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QUARTER 2 2016

Thinking ahead for success

Tackle tight margins with value based pricing 5 tips for managing FX risk Social media for business Security in finance: a practical guide Start-up Q&A: making a success of the first year

“The critical ingredient is getting off your butt and doing something. It’s as simple as that. A lot of people have ideas, but there are few who decide to do something about them now. Not tomorrow. Not next week. But today.” Nolan Bushnell, Atari founder

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 and Australia and provided business owners over $850 million growth capital finance.


Fifo Capital is a leading provider of business finance solutions,


One thing in business is true regardless of market conditions, media commentary, or how the economy is performing... and that is, run your own race and you’ll have a far better chance of success than constantly looking over your shoulder. It’s the only race to be in.

The increasing pace of the world means businesses have to continually evolve to stay relevant.

It’s common to get side-tracked by broad sweeping commentary about business expectations and economic performance – good or bad. And while any smart business owner needs to factor in potential shifts in their market, time-and-time again we see that those who focus on their own business rather than the environment around them, are the ones that achieve. There are plenty of success stories that opened their doors wider during the GFC – a time that if you were to rule your life by media commentary and economic analysis, would have seemed highly problematic for the launch a new venture. Those businesses that didn’t rest on negatives as a reason not to start, expand or try new directions, are better for it today.

At the end of the day, all market conditions could be perfect for a particular product or service, but ultimate success comes down to tenacity, perseverance and commitment, which any seasoned business owner would attest to. And the role of these qualities is only growing in importance. The increasing pace of the business world spurred on by new technology and the need for immediacy means businesses have to continually evolve to stay relevant. Business is fuelled by people. When business owners have a clear, articulated vision on what they want to achieve and then set about running their own race irrespective of external influences, it is that much more likely success will follow. After all, isn’t doing it our own way one of the reasons we all start out in the first place? Nigel Thomson Fifo Capital Founder and CEO


Reduce stress for better business


Time to get a thermometer?


Get real value from virtual teams


Automation: Ready for the future


5 tips for managing FX risk


Social media for business – A beginners guide


Start-up Q&A: making a success of the first year


What they say, means business


Security in finance: a practical guide


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


Tackle tight margins with value based pricing

Business world

Tackle tight margins with value based pricing Value based pricing offers an opportunity to change the conversation that a business has with its customers. By moving from price to benefits, a business can increase the amount it charges for its products or services. This is a customer-centric approach that can significantly change the way that businesses price their offering.

Value-based pricing focuses on the benefit that the business is delivering to the customer. It takes a conversation which could have been about a price or cost and makes it about the importance of investment.


Pricing problems It’s not uncommon for businesses to underprice themselves in a bid to be competitive, or because they have based their pricing on their costs and underestimated their required margins. This can be a particular struggle in the service industry, especially where a business comprises a single operator charging an hourly rate. It can also be a challenge where a business offers a product with enhanced features but finds itself unable to charge a premium because of the low prices of the competition. Value based pricing offers a potential solution to tight margins and costfocused customers.

What is value based pricing? Value based pricing is a two stage process. Firstly the product or service offering is designed to fulfil the needs of the customer and deliver a tangible benefit. Secondly the pricing of the offering is set based on the value that the customer places on the fulfilment of these needs. Developing value-based pricing is at it’s heart a research solution: it requires an understanding of the needs of a group of customers and the value that they attribute to having those needs fulfilled. As such it usually requires upfront research investment, causing many businesses to shy away from it and put it in the ‘too hard’ or ‘too expensive’ basket. It’s important to understand who potential customers are, and remember that any insights generated may still vary by customer and by market. The most effective value based pricing often aligns with segmentation to recognise the value that different types of customers attribute to different needs being fulfilled.

What is the benefit? Without a value-based product or service offering, the purchase or business decision is often focused on price, i.e. the cost to the customer. And because of the transparent nature of most pricing, if a customer is comparing two costs it is all too common that they will choose the lower one. Or perhaps they will challenge the higher price and question where the justification is for it being charged. Value-based pricing focuses on the benefit that the business is delivering to the customer. It takes a conversation which could have been about a price or cost and makes it about the importance of investment. This links the service directly with the end benefit to the customer. It

also makes it possible to charge a much higher price than merely the cost of getting the job done.

Tailored pricing solutions Another important benefit of value-based pricing is that it can be developed in partnership with the customer and directly tailored to their situation. If there is a chance that customers are likely to have different levels of needs then a menu can be developed. This can offer different benefits to the customer, and therefore different tiers of cost: each attributed to the value that they will generate for the customer. In this situation customers can choose to invest more or less, and get more or less of the benefits that the service or product will generate.

