Smarter Business Ideas

tm

February 2011

$5.95

”We grew 20% in the last quarter, by helping other businesses get paid on time.”

10

Trent Brown, EzyPay, Sydney

ways to drive your business into 2011 real-life tips from 5 award winning companies

NEW RETAIL RULES hOW TO SELL TO TODAY’S CONSUMER

Ross Greenwood:

“SME exporters need government support”

Beat the funding crisis Need cash?

READ OUR Expert advice

! n i W $ 5000

e phonh s s e in rt A bucskage wo pa

My Life My BlackBerry 7:48 am Wake up and check emails on my BlackBerry® smartphone while demolishing my cereal.

8:07am Arrive at my desk in desperate need of a caffeine hit. Ask Alex to grab me a long black through BlackBerry® Messenger.

11:30 am Back to back meetings. I email confidential new designs to a client on my BlackBerry® smartphone, knowing that they’re protected by industryleading security features.

12:45pm Find time to get some sushi.

See what everyone else is up to on Facebook®.

1:13 pm Realise I haven’t printed designs for the team back at the office. Print them out back at base via HP ePrint.

2:39 pm Leave for a new business presentation in Woop Woop.

Thank you GPS!

5:30pm Head back to the office.

See what’s left on today’s to-do list using mProductive™ for BlackBerry to check my calendar, tasks and memos.

6:35pm Finish debriefing the team and call it a day. Use the Poynt app to find the closest pizza place on the way home so I don’t have to cook!

Every day is a new challenge for small business owner and entrepreneur Daniel Allen, and with the BlackBerry® Torch™ 9800 smartphone he makes the most of each and every one. No matter where he is, he can stay in touch with intuitive mobile technology, useful business apps, and the ability to sync flawlessly with his business.

So whether he’s out and about talking to clients, or flying to business meetings interstate, he can do everything he needs to, and more. Thanks to BlackBerry, now everywhere is Daniel’s office.

See what a BlackBerry® smartphone can do for you. Visit au.blackberry.com/smb Connect in real-time, anytime on BlackBerry® Messenger

Apps designed for you to do more. http://au.blackberry.com/service/appworld/

© 2011 Research In Motion Limited. All rights reserved. BlackBerry®, RIM®, Research In Motion® and related trademarks, names and logos are the property of Research In Motion Limited and are registered and/or used in the U.S. and countries around the world. All app trademarks, trade names, logos/icons and images are the property of their respective owners.

Ordering your print online has never been easier

Zenith, the Kwik Kopy Web2Print System is your new best friend.

Designed to make your day job that much easier, Zenith Web2Print offers convenience and total control over updating and ordering all your printed materials and branded assets.

Our team at Kwik Kopy will help you design a customised print catalogue that is fast, exible, accessible and convenient for you and your business to use.

56288

web2print

Online print made easy

s "UILD A LIBRARY OF ALL YOUR PRINT ASSETS s /NE POINT OF ACCESS FOR YOUR WHOLE TEAM s 3AVES TIME FOR ROUTINE REPEAT ORDERS ELIMINATING THE RISK OF human error s /RDER WHEN IT SUITS YOU s 3YSTEM TAILORED TO YOUR REQUIREMENTS

To book a Zenith Web2Print consultation at your nearest Kwik Kopy Centre call us on or visit www.kwikkopy.com.au

contents EDITORIAL EDITOR John Kavanagh

ISSUE 1 | FEBRUARY 2011

12

Techzone

26 Broadband

Broadband is now central to many businesses’ survival. Here’s what to consider when buying your broadband service.

ART DIRECTOR Bruce Daly SUB-EDITOR Graham Lauren EDITORIAL ENQUIRIES Kristine Young (02) 9282 8521 54 Park Street, Sydney NSW 2000

30 Mobile phone review

Telstra Business

Which mobile platform is best for your business?

GMD Telstra Business Deena Shiff Publication Manger Nicole Birbas Editorial Advisor Rod Bruem

32 Mobility

GM Marketing Fiona Hallett Legal Advisors Rachael Falk, Melanie Lucas

How the convergence of mobile telephony and computing is creating new ways to do business.

