Sunday, September 17, 2017

How to increase profits in your small business

You can’t stay in business for long unless you’re making a healthy profit.

small business AustraliaAs an entrepreneur of course you want to pursue your dream and passion; but at the end of the day you’ve got to be making enough money to be paying all the bills ..... And let's not forget paying yourself a reasonable wage to make all the hard work and long hours worthwhile.

At its simplest, in order to increase profit you need to be able to either increase your revenue, or reduce costs and expenses. Let’s explore these broad strategies a bit further and turn them into seven practical tips …..

  1. Increase sales by increasing your customer base. This could be done through local promotions, retail displays, targeted email marketing campaigns, or online Google advertising.  Encouraging referrals from satisfied customers – and using testimonials from satisfied customers in your marketing. Ensure staff have been properly trained and resourced so that when your promotions succeed in generating new enquiries, these will be converted to sales. When you focus upon expanding your customer base, take care that this is not achieved at the expense of compromising service quality to existing customers – repeat business from loyal customers is the lifeblood of any successful business. Also take care that you're not spending so much on advertising and marketing that it outweighs what you gain through acquiring new customers.
  2. Expand your line of products or services. In other words, you will be able to offer a wider range of solutions to existing customers. Increasing the opportunity for cross-selling and leveraging the relationships and goodwill you have established with your existing customer base to sell more items to them. Are there existing product lines that could be expanded with “accessories” for example? Selling belts and not just trousers, or selling pet food and not just pets.
  3. Reduce operating costs and expenses.
    Sometimes, this can be achieved through negotiating more effectively with existing suppliers – or investigating alternative suppliers that can offer you a better deal. It could be that if you have been with a particular supplier for a prolonged period of time that they may have become complacent in their pricing with you. You might explore with them whether you could obtain a better unit rate through increasing the volume of your order, or changing required delivery times for example. .Even simple savings through introducing energy efficiency initiatives in your business can contribute to reductions in power bills. And finally – ask your accountant if there is anything you can do to ensure you are claiming all possible tax deductions
  4. Consider increasing your prices. This can be a scary thought ….. Obviously care must be taken that you don’t price yourself out of the market – and you need to keep an eye on your competition. However if you are offering a strong value proposition to your customers, in terms of either a clear advantage in quality, delivery time, or service and support for example – then many customers are prepared to pay more.
  5. Prune your offerings – so you can focus your efforts on the more profitable items. It may well be that some of the products or services are not providing a reasonable margin for you – and its time to re-direct your energy and resources towards the items that are more important to the success of the business.
  6. Get better at credit management. In other words, be active in chasing up debts so that people or businesses who owe you money learn that they need to pay you on time. Setting tighter credit terms and shorter payment terms will help to improve your cash flow. Have a clear credit policy in place so that you automatically turn off supply to debtors once their debts go beyond a reasonable trigger-point. There are too many examples in the construction industry for example, where trade sub-contractors have ended up being owed tens of thousands of dollars because builders went out of business. They continued to offer generous credit terms and continued working in the vain hope they would eventually get paid by the builder. There were instances where these sub-contractors were lucky to be paid one in ten dollars by Receivers.
  7. Ensure your staff are productive. If your business employs staff, then wages are a significant expense. So take the time to hire the best people up-front; they will subsequently require less direction and supervision from you. And when you have quality staff that you treat well and actually engage them in your business – then they will contribute ideas and suggestions that will help to improve efficiency and enhance service delivery to your customers. Ensuring your staff are fairly rewarded for good work will reduce staff turnover and avoid expenses associated with hiring and training new staff. But even when you have good people working for you, there will still be instances where it will be more cost-efficient to outsource the performance of certain tasks rather than performing them “in-house”. Book-keeping might be one example of such a task within a small business - outsourcing it can allow you and your team to really focus on what you all do best.
In summary – a growth in profits  for your business will more likely be achieved through a combination of these strategies rather than one in isolation. Whatever changes you decide to make in the business – the key is always to carefully trial and then measure outcomes to check whether the change should become embedded in the practice of the business, or perhaps you discover that it's not an idea worth pursuing. Although over time you will find some ideas don't work, it is a healthy sign that that you continue to improve the business through innovation

Further posts & articles on this topic
Small business and how to boost sales ; 
Why small businesses fail to grow : the E-myth 
The entrepreneur and the inner game of business

Author
Brian Carroll is the editor of Australia Small Business. He is the founder of Melbourne based Performance Development, a corporate training & HR consulting business that has been established for more than 25 years.