Wider benefit Value based pricing requires a strong understanding of the customer’s needs, and the value they would place on having those needs fulfilled. It is not just a pathway to correcting a business’s pricing strategy, it also allows businesses to get more involved with matching their product to their target audience.

This means that products and services are developed to a higher standard to ensure that customer’s needs are being satisfied. The process of researching the customer’s needs can lead to new product and service enhancements or development opportunities. Product and service attributes that do not add value can also be removed. Because value-based pricing requires an understanding of what customers need, it will quickly become apparent if part of a product offering serves no purpose other than being a good idea that customers will not value or pay for. The end result? Value based pricing allows businesses to charge a premium for their ability to deliver tangible benefits to their customer. Their enhanced understanding of the customer’s needs allows them to build stronger relationships, encouraging repeat business and referrals. And because the business deals in benefits and value rather than product and cost, they are competitively more difficult to match.

The end result? Value based pricing allows businesses to charge a premium for their ability to deliver tangible benefits to their customer.

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If you’ve ever found yourself struggling with the worry of running a business, then you’re probably well acquainted with stress. And running a business is not just stressful, it’s also a breeding ground for anxiety. If you’re feeling stressed and anxious, is it any wonder you’re struggling to achieve the results you need?

Reduce stress for better business

A little dose of stress can provide the fire in your belly that helps you to deliver and achieve goals, but too much stress can simply result in a burn-out. So what’s the trick to managing the balance of running a business and dealing with stress, without losing control?

Be upfront in addressing worries Worry and stress go hand in hand. Undefined worry can often appear to be bigger and more concerning than a worry that has been clearly described and explored. Sometimes the breadth of worries that occur to us can become a greater source of stress in themselves. A useful exercise for anyone who’s finding themselves overwhelmed with the worry of doing business is to catalogue their worries by writing them down. It should then be possible to review the list and be clear on what is worth worrying about and what is not. If something is a valid cause for concern it can be converted into action. It’s not uncommon for past problems to be a source of stress, even if they are no longer impacting the business. Countering negative thoughts about what has happened previously with positive thoughts about the important learnings that have been received is a good way to quash this worry. An important context to understanding the validity of worries is provided by a robust business and financial plan. This makes it possible to set clear business priorities. With defined priorities it’s possible to

prioritise worries and understand if they have the potential to impact business goals. If they don’t then they might need to be parked while more important things are dealt with.

Take action Writing down a list of worries can in itself serve to counter rising stress levels. But it’s also important to proactively address the worries in order to ensure they don’t continue to convert into stress. It’s possible to neutralise problems by first categorising the potential issue – financial, competitive, market etc. – and then addressing each worry by deciding whether it is justified and if so, creating an action plan to address it. It’s also important to prioritise worries based on the immediacy of the impact. For example, a worry about managing a tax bill at the end of the financial year should be given immediate focus, while a worry about how to replace a piece of machinery when it wears out in 10 years is less urgent. Once the concerns that could impact the business have been outlined and prioritised, its worth creating a project plan to allow any required actions to be managed appropriately. It’s key that dealing with potential issues does not impact the day-today running and management of the business.


feel their stress has increased over the past 5 years.

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Worries that relate to finance Financial issues that are causing worry should be carefully reviewed. If the source of worry is an immediate threat to the business then it should be prioritised and addressed as soon as possible. With any worry that threatens the financial stability of a business it’s wise to seek an external perspective. A good source of feedback on potential solutions is a business mentor, but it’s also wise to consult with the business’s main lender or financial adviser. Where stress is linked to cash flow, it’s always possible to contact a Fifo Capital Business Partner. Business Partners have years of experience helping businesses get through their cash flow problems with smart solutions. They work in partnership with companies to help them resolve their funding worries.

Did you know

Job stress

is more strongly associated with health complaints than financial or family problems.


Some sources of worry are outside a business’s control. For example, changes in the funding position of the bank or customers who are unable to pay their bills: situations such as these can create a cash flow emergency and are often the cause of ongoing worry. The good news is that Fifo Capital offers the ability to set up a finance standby facility, meaning businesses can prepare themselves for ‘what if’ and manage some of the worry of maintaining a healthy cash flow position.

Worrying about time Being in control creates a feeling of well-being and conversely losing control often leads to feelings of stress. That’s probably why business people feel calmer when their working environment is organised and their filing is working at top efficiency. Stress attacks control. The office becomes messy, the filing never gets done, and there’s an ongoing feeling that there are never enough hours in the day. No surprise that working hours increase, weekends become two more workdays, and the stress levels continue to escalate. That’s when some smart time management tools can make a big difference. One of the biggest challenges is that as stress levels increase it becomes more and more difficult to be productive. Productivity needs a refreshed mind that has enjoyed time switched off from the issues of business. This in combination with clear plans and the ability to focus on delivering them, leads to good productivity. But stress can undermine all of this. Worry can often be rooted in being short of time and big on tasks to get done. It’s possible to get ahead of this concern by tightly managing a to-do list and adopting some smart scheduling tricks. Scheduling ensures that progress through tasks is apparent: this has a can have a huge positive impact on stress levels.