ADVERTISING GROUP SALES MANAGER CUSTOM MEDIA Patricia Connolly pconolly@acpmagazines.com.au 02 9282 8418 NATIONAL SALES MANAGER Jeremy Pell jpell@acpmagazines.com.au 02 9282 8061 NSW SALES MANAGER Benn Sykes bsykes@acpmagazines.com.au 02 9282 8996 VICTORIAN SALES MANAGER Craig Hunter crhunter@acpmagazines.com.au 03 9823 6365 SALES COORDINATOR Christie Ikonomou cikonomou@acpmagazines.com.au 02 9282 8269

ACP MAGAZINES Managing Director Phil Scott Deputy Group Publishing Director Gerry Reynolds Director Of Sales Louise Barrett ACP Custom Media General Manager Sally Wright Publishing Manager Andy Ford

NINE ENTERTAINMENT Chief Executive Officer David Gyngell Group Sales & Marketing Director Peter Wiltshire

PRODUCTION PRODUCTION SERVICES MANAGER Peter Woodward DIGITAL REPRODUCTION Klaus Müller

Design your own shoes.

Shoes of Prey is wowing experience-hungry shoppers with its online custom shoemaking service

NEWS

6

Get up to date with the growing popularity of cooking schools, a new communications offer for SMEs and upcoming conferences and seminars.

Features

10 Me and My Mentor

Finding the right guidance can transform a business. SME owner Lara Solomon tells how her mentor helped her set better goals for her team.

Printed by Hannanprint 55 Doody St, Alexandria NSW. © Telstra. Reproduction in whole or in part is prohibited without Telstra’s prior permission. Produced on behalf of Telstra, ACN 051 775 556 by ACP Magazines Ltd, ACN 053 273 546.

Cover photo by NICK CUBBIN

Make online billing’s many benefits work to the advantage of your business.

WHIP YOUR BUSINESS INTO SHAPE FOR 2011 Succesful leaders like Trent Brown at EzyPay share their knowledge

36

the new consumer Demanding shoppers are looking for a great retail experience.

Here’s how to give them one.

the funding crisis Financing a business can be tough for SMEs. Follow our guide to alternative sources of funding.

22 Cloud Computing

Outsourcing IT needs for speed and reliability.

36 Whip your

BUSINESS into shape by following this 10-step exercise program, from better planning and budgeting to fraud prevention and IT protection.

EXPERT ADVICE

35 Communications

Place your business at the top of search engine results with the right web-optimisation strategy.

42 Money

Understand how rule changes can help self-managed super fund trustees borrow to get a better return on their investments.

45 The manager

Guidance on how best to plan for succession in your business, from expert Michael Derin.

12 Selling to 16 Beating

The information provided in this magazine has been obtained or derived from sources believed by Smarter Business Ideas magazine to be reliable. However, Smarter Business Ideas does not make any representation or warranty, express or implied, as to its accuracy or completeness. We recommend persons making investment decisions contact their financial advisers. ACP Magazines Ltd and Telstra, their related bodies corporate, and their directors and employees, do not accept any responsibility arising in any way (including negligence) for errors in, or omissions from, the information provided in Smarter Business Ideas magazine.

34 GET YOUR bill online

49 Ask the expert COVER STORY

30

Motorola DEFY: “A seriously tough smartphone,” says our review

Our panel advises you on email etiquette, capital gains tax relief, new dividend rules and insurance for your key people.

50

Greenwood International trade is an SME issue and Australia’s leading business and finance journalist, Ross Greenwood, tells us why.

Win!

One of 10 business phone packages worth

$5000 page 47

www.telstra.com/smarter

5

news

stories from a business point of view

Go to telstra.com/SMARTER/NEWS for daily business news updates

getting to grips with modern awards

A leading employer group has warned that too many companies have their heads in the sand about the new industrial relations system. Senior workplace policy advisor at the New South Wales Business Chamber, Blake Briggs, says the move from thousands of federal and state awards to 123 modern awards on January 1 last year has proved to be more complex than anticipated.

provisions. The view of groups such as NSW Business Chamber is that, where the modern award includes a higher pay rate, employers who have previously paid over the award can offset previous “overpayments” against the increases in payments now in place. But unions say that regardless of the past, pay should go up by the amount of the later award increase.

