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Thinking ahead for success QUARTER 3 2016

The implications of BrEXIT The little company making big waves in the cloud A close look at crowdfunding websites Digital banking – revolution not evolution Reach maximum efficiency with lean management principles

It’s time you dealt with the decision maker Fifo Capital’s business partners aren’t your typical finance people. We know business can be hard enough without having tough conversations with conventional types following rigid approaches. We’re more like friendly colleagues who champion your success. Or the confidant you call to help guide you through any situation. You can talk straight with us knowing you’re in a safe zone. And the person you talk to is a decision maker, so you’ll get answers fast. When you’re ready to experience a caring and efficient approach to business finance, talk to Fifo Capital. We’re good listeners armed with modern tools for success. Contact Fifo Capital today for more information. 1300 852 556 fifocapital.com.au

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,


Everything is moving at a rapid pace, thanks to technology. The digital revolution ushered in the information age and with it, big data. Knowledge is power, yet with so much information we can fall into the paralysis by analysis trap.

“The only thing that is constant is change.” These words are as true today as they were when Greek philosopher, Heraclitus, wrote them in 485BC.

Many people focus too much on external events. “What does this mean?” “How is this going to affect me?” “Should I be doing that instead?” Yet the vast majority of us operate in a micro environment where we have little to no influence over economies, trade deals, government policies and more. These external events will continue to touch you from afar, but they don’t need to steer you off course. It’s easy to get distracted, especially when you have a 5-inch screen and shiny objects screaming for your attention. No matter what’s happening in the world, or inside that little screen, it’s important to remain focused on what your business needs from you to survive.

Things change but any change you make needs to be beneficial to your business. Because it’s what you do in your business that will help propel your plans forward. If you need help to reconnect with what’s really important, think about the passion, desire and need that drove you into your business. By reconnecting to the moment you decided to leap, you can give yourself a little jolt of reality that you might need to continue moving forward and reach your ultimate goal. Nigel Thomson Fifo Capital Founder and CEO


The little company making waves in the cloud


How to nuture prospects to become long-term customers


A close look at crowdfunding websites


A guide to business cashflow health


7 smart ways to find your business


Prove trade mark use and distinctiveness


Use your trade mark or lose it


Digital banking – revolution not evolution


Reach maximum efficiency with lean management principles


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


The implications of BrEXIT

The implications of BrEXIT On 23 June 2016 the United Kingdom voted, by a slim margin of 52% to 48%, to leave the EU. This is an unprecedented event that immediately impacted global financial markets and now affects negotiated global trade deals. What’s next and how does this affect us in the southern hemisphere? What is the EU? The European Union (EU) began five years after World War II ended, when France and Germany devised a plan to maintain peace and foster economic co-operation. The thinking was: countries that trade together are less likely to war against each other. The resulting deal was signed by six nations who pooled their coal and steel resources in 1950. It grew to become a ‘single market’ in 1992, where goods, services and people move freely, as if it was a single country. The EU’s own currency, the euro, has been adopted by 19 of the member countries. Today the EU is an economic and political partnership between 28 European countries, with a total population of more than


500 million people. There are four key institutions that work together to run the EU’s political and economic bureaucracy - the European Commission, the European Parliament, the European Council and the Court of Justice.

Why isn’t the EU working for the UK? The EU requires common laws to ensure products are made to the same standards with various rules to help ‘level the playing field’. With much of their national decisionmaking process removed, it’s seen as undemocratic and unaccountable to the public; which raises the issue of sovereignty. “Who governs you?” is the most important question for any population. Regulations and bureaucracy are seen as being excessive and too expensive for the British economy to sustain. According to Treasury figures, after funds for development returned to the UK, their net contribution in 2015 was £8.5bn, approximately 12.6% of the EU budget. Incidentally, Germany paid

the largest share at 21.36% followed by France at 15.72%. Many believed Britain was being held back by the EU, and generated little return in exchange for the money it paid into the system. Mass migration from poorer countries has raised questions about the free movement rule. In 2015 the UK had a net migration of 330,000 people, with a slight majority coming from outside the EU. Between 1993 and 2014 the UK’s foreign-born population more than doubled from 3.8 million to around 8.3 million, with foreign citizens increasing more than 3 million in the same period. This immigrant influx led to a major spike in antiimmigration sentiment, with 77 percent of Britons believing that immigration levels should be reduced.

What brought Brexit to a head? There has always been a faction within British politics that’s been skeptical of a deep integration

with the rest of Europe. This was reinforced during the global financial crisis and ongoing poor performance of the European economies. If you thought the post-2008 recession was bad in the US, it was almost apocalyptic in the EU. This was because a number of EU nations embraced austerity measures. Central banks normally increase money supply during recessions but in 2011, the European Central Bank raised interest rates, tipping the eurozone into a double-dip recession. Greece illustrated how exposed the Eurozone was, and what could be in store for other countries. At a grassroots level, most people in Europe feel more loyal to their own countries and resent the amount of power that Brussels exerts over their lives. Other events, such as the ongoing Syrian refugee crisis, have put even greater pressure on the EU’s resources. In 2012, after three years of the Eurozone crisis, Prime Minister David

Cameron was under pressure from his own Conservative party to hold a referendum, now known as Brexit. Conservative legislators passed the bill to hold a vote before December 2017.

The most common arguments for Brexit were: • The EU threatens British sovereignty • The EU is strangling the UK in burdensome regulations • The EU entrenches corporate interests and prevents radical reforms • The EU was a good idea in theory, but the euro is a disaster • The EU allows too many immigrants • The UK could have a more rational immigration system outside the EU • The UK could keep the money it currently sends to the EU. ... continued page 21

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The little company making big waves in the cloud Meet Dale and Nathan, the names behind Quotient. It’s a supersuccessful online quoting system at quotientapp.com that’s redefining the humble quote.