Development or external worries All worries need to be carefully reviewed to see if they should be given attention. If a worry warrants further investigation then business owners can create an action plan with clear deliverables that will allow them to address the concern. The aim should be to address or neutralise the issue. An example of this would be if a business were concerned about a new entrant coming into the market. It could be possible to explore some scenarios to work out how they could react if a new entrant did arrive. These scenarios may lead them to identify a need to build a customer loyalty plan, or diversify their product line. The important thing is that they would create a plan and implement actions to protect their position. Having those actions in place would move them from a position of worrying about a change to being prepared for it. Time management techniques allow business owners to take control of actions that need to be undertaken to protect and grow their business. Reviewed in the context of business and financial plans these actions can be confirmed as driving towards the future goals of the company. This also ensures that resources are not being misdirected due to minor worries that may never materialise. Worry is at the root of a lot of stress and can easily flourish in a company if action is not taken to deal with it. Writing out all the worries that occupy a business owner allows them to be addressed and dealt with before stress becomes a negative impact on productivity and progress. Building a context to any concerns in a robust business plan ensures that the business continues to focus on its strategic and financial goals.

Increase sales when offering customer payment plans Receive the sale amount upfront, while giving customers time to pay.

Fifo Flexi-Pay: 3 to 12 month extended payment terms. Purpose-fit for businesses that: • Want to grow or attract new customers • Provide large, one-off sales to their customers • Would like to increase sales to their existing customer-base.

Contact Fifo Capital today for more information. 1300 852 556


Time to get the thermometer? Completing your annual financial review will give you the opportunity to capture valuable insights about the state of your business, your market and the economy in general.


An annual business health check is a worthwhile investment in time and energy. Analysing your position creates the opportunity to review your performance; celebrate successes or targets achieved; and realign yourself where you may have gone off track. Here are five steps to completing an annual review of your business.


Review your financial goals Whatever the financial targets were that you set for the year, this is your opportunity to review them. Take some time to assess how you performed and note down what worked well and what didn’t. You can use your successes and failures to support an understanding of how to be even better next year.


Use any and all information you can get hold of to make some predictions about how your market could evolve over the next five years, and how your business will need to evolve to make the most of it.

Watch the market An important element of an annual business review is taking stock of your position in the market and reviewing any external factors that may change in the months ahead. A good starting point is to consider how your market has changed over the previous 12 months. Has the market undergone growth or is it in decline? Take a look at the factors that have influenced market performance. These will provide valuable insights that you can use to plan for what lies ahead. Take an objective look at your competitive position in the marketplace and consider how it has changed over the last 12 months. Has your position impacted the price you charge for your products and/or services? Should it? You should

Market research is a valuable tool that will allow you to understand consumer trends as they begin to unfold. It’s worthwhile paying particular attention to the advances in areas like technology that have the potential to completely change the nature of society.


Your exit strategy will dictate the financial targets that you set for your business and the amount of time you have to achieve them. If you’re not on track then you will need to decide whether to revise your exit strategy or ramp up activity now in order to ensure you can still achieve your goals.

Keep an eye on the economy Wider economic influences may have impacted your ability to make money over the past year. Interest rate increases or decreases, strengthening or weakening currency, and government driven factors such as taxation rates can all have a dramatic impact on the net performance of your company. It’s also wise to keep your eyes open for any trade agreements that may impact your industry in the future.

Your short term goals provide a pathway to achieving your long term targets. These will need to tweaked or adjusted as part of your review. If your long term targets remain the same but your goals for the year have not been met, you may have to boost activity in the next 12 months to ensure you achieve your plans.


the details now and understand what your business will need to achieve to support your financial goals.

also take a look at those who are new to the market and those who have left. Use your understanding of what they have done well to fuel your performance.

Touch base with your exit plan You may not be planning to exit your business within the next 12 months, but if you have thought out your exit strategy then it’s important that your business goals are leading you to this personal target. If you haven’t built a plan around funding your retirement you should also work through


Consider worst case scenarios An essential output of your annual business review is your increased ability to imagine and plan for what comes next. By understanding the changes of the last 12 months you can map out some trends and predict where your business could go in the next 12. Put some effort into scenario planning and you will be better placed to deal with extreme events that have the potential to blindside your business. Completing your annual financial review will give you the opportunity to capture valuable insights about the state of your business, your market and the economy in general. A thorough review of your targets and goals will allow you to understand whether you are on track to achieve your long term targets or if you need to adjust your business plans in any way. Business changes constantly, just like life, and an annual business review is a valuable opportunity to keep your plans relevant to your long term goals.