Employers are on notice to come to grips with the new industrial relations regime or risk prosecution for non-compliance.

“Employers who have avoided getting into the detail are running into problems. If the Fair Work Ombudsman finds them wilfully ignoring their obligations under the new system they will be prosecuted,” Briggs says.

Briggs says Fair Work Australia has failed to clarify the situation. “To be fair to Fair Work Australia, it can only do what the legislation allows. As a practical alternative, we are seeking for the Fair Work Ombudsman to make rulings, similar to the binding tax rulings issued by the Australian Taxation Office.”

An example of the uncertainty over the new system is the conflicting reading of the impact of modern awards on employers who have paid over the award under their old award

“If the Fair Work Ombudsman finds them wilfully ignoring their obligations under the new system, they will be prosecuted,” policy advisor, Blake Briggs

GET MORE ON THIS STORY AT: telstra.com/business/hrcompliance

A big business loan for small business

That looks like changing. National Australia Bank is offering SMEs a product called Business Market Loan, which is based on a standard term loan but includes access to financial-market products.

BML allows a business borrower to vary its loan terms. They can switch from variable to fixed-rate or opt for a mix of variable and fixed. They can set caps and collars on their rates.

They can vary repayment amounts and take repayment holidays.

Maturities are flexible.

Executive general manager NAB Business, Geoff Greer, says, “It allows customers to tailor their funding to their cash-generation

6

smarter business ideas

| FEBRUARY 2011

ability. Cash flows go up and down with seasonal conditions and changing business conditions.

BML makes it easy to change payment terms.”

Greer says the product was also designed to give customers greater certainty.

“Two big uncertainties in business are interest rates and exchange rates. BML allows them to take some of the uncertainty out of the equation.

“We see this as part of the development of a wider business relationship. We have interest rate and exchange rate people in our business centres who explain the applications of the product to our customers.”

Greer says there is no premium for the product. Rates are negotiable and there is no extra fee.

Photo : n i c k c u b b i n I l lu s t rat i o n : ge t t y i mage s

Small business owners don’t like the way their financing options are limited to fairly conventional loan facilities, while the big boys get to play with all sorts of funding options.

Taking out the rubbish

sort the red-hot business opportunities fad or We from the commercial dead ends forever #1: Cooking schools

A bugbear for SMEs is working out how to dispose of waste in an environmentally responsible way.

An initiative that will improve things is Business Recycling, which helps businesses locate recycling services for a wide variety of waste.

Business Recycling was put together by Planet Ark, Pitney Bowes and the New South Wales Department of Environment, Climate Change & Water. The service is national.

Visitors to the web site (www.businessrecycling.com.au) provide details of the waste they want to get rid of, which might be anything from car parts to cooking oil, and the site lists the closest locations. Options include drop-off locations and pick-up services.

Planet Ark campaign manager Brad Gray says: “Our research shows most businesses have looked into strategies aimed at reducing their impact on the environment. But before Business Recycling there was no easy way to find relevant recycling services.”

According to Planet Ark, the most common inquiries have been about where to dispose of electronic waste – computers and other electronic equipment, batteries, mobile phones and printer cartridges.

Prawns flambé anyone? Another group works its way through “team-building food preparation” in the kitchen at Sydney’s Cheeky Food Group

Cookery schools are booming on the back of successful TV cooking shows, with classes full from coast to coast. But will it last, asks Josephine Quilty?

Who’s doing it?

Leona Watson is the managing director of Cheeky Food Group, based in Sydney’s Surry Hills, which marries food, wine and corporate team-building. She describes it as a cooking-events company, but that barely explains what she and her team do on a daily basis.

Late last year, Watson and her team of chef-presenters set up a marquee on Hamilton Island and taught 150 people how to cook prawns flambé, barbecued lamb backstraps and wicked chocolate pudding. A few weeks later, she was picking salad greens out of the coffee infusion for Italian dessert tiramisu as two twenty-somethings confused an instruction to use marsala (Italian wine) with a

neighbouring table’s instruction to use mizuna (Japanese salad).

creation of restaurants and we learn to cook by going out and eating.”