When you think of powerful cloud software, Hamilton, New Zealand probably doesn’t come to mind. Yet this city (an hour’s drive south of Auckland), affectionately known as ‘The Tron’, has a thriving tech community. One of its shining stars is Quotient. They won Xero’s Emerging Add-On Partner of the year award in 2012 and were regional winner of the Rising Star, Deloitte Fast 50 awards in 2015. Before focusing on Quotient, Dale and Nathan built a successful web design, application and software development company, with an everexpanding team.

Using creativity to solve problems They’d always enjoyed using creativity to solve their own and clients’ problems. And they excelled when using their complementary skills to build micro systems to make the work lives of their team and clients more efficient. The system that shined brightest was their online quote system. Their prospects and clients were exposed to it daily, and they loved what they saw. “They often told us that we won their projects based on our innovative quotes,” says Nathan. These quotes were their point of difference, making them look like serious players. Which got them thinking, the first piece of collateral that a prospect or client is exposed to is the humble quote. It really is the perfect opportunity to make a great first impression, yet so many people treat quotes like a ‘necessary evil’ versus an opportunity to shine and make a great first impression. “The quoting stage of a business’s workflow interests us because there’s so much potential wrapped up in these little good fortune notices. Helping businesses to save time, be more organised, make more money and

look super-professional, is something that really excited us,” says Dale.

Taking an in-house quoting system to the world Dale and Nathan got to a point financially in their business where they had the luxury of looking at a bigger challenge. They wanted to put both their skills to use and create something that would put a larger dent in the world, something to live on its own esteem. “There is something good about sharing an idea and seeing people genuinely interested in it. It becomes personal and worthwhile,” says Nathan After some soul searching and countless client requests to turn their quote system into a standalone product, Dale and Nathan decided to make it available to everyone. They knew it was going to take a lot of time and it’s hard to justify the expense, but they’ve never been driven by money. The challenge to create a gamechanging piece of software, to make businesses look more professional and gain efficiencies really excited them. “The intention behind our decision was good; to put power in the customer’s hands. We feel that with anything with a little bit of magic tied to it, has far greater potential than just money. We’re more interested in leverage – doing something that has a bigger impact. And we had a belief in ourselves,” says Dale. They handed the management of their growing web design business over to their team and devoted every waking hour to making what would become Quotient. On a sunny day in December 2011, after a year of intense development, they quietly released Quotient and crossed their fingers. ... continued page 23

Quotient founders, Dale Vink (L) and Nathan Carter (R).

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Looking for a bridging option for clients? Is a change in full-ledger invoice finance services disrupting your client’s cash flow facilities? Facilities change as do client’s needs. If any of your clients who are currently using full-factoring services fall into one of the following categories, we can help.




Transitioning from fullfactoring to occasional cash flow support services.

Reviewing their full-factoring options for better business terms.

Fall outside of new credit criteria introduced by the full-factoring provider

Our as-needed service with no ongoing contracts, means clients transitioning from fullledger invoice finance can use the service on an occasional basis when the need arises.

We can buy out the full-ledger for a short period of time (typically one to six months), giving clients breathing time to find the appropriate long term solution.

As above – by taking on the full ledger for a short period of time and working with clients on their invoice finance structure, we provide the needed breathing time to find the appropriate long term solution.

Single invoice finance with Fifo Capital provides a short term, expert solution for businesses undergoing a change in their full-ledger invoice finance services. Fast, expert and flexible, Fifo Capital is the quality option to bridge the cash flow gap.

How to nurture prospects to become long-term customers For many companies, the sales process starts attraction to encourage a sale. These companies assume that once their prospect has made a purchase, they’ll become a valuable, long-term customer, with little more effort. But for this to happen, you need to nurture them and develop a solid relationship. Your customer needs to view your team as trusted advisors who offer solutions to their problems, and not just a salesperson needing to meet targets.

Read on for some tips on how to develop a nurturing relationship that will help turn prospects into regular customers.

Start with a customer journey map

Develop lead progression marketing content

You can get pretty close to understanding a customer’s ideal experience with you by developing a customer journey map. This is their anticipated relationship timeline with you, from initial contact, discussions and engagement through to the desired destination, which is a longterm mutually beneficial relationship.

Lead progression marketing is different to the approach you take with a lead capture campaign. It uses specific marketing language that is relevant and educational, whilst promoting your organisation as a trusted advisor with relevant solutions.

The customer journey map will help you to understand their motivations and the key points of interaction that demand extra attention and more nurturing. By putting yourself in their shoes and going through this process, you’ll gain valuable customer insights so that you can anticipate their questions and offer the perfect solutions to their problems.

People buy in their own time, so refrain from rushing your prospects. Sometimes it can take several months from being curious to feeling confident that the solution you offer is right for them. Your sales team needs to play the long game and proceed at your prospect’s pace. If you try to pressure them, you may drive them away or worse, send them into the arms of your competitors.

Play the long game

Never give up on lead nurturing As Winston Churchill said, “Never, never, never give up.” (Yes, business can be war.) Research suggests that businesses that invest heavily in lead nurturing report a 45% higher return on investment than companies that don’t. There’s also anecdotal evidence that suggests that people often give up just before they were about to succeed. So when the going gets tough, don’t be disillusioned. It can be a long road to success – turning a prospect into a customer, especially when the stakes are high. Nurturing them further until they become raving fans is when you’ll see serious returns from their word of mouth and viral marketing efforts.