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The quest for

big picture thinking Big things are achieved through big thinking; stepping out of the confines of the probable and embracing the possible. Business owners achieve to the limits they set. Market, competition and finance always play a role, but the underlying – and often invisible – perception of what can be achieved, either limits or stretches business potential. Widen the view; challenge existing limits – real and perceived; banish the concept of settling for the status quo. Make big picture thinking a standard business action; put it on the to-do list; make it a priority in routine operations. Give it encouragement until it becomes a natural part of business. And keep pushing. Big picture thinking takes a toll on time and demands more from every aspect of business. But if you’re inclined towards the possible rather than the probable, wouldn’t you rather find out what can really be achieved, and then stretch it, and then stretch it again…

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Get real value from virtual teams It’s not uncommon for businesses to believe that building virtual teams will yield cost savings and multiple benefits. In terms of benefits these could be demonstrated to be: high skill levels, cultural diversity, unique perspective and high productivity.

However using virtual resources is not as straightforward as welcoming a new person to the desk next to yours. So when is a virtual team the right tool for business? What’s the cost? If a virtual team is on the menu, then a business is probably already aware of some of the advantages. The cost savings associated with virtual teams come from a number of different factors.


If a business plans to recruit the best talent to deliver the task that their business needs, then a virtual team takes away the obstacle of location. The impact of currency and geography on rates of pay means that, in some circumstances, a business will pay less for this talent than they would if they were recruiting in the same city. There are also some tangible cost savings on the part of the employee as their actual cost of doing business is reduced. They save time and money by working from home or a remote office location, and avoid a daily commute to and from the office.

Allowing employees to work away from the office – whether that be from home or from another city or country altogether – can yield large savings in real estate costs. Businesses are able to reduce their office footprint as more staff work remotely.

Diverse skills and personalities Effectively managing a virtual team is about more than just cheap labour. For virtual teams to be functional it’s ideal if they can be recruited as a group, so that a business can carefully manage the personalities and skill sets for optimum performance. According to a Harvard Business Review article titled Getting Virtual Teams Right, effective virtual teams share some consistent character traits. These include high emotional intelligence, good communication skills, and the ability to work independently. Investing in the right team members upfront can yield large benefits in the long run. Virtual teams are notoriously challenging to manage effectively so having the right personalities will give businesses a head-start.

A boost to productivity A well managed virtual team can increase productivity. A study by Aon Consulting called The reality of virtual work: is your organisation ready?, found that productivity in a virtual team could increase by between 10 and 43 percent, depending on the organisation. However, without carefully guidance a virtual team is more likely to fail than one located in the same office. The main tool that virtual teams require is careful process and result mapping. This means that the team is collectively aware of what their purpose is and individually aware of what each person’s contribution to that purpose needs to be. The cycle

of delivery needs to be carefully managed by a team leader to ensure deadlines are achieved and information is shared effectively.

Communication is key Keeping a virtual team on track and delivering the results a business requires is an exercise in excellent communication. Virtual teams require more than just good technology to facilitate communication, but good technology is essential. Businesses need to recognise how their virtual teams work and then support them with the best tools. The team leader needs to manage a structured cycle of meetings to ensure that the virtual team has shared time together on a regular basis. Frequent 1:1 meetings with the team leader will also help to share perspectives and resolve any issues. More complex than functional communication is how a team leader manages social interactions. These are essential to uniting a team and creating the emotional bonds necessary to improve productivity. Teams require trust, respect, and empathy in order to function effectively, and these can be challenging to create if a team is located remotely. Team leaders of virtual teams must become experts in fostering social interactions at a remote level.

Virtual team

Businesses may wrongly perceive that remote teams will be more productive because they will drop down-time taken up with social interactions and ‘daily chit-chat’. In reality this is a key part of the toolkit that connects employees to each other and to the business. Social interactions must be artificially sustained to build and maintain that connection.

Culture is of great importance Recruiting and managing a team of people who are remotely located, and potentially based in different countries, requires great cultural awareness. Large businesses are often up to speed with the importance of cultural awareness, even for interactions with staff who are based in the same city or country. For businesses who have not had experience of dealing with other cultures up-skilling is essential. Ensuring that both team members and team leader are culturally aware is key to being able to build the processes that will resolve any potential cultural friction. It’s easy to believe that building virtual teams is an easy solution. More realistically virtual teams offer businesses the opportunity to access skills by removing the boundaries of geography. There are great benefits in productivity and diversity to be gained by introducing a virtual team to a business, but they come at the cost of increased input and the careful management that is required to ensure that the required output is achieved.

def. a group of individuals who work across time, space and boundaries with communication webs.

