as it is issued. As long as the product or service can be brought to market and sold within 90 days of the date that a respective supplier payment is due, it can be financed using this method.

Take advantage of short term opportunities When a growth opportunity, such as an unexpectedly large client, comes knocking, businesses need to act fast. In order to expand their operations to accommodate the additional work, they need to immediately purchase supplies, and potentially hire additional workers. Traditional loans simply take too long to be an

Boost capacity for seasonal work Of course, growth opportunities don’t always have to be sudden and unexpected. Many seasonal opportunities, such as major holidays or literal seasons, represent predictable fluctuations in consumer demand. In order to take full advantage of a seasonal boost, businesses need to be able to invest in themselves. Some retailers, for example, generate the bulk of their revenues during the holiday season. After a rough summer, though, businesses often don’t have the funds to make the most of the holiday rush. Besides these short term options, businesses can also use these tools to fully finance their entire regular production process. In effect, the business can ensure that supplier payments are not due until after the revenues that those supplies generated are collected. This allows businesses to recover the funds that they were previously using to finance their operations, and to redirect it toward funding growth. Fifo Capital Headway


Improve your recruitment strategy to boost growth


In order to support steady growth, businesses need funding, customers, resources, and labour. Most often, businesses still struggle with getting the funds they need to support a long-term growth strategy. For many businesses, particularly those reliant on highly skilled workers, this is no longer the most urgent issue. With developed countries around the world facing an escalating skill shortage, finding and retaining qualified workers is becoming increasingly important for businesses to manage proactively. A great recruitment strategy does more than simply bring in applicants. Rather, it helps businesses to attract interest from potential candidates, to streamline the recruitment process, and to better retain new hires. This allows them to hire better candidates more efficiently, while also reducing the costs involved in hiring and training new workers.

Communicate effectively to filter candidates up front Filtering through hundreds of applicants in hopes of finding a few qualified candidates is both frustrating and time consuming. Often, this is the result of a poor job description that doesn’t effectively communicate who the business is looking for. It’s tempting, in some cases, to include all of the potential responsibilities that might be required of an employee, or to create a job description so vague that the new hire could be put to a variety of uses. This is not, however, a good way to attract candidates with specific skills and qualifications. A great job listing should be clear and concise, from the job title to the requirements. Required skills should be listed in order of importance, and the description of the responsibilities of the role should be specific without being pedantic. This allows candidates to quickly scan the listing to see if they are a good fit, without being distracted or confused by vague language or unnecessary details.

Interview fewer candidates in greater depth Businesses that operate in industries with a high demand for skilled labour need to move quickly to get top quality talent. This means that long recruitment processes that involve many rounds of interviews are going to be counterproductive. Slowly whittling down a long list of candidates through a process of elimination is only an option for businesses who are working to fill a very highvalue position, with many eager applicants. In a high-demand labour market, highly skilled workers can expect to receive multiple offers from competing businesses. By the time an indecisive employer offers

By improving their onboarding processes, businesses can reduce turnover, and cut down on the overall cost of hiring and training new workers. More importantly, businesses can use their new hires to grow their business, rather than simply replacing lost employees.

a fourth interview, the best candidates involved in the process will have already been hired by competitors. Instead, businesses need to choose just a few promising candidates from the long list of applicants to interview in depth, and move from the initial interview to an offer with as few intermediary steps as possible.

The onboarding process takes longer than you think Over 60 per cent of all turnover is the result of employees leaving within their first year with a new employer. This can quickly get expensive for businesses. Once a new hire is made, it can take weeks or months for them to begin providing a net benefit to their new employer. Learning how to operate in the business’ structure, to use new software, and to become familiar with new responsibilities and coworkers takes time and resources. Additionally, it places a burden on other employees, who need to devote a portion of their time and energy to integrate and train the new hire. By improving their onboarding processes, businesses can reduce turnover, and cut down on the overall cost of hiring and training new workers. More importantly, businesses can use their new hires to grow their business, rather than simply replacing lost employees. The way to do that is to acknowledge that onboarding is a long process that goes far beyond orienting and training a new employee in their first few weeks. Instead, businesses need to work to integrate employees into the business’ culture throughout their first year. This goes far beyond helping the new hire to manage their responsibilities. It means also helping them to establish a good long term working relationship with their peers and their superiors. Businesses often avoid creating an in-depth onboarding process like this because it looks costly on paper. However, the unplanned costs associated with high employee turnover are much higher than a robust recruitment and onboarding strategy. By investing the resources and effort to hire more efficiently and to better retain workers up front, businesses can ultimately save money. That money can then be reinvested into the business to drive further growth.

Fifo Capital Headway


When expertise counts Not all business finance needs can be solved with vanilla solutions. When an expert sounding-board is needed, Fifo Capital can help: • One-on-one consultancy (complimentary) with a business finance specialist • Fast response and approval of finance (24 hours) to meet changing business needs • Consultancy in partnership with your financial advisers and with banking facilities • Solution-solvers for short term needs, and long term sustainability. When your business finance needs demand expert thinking and purpose-fit solutions, call Fifo Capital on 1300 852 556

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