Monday, September 4, 2017

Five quick tips if you’re thinking about starting up your own business

starting up your own business
So you’re toying with the idea of starting up your own small business - but you’re still uncertain about either whether to do it or how to go about it. Of these two possible uncertainties, resolving the first issue will determine whether you need to worry at all about the second issue. 

Although there is definitely some merit in the old adage to "follow your dreams", there is still a need to ensure that there is as much"head" as there is "heart" in your decision making  . Yes, you want to be doing something that you're passionate about - but you need to be able to pay the bills as well.

So here’s five quick practical tips that might help you, if you're contemplating the entrepreneur's path … And by the way, you might like to also check out the link Small Business Resources
  1. .If you don’t have bucket-loads of grit and resilience in your character, then now’s not the right time for you to be looking at setting up a business.  It doesn’t matter how good your business idea is, the fact is that starting and running your own business will prove frustrating - and will inevitably challenge you to draw upon all of your inner resources. Yes, it can prove deeply fulfilling to build and create something from scratch – but there will be many periods of disappointment and stress. In the early days, there will likely be times of cash-flow strain, when you will be kept awake at night with the anxiety of worrying whether your monthly sales will exceed your monthly costs and expenses. It's a sobering statistic when you read that almost half of new businesses have "closed shop" within two years of opening…….. But if you are someone who is eager for the challenge of being your own boss, not easily discouraged, and if you are also  highly self-motivated - then read on ......
  2. Be conservative when projecting your sales versus costs  Once you decide that you want to stop just dreaming and start exploring the real viability of your business idea, then it's time to put your business plan together and take a serious look at the numbers, It is wise to be a little conservative when developing your business plan and projecting future sales – rather than being wildly optimistic about revenue and thereby possibly over-committing on your early expenditure because of  an unrealistic expectation of strong sales.
  3. Keep an eye on your competition. Who is already playing in your space … how will you differentiate yourself from them? …… Alternatively, maybe there are no current players and there really is a gap in the marketplace for your product or service. Perhaps nobody else has yet seen the problem for which you will be providing people with a solution ….. However, you still need to consider the potential cost or ease of entry for a new player in the future. In other words, were you to succeed with the commercialisation of your idea – even though at present there may be an absence of competition – chances are that others will eventually see your success and seek to copy what you do. So even after you’ve established your business, you’ve got to continue to learn, improve and innovate.
  4. Selecting & registering your business name.  This is one of the most critical early decisions that you will be making. There are two schools of thought on how to do this. One option is to choose a “quirky” name that is different and therefore memorable for your customers. Examples of this might be Google, Apple or Bing. …… The other option is to choose a name that clearly reflects the service or product that you offer. For example Anderson’s Landscaping Services. This might also reflect that it is a family business. However it can be very effective to add a “local” aspect to your business name if you are going to particularly target a local market. For example, Bayside Gardening Services or Eastern Suburbs Engineering. If possible, align the domain name of your website with your business name – although this is not essential it is generally preferable to have that consistency. Within Australia, ASIC is the government agency where you can  check business name availability. Even if you intend to set up your business as a sole trader, you will likely be required to apply for an ABN in order to register your business name, after you've established that it is available (the ABN  on-line application is free - although a tax agent would likely charge you a fee to do this on your behalf).  In 2017, the annual cost of registration of a business name is $35. For creating your business website and selection of a domain name, Wordpress is a very popular and affordable platform for those who want to save some money and do-it-yourself.
  5. Start small and test the market. You don’t necessarily have to quit your day job in order to test the viability of your business idea. Let’s say for example you intend to sell hand-crafted aromatic candles. Before taking out a long term lease on a store and setting up shop, you might first try selling them at local markets. Maybe you set up an affordable on-line e-commerce store and process your orders in the evenings after work. ……… Over time, if you discover that a steady demand for your product or service does exist and your sales clearly confirm the opportunity exists, then you might decide to commit to your business venture “full-time”. 

In closing, let me say from having started and run my own consulting business - Performance Development - for more than 25 years, it has been both a hugely rewarding yet at times extremely stressful experience. You might perhaps ask if I had my time over, would I do it again? ...... Absolutely ...... But whether it is the right path for you, will be your decision. By all means, consult with other people that you trust and respect - and consider their advice and suggestions. But ultimately it is going to be about what is right for you (and your family, if you are the main bread-winner)

Other relevant articles - "Mental toughness and running your own business" and "Avoiding seven common small business pitfalls"  AND here's a link to a great brochure that you can download from ASIC (the government agency that regulates companies in Australia) which offers good practical advice on starting up a new small business "Doing Business in Australia"

Wednesday, June 7, 2017

Would you hire a mature aged worker?