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Automation: Ready for the future? Carl Frey, an Oxford Economist, and Michael Osborne, a Machine Learning Expert, reported in 2013 in The Future of Employment that 47 percent of America’s jobs could potentially become automated within two decades. This report has been both questioned and agreed with by the media and the academic world, and remains an important indication of the impact of automation on the job landscape of today and tomorrow.

Technology in history It is expected that large scale automation will impact on employment. This will see jobs move from some sectors and into others, as the market creates new opportunities and demands new skills to match them.

Technological advances always seem to have a direct or indirect impact on employment. The nature of jobs has undergone an evolution since the introduction of machines. The automation of tasks has resulted in reduced manual labour and the transfer of repetitive function away from the employee. A prime example of the transformation that machines bring about is the farmer. Farmers are notoriously hard workers, but before the invention of the tractor they relied on their hands, horse and labourers to manage the land. With the introduction of machinery came the ability to manage larger areas of land, and complete tasks faster and with less effort. This in turn reduced the required size of the workforce.

The continuous growth of automation Automation continues to grow in today’s society. The consumer world bears witness to its increasing penetration in the growth of selfservice kiosks as a tool for fulfilling transactions from airports to


supermarkets. The future holds the imminent arrival of the driverless car. Once the technology of automation advances, it impacts society, displaces jobs, and requires consideration at a government level. However it is interesting that the UK retail sector, which is a hotbed of self-service automation, has seen a 30 percent growth in jobs since 1978, according to UK government figures. Automation is growing in purpose in the business world. The manufacturing industry has already been transformed, and is about to undergo another evolution with the developments in 3D printing. Amazon continues to demonstrate its position at the forefront of advancement with Kiva Systems’ robotic technology that will “pick, pack and ship any item, anywhere, at any time”. The office environment has undergone dramatic transformation over the past 40 years. Current technology has instigated the disappearance of the secretary or personal assistant as previously complex tasks like managing an executive’s schedule become automated with scheduling and management tools and applications. Increasingly the repetitive tasks in business are capable of being delivered by machines and computers.

Introducing Robotic Process Automation The latest transformation of the job landscape comes courtesy of software that is known as Robotic Process Automation (RPA). The Institute for Robotic Process Automation defines RPA as: “the

application of technology that allows employees in a company to configure computer software or a “robot” to capture and interpret existing applications for processing a transaction, manipulating data, triggering responses and communicating with other digital systems.” If companies use manpower to process information in high volume, transactional functions; then Robotic Process Automation has great ability to transform them. RPA is mainly a back end system, removing people from core process like: IT support, workflow processes, expense management, and data entry. RPA aims to increase the speed and accuracy with which processes are managed. Where previous large scale transformations driven by technology occurred in the manufacturing sector, so now it seems likely that it will be business support services that will experience the effects of RPAs. In analysis based on Frey and Osborne in 2014, Deloitte’s The robots are coming: moving beyond traditional methods of automation reported that 56 percent of financial function roles in the UK had a high probability of being automated.

Of respondents surveyed, 91 percent indicated their plan to apply RPA to accounts payable functions, 55 percent planned to apply RPA to travel and expenses, and 36 percent indicated their intention to apply RPA to fixed assets. 13 percent of those surveyed intended to invest in robotic process automation in the next 12 months. RPA has the potential to allow many businesses to introduce processing services that may previously have been outside what they could afford or their resource availability. If their historical solution to access these services was outsourcing, they could be looking forward to a significant financial gain. Automation offers the potential to achieve more with a lot less: which can only benefit businesses that are lean on resource. Increasing the opportunities to automate in both the business and consumer world will continue to transform society. It’s challenging to guess the impact on jobs, as economists consistently predict that where jobs are lost to technology, new ones are also created. The WEF’s Future of Jobs report released in January 2016 indicated an estimated unemployment increase of 0.3 percent on a global scale.

This number struggles to be significant in the context of the global economy, and reinforces the universal belief that where jobs are lost they will also be gained, and usually of a higher pay level. It is expected that large scale automation will impact on employment. This will see jobs move from some sectors and into others, as the market creates new opportunities and demands new skills to match them. While big changes may be predicted, this will be over a number of years and the expectation is that much of the change will evolve with the normal churn of employees leaving and arriving in the workforce. The real focus for change lies with the leaders of government and corporations who must empower the workers of tomorrow with the skills that are needed to succeed in jobs that have not yet been created.

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Financial health

Top five tips for managing FX risk


FX volatility is one of the biggest risks faced by New Zealand businesses involved in cross border trade. Even in an average year the NZD moves as much as 15 per cent up or down against the USD and in a volatile year it has been as much as 25 per cent. Regardless of the nature of your exposure, FX risk can quickly wipe out your profit margins. So what can you do to protect your business against this volatility and smooth out the impact of unfavourable currency movements? While there are widely used products like FX forward contracts, effective foreign exchange risk management is more than just taking out forward cover.


