20 tips for

growth: business owners tell

Advice on marketing, profit & planning

20 tips for growth: business owners tell

Australias online magazine for entrepreneurs and SMEs

INTRODUCTION
Every business owner knows theres nothing more valuable than advice from entrepreneurs who have been in the trenches and have the battle scars to prove it. With this in mind weve prepared 20 tips from some of Australias best business leaders. We cover a range of issues concerning SMEs and entrepreneurs, from knowing how to prepare for a negotiation to tailoring your strategy when building your business and preparing a realistic business plan. Weve also got tips on hiring great sales people, good leaders, finding the right person for each role and cultivating a positive attitude among your staff. Theres also advice on improving your cashflow management, how to adjust your sales peoples pay structure to get better results and a reminder to use your creativity within your business.

James Thomson Editor, SmartCompany

20 tips for growth: business owners tell

Australias online magazine for entrepreneurs and SMEs

Dont forget profit while chasing revenue

The usual trap I see businesses falling into is that they often chase revenue, and forget profit. In our organisation, we are very profit-focused, to the point we dont pay our sales people for the total revenue of a contract, we pay them based on long-term recurring revenue they provide. We align staff interests with company interests. Our sales people originally just wanted to chase any business, but rather we said, lets just keep to the products we know and then were going to have a price advantage over our competitors. Id rather have a smaller deal with a bigger profit. Bevan Slattery, PIPE Networks chief executive

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Make sure your pricing fits your marketing

I am going to make a sweeping generalisation here, but women really, really underprice. There could be a little lack of confidence - they sort of think oh gosh, well if I can do this, well then anybody could therefore I will lower the price. Ive met so many women who say I feel bad charging them so I just did it for free. There was a lady I know that runs a business called Sara Jane Shoes and she imports shoes for ladies with large feet. When she first started doing it the cost of the shoes was lets say $40 and she was selling them for $50 and nobody bought them. They were Italian shoes, beautiful leather, but nobody bought them because everybody thought that obviously they couldnt possibly be genuine Italian shoes because they were so cheap. And she put the price up to something like $300 and her business changed overnight and she was enormously successful. Julia Bickerstaff, The Business Bakery

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20 tips for growth: business owners tell

Australias online magazine for entrepreneurs and SMEs

Select the right technologies

The solution to selecting the right technologies lies in research. I recently sought an app for my iPhone to view my modest share portfolio. It is not a big portfolio, so I didnt want to spend a lot of time or money on the research. I looked for the best free app and found Bloomberg was highly recommended. It turned out to be a good tool, but didnt keep a tally of my holdings just a list of the companies that showed current prices and change. So I had to look further and pay just over $8.00 for a tool that met my purposes. The time that went into this research was over an hour. When I wanted a more common app like weather, I just asked one of my techs in my office and two minutes later had the solution downloaded for under $3.00. The moral of the story is that you can put more time into your research than the solution costs, and even then end up with the wrong product based on that research, and be forced to try again. When we are talking business apps, rather than iPhone apps, this is an expensive proposition. Clearly we need to go back a step and look at the strategic approach. First, figure out what business functions you want to improve productivity in. Questions here to consider are: Where will you get the quickest financial gains in your business? Can you group a few of these gains together and solve them with one piece of software or one set of infrastructure? Will the cost of developing the solution be returned in a reasonable timeframe? Are there better technologies that will solve a broader range of problems? How will the solution integrate with other aspects of the business such as sales, marketing, production and finance?

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David Markus, Combo

20 tips for growth: business owners tell

Australias online magazine for entrepreneurs and SMEs

Look at your fee structure from another angle

We let our clients decide how much they should pay us. The client determines the fee and its entirely up to them to determine whether we have added value to their company. For a year and a half, we didnt pay ourselves. Any revenue we earned went back into the company to help us market, and to pay the lady who helped us in the office. We just spent that time establishing our name, and getting work by word-of-mouth. But we needed to charge more, and we didnt know how to do that initially. But when we had established a track record we wrote a letter to all our clients saying were not charging enough for our services. Thats when we introduced this fee the client decides upon. We charge a fixed fee, then they pay another fee that is up to their discretion. Its been incredibly successful. We recorded $2.6 million in revenue for 2007-08 with 5% growth in 2008-09 to reach $2.73 million. Sean Russo, Noahs Rule founder