The business has been going for nine years, but things went so wild last November that Watson had to add three extra people to her staff of eight. Since she founded the company, she and her team have taught 40,000 people to chop, sauté and whisk.

Newton has another reason for believing in the longevity of a cooking school like Watson’s. “It’s a great idea – putting a bunch of people under the same roof in a hot room with raw ingredients and sharp knives.”

Will it last?

Watson says, “I thought it would have run out of steam earlier … the television-cooking phenomenon has extended [my business] and it has become more part of our lifestyle now. It will be interesting to see over the next three to five years whether it will dip greatly, or just dip a little and then stay steady.”

The author of the Good Food Shopping Guide, John Newton, is convinced that cooking schools are here to stay.

One reason is that parents no longer teach their kids to cook, so they have to learn from the professionals.

“Most families don’t do that any more, Australian cooking is a

Business forecaster IBISWorld says the cooking school sector will grow by 30 per cent in the next 12 months, driven by a resurgent interest in creating food.

The growth will also extend to the commercial catering schools who train entrants to the café and restaurant industry, it says.

IBISWorld is forecasting 22 per cent revenue growth in the restaurant and café industry over the next five years, 20.7 per cent growth in catering and food service contracting over the same period and 54 per cent growth in demand for kitchenware.

Verdict Cooking schools

are a viable business opportunity for the foreseeable future.

www.telstra.com/smarter

7

news

Answering the call growing trend for workforce mobility in the small business sector of the market.

Andrew Stormont, director of digital business, states that, “In my conversations with many small business owners, they see themselves as a multi-site business.

“Even if they have one main work site, they need to be able to work on the move or even at home. We’ve listened to them.

So, we’re focused on delivering a solution that helps businesses connect when they are off site, as well as in an office or store.”

It will combine voice, data and software applications across fixed and mobile services.

The solutions include digital telephony with new calling functionality and sophisticated messaging.

Telstra Digital Business has been designed to address the

There are new features which will help customers stay in touch with their business, more efficiently. A centralised message inbox will give customers access to fixed and mobile voicemail, as well as their email. It’s a simple way of managing messages from the one place.

Andrew Stormont says businesses report that one of their big challenges is maintaining contact with customers and picking up calls from new customers when they are either busy,

Disability no barrier Disability support is to drive a big change on this year’s workplace agenda, as a Productivity Commission review, due to be released this month, makes recommendations on ways government and employers can help more disabled people to get into employment.

The Commission was asked to look at how disabled workers can be drawn into industry and what role government should play in upgrading the training opportunities available to workers.

Typical of the submissions to the Commission was national peak disability rights and advocacy organisation People with Disability’s call for the government to put programs in place so that, “workplaces better understand the contribution that people with disability make, so that they can assist with greater participation in the workforce.”

8

smarter business ideas

| FEBRUARY 2011

away from the office or simply not contactable.

“For many small business customers, every business call is important, whether it is to serve a customer, generate a sale or simply deal with a supplier “So it’s important that we give them a range of options to suit the way they work and how they want to run their business.”

To help customers get the most from this new technology, Telstra will also provide a range of professional services including assisted set-up, professional installation and even educational tutorials.

It’s only the start of this exciting journey, with plans to include a range of new features including video surveillance and video calling.

It’s coming soon. Look out for it.

A number of submissions called for increased funding for trade training.

The Joint Epilepsy Council of Australia and Epilepsy Australia say many people with epilepsy find it very hard to get or to retain a position following a diagnosis of epilepsy. Yet, it says people with epilepsy can often work and could do so with support and flexible arrangements.

Access Innovation Media, a technology provider of “speech-to-text solutions”, estimates that 160,000 people are out of work because they cannot hear. It says the cost of providing access to education and employment for all deaf and hearing-impaired Australians through real-time captioning would be $600 million a year – less than the cost of exclusion.

Many submissions argue that an investment in job opportunities for the disabled would pay dividends for the community. The question is whether government or industry would meet that cost.