Understand how material FX risk is to your business

Regardless of your exposure, if you transact in a foreign currency you should understand the potential impact of currency volatility and plan for the impact during your budgeting process. The moment you realise you have an FX requirement you are exposed to currency risk, which is why budgeting and accounting for FX risk is so important. And the longer the timeframe between realising you have an exposure and the actual cash flow the bigger the risk. Foreign exchange specialists can help you understand the risk by considering recent volatility and modelling against your specific exposure as well as looking at the various options and costs of hedging.


Have a plan

Even if your approach is to do nothing and simply use the spot rate on the day, you should have a policy. Not all businesses need a detailed FX Policy, but everyone should have a guideline. This can be as simple as a one to two page document that outlines a framework for managing your currency requirements. FX specialists will be able to help you with this and formulate an approach but you should include the following: - Who makes the FX hedging decisions - How far forward to hedge - If no hedging is permitted when is an invoice or receipt converted - What hedging instruments to use- FX forwards, Vanilla Options, Structured Options etc - How much to hedge at any given time - Who to use- banks and /or FX specialists.


Don’t rely on forecasts

A recent Reuters FX Poll from 40 economists showed a range of 0.520.73 for the NZD/USD over the next 12 months. The bottom line is no one knows where the FX market will be in the future (if you did, you wouldn’t be bothered importing or exporting when you could be making millions of dollars speculating in the FX market!). Hedging foreign exchange risk isn’t about making a profit, it’s about giving you more certainty and smoothing out the impact of unfavourable FX volatility.


Only dealing with one provider

As businesses strive to grow and remain competitive, managing all costs is imperative. However, very few businesses receive competitive FX rates. While all FX rates are ultimately driven by the underlying wholesale market, the rates given to customers include spreads or margins of between 0.1- 5%. This means the cost to transfer money internationally on a $100k can vary by $100- $5,000. While most people have a fair idea where the spot rate is on any given day (websites like publish the real time wholesale mid rates), FX forward points are much harder to come by and can include huge spreads. If you have an active hedging programme, you should always have at least two providers to ensure you have sufficient liquidity to cover when required. Banks and FX specialists will have a set amount of credit appetite for any given customer which can restrict your ability to take out additional contracts.


We’ve always done it this way

Just because an approach to managing foreign exchange worked a few years ago, doesn’t mean it’s relevant today. FX rates and the competitive environment are constantly changing. If you aren’t reviewing your policy on a regular basis, you are at risk of using an outdated approach.

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you would like to have with this audience through social media. This will help you identify which, if any, of the multiple social media platforms available is right for you. You also need to plan for two-way communication: how you will respond to the voice of your customers?

Create a content plan and work out how you will maintain it Clearly understanding your audience will allow you to plan the content you need to create and the frequency with which you are going to share it. Be realistic about the amount of work you could be committing to in order to keep your presence updated.

Set and track targets

Social media for business

A beginner’s guide

Social media can be a wonderful tool for communicating with customers. But those who consider using it should be clear about who they are communicating with and what the message is that they want to share.

Is your business considering diving into the world of social media? We take a look at social media for business and ask some important questions about how they can work well together.

Your brand and social media For any business considering a new communication tool, it’s incredibly important to take some time to ask yourself what your company stands for and what are the key characteristics of your brand. When you communicate through social media you will need to decide which voice of your company you are using so that you can both share with and react to your audience appropriately.

Identify your target audience and create a strategic plan You need to be clear on your target audience and what you want to achieve. Map the relationship 17

Social media often has a reputation as a free tool but in reality it’s hungry for content and can end up costing you a lot in the time required to maintain and manage your space. Think about how you are going to measure the success of what you invest, and set some clear targets for what you want to achieve.

Consider asking an expert Finally, consider whether it might be worthwhile to call in an expert. A specialist in social media for business will be able to help you create your strategy and execution plans will also be able to create plans for measuring the effectiveness of any investment in time or money that you make. Social media can be a wonderful tool for communicating with customers. But those who consider using it should be clear about who they are communicating with and what the message is that they want to share. Armed with some forward thinking and good planning, your success in the sphere of social media could be just around the corner.