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Fix any defaults on your credit file

There are avenues you can utilise to have your complaint addressed. However, you must be aware that it is standard procedure for a default to remain on a persons credit file for up to five years - it can be listed as paid, however it will not be removed. The following steps can be taken to address concerns you may have about your credit file: Step 1: If you havent done so already, get a copy of your credit report. If the information in your credit record is wrong or misleading you can make a complaint. Step 2: Write to the credit provider to raise your dispute. You need to give reasons as to why the listing is misleading or incorrect. Step 3: If you do not receive a satisfactory response to your complaint you can make a written complaint to the Federal Privacy Commissioner. Christine Christian, Dun & Bradstreet
20 tips for growth: business owners tell

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Australias online magazine for entrepreneurs and SMEs

Make sure you have the right person for the role
Everybody wants to run a team of A-graders, but youve got to find the right person for the right role. And I would say that an organisation has a certain responsibility to make sure theyve got the right person in the right role. So we use some tools to find out what their strengths are. We use the Gallup tool and we look at what peoples strengths are. So if youve put somebody into an analytical role and theyre really, really struggling with it and they are at 60%, and then you look at what their strengths are and they might be WOO. WOO is winning others over, and speaking to people - it might be positivity; theyre as bubbly as anything and youve got them in an analytical role. Youve actually put them in the wrong role. So I think there is a certain responsibility for employers. If youve recruited somebody in, be responsible about making sure you have the right role for them and youre delivering what youve promised. Its a two way street here; dont bring them in to do what you think is one role and then shift them into another one because that is more urgent than the others. Naomi Simson, RedBalloon.com founder

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Improve your cashflow management

The first step to improving cashflow management is to know your businesss balance sheet back to front. This may sound obvious but many people dont know what they need to know when it comes to cashflow. Often small business owners have a passion for providing a service or a product rather than a financial background and it can glaze their eyes over until they get into trouble. The error many people make is to focus on their businesss profit and loss statement to the exclusion of all else. Its a potentially fatal mistake because healthy profits can mask an incipient cashflow crisis. Profit and loss statements do not usually contain the information required to make an adequate cashflow projection. To get across cashflow, you must start with a properly structured balance sheet that has all the detail, from inventory and debts to interest costs. You must know and understand the numbers. Business owners often think thats what their accountant is for, but they couldnt be more wrong. Only with a comprehensive balance sheet in hand is it possible to construct a useful cashflow budget. Sometimes called a cashflow projection, this vital document is a best guess at a businesss cash inflows and outflows over a period of time. Business owners should update and review their businesss cashflow budget on a regular basis using conservative revenue and expense estimates. This will not only provide an early warning system for potential cash shortages, it will also help build your businesss credit track record, useful information when asking banks for credit. Michael Burdette, business analyst and author

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20 tips for growth: business owners tell

Australias online magazine for entrepreneurs and SMEs

Know how to prepare for a negotiation

When it comes to negotiations there are three things to consider. First of all you need to be very well aware that you know your needs and you know the customers needs and if you dont know, do everything in your power to find them. Through skilful use of questions and listening, youll do that. The second thing is relationships - you know you get more out of life and you get more out of business situations if youve taken the time to build good relationships, friendships, rapport, and its a general rule that people will give things to people easier and more plentifully that they like. If someone doesnt like you, theyre not likely to give you much. But if they like you, theyll give you that extra tip, theyll give you that extra support. And the third thing is entrepreneurs have to learn to say no. So needs, relationships and no are very important in negotiations, they are the three key tips. Listening and respectfully listening is the most generous or inexpensive concession you can make as then the person feels respected and they feel at the end of the day that their needs have been taken into consideration. Emanuel Perdis, Napoleon Perdis Cosmetics managing director

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20 tips for growth: business owners tell