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A close look at crowdfunding websites ‘Crowdfunding’ seems to be a hot topic for anyone who needs a cash injection into their business. But how does it actually work?

Crowdfunding websites are providing many enterprises with the ability to reach their audience. That audience has money to invest or donate, and is looking for the next opportunity. Depending on the type of crowdfunding site, businesses can pitch for different types of investment. While many aspects of finance and banking can appear to be complicated, crowdfunding is really quite a straightforward concept.

What is crowdfunding? In the past, businesses seeking a cash injection for their business – either to fund start up, growth or a big project – had limited funding options. This usually involved choosing between finding a big investor willing to contribute to the company’s coffers, or approaching a bank or finance company. Crowdfunding websites allow small to large groups of individuals to contribute small to medium quantities of cash in order to allow a person or organisation to reach their financial goals. Crowdfunding has been around for centuries in one form or another, but has gained traction since the launch of the first crowdfunding website in 2003. Today it is a multibillion-dollar global industry.

How does crowdfunding work? The two most popular types of crowdfunding website are social crowdfunding and equity crowdfunding. A third type, known as debt crowdfunding or peer-topeer lending is now growing in popularity as well.

Social crowdfunding Social crowdfunding is a straightforward donation based funding model. The basic principle


Briefly... is that individuals or groups who want to raise money can put a pitch out through a social crowdfunding website and if people are interested they will donate to the cause. They either receive nothing in return or a small gift or reward. For example, a new company may give them one of their products in exchange for a donation of a certain value.

you, it’s worth spending some time researching the different websites available so that you can understand the pros and cons of each. Different crowdfunding providers attract different types of pitches, so it’s important that you choose the best website for both your product and your target audience.

Crowdfunding is an excellent way to raise cash for your business or to fund an initiative. Choose your crowdfunding provider carefully and get advice if you can on the best site for your type of pitch. Equity crowdfunding If you’re willing to share ownership of your business as an incentive to build funds, then equity crowdfunding could work for you. Unlike social crowdfunding, equity crowdfunding actually gives those who are interested in your company the ability to donate and receive shares, or an equity stake. This requires a licensed equity crowdfunding provider and is subject to careful regulation.

Peer-to-peer lending Unlike crowdfunding, peer-to-peer lending or debt crowdfunding is a funding situation where those providing the cash expect it back. It’s conducted online, through a third party website, and allows groups of lenders to combine to provide loans to those in need of cash. It’s a combination of lending and investment and so is often seen as more of an alternative financial service rather than a crowdfunding scenario.

So what’s the process? If crowdfunding seems like something that could be of benefit to

Once you’ve chosen your preferred site, you’ll need to prepare a pitch. The provider will then decide if it’s suitable to their audience, and if you’re given the green light you will be able to make the pitch on their website. It’s your responsibility to spread the word about your campaign. Crowdfunding has been described as the social media of the funding world, and you’re going to need to put your network into play. Reaching your campaign targets will rely on a large audience where those who donate make small contributions. That means it’s crucial to spread your message far and wide. When your campaign closes, your funds are not guaranteed. Some crowdfunding websites only release funds to you if you reach your campaign targets. It’s important to choose carefully upfront and decide whether to go with a site that will give you all the money donated or only give you donations if you hit your targets. Whatever your end outcome in terms of money, remember there will be fees to pay for the service. These usually include a fee for taking part, and a percentage of any money raised. Due to the nature of

Crowdfunding websites allow many people to donate small amounts to help businesses, charities or individuals to reach their fund-raising goals

There are two main types of crowdfunding social crowdfunding and equity crowdfunding

It’s important to choose your preferred website carefully. It needs to match your pitch, your audience, and reflect your funding goals.

the process, equity crowdfunding usually requires an upfront fee. It’s also important to be sure of your tax position on any funding received. Crowdfunding is an excellent way to raise cash for your business or to fund an initiative. Choose your crowdfunding provider carefully and get advice if you can on the best site for your type of pitch. There is a great deal of importance in creating a pitch that will resonate with a wide audience: this is an investment in time and money, but done well should help you to gather the cash you need to take the next step. Businesses who use crowdfunding to gain funding for new ideas or start-ups can also benefit from the valuable feedback that their pitch gets from both potential customers and investors.

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A guide to business cash flow health If you want to learn the secret to successful business repeat this phrase: Cash is King.

Cash is one of the few things your business really can’t survive without. Take some time today to read up on some easy measures for protecting your business cash flow. If you’re running a business, then it’s important to remember at all times that Cash is King. Whether you’ve heard the phrase before or not, you should repeat it to yourself at least five times a day. Every business needs to manage their cash carefully to ensure their survival.

Here are five tips for taking control of your cash flow to ensure the success of your business. 1 Create a cash flow budget If you’re going to manage your cash position as a business then you need to know what it is. Start by building a business cash flow statement and work it into a forecast that will allow you to look six to 12 months into the future. Your cash flow forecast should incorporate all your business costs, both fixed and variable, as well as


your revenue and any other expected income. Looking into the future should allow you to anticipate any issues you may have where income does not meet outgoings and you’re going to be short of cash.

case you experience a sudden drop in revenue or a customer is late in making a payment.

If you see a shortfall in your cash flow forecast then start to plan the remedy today. There are a range of finance options available through your bank or alternative finance providers. Planning ahead means you should have plenty of time to find the best solution to meet your business’s needs.

In case of a cash flow emergency you may also find it advantageous to set up a finance facility with Fifo Capital. This basically allows you to choose your preferred type of finance and get pre-approved so that you can switch it on quickly if you need it. There’s no cost to set it up, it just works like a safety barrier to stop your business crashing in a cash flow crisis.