February Business women’s group Business Chicks is holding breakfasts in Sydney, Brisbane, Melbourne and Perth through February and March. They include a guest speaker, prize draws and networking opportunities. Find details at www.businesschicks.com.au The Australian Association of Angel Investors is holding its national conference, Angels Without Borders, at Newcastle City Hall, February 16 to 18. Visit www.aaai.net.au Business Victoria is running a series of seminars throughout rural Victoria in February, covering business start-up, marketing basics, understanding financial statements and business planning. Go to www.business.vic.gov.au ASIC Summer School. The Australian Securities & Investments Commission runs a three-day program each year to bring business up to date on all regulatory issues that will have an impact in the year ahead. Hilton Hotel, Sydney, February 21 to 23. Details at www.asic.gov.au/asic/asic. nsf/byheadline/Summer+school Telstra Business Awards The 2011 program opens on February 14 and close of entries is April 4. The Telstra Australian Business of the Year will be named on August 26 in Melbourne.

March Funding Connect, sponsored by the NSW government’s Industry and Investment Office, is a half-day program for entrepreneurs at the University of Technology, Sydney in March.

Details at www.ats.business.gov.au/events May Family Business Australia will present strategic planning courses in Sydney, Melbourne and Perth between May and September. Check www.fambiz.org.au The Australia Arab Chamber of Commerce & Industry and Austrade will hold what is being promoted as the first Arab business forum in Australia. May 5 in Melbourne. Details at www. austrade.gov.au June The Asia-Pacific Centre for Franchising Excellence holds its annual Franchise Forum each June at Griffith University in Brisbane.

For details of last year’s Forum go to www. franchise.edu.au Australian Chambers Business Congress The inaugural Australian Chambers Business Congress brings together over 1000 business leaders, expert speakers and exhibitors on the Gold Coast, June 1-3. For more information: www.

BusinessCongress.com.au July The eighth Asia Pacific Conference on Sustainable Energy & Environment runs from July 10 to 13 at the University of Adelaide.

Contact APCSEET2011@adalaide.edu.au August Tech23 is a forum for innovative companies to present to investors and customers. Sponsored by the Australian Technology Showcase, the Sydney event will be held in August. Go to www. ats.business.gov

›› Do you have a date for the diary?

Contact Smarter Business Ideas at Smarter@acpmagazines.com.au.

i l lu s t rat i o n : ge t t y i mage s

Telstra Business is to launch a new range of flexible working solutions for small businesses with up to 10 employees.

business events diary

We give your business answers, not answering machines.

Call our Business Banking Service Centre on 13 1998 and you’ll speak to a Business Banker who can help 24 hours a day, 7 days a week, every day of the year.

More Business Bankers. More time for your business. commbank.com.au/morebankers

Commonwealth Bank of Australia ABN 48 123 123 124. CBABM1067_1E www.telstra.com/smarter

9

ME & MY MENTOR | by Josephine Quilty

personal BRANDing

Jen Dalitz I worked in banking for years and there was only one other woman at my level reporting to the chief operating officer. I started looking for role models but there weren’t any. It was such a boys’ club, there were no women I could ask for advice.

All the mentors I’d ever had were men, so I wondered if I could maintain my career and still have kids. How would I fit that in? My mentors all had wives who had left the workforce to raise their families. How did other working mums manage the juggle?

In 2007, I started www.sphinxx.org as a way to connect time-poor women, share ideas and save time. That is where the mentoring started.

Lara was looking for very specific help in improving her business, and she’s an experienced businesswoman as well. She’s also an action-oriented person, so I had to get straight to it.

Lara’s terrific, she makes notes, goes away and does it. She holds herself to account. I expect mentees to take ownership for their actions. It won’t work if they can’t hold themselves to account.

If there is one thing I would pick out

10

smarter business ideas

| FEBRUARY 2011

about Lara’s success, it’s her focus on building her own personal brand in the public sphere, and her own business brand. I’ve learnt a lot from her on this.

This is an important issue because many women are not confident about putting themselves forward in business.