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Real business

Start-up Q&A: Making a success of the first year Planning is essential when starting a new business, but it only gets you so far. A huge ingredient in whether start-ups are successful, is how business owner’s respond to the many new, and often challenging, experiences business ownership brings. Newsletter Ready – a full service eNewsletter offering for small businesses – opened its doors in 2015. We spoke to General Manager, Anthony Sievers about his experience of starting a business – the expected, the unexpected and what he’s learnt in his first year of operation.  ooking back, what excited you L most about starting Newsletter Ready? For me it was validating that the idea wasn’t just a pipedream; people wanted the service. I spoke to a sample group of businesses and 90 per cent of them said “yes, I need that”. That’s when I knew I had a business on my hands.  lanning only takes you so far P – what didn’t you expect about business ownership? The amount of change you have to handle and adapt to. Of course I expected change, but I didn’t expect the amount of change, or that everything changes – my sales method; how I structure my day and how I work; evolving the product. Nothing is static and you have to get on-board with change fast.

 hat would you say is the most W important thing to get right when starting a business? Do the ‘hard yards’ before looking at all the seductive marketing options. Putting in the time to sell directly rather than through marketing, is a hugely valuable discovery process – about your product, your pitch, and your market. By cold calling and talking to prospects, I found out as much from those who said ‘no’ as I did from those who said ‘yes’.  hat have you found most W enjoyable about starting your own business? Comradery, definitely. I have joined a number of networking groups and have really enjoyed talking with and learning from other business owners. We all grapple with similar challenges and are striving for the same goal – building and growing our businesses. It’s very real and sharing the experience with those who ‘get-it’ has been both enjoyable and invaluable for my business.  hat have you found most W challenging? Adapting to the new structure of ‘just-me’. As an employee, I took for granted the tangible and intangible support structure. When you start-up,

all of a sudden you are in a vacuum and it takes a while to understand the implications of being on your own. Now I have a team, I have to create a team work environment, manage staff working hours, and individual motivations.  rom your experience, what F would you say are the key attributes for success? Tenacity, discipline and focus, but perhaps most important, humility. You can’t go into business ownership thinking you know it all – it’s very different when you get out there. Being self-aware, open to constant learning, and able to bounce back from a bad day and turn the negative into a learning, are absolutely crucial attributes. I f you could give budding business owners one piece of advice, what would it be? Make a sale first – before you open your doors. Once you have made a sale and proven the concept, you just have to add zero’s and optimise your service. It’s easy to get trapped in the research phase; isolated from the real customer. Nobody wants to have their concept or idea disproved, but getting real feedback is the only way to prove it has legs. Get someone to buy it, and you’re on your way.

Being self-aware, open to constant learning, and able to bounce back from a bad day and turn the negative into a learning, are absolutely crucial attributes. ANTHONY SIEVERS, GENERAL MANAGER

Fifo Capital Headway


What they say, means business We all talk about how important our customers are to our businesses. But the most effective businesses integrate this into the way that they work. Being customer focused is not just about listening when customers talk, it’s also about taking a measured approach to customer feedback that allows you to react appropriately to what you hear.

So how do you ensure that your customer is at the heart of your business? Drawing on the insights from clients we’ve seen go from strength to strength, here are a few of our top tips.

Loyalty is key In everything you do with your customers; loyalty is key. It’s important to make sure that they are both happy with you and that they don’t perceive that they might be happier elsewhere. As a first step in generating loyalty, listening to customers is a great way to make them feel valued. Whether your customers are happy or not – listening to them will create an important connection between them and your company.

What do you think? Formalising a feedback process is a great way of turning general


customer feedback into a tangible business tool. It can start over the phone or face-to-face, and you can add in other tools like online surveys and feedback cards as your business grows and when you feel it’s appropriate. Gathering customer feedback doesn’t need to be expensive, but it should be consistent.

Be consistent Whatever the method you use to capture your customer’s thoughts, take the time to compose some questions that will yield the information that would be really valuable to your business. Think carefully about what is important to both your customers and your business success, then make sure you use these questions again and again. Changing questions will change responses, so it’s important that they don’t change. If you discover in the future that you’re missing a key piece of information, you can consider adding additional questions at that time.

Track the changes By using the same questions over and over, you can spot trends and changes in your customer’s feedback. These can allow you to measure the impact of business improvements or challenges, competitor activity, and can also be used to drive change in themselves. Consistently asked questions and related answers can also be built into company metrics and performance measurement to ensure that your team is also measured on making customers happy and achieving business targets.

– this will make it easier to manage their expectations. It’s always important with customer feedback to stay realistic about what you will do with their ideas.

Find out what you do well Almost as important as opportunities to improve, are opportunities to recognise your successes. Positive customer feedback can identify business strengths to use in promotional tools, areas to reward your staff and suppliers, and create opportunities to share feedback online.

If you like it – Like us If customers tell you that they like you and your product or service, ask them to share their thoughts in a public space like LinkedIn. Positive testimonials and feedback are a great way to drive new business

The good, the bad and the ugly When you ask for feedback there will be unhappy customers, but at least by listening to their issues you can reduce the chance of them sharing their negative opinions elsewhere.

Customers are a great source of ideas.