Manage a cash reserve

Be realistic with your sales volume estimates

If your business is operating with a cash balance of zero you’re going to find it very hard to function. Business cash flow challenges are rarely within your control so without a buffer in place you could easily find yourself facing a cash emergency.

There’s nothing wrong with being optimistic in business – until it comes to building forecasts. When you build your cash flow forecast and plan the future of your business it’s important to be realistic with your revenue expectations.

To protect your cash position it’s advisable to maintain a balance that’s equivalent to at least two months of operating expenses. That means that you’ve got reserves in place to protect yourself just in

Realism will ensure that you take action now if it looks like your sales are not going to support you achieving a breakeven position. You can also take a close look at your costs and understand if there’s

action that can be taken to improve your overall finances. Working with a mentor from within your own industry, or a financial advisor who has experience dealing with similar businesses, will help you to build a context around your predictions. Forecasting revenue is notoriously difficult for businesses in their first three years so canvassing feedback will help you ensure your expectations are objective.


Stay focused on collecting revenue from your customers

Your customers have the power to make or break your business with their ability or inability to pay their bills. Because of this it’s incredibly important to micromanage your invoices and set up a robust structure around customer payment.

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This will ensure that both you and they know where you stand. Credit checking up front will help to minimise the risk of customer non-payment. Follow this up with clear payment terms agreed in writing. Consider implementing early payment incentives and late payment penalties – both can help to reinforce to your customers your expectations around when payments will be made. The most important tool for managing customer payment is regular communication. Being constantly in touch with customers keeps your business front of mind and allows you to keep them across imminent payment deadlines before they happen, reducing the risk that they are missed and you are left without the cash you need.


Invoice management is a time consuming process so it’s certainly worthwhile investigating automation where possible. Customers will quickly pick up on any failure to issue invoices on time or chase late payment, and will often assume this means they can miss deadlines themselves. Close management of your deadlines is a key part of reminding customers to meet the time-scales you set.

It’s easy to begin your business with coffers filled with cash and find yourself tempted by products and services that promise to make running your business even easier. Take the time to carry out a cost-benefit analysis on any opportunities: then you can be sure that any decision to spend is backed by the knowledge that it will deliver a positive revenue impact on your business.

5 Keep a tight hold on your purse strings, especially through start up

Cash is King, and as a business owner it’s important to protect your cash reserves as they are essential to your success. Your business cannot function without cash, so it’s important to put it at the centre of everything you do today and chart a cash positive course for a successful future.

Every dollar your business spends reduces your cash reserves and moves you closer to a potential cash flow crisis. The best way to protect your cash is to create a budget for the spend you know you need to make, and then stick to it.


7 smart ways to fund your business If your business is in need of funds, then it’s good to know all of your options. You might be surprised at the range of ways that you can get cash for your company. Businesses require funding at different stages in their growth. If you’re looking for a boost to your cash reserves or a lump sum investment to support a new direction, there are a range of options available; here is just seven.


Product pre-sales

Pre-selling your product is a great way to raise funds for inventory and also demonstrate the potential of your business to other investors or possible retailers. Make sure you set clear timelines for delivery of the product if it is not available at the time of selling.


Bank loans

There are different structures and terms for bank loans so to a large extent you can pick and choose the loan set up that works for you. With a bank loan you decide how much you want to borrow and how long you want to borrow it for. Take your time and shop around for a set up that suits your business needs.

If you’re looking for funding for your business, then choose carefully. Your funding needs to support your business in the short term and help you maintain profitability in the long term

short term and only uses the customer as security, this is a good form of finance to manage alongside other financial agreements.



If you’re willing to share your business idea with a wide audience then you could consider crowdfunding. By gathering small donations from a large number of people you have the potential to reach your fundraising targets.

Motivating investors can be very tough. You can impress them by understanding both your market and the business opportunity in great detail.


Angel investors

It’s important to know your business well if you want to attract Angel investors. Angel investors don’t like to follow trends and are looking for businesses that demonstrate a unique understanding of their market.


Venture capitalists

Like angel investors, venture capitalist are very selective with where they share their cash. Venture capitalists prefer to work with business that are set up within fast growth industries and have already defined clear exit strategies.


Competitions and grants

Businesses that deliver within areas of specific interest to governments or large corporations could benefit from awards. Whether competition or grant based, it’s worth investigating if your company’s interests intersect with any areas that could yield additional funding.


Invoice factoring

If the gap between issuing invoices and being paid is causing you cash flow issues you could consider invoice factoring. It’s also a good option if you need fast access to cash for a short period of time. With invoice finance the cash you access is what you have already earned but not yet been paid. Because the agreement is

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Prove trade mark use and distinctiveness The large United States-based convenience store business, 7-Eleven, has been trading for over 50 years. But they recently discovered the importance of using their mark in the jurisdiction they wish to register it in.

didn’t operate in New Zealand at the time of filing their application. They were relying on their reputation and long use overseas, including use of the mark in movies, as well as recognition by Kiwis when holidaying abroad.

be that over time, whether by use of the relevant mark in New Zealand or other circumstances, 7-Eleven’s mark will acquire the necessary distinctiveness in New Zealand. However, on the evidence before me, I consider that is yet to be the case.”

In 2012, 7-Eleven filed a trade mark application for their device mark in New Zealand and Australia. Their device consists of three horizontal bars coloured orange, green and red without the words “7-Eleven”. While 7-Eleven’s Australian application eventually proceeded to acceptance and registration, the Intellectual Property Office of New Zealand (IPONZ) found the 7-Eleven mark lacked distinctive character and refused to accept the mark on this basis.