Australias online magazine for entrepreneurs and SMEs

Plan your IT spend

When buying things in a hurry people can make mistakes, so its better to spend some time thinking about what you need to buy and at what price. Theres no need to waste money just for the sake of buying new stuff. Discuss where the weak points are with your staff and systems administrator, and where they think your systems can be improved. That five year old computer has been long written off, and the time your staff spend struggling with older, inadequate technology is a far greater loss than the cost of investing in new systems. Also keep in mind there are various tax concessions currently available for businesses. So have a chat with your accountant before signing the purchase order or pulling out the credit card. Technology is the most important investment your business can make. Now is the time to think about the right tools so your staff can work wonders for your enterprise. Paul Wallbank, PC Rescue founder

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Find and hire good leaders

I look for leaders who demonstrate curiosity. By curiosity I mean they are constantly restless with the status quo. Theyre always looking into the horizon at emerging trends. Trends that may not impact either top line or bottom line right now, but trends in new types of technologies, changes in demographics, changes in trade patterns, changes in sources of capital, changes in supply chain and so forth and say: How can I capitalise on this?, How can I build new unexpected sort of value around that?, How can I cannibalise what Im currently doing and move ahead to the next wave?. Thats what curiositys about. The best leaders are not only themselves curious, they hire curious people. And thats easier said than done, because a lot of times we like to hire folks who basically will say yes sir, yes maam to us, and curious people are often a royal pain in the behind. Oren Harari, professor, Graduate School of Business, University of San Francisco

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20 tips for growth: business owners tell

Australias online magazine for entrepreneurs and SMEs

Find a good board

I dont think that you can under-estimate the value of a board. Bringing in a board of directors very early is hugely critical. If I had my time over, I would have brought inside probably the first two years of the business. It took me 10 years to do it. People say, Oh, I cant afford it and my response is, You cant afford not to, even if you just have a quarterly meeting of people who are there for no other reason than to help you. Surrounding yourself with people whove been there and done it... theyve got a bit of grey power and theyre happy to advise you. So I think that thats critical. Not just for advice but also for discipline. I was 100% owner of this company for 20 years and I dont think we ever went to a vote on the board, based on the fact that a lot of the times Id present up to the board an idea. Theyd tell me I was off my head, go away and think about it and re-present the upsides and the downsides. By the time the next board meeting came around Id either turn up and say, You were dead right or I would re-present, giving a lot more thought and realising that there was either more opportunity or more risk involved. I think that that is a great tip if you can surround yourself with two or three advisers and have structured meetings every month or every two or three months. Tom Potter, Eagle Boys Pizza founder

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20 tips for growth: business owners tell

Australias online magazine for entrepreneurs and SMEs

Know how to spot great sales people

What entrepreneurs should really focus on is finding other sales people to join their enterprise and growing them once theyve got there. We sell too soon. Were so driven to hitting our numbers that the person that gets overlooked all too often is the customer. Are we really exceeding what the customers actual needs are? Are we delivering something that they actually have a desire and a need for? And so a sales persons job is to do a lot less selling and a lot more helping people to buy. The very first time that a customer elects to buy from a sales persons company they dont buy real value; they buy perceived value because the only time that you can buy real value is on the second and subsequent purchases. The very first time you win over a customer, what youre winning them over with is perception of value. Those are the people that are going to come in hourly on their own initiative. Theyre going to stay late on their own initiative, and when the customer needs something theyre going to jump before any of the customers say they need to be jumping. In fact, theyre going to ask how high they should jump. And as an owner-entrepreneur thats not something you can very easily dictate. Jack Daly, sales guru

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20 tips for growth: business owners tell

Australias online magazine for entrepreneurs and SMEs

Cultivate a positive attitude among your staff

My theory is that most every new employee, and including myself, comes to work with an attitude of I want to do the best I can and Im going to add value and Ill do the right thing by my customers and by my clients. Then because were all human it all gets messed up based on the inter-relationships that we have with each other. Weve made a lot of effort in deciding a culture or a set of ethics that we wish to do business with, but most importantly a set of rules about how we want to get along with each other. Once we formed that culture, as a very small company everybody who comes along gets educated in that culture and either decides that theyre going to like those rules and fit in with them or they can leave and go somewhere else. We have a term called FIFO, which most people could guess what that means, but basically its a set of rules that define how we work and get along with each other. FIFO is about helping people recognise that getting along with other people is a significant efficiency gain in your business. And if youre someone whos a super intellectual person and can add lots of value to a business but the way you go about operating really distresses everybody else around you, you might be adding extra value but youre taking it away from all those other people. Neil Tilley, Upstream Solutions founder