But her ability to create a profile is such that, given the strength of her personal brand, I was surprised her business was smaller than I’d thought it would be.

She does it by making herself available, by giving things a go and by being on-message all the time.

Lara’s commitment to mentoring is what makes it work.

Lara Solomon Before Jen, my dad was my mentor, but he died in 2008 and I didn’t have a peer group to help me. With Jen, it’s just having someone questioning what you are doing. I needed the one-on-one attention to get me through some things which were going on in my business.

I knew her background, so I met up with her and chatted about what she’d done before. For me, a mentor is someone you just have to click with.

“Jen helped me change how my team worked – making them more accountable.”

Left, Jen Dalitz, and right, Lara Solomon

Lara “ holds

herself to account.

I expect mentees to take owneRship for their actions

”

- JeN

Jen helped me change the way my team worked, to build them into roles.

I wanted to get more out of them, make them more accountable.

I asked every one of my people to email me a report once a week on things they had done during the week and things they planned to do the next week.

I had been having a problem with a lot of procrastination and this process made everyone more accountable.

As a result, I spent a lot less time chasing people.

Instead of vague ideas, like “increase sales”, we went for specific key performance indicators, just something small. Answer the phones. Answer emails within 24 hours. Very specific.

In 2009, we turned over $1.4 million, and we’ve sold 1.6 million Mocks worldwide to date.

Jen’s very to the point and she just tells me what is required.

I’ve now got a better understanding of my business and a more strategic view in terms of direction.

Having her as a mentor has helped me because she challenges what I do as opposed to me rushing into things.

Photo : n i c k c u b b i n

In the first of a series, we profile Lara Solomon, founder of mobile accessory company Mocks, and her mentor Jen Dalitz, CEO of businesswomen’s networking site, Sphinxx.

Google AdWords is a great way to drive customers to your site.

Your business has a website. You’d like to attract more visitors but online advertising is a mystery. You need to know about Google AdWords.

It’s affordable. It’s easy to get started. You’re in complete control and you’ll know when it works.

Start your free trial today.

Experience the simplicity and effectiveness of Google AdWords with a no-obligation $50.00 free advertising credit.

It’s easy to redeem your offer:

IAL* R T G N I S DVERTI FREE A

1. SMS “AdWords” to 1995 4995 2. We’ll send you a unique redemption code by return SMS 3. Go to your computer and set up your Google AdWords account at www.google.com.au/adwords/advertisingoffer/ 4. Follow the on-screen prompts to get started Hurry, this free $50.00 advertising credit expires 1 April 2011.

Redeem your offer and start attracting new customers today.

Terms and Conditions: SMS cost is 55c including GST. Offer opens 1 February 2011 and closes 1 April 2011, and is open to all Australian residents. Please visit the Google AdWords advertising offer website from your computer as some smart phones may have difficulty with the site. Please call our help desk on 1300 464 866 if having problems receiving your unique redemption code. *Promotional credit is available only to new Google AdWords customers whose accounts are less than 30 days old at the time you enter your promotional code, whose billing address is in Australia and who choose a post-pay payment method. Based on the details you provided to receive your coupon, Google may contact you at a later date with regards to setting up your account. Use of Google AdWords and redemption of the promotional credit is subject to ad approval, valid registration and acceptance of the current Advertising Terms and Conditions. The promotional credit will be automatically credited to your new Google AdWords account once you have entered your promotional code and billing preferences. Under the post-pay payment method, Google will include an activation fee (currently AUD$10) that is applied to your account but is not charged to you and does not change the value of your promotional credit. You will be charged for any advertising charges that exceed the promotional credit, and you are solely responsible for the payment of any taxes incurred. If you do not wish to incur additional charges beyond the promotional credit then you should monitor your account and pause or delete your campaign before or once this amount has been reached. The promotional credit is non-transferable and may not be sold or bartered. If you indicate that your Google AdWords account should be subject to a different currency to the one in which your promotional credit has been awarded, then the actual amount of the promotional credit may be subject to foreign currency fluctuations. Offer may be changed or revoked at any time for any reason by Google Ireland Limited and/or any affiliated company offering the AdWords service in your country. One promotional credit per customer. Actual expiry dates are provided on the coupon. Void where prohibited or restricted by law. Google and AdWords are trademarks of Google Inc. and are registered in the US and other countries. Your use of this coupon and/or the promotional credit constitutes your acceptance of these terms and conditions. For details on Google’s Privacy Policy please visit http://www.google.com/privacypolicy.html www.telstra.com/smarter