Age discrimination is not a myth!


Too often, age is a barrier for older job seekers
In a significant number of companies and businesses around Australia, there seems to be a reluctance to employ those men and women who are aged over 50.

Perhaps because of a perception that the more mature aged worker is less open to learning and more resistant to change. Or maybe there’s a view that this age-group is unable to adapt to the use of new technology and are too “set in their ways”. 

Whatever the reason, the fact is there are many people seeking productive employment that are aged over 50 and have reported feeling they have been unfairly denied opportunities to re-enter the workforce because of their age (2016 report prepared for Human Rights Commission). Most employers would readily agree in principle, that age itself should not be a barrier to winning a job and that employment should be based on a person’s capability to perform the duties of the job.

However there is evidence that indicates that age-discrimination does indeed exist in the Australian workplace, with one recent study reporting that almost one half of hiring managers had observed age discrimination in their own organisation’s recruitment practices. ….. And this is probably why there is a financial incentive offered to employers to give this particular age group of workers a “fair-go”

In case you’re not aware of it, the Australian Government offers a $10,000 wage subsidy as an incentive for businesses to hire eligible mature aged job seekers. Given the aging population and the implications for the labour market, it is understandable that the government seeks to encourage employers to overcome their reticence in hiring “over-50’s”. 

A production manager explains why his  business hired an older worker
This article explores the experience of an Australian mid-size furniture manufacturing company, based in the eastern suburbs of Melbourne that have taken advantage of the Australian Government’s Restart wage subsidy. 

Coringle Furniture based in Melbourne, Australia
Coringle Furniture use Australian hardwood as the core material for products such as bed-frames and bedside tables which they supply to retailers such as Harvey Norman, Snooze and Forty Winks for example.

If their experience is any guide, then it would appear the mature aged job-seeker could be an untapped resource just waiting to be given a fair chance to show what they can bring to a workplace.

I met with the Production Manager at Coringle Furniture, David Roberts, who is a staunch supporter of Restart. It was David’s initiative to access the wage subsidy through a local jobactive provider (Sarina Russo).  The provider’s service can include pre-screening, shortlisting and even continuing to mentor the mature aged worker after their initial engagement – usually at no cost whatsoever to the employer / business.

The employee is named Van, and is of Burmese background. David says of him -
“Van is really keen to work and eager to learn”

The production floor at Coringle
Coringle Furniture demonstrates quite a commitment to diversity in their workplace, having hired several other Burmese workers. Like any workplace in which there is diversity - whether in terms of culture, gender, age or even personality – the key to making things work smoothly is staff having respect for each other and an acceptance of the differences that exist.

Anyone who has ever worked in a production or factory environment would be aware that it is typically one that is time, quality and target sensitive – with daily production deadlines and quotas that need to be met.

In this type of workplace however, working in a safe manner and adhering to all safety standards is a central part of being a productive employee. And so too is the need to get along with co-workers. David explained that Van fitted nicely into the workplace culture at their factory.

I asked David why his company decided to fill their vacancy through jobactive Restart and hire a mature aged worker.

David says Van has been a great addition to the team
He replied simply “Why wouldn’t we? ….. The older worker brings a wealth of experience. Often they are more settled in their personal life – and can provide a good stable and steady example to the younger one’s starting out in their careers. Van has proven himself to be a loyal and reliable worker and we have been really pleased with what he has been able to bring to our production team. All the other members of the team find him easy to get along with.”

David went on to say “We have no fear in hiring any job seeker who brings the right attitude, the right work ethic and some basic skills which we can then build on – regardless of their age, culture or background. The main thing for us is not the prospect of any wage subsidy – but more importantly is that they can do the job and work well with others. Getting along with others in the workplace is important, because we spend so much of our time at work, don’t we.”

Further testimony of Coringle Furniture’s commitment to this principle was their recent employment of a 62 year old to their production team – quite separate to jobactive Restart.

Watch out for “unconscious bias” clouding your  assessment of a job-seeker
Most hiring managers do not knowingly discriminate 
If your business or organisation has a vacancy, then consider hiring a mature aged worker through jobactive , which has the added benefit of being eligible for a Restart wage subsidy. And if you’re feeling reluctant, then maybe reflect on whether you may be guilty of making some negative assumptions and generalisations about a job seeker based upon their age. 

No-one is saying to give them an advantage over other job seekers – but simply to ensure they are getting as much of a fair go as any other applicant that you consider. It should be said that few hiring managers or small business owners would knowingly discriminate – instead it is more often in the nature of what is sometimes coined an “unconscious bias”.