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20 tips for growth: business owners tell

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Australias online magazine for entrepreneurs and SMEs

Prepare a realistic business plan

When youre starting out in a business, you actually cant plan for a lot of the things because you just dont know enough. But I think there is sort of a halfway house which is actually thinking about the business in terms of what you are bringing to the business. Maybe Im bringing my technical skills or maybe Im a person whos very good at selling or maybe Im a person whos very good on finance or maybe Im a person whos a very good manager. But what are all the other things that the business needs that I dont bring to it? And I think thats the number one thing that people dont think about. The other part I think is actually the money model - how are we actually going to make money out of doing this? And I think thats the big thing that people dont do ahead of time. So its less about the sort of formal business plan and big analysis. Because people who do big analysis of markets always go wow, look the market is $20 million and we only need this tiny percentage of that so were going to be rich because were going to get $2 million straight away. But they dont think whats the actual cost of marketing to those people, whats the cost of producing, whats the cost of distributing, whats the cost of this and that and everything. So they dont actually put together what I call just a simple money model of how are we going to make money out of doing this and whats the value that were adding? One of my favourite sayings is from the cook Nigella Lawson. She always says a cake demands mathematical respect. And I think the same with starting a business. A business demands mathematical respect, you need to have a look at it from a numbers point of view and thats the key thing that people dont do. Ive seen lots of businesses start up and they actually werent ever going to be able to make money out of it because there is a huge chunk which theyve missed in the process. Julia Bickerstaff, The Business Bakery

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20 tips for growth: business owners tell

Australias online magazine for entrepreneurs and SMEs

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Target Gen Y

I think the biggest mistake is lack of knowledge on how best to connect with this market. It is very competitive out there in the advertising industry and in saying that there are a lot of companies that believe that they have the right tools to access this particular audience. The biggest segment is mainstream, representing 50% of the young adult lifestyle market, but the most influential segments are the style surfers and brand winners. And the most commercial are the brand winners and the brand followers. Were talking 16 to 30 by demographic, but we also measure the psychographic as well because we recognised over the last seven years of doing all of this research that its more of a mindset and a behaviour than it is an age. So we ask a number of questions about self-perception. So how you perceive yourself and how you want others to perceive you to help you establish your identity and enable you to express yourself. And those questions of perception enable us to understand whether somebody that is 34, 35, 36 or 14 or 15 years of age still fits within the mindset of 16 to 30 year olds. There are a lot of companies that will just go out and just go its on television, its on outdoor, its on radio, its on the internet because we need to be on the internet because all the young adults are on the internet. What theyre sort of missing is the ability to plan accordingly so that you sort of put it into their environment first so that theyre the first to know and then let it amplify out into the broader mainstream mediums, which are still very important and still very powerful and very much part of the mix. Dion Appel, Lifelounge

20 tips for growth: business owners tell

Australias online magazine for entrepreneurs and SMEs

Use your creativity in business

I think the word innovation is bandied around by every man and his dog. We all aspire to be innovative, but actually what many people dont recognise is that innovation can only occur when a creative process is in place. So many organisations that claim to be innovative dont actually have creative processes in place. For some reason we havent called research creativity in Australia. We see creativity as ballet dancing, singing, writing, sculpture, whatever. But actually creativity is something that we all have access to, no matter what our job, whether its a GP, a CEO, a head of a board or an accountant. There is a 15 country study that showed that three to five year olds exhibit 98% creative behaviour and then by the time we get to 25 weve been educated out of our creative behaviour and its measured at 2%. But its still sitting there, were just not really nurturing that. If youre only focussed on results and the left side of the brain, youre going to miss out on a huge amount of potential that your people can bring to you. Furthermore, people who are not feeling like their creative side is being nurtured, that their voice is not being heard, that all their talents are not being brought to the table, dont contribute as much and they dont feel good. So by having creative processes and creativity in the workplace, you engage better with your employees, they feel better, they are more likely to be innovative and your business is going to be a lot more productive. You cant have innovation without creativity. You have to adopt some creative processes, and I dont mean that all employees have to sing and dance, but people need to be encouraged to think creatively and perhaps there needs to be catalysts and ambassadors so that creative ideas are brought forward and come from the bottom up to the top. And also from the top down because I think there are plenty of people in boardrooms that are actually very creative but feel stifled by the strict governance processes that take place in a boardroom. Tania de Jong, Creativity Australia founder