11

FEATURE | SELLING

SELLING TO THE NEW CONSUMER STORY Rachael McKinney

12

smarter business ideas

| FEBRUARY 2011

Consumers are looking for something new They want a great experience to go with their buys. Meet the businesses driving sales by designing new experiences for their customers.

Letting the customer design their own shoes is putting fun at the heart of Shoes of Prey.

Founders, left to right: Jodie and Michael Fox, Mike Knapp.

A

ustralian consumers are proving a tough sell. Despite job growth and wage increases, retail spending was flat in 2010. Consumers are still spending, but their preferences are increasingly for memorable buying experiences over the simple accumulation of more goods.

Consumer research conducted recently for credit card operator, Visa, suggests that retailers can adapt to this change in a number of ways: by providing entertainment, education or expert advice in stores, by creating a different environment to the homogenous shopping mall experience, and by using the internet for superior communication and engagement.

“The global financial crisis has not meant a complete retreat from premium products and services, but more of a reframing,” says Judy Shaw, Visa’s acting director of corporate relations.

Above basic consumerism, she says, there’s a desire for feeling and learning.

Tapping into that desire presents a challenge, but providing consumers with an enhanced shopping experience doesn’t need to be expensive or time-consuming for retailers, big or small, online or offline.

That’s Shoppertainment Selma Mehmedovic, a research analyst at Monash University’s Australian Centre for Retail Studies (ACRS), says retailers are turning to “shoppertainment” to keep customers coming back. As an example, she cites Sportsgirl, whose Chadstone, Victoria, store now has a lounge area with a DJ and a styling studio.

Harvey Norman delivers a program of classes run by well-known cooks at its Alexandria store in Sydney. It gives the retailer a fresh way of promoting its kitchen appliances.

Australian online shoe retailer, Shoes of Prey, offers an enhanced shopping experience by inviting customers to design their own shoes using tools, materials and expertise provided on the company’s web site. (See case study, right.)

The company’s director of operations, Michael Fox, says, “The design process is quick, but most customers will spend quite a bit of time on it.”

Photo s : TI M B AU E R

Better communication Executive director of the Australian Retailers Association, Russell Zimmerman, says, “Retailers are looking for ways to make the customer feel good. You even get some who email or phone the customer when they have new stock,” he says.

“This is about customer loyalty and care.”

Communication and efficient service cannot be underestimated when enhancing the customer experience, both online and especially in store.

Even though increasing numbers of consumers are buying online, in-store shopping is still preferred by most, the ACRS says.

“People still love that tactile experience; they also like having that interaction with the sales assistant,” Mehmedovic says.

Show your expertise Brian Walker, chief executive of consulting group Retail Doctor, says retailers benefit by showing some expertise. “If you look at Athlete’s Foot, they offer running shoes – a simple product. But they add expertise, knowledge and have highly developed skills that personalise their customer service. That is what stores need to offer.”

Customers also like to be able to interact with the products, as it allows them to feel like they control the shopping environment.

Letting them try products before buying them, at their own pace, is one of a number of trends relevant to Australian retailers identified this year

by US online retail publication Inside Retailing.

Create a different environment Zimmerman says, “There will always be a need for shops … for the experience; to touch and feel.”

Case study

Bricks-and-mortar businesses can do a number of other things to enhance the in-store purchasing experience. Music, lighting, a coffee machine, water, and even a kids’ play area, are all relatively inexpensive improvements that can be controlled by the retailer, and can add to the shopping experience for the customer, Mehmedovic says.

“Think of something small and creative but of relevance to the customer.”

Gilbert Rochecouste, principal of Victorian design consultancy Village Well, says the combination of a small number of large shopping mall operators and increasing level of retail franchising has turned shopping into a “samesame” experience. Consumers are eager to find something different, he says, citing the popularity of local growers’ markets as an example.