By remaining vigilant to such a possible negative bias, and assessing every job applicant genuinely on their individual merit, then you will be more capable of making the right decision and appointing the best person to join your business ……. And maybe you will find another Van out there – just waiting to contribute their skills and experience to support the future growth of your business.

For more information about whether your business may be eligible for the wage subsidy, check out the jobactive Restart website

About the author

Brian Carroll is the founder of Performance Development, a corporate training consulting business. He regularly delivers Recruitment & Selection training to hiring managers in both public and private sector organisations, alerting them to the risks of unconscious bias

P.S  The ABC News website reports (April 28, 2017) on a recent study in which almost one third of Australians surveyed said they had perceived some form of mature age-related discrimination either in the workplace or whilst job searching in the past 12 months.

Monday, May 29, 2017

From Start-Up Tech to International Success- An entrepreneur shares his story

Richard Smith is co-founder of CleverLoop-  a business that markets innovative "smart" security camera systems for both home and business, that can alert you to any unusual activity.

Richard is responsible for international sales, marketing and growth. He has worked in both small businesses and large corporate environments - across Australia, New Zealand, the UK and the USA, including having a focus on China (he speaks Mandarin). He’s regularly asked to present at start-up and small business accelerator forums, particularly to share insights into doing business in China. 

I recently had the opportunity to have a long chat with Richard and posed some questions about his experience 

Journey of an Australian start-up

1. What inspired you to start your own camera security business? 

For a long time, I was one of those people bursting with ideas for running my own business - while still churning away at a well-paid 9 to 5 job ..... Starting a new business certainly fixed all that. However, the challenges were enormous, and I always advise budding entrepreneurs to be prepared for fast learning on the job, long hours and a pay packet that starts small. 

Instant millionaires are few and far between, but the deep sense of satisfaction, pride and achievement that comes with being in charge of your own destiny is immense, and continues to inspire me.

Together with a couple of friends who are highly technical, we kick-started our company. Our aim was to change the way that people think about camera security systems, particularly in terms of the benefits for home security and, more recently, small business security.

2. What were some of the early challenges you faced during the first year of start-up – which can be both an exciting and yet stressful time for many new small business owners?

In today’s fast-moving world, if a fledgling business is to thrive  then entrepreneurs need to be flexible enough in both their skills and thinking to work across boundaries and respond quickly to change  Thinking outside the square is essential in order to seize the opportunity when it arises

In our situation, CleverLoop needed a team capable of handling security camera system technology, hardware design and production, the development of leading-edge video footage analysis algorithms, the creation of user friendly Android and iOS security apps and integrating servers, as well delivering important business strategy, sales and marketing functions.

Whilst we could cover the majority of the skills needed within the core team, it took early innovation to bring the outcomes needed. For example, our approach to PhD students studying video footage analysis technology at a leading university provided us with key skills at the forefront of development, without the need for permanent or full-time staff in this area.

Our strategy towards staff location was also key. We decided early on that it made sense to have the best people doing the job, no matter where they were based, rather than selecting people because of a local location we were working in. A small but distinctive difference, which now means we have people in four countries working collaboratively together ‘virtually’.

Jumping the funding speed bumps
Another challenge that we faced, as do most new businesses in Australia and elsewhere, was how to get going when the costs of starting can be high. For us, we boiled this issue down to the need for a proof of concept.
" ...... we accessed large crowd-funding platforms"
How did we demonstrate that our concept for the future of smart security was marketable, before spending the time and money needed to manufacture a new camera security system? The reality is, asking friends and family will only get you so close to the truth.

We turned to large, international crowd-funding platforms, such as Kickstarter and Indiegogo. In the end we ran a campaign on Indiegogo and successfully hit our funding goal. Meeting the funding goal provided us with three benefits:

i.               Early money in the bank. Crowdfunding gave us a number of pre-orders paid upfront, which in reality is money that can go towards final development and initial manufacturing costs, which can be high.

ii.               Confidence. A positive response from the market gave us the confidence that we had a concept worth pursuing, a consumer product with genuine potential in the well-established security sector.

iii               Funding options. Positive market responses give venture capital investors the belief needed to back a team and a product with some serious funding, something we were lucky enough to secure.  
3. What have you learned about marketing?

Listening to your customers, when it counts
Listening to your customers is one of those fundamental concepts that we’ve all heard before. However, balancing what customers say with what you know is also important, especially when you’re looking to change some-long held beliefs.

Home security in Australia has long been dominated by back to base security systems that rely only on old-tech motion sensors and come with ongoing monitoring fees of $30 to $50 a month. Most people either don’t have a system, or if they do have some sort of burglar alarm, then they just don’t use it.