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20 tips for growth: business owners tell

Australias online magazine for entrepreneurs and SMEs

Tailor your strategy when building your business

Entrepreneurs and business owners must realise that circumstances change, customers need change. There will be events that nobody has predicted. You really need to think change and adapt very, very quickly. I saw the credit crunch initially as a huge concern and weve turned that into an advantage for us. Thats without the Commonwealth Bank involvement, and we then had to work out how could we absolutely leverage our strong position and we worked very quickly, and the good thing with the Commonwealth Bank was they had a strong appetite for investment with Aussie because they approached me and I had never been out to look at selling part or whole of the business. You need to be on the lookout for ways to grow your business rather than just organically, and that really does mean that you need strong business relationships and partnerships with those organisations that share the same vision synergistically, and you need to understand very clearly those areas of your business that would benefit by forging strong relationships. Youve also got to be in a position to adjust very quickly to changing market circumstances, and fortunately for us Aussie is an organisation that is used to change. We embrace change. We always have. We always look for opportunities and the positive nature of change rather than be a victim of change, which unfortunately many organisations succumb to. John Symond, Aussie Home Loans

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20 tips for growth: business owners tell

Australias online magazine for entrepreneurs and SMEs

Make sure you actually take holidays

At various points and times Ive almost gone a bit loopy because youre just so entrenched in the business. You forget to have holidays, all the things that you know you should do but often dont get around to doing. I guess maintaining fitness is a big thing. Ive got a dog, so when youre in the middle of the day and its all getting a bit heavy and you are going what am I doing here?, simple things like taking the dog to the park for a walk can often clear the head. Theres no silver bullet answer there. Definitely having holidays is a big one and all the entrepreneurs that I talk to say when you come back from your previous holiday, book your next one because 18 months go by and youve kind of forgotten to take one and you dont realise youre burning out. Scott Kilmartin, Haul and Riveting founder

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Adjust your sales peoples pay structure to get better results

We reduced our sales staffs commissions down to about 10-15% and we gave them a base salary and a car allowance, just to give them a little bit of comfort. And those guys that are still with us have really kicked on. And Im pleased to say that most of our sales guys have got the capability and some are earning over $100,000 per annum now. Its a system thats working. In addition to that, a lot of our leads are generated through telemarketing efforts and initially the technology provided inside the telemarketing teams was quite woeful. None of the telemarketers had a computer on their desk when I walked in the building and they were using physically the Yellow Pages and local papers for generating leads. None of that was being recorded so obviously that changed dramatically with a brand new CRM system and a lot better lead management with automatic email leads to salespeople, so we could act a lot more quickly. David Burden, Webfirm chief executive

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20 tips for growth: business owners tell

Australias online magazine for entrepreneurs and SMEs

Learn how to fail

Growing the company has been a nightmare, because in a way we are creating an industry. We deliver 25% of solar systems in the market, were the largest supplier by double, and challenges have included finding people to hire who simply dont exist. There is no single entity to recruit from, and weve had to invest, train them and do that very, very quickly. And with no one to follow, the industry sort of watches us, and whenever we do something right that rolls on, and whenever we make a mistake its avoided. Being at the forefront of an industry, there is something going wrong every day. Weve certainly failed in a number of ways, because we are creating an industry and dont have anyone to copy off. As soon as we roll something out, you make a lot of mistakes and you have to create a culture that says its okay to do that, its okay to learn from them and move on quickly. When we do something right, others copy us, and when we make a mistake they learn from that and run with it. Tony Thornton, Solar Shop chief executive

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20 tips for growth: business owners tell