IPONZ did not consider that 7-Eleven’s use of the mark sufficiently demonstrated the mark had become a badge of recognition in New Zealand. 7-Eleven appealed the Office’s decision before an Assistant Commissioner, but were unsuccessful.

This decision reinforces that demonstration of use of a mark in the jurisdiction of interest is paramount to a claim of acquired distinctiveness. Where a mark of low inherent distinctiveness is not used in New Zealand, it is difficult to obtain protection. Although evidence of ‘spill-over’ (from the likes of movies, etc) may assist a claim of acquired distinctiveness in New Zealand, there must be some use in New Zealand. However, the decision does not rule out the possibility that a mark can become distinctive with minimal use in New Zealand, although strong evidence will be required.

As in Australia, in New Zealand a distinctiveness objection can be overcome when the applicant can demonstrate the mark has become distinctive through use in the marketplace, so that the average consumer associates the mark solely with their business. So naturally, 7-Eleven filed their evidence showing use of the mark. Although 7-Eleven operate in several countries including Australia, they


The Assistant Commissioner agreed with her Office’s decision. The use and registration of the mark in other jurisdictions was not sufficient to establish acquired distinctiveness for the mark in New Zealand. In deciding the mark was not distinctive and had not acquired distinctiveness, the Assistant Commissioner stated that, “It may

Where a mark of low inherent distinctiveness is not used in Australia, it is difficult to obtain protection. Although evidence of ‘spill-over’ (from the likes of movies, etc) may assist a claim of acquired distinctiveness in Australia, there must be some use in Australia.

Use your trade mark or lose it Once your trade mark is registered it’s not necessarily yours forever. The owner of a trade mark registration must continue to use the mark to ensure it remains their property. In Australia, after a five year “grace period” starting from the date of application, anyone can apply to remove a trade mark from the register if it has not been used for a continuous 3-year period. Applying for removal of a trade mark can have benefits if you have applied for a trade mark and find there is an existing mark which is blocking the acceptance of your mark. If the mark blocking yours has not been used for more than 3 years, so long as the grace period has expired, you

It’s important to use your trade mark and actively promote it and build its profile in the marketplace.

can apply to have that mark revoked from the Register allowing your mark to proceed to acceptance. In New Zealand, a mark can be revoked if it has not been used for a continuous 3-year period from the date of registration. There is no grace period. Simply registering your trade mark is not enough. It’s important to use your trade mark and actively promote it and build its profile in the marketplace.

Articles kindly supplied by Zone Law Ltd. Zonelaw.co.nz

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Digital banking – revolution not evolution The banking sector must embrace digital transformation Are you ready for the next big technological revolution? The banking sector needs to adapt for survival because the age of digital transformation has arrived. Will they be able to transform themselves or will they lose the battle to become digitally proficient? “Emerging alternative non-bank players – more commonly known as Fintechs – are beginning to transform the financial sector by revamping offerings and solutions in the new digital landscape; some creating sustainable disruption practices while others are enabling their clients to do more with less.” [Deloitte: Digital Transaction Banking, Opportunities & Challenges]

The financial services industry is in the midst of a digital transformation. It’s most typically characterised as a battle between old and new, with new innovative businesses competing against traditional banking service providers. But can banks adapt to fulfil the evolving needs of their customers in the changing financial services marketplace?

The rise of the digitally savvy It is the need of consumers that is driving the revolution in the banking industry. In it’s report Digital Transaction Banking, Opportunities & Challenges, Deloitte estimated that by 2025, “Generations X, Y, and Z will account for 75% of the total USD 2.5 trillion spending power of endconsumers in Australia, Hong Kong, Malaysia and Singapore.” This combined spending power of the digital natives and digitally savvy requires banking to join the digital space. For traditional banks this means they must now adopt a strategy of conquer or be conquered, and that isn’t an easy move to make.


“A concern that the banks have is the arrival of big ecosystems that will replace them, so Google, Facebook, Apple, etc,” says Alessandro Hatami, former digital payments and innovation director at UK bank Lloyds. “These are customer-based. The customers are already users of these environments. If they start pushing financial services to their own customer bases, these ecosystems can potentially take customers away from

New customer centric players are entering the financial services market, and traditional banks are quickly discovering that their market position is under threat from digital advancements the banks.” [source: How technology will transform banking in 2016]

An industry evolution or revolution? Some commentators liken the revolution that the financial services industry faces to the changes that home entertainment underwent when Netflix replaced Blockbuster, or the impact that Spotify had on the music industry. Digital technology is likely to change both the face and structure of the banking industry. The biggest challenge that banks face is that

becoming digitally adept requires both a cultural and physical change to their operating structures. And it needs to happen fast.

service and digital platforms carries them on the path of innovation. They successfully maintain their presence in a digitally focused marketplace.

In today’s banking world, existing banks are struggling to realign themselves. Many are battling infrastructures that are not suited to the flexibility they will need in digital environment, with legacy technology and business processes that do not fit with the fast paced developments and collaboration that is typical of the digital age.

Whichever direction traditional banking follows, it’s important that they recognise that playing in a digital marketplace requires more than just a desire to make customers happy. Businesses that embrace technology and innovation are more than just customer centric, they are culturally unique.