Build an online presence A web site doesn’t have to be about selling online.

It can be about demonstrating creativity. For bricks and mortar retailers, it can simply provide a way of telling customers about their products.

ACRS research has found that consumers who research product information on the internet before buying in store spend significantly more across a range of categories, including beauty and skincare and DIY hardware. But printed catalogues are also important, the research shows.

As an online retailer, Shoes of Prey has also taken advantage of the social media.

Online shoe retailer Shoes of Prey

“Our customers know what they like … they are very particular about what they are looking for,” says Michael Fox, who along with wife Jodie and Mike Knapp is a founder of online shoe seller Shoes of Prey.

The company’s business lets customers design their own shoes by using a design template on its web site, at www.shoesofprey.com.au.

Launched in October 2009, the business was profitable within four months of launch, and sales have grown steadily. Its customer base is mainly 25-to-

60-year-old professional women.

Customers choose heel, toe, fabric, colour and embellishments for their shoes.

These are leather-lined, and handmade by suppliers in China from materials and rubber imported from Europe, and, after local quality-control checks, shipped directly to the customer.

Manufacturing time is about four weeks.

However co-creation is just one way Shoes of Prey enhances its customer experience.

“We focus on customer service,” Fox says. “The shoes are delivered in a beautifully packaged box with a handwritten note and a photograph of the shoes that has also been emailed

separately as part of the despatch process.”

“Because we spent a lot of time finding good suppliers, the shoes are good,” Fox says. “The shoes also live up to the hype.”

Shoes of Prey demonstrates its customer care with a no-quibble returns policy accompanied by a full refund, including the initial shipping charge. It has also taken advantage of the social media phenomenon by setting up a Facebook page.

Shoes of Prey also has a YouTube channel and a regularly updated blog. When it was five months old, its site had received over 200,000 hits, a fairly substantial amount for a start-up online retailer, thanks to some local fashion media coverage.

www.telstra.com/smarter

13

FEATURE | SELLING “Facebook works really well for us,” Michael Fox says. “We have over 8000 fans, and there’s lots of discussion going on there.”

However, as ACRS’s Mehmedovic says, “It’s not enough just to have a Facebook presence ... you have to engage with your followers.”

Customers will think they are being ignored if you don’t respond to their content, she says. This means you need to have the time and resources to manage social media as a marketing tool.

Engage the customer The Shoes of Prey team in Sydney, with a collection of their shoes

HOW TO Create A GREAT customer experience Offer sound basic customer service and make sure your product lives up to customer expectations. React quickly to complaints and remedy cause and effect.

Communicate promptly and personally with customers via email and mailouts, or even call them directly.

Think about your store environment: does the music and lighting suit your products, and is it appealing to your target market? What about offering water, a coffee machine or a kids’ play area?

Where feasible, give customers the time and space to try your products before they buy.

Get to know your customers, and learn to adapt to their changing needs. Target key customer groups with your marketing and store layouts.

Be flexible in changing economic conditions with returns policies and methods and terms of payment.

Think creatively about ways you can take your products to the local market. Don’t just sponsor a local sports team, get involved.

Start small and test out new ideas for engaging customers with your products. Be creative and think outside the box; new approaches don’t need to be expensive or time-consuming.

Know your target audience, and make sure you can identify whether any new approach is creating the impact you want.

Even if you are not planning to sell online, think about setting up a simple web site to showcase your products.

If you are planning to use social media to engage with customers, make sure you have the resources to manage it effectively as a marketing tool.

14

smarter business ideas

| FEBRUARY 2011

Directly engaging with customers is known as experiential marketing. You could create branded content such as a YouTube video, run an event, a sampling program, a roadshow or a PR stunt.

“We have moved from an era where marketing is about interruptions to one where it is about engagement,” says Adam Jeffrey, strategy director of experiential marketing agency, Traffik.

But, he says, “If you’re going to engage customers, you need to make sure they have time to engage … [they must be in the] right place, right time, right frame of mind.”

For small businesses considering experiential marketing