Listening to negative feedback and responding to it positively could help you to retain a customer. There could be other customers who feel the same way but haven’t spoken up, or you may find that you need to develop or enhance a product or service in order to maintain customer satisfaction. As long as you have an open line of communication with your customers you can try to deal with any issues and turn negative feedback into positive experiences.

Goodbye need not be forever If you do lose a customer, getting in touch to find out why they left could help you to bring them back – in the short or longer term. And certainly using their feedback could be what you need to keep your remaining customers with you and happy. Customers give businesses a reason to be, and it is important that business do everything they can to understand the opportunities and the issues that they face in keeping customers happy. There is a reason why people say “feedback is a gift”, so why not make the most of what feedback could do for your business?

Asking them for their thoughts on how you can do things better can yield great opportunities for improvement.

Spot the opportunities Customers are a great source of ideas. Asking them for their thoughts on how you can do things better can yield great opportunities for improvement. If you can, try to stay focused on exploring their needs rather than communicating solutions

Fifo Capital Headway


Security in finance: a practical guide Unfortunately, none of us have a crystal ball to see into the future and plan for what it will bring. But even without a crystal ball, it is possible to follow some basic steps to ensure that you maximise the use of your assets and manage your security position with an eye to the future. Security is quite simply the tool that lenders use to protect their money when they give it to your business. This is done by registering a charge in the Personal Property Securities Register (PPSR) against one of your business or personal assets. There are different types of charges based on what the asset is, and charges are prioritised based on the date

Your security position is a business tool that, just like all other business components, needs a health check from time-to-time.


registered. This means that you can have more than one charge against an asset, but the charge registered first gets priority. The details of exactly what assets you are offering as security will be in the security section of any lending or terms of trade agreement that you sign. If you weren’t aware of them, you are not alone. Remember to always get a lawyer to review any documentation before you sign it. The most favoured form of security is property, but security can basically be taken against anything that you or your business owns.

Setting up your finance When you first set up your finance agreement with the bank, they will require security against the money they are giving you to start up and run your business. In an ideal world the bank would like to use property as security, but they will probably try

to take security against every asset that you have. It’s natural that the more security they have, the more comfortable they will be lending you money. Be proactive in reviewing your security options before you sign any agreement: this is essential to protect your future position. We recommend that you try to keep debtors and stock apart from your agreement with the bank. The bank traditionally values these at 0-25 percent of their actual balance on your books. An alternative finance provider like Fifo Capital would value your debtors at up to 90 percent of their actual balance. This means that should you have a future requirement to borrow more money, alternative lenders may value your assets higher than the bank. In this scenario an alternative lender would be able to give you money where a bank might say no.

What lies ahead? When the bank funds your business, it is usually based on your historic performance, which can be quite an outdated picture – for example, business figures from 12 or 18 months ago. The bank also looks at the current status of the industry within which you operate, and the current position of the wider market. All of these things will change as time passes. You will gain and lose customers. The industry may grow and decline, it could experience a boom or it could retract. The economy could be strong, or it could experience decline caused by internal or external factors. And any one of these changes could cause the bank to reassess its position with regard to your lending and your security. When the change is positive the bank will probably increase your ability to borrow because it will be aware of the increased potential of your business. But unfortunately if the change is negative the bank could freeze or reduce your funding.

Understanding and managing your security position with regards to these factors is essential; proactively managing your security position gives you the flexibility needed to protect your business from changes in lending appetites.

Security essentials for all business owners You may need finance for growth; to manage your costs while you deal with the loss of a customer; to support your business after a drop in prices or an increase in competition; or just to manage day-to-day operations. Whatever the reason, managing your security is key to keeping your finance options open. Here are two essential actions for any business: 1. Outdated security registrations: It is all too common for businesses to secure lending with an asset and pay back the facility, but then forget to check that the lender has lifted their registration against the asset. Run a check on your PPSR – if you find lenders registered against assets where the finance has been repaid, request that they be removed quick smart. Old registrations on assets have the potential to slow down your ability to raise money in the future. 2. Map your security: Review your finance agreements and create a working document of all the securities you have granted for finance that you are currently paying off; and also list the additional security options you have available.


Review your securities annually. Not all business loans require assets as security. Don’t be afraid to ask for a change or release of securities.

Ask an expert to review your finance for you – get a second opinion.

Your security position is a business tool that, just like all other business components, needs a health check from time-to-time.

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 with a business finance specialist • Fast response and approval of finance to meet changing business needs • Consultancy in partnership with your financial advisers and with current 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.

National Head Office Call Fifo Capital today on 1300 852 556

Fifo Capital Australia National Head Office L16, 390 St Kilda Road Melbourne VIC 3004 Neil McMillian, Managing Director P +61 3 9866 2930

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National Head Office L16, 390 St Kilda Road Melbourne VIC 3004 P 1300 852 556

Fifo Capital Headway Magazine, Q2 2016 Australia  
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