Adapt to survive Largely for the existing players their future can be split into two scenarios, as outlined in Accenture’s report The Future of Fintech and Banking: Digitally disrupted or reimagined?. Scenario 1 is “Digitally Disrupted”. In this scenario banks are unable to complete their own internal evolutions in order to compete in the new digital marketplace. This inability to evolve could be driven by existing regulations or cost structures. Whatever its cause, the end result is that traditional banks are left behind as new players enter the market. The new players are customerfocused where existing banks have become product-centric. This leaves them well-positioned to introduce new, more effective, financial products and services that are attuned to a digital age. Scenario 2 is “Digitally Reimagined”. Banks succeed in transforming their product-centric structures and become more customer focused. Their ability to imagine and improve their customer’s lives with smart

Embracing open technology/ innovation Open innovation ensures that technology evolves with multiple internal and external inputs, continuously adapting and developing to match the evolving needs of the end consumer. This kind of collaboration usually requires open access to technology for developers who compete and vie to create the next step change in innovation.

Collaboration/co-innovation Collaboration is an essential facet of digital business. Not just collaboration within technology or inside a platform, but also the wider reaching collaborative opportunities that come from working between and alongside other industries and businesses that service the same customers. Banks are no strangers to collaboration within their industry: working together across payment platforms or regulatory requirements. This larger opportunity for collaboration will require a step change towards more lateral and innovative thinking.

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Reach maximum efficiency with lean management principles


For businesses focused on maximum efficiency and continuous improvement, lean management principles have a lot to offer. Lean management is a set of continuous improvement principles that has been implemented with varying success across different industries. The principles of Lean began in the Japanese manufacturing industry, and have most famously been adopted successfully and developed by Toyota into their Toyota Production System. But the waste reductive theories that underpin Lean practices actually trace back far into history. Lean as a phrase is much more modern, and was coined in 1988 by

John Krafcik in his article, “Triumph of the Lean Production System” based on his master’s thesis, which went on to form the foundations to the now international best-selling book The Machine That Changed The World, co-authored by Jim Womack, Daniel Jones, and Daniel Roos.

What is Lean Management? In effect Lean principles provide a more efficient and effective way to do business. A commonly held view is that Lean is represented by the toolkit of techniques and practices that support the elimination of waste. However the Toyota Production System holds that Lean is the practice of eliminating

waste, and the tools are secondary, providing ways to make that happen.

The elimination of waste Originally in Lean practice waste was defined by the three Japanese words: muda, muri and mura. For modern Lean practitioners waste exists in 8 states, which are defined as: defects; overproduction; waiting time; un-utilised talents; unnecessary transportation; excess inventory; extra motion; extra processing. The principles of Lean focus on reducing these forms of waste across the entire business and thereby driving positive benefits.

In effect Lean principles provide a more efficient and effective way to do business.

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Cost reduction Cost reduction is a natural side effect of successful Lean management practices. What is important is that cost reduction is not the formative thought that drives the Lean process, but rather that it is the output from the reduction of waste. Cost reduction can come from a range of practices such as more efficient use of resources; less stock-piling of materials and products; and removal of product elements that do not add value to customers.

Perfect work flow Perfect work flow is a target of Lean manufacturing, as it eliminates many of the different types of waste. Perfect work flow is achieved by mapping the value stream (value stream mapping) from the beginning of a process through to the end customer, and identifying then eliminating any element which is non-essential or does not add value. Another element of perfect work flow is achieved by managing defects by avoiding peaks and troughs in workflow. A good example of the detrimental effect of inconsistent workflow would be a production plant who have a quarterly production target to meet and so put in extra time and increase the speed of production in order to achieve it. The inevitable output of the stress on both workers and machines would be seen to be an decrease in quality levels due to both machine and human errors. Lean practices avoid placing their people or equipment under physical or mental stress


as it is believed that natural limits should be managed for optimum productivity.

Efficient use of resources Lean has a strong reputation for efficiency and this translates to a smooth production flow often referred to as ‘right things to right place at right time in right quantity’. This is a direct path both to improved quality and reduced stock piling. Materials are only purchased as they are needed thanks to a Kanban or trigger, which indicates optimum reordering points for minimum stock holding. Similarly, companies do not manufacture large quantities of product which cannot be sold, as there is no value in product that rests in a warehouse. People and machines are also regarded as resources, and so the consistency of operation supports quality as neither are put under undue strain and therefore good production practices can be adhered to and optimum processing delivered.

Increased value to the customer Lean management principles extend beyond the production line to the design of the product itself. A focus on eliminating extra processing requires that the configuration and attributes of a product be evaluated to ensure that they deliver value to the customer. Any element that does not add value translates to a waste of resource

throughout the manufacturing and production processes, and in the product itself. Removing non-valueadding attributes contributes to the efficiency of the product and the removal of waste.

Continuous improvement One of the best recognised principles of Lean in the broader business community is the practice of continuous improvement, but like many Lean processes it is open to misinterpretation.

Continuous improvement is successful as part of Lean because it is a cultural tool that is embraced from the top of the business down, and is adopted by every member of a company. Continuous improvement empowers workers by clearly communicating goals and strategies. Staff are then challenged to create smart strategies for improving their own processes in order to contribute to those goals. The process focuses upon an iterative cycle of PDCA (Plan Do Check Act) which is recognised as effective as it allows the evolution of processes and the adoption of continuous improvement. PDCA has more recently been championed as an effective tool for start-up businesses, where it is increasingly recognised as a smart strategy for evolving a product

concept before fully conceptualising and materially producing it. PDCA allows entrepreneurs to quickly bring to life their ideas and then incorporate feedback. By evolving both creative design and financial thinking they can quickly progress to a product that achieves targets by meeting the needs of their customers and their financial goals.