So how about a home security system easy enough to self-install, and one that sends alert clips directly to your smart phone security app whenever anything usual happens inside your home, at the front door or in the back yard? One that filters out the unimportant stuff like pets, trees and shadow changes, but that also lets you live view the cameras at any time if you do get an alert. And one without the monthly fees, because you and your family are ‘self-monitoring’?

This is what CleverLoop delivered to home owners and is the reason that we gained sales in over 20 countries in the first 6 months. We did this by understanding what our customers needed, but not necessarily by meeting their previously held home security expectations.

But then something unexpected starting happening. We began receiving more and more emails and phone calls from people in small businesses and mid-sized companies asking if CleverLoop would work as a business security system.

The CleverLoop feature set was perfect for this – continuously stored CCTV like footage during opening hours, video alerts to your phone if anyone is in the premises after-hours, live view of your business if you’re not there and no additional monthly outgoings.

We quickly developed new marketing collateral and specific business security web pages, explaining how smart security cameras could be of benefit in the business world, whether for store security, office safety or keeping an eye on stock. And it wasn't long until our business security system market equaled the number of people using our product for residential security.  

Making marketing budgets go ‘better’ not ‘further’
New businesses generally have similar constraints when starting out, including a limited number of initial customers and limited budget. These two constraints don’t work well together, so it’s certainly a case of finding the way to get the best from what you have to spend.

And you have to cover a lot of marketing disciplines when starting a new business. For those starting out, you can make your marketing budget go ‘better’ by making use of affordable outsourcing services such as Design Crowd, Fiverr, Upwork and Freelancer. This provides instant access, when you need it, to specialist people with proven track record. And it’s significantly less expensive than the traditional ‘hiring staff’.

The other way to get better results is test a few marketing methods with different segments and then focus on the ones that provide the most return. For CleverLoop we found that Facebook and Adwords didn’t provide the ROI we were looking for, but other techniques were more effective.

4. You have several patents and trademarks to protect both your technology and your brand ........ What advice would you give to small business owners when they are weighing up the costs versus benefits of this?

Get the groundwork right 
If you are aiming at building a long-term and successful business, then you want to put the right foundations in place. Accounting, file sharing, contact and relationship management, task management and customer support are all systems that should be in place early. Be sure to choose ones that scale up easily as your business does, otherwise there is a lot of rework later.

The other important area to consider is trademarks and patents. It’s well worth investing some time and money into making sure that what you are developing doesn’t infringe on the patents and trademarks of others, and that you also protect your brand into the future.

Early on, we found that the brand name we wanted to use could be registered in Australia, NZ and other countries, but not in the USA. Although seemingly different to anything else on the US Patent and Trademark Office register, the name turned out to be too close that of another company in a completely different sector. We now enjoy the benefit of this same level of protection.

5. Tell us a little bit about your product development journey – and what tips you would offer to entrepreneurs about getting their product to market?

There are 3 quick tips that I would offer -
i) Think hard about where you manufacture. Locally manufactured is generally easier to manage and control, whereas offshore manufacturing is often more cost effective and can let you tap into technology that’s not available locally. We manufacture in the city of Shenzhen in southern China. It happens to be the same place that Apple, along with host of the world’s other major tech companies, manufacture their products.
ii) Test your product. Following our successful crowd-funding campaign, we selected 20 ‘test pilots’ from around the world to use a beta version of the CleverLoop product. We worked with these people for a few months to build in the features they thought would be super useful and to iron out any problems they came across.
iii) Continue to evolve. Delivering your product to market is the first step in developing your product, especially if it is in the tech market. Ongoing development is key, and so creating a road-map which includes user input, is well worth doing. For example, our experience was that we’d offered indoor cameras from the beginning, but it was user input about protecting properties from the outside as well as the inside, that brought forward the integration of weatherproof, outdoor security cameras.

6.  Any final bits of advice to budding entrepreneurs?

One of the keys to being an entrepreneur is resilience. Let’s liken this to climbing Mount Everest. It’s hard, it’s challenging and needs the right support people, the right equipment, the right systems and the drive to push through the barriers that almost inevitably eventually appear.

These elements are, by default, a regular part of an entrepreneur's job description. If a product or a service was easy to develop or create, then the chances are it will have been done already. So make sure you have ways to strengthen your own resilience, as well as that of your co-workers and your business.

Thanks to Richard, for sharing his experience. A related article that might also interest you - How To Be An Entrepreneur

About the author
Brian Carroll is a qualified psychologist and the founder of a Melbourne based training consulting business  Performance Development, providing corporate training & HR services.