Creativity and innovation from the ground up Lean manufacturing processes create a culture of ownership. Staff are empowered to make their sphere of influence as free of waste as possible. And because efficiency is increased and waste is reduced, it becomes possible to instil in the workforce a culture of creativity and innovation.

increasingly engaged in working collaboratively to bring greater success to the business. Problem solving leads to creative thinking and those who build the product are challenged to come up with ways of innovating and improving the product in a way that adds further value without increasing waste. Lean manufacturing may focus on eliminating waste, but it’s success is in the complete package of waste elimination, improved efficiency and increased staff engagement. From the customer’s perspective they can rely on consistent product quality and standards of service.

From the employee’s perspective they are involved in the decisions that affect the way that they work, and they are empowered to improve their own productivity and influence the success of the business. It’s easy to see why Toyota see Lean as more than just a toolkit and believe that the reduction of waste is really the core principle.

“Only the last turn of the bolt tightens it – the rest is just movement.” Shigeo Shingo, Japanese Industrial Engineer and leading expert on manufacturing processes and Toyota Production System.

People become involved in ideas for improving processes and become

Briefly... Lean management focuses on the elimination of waste to drive greater efficiency

Lean began as a set of continuous improvement principles that were applied in Japanese manufacturing, but its principles are now adopted by a varied and diverse range of industries

Start-up businesses can benefit from Lean management processes when they evolve their product prior to finalising the concept.

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The implications of BrEXIT ... continued from page 2 The intellectual case for Brexit centred around economic regulation and political sovereignty, whereas the political argument – which was targeted at everyday Britons with force – was based on the emotionally charged liberal internal migration rules.

18-24 24-49 50-64 65+

With a few exceptions, big business was in favour of Britain remaining in the EU, as it’s easier to move money, people and products.

This all led to a historic vote on 23 June 2016 The referendum saw Brexit win with 52% versus 48%. Turnout was a massive 71.8%, with more than 30 million people voting. Scotland and Northern Ireland both backed staying in the EU. It’s interesting to see that UK’s new tax base voted to Remain, and will have much longer to live with the decision of their elders.


Here’s the age split of voters: 18-24: 75% voted Remain 24-49: 56% voted Remain 50-64: 56% voted to Leave 65+:

61% voted to Leave

Racism attacks on the rise Post-Brexit, racial abuse has been on the rise, with Muslims and the Eastern Europeans being targeted the most. The Police treat these as hate crimes.

What does the future look like? There’s no precedent for a country leaving the EU, so this won’t be a straightforward process. The EU is questioning whether the margin is wide enough to be a legally binding decision based on EU regulations, and is discussing whether it can force a second referendum. They also know that Brexit wasn’t a legally binding referendum. The decision has not yet been ratified by Westminster and London hasn’t submitted the formal departure process to Brussels. Prime minister Cameron said he would leave this to the next leader when he steps down as PM in October 2016. But should the British invoke Article 50 of the Lisbon Treaty (which sets out exit rules), the parties have two-years to negotiate a deal. If no deal is negotiated in this time, the UK’s membership in the EU would automatically expire.

At issue is whether any EU treaties and laws would continue to apply to the UK after it leaves. Until then, the UK will continue to abide by these, but not take part in any decision-making.

Brexit places the EU at a crossroads. We could either witness a domino effect where other countries opt-out of the EU, or the EU will become even closer.

our exporters being the boosting of New Zealand’s currency. The kiwi is currently trading around 53.96 British pence, and is also up against the Australian and US dollars.

Britain could negotiate a deal with the EU, similar to Norway’s. They’re not a EU member, but voluntarily agreed to abide by most EU rules in exchange for most of the benefits of EU membership. So British businesses could in theory be granted the same preferential access to the EU that they enjoy now. However, EU members have already expressed that Britain can’t cherry pick the best parts of the EU.

The Scots may press for a new independence referendum, and if successful, will seek to join the EU. Northern Ireland could follow suit. British businesses with substantial EU interests might then relocate from England to Scotland.

New Zealand’s Finance Minister Bill English insists that NZ is better placed than most countries to manage the decision of British voters. He said New Zealand was comparable with countries such as Iceland, South Korea and Australia and had a “combination of reasonable government finances, a reasonable growth path, and room for interest rates to move.”

At stake is half of the UK’s trade that occurs with the EU, and trade deals with a further 60 countries which are governed by agreements the EU has negotiated. However, trade and investment flow both ways. The UK is the second largest economy in Europe and the fifth largest in the world. Outside the EU, Britain would be free to sign other trade deals with the likes of India and China.

What are the markets doing? Following Brexit, the British pound dropped 8% after the first trading day. This took the pound to its lowest value since the 1980s. The UK government estimates that exiting the EU could reduce the British economy by up to 7.5 percent by 2030. Yet, global financial markets appear to be mostly shrugging off the Brexit result, with almost all major markets recovering their postBrexit losses. However, currency markets point to choppy waters ahead for the British economy; the unwanted result for

NZ Traders believe the Reserve Bank will cut the official cash rate to 2 percent from 2.25 percent on August 11. There’s still a lot of uncertainty, but overall the market appears to be tracking for a positive outcome. These are interesting times, which we’re following at Fifo Capital. Overall, we think it is business as usual and agree with the NZ finance minister, that our economy will be relatively protected.

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The little company making big waves in the cloud ... continued from page 4 “We spent a year working purely on Quotient. There was no deadline but plenty of effort. It was a slow, agonising start, thanks largely to our bootstrapped approach—no big marketing budgets here—but then once the sales needle moved steadily upwards, it showed no signs of slowing. Happy customers were helping spread the word about Quotient,” says Dale. A favourite feedback of theirs is from a customer called Dan: “If these guys made beer it would probably be the tastiest beer around. But instead they make bloody great quoting software that gets jobs accepted. Well done.” It sums them up nicely too. Despite their success, they’re everyday guys where little fazes them. Like when Xero launched their quote functionality. Quotient integrates with Xero, and in the early days a lot of their customers were also Xero customers (many still are). The Xero integration was instrumental to their early growth. But what many customers found, including returning defectors, is

Use Quotient anywhere from any device.


nobody does quotes like Quotient. When you specialise in one thing and do it really well, it’s hard to compete with that depth of thinking, design, quality and intuitive approach that simply makes life better and ultimately more profitable. Quotient has a growing list of integrations with other apps including Intuit’s QuickBooks Online, Insightly, Capsule, and MailChimp, with more on the way. Integrations with appropriate apps can be real time savers. For instance, when a Quotient quote is accepted online, it automatically appears inside Xero as a draft invoice. Then all you need to do is approve and send it to your client. No more double-handling or cross checking. It’s all done for you. Fast-forward to 2015 when they sold their web company to a local competitor to concentrate on making Quotient the best online quoting system on the planet. To date, nearly 2,000 businesses (and growing every day) around the world agree with them. “It’s a positive affirmation that we’re doing something right,” says Dale.

What has inspired you? “Making awesome software. Apple’s approach inspired us. They were willing to make a few hard design decisions for the benefit of the user

experience as a whole,” says Nathan. The book Re:work by the guys behind 37 Signals (most commonly Basecamp and Highrise) inspired them too. They had a scattergun approach to products, and developed one every three months, for a twoyear period. Then one day they were only concentrating on Basecamp. “We thought this was really interesting. We could apply what we had learnt and put this into another concept, and build something easier than starting from scratch. But that would only distract us from doubling customer numbers in Quotient. So it was great observing their journey and learning from it,” says Dale.

What’s your model? “We’re bootstrapped – profitable and proud. Customers love what we do, so being self-funded has worked for us. If we had a much larger team to fund, this might be different. “If we had investors they’d come with different priorities. But we will always be focused on our customers and developing the best quoting system for their needs, not shareholder goals, or profit, money or ROI. So as the product grows, it gives us more freedom to make our own choices,” says Dale and Nathan.

What’s your design and development methodology? “We are design-centric. We hate clichés, but ‘keep it simple’ is a real driver for us. We started in graphic design and the emphasis back then was on fashion. Clients needed to look cool, but not necessarily be super-functional. We had a big shift in our thinking on what makes good design. Things have a natural flow and a good feel. You’re not sure why it feels good but it resonates with you,” says Dale. “As we are smaller we can see through the layers – aesthetic design, and the engineering behind it, and how they combine to become a good user experience. So we started with a need ourselves and we had the ability to tie it all together as we are cross disciplined. Know the chain, how it works and why. In the end this makes each component stronger,” says Dale “As companies get bigger those roles separate out and you may lose touch with that connection. So the advantage for us, by being small, is we get to touch everything and see it through to the end,” says Nathan. With Quotient, Dale and Nathan are in a state of constant iteration. They have their update path and development plan. And they’ll often park things until the timing is right. So on one hand they aren’t constrained by time, like if they still had the web development clients with their deadlines. But everyone and everything is moving and innovating fast, so in that sense they

are still under the pump to evolve and get their plans to the market as fast as possible.

Why do you do what you do today? “Ultimately, we spend time on what truly matters to our end user. If we do a good job, and continue to make the product better, Quotient will sell itself. We’re not driven by money, because we are already pretty comfortable. We do what we do because it is exciting; we love making good stuff and delighting people; the human connection is important to us. Getting great feedback is exciting too,” says Dale. “Being able to have a product in the marketplace that competes on the world stage. And being able to improve on it and work in an exciting industry is gratifying. The design and engineering side is personally rewarding for us, as well as not working for someone else,” says Nathan.

What big lessons have you learned? “Learning how to manage feedback has been huge and knowing what requests to filter out. Email makes a hero out of anyone. (We all laugh.) So have a thick thin,” says Nathan, who handles customer care. “Carve your own path and know what to focus on. For instance, we read a book and did everything opposite to it. So don’t necessarily follow what someone else is doing. Don’t assume the competition is doing it right. We have been caught looking elsewhere for validation. Just figure out what needs to be done for yourself; it’s the easiest path to where you are heading,” says Dale. They’ve also learnt that you can’t be all things to all people; don’t get too hung up on stuff – just get it out there.

Would you do anything differently? “We’re happy to admit we can always do things better or differently. Nothing is sacred here. But we keep it light as we have the same common goal. You have to give up some personal attachment or it would get on top of you,” says Dale.

What’s the vision for Quotient? “The goal really is to continue making a great product that fulfills a big problem and gets more customers for our customers. If you focus on having a good product you don’t have to worry about money or being the biggest. It comes naturally. We like to help people make more money by being more professional and organised and saving them time,” says Dale. “Quotient is still evolving. We’re working on some great features to make life even sweeter for our customers. We’re continuing with more software integrations and recently launched a range of quote examples for different industries, which is receiving a lot of positive feedback from our customers,” says Nathan. After spending time with Dale and Nathan it’s like watching a combined, powerful mind where they finish each other’s sentences. They have a deep mental connection that shows in their work. They sense check everything with each other. Nothing is ever rushed. Everything that is in Quotient is there for a reason. They’re methodical and precise and it shows in the quality product that is Quotient. It’s a purity that is rarely witnessed in business. If you create quotes and want to make a better impression with your prospects and customers, you can trial Quotient free for 30 days at www.quotientapp.com

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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.

National Head Office Call Fifo Capital today on 1300 852 556

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Profile for Headway magazine

Fifo Capital Headway Magazine, Q3 2016 Australia  

Fifo Capital Headway Magazine, Q3 2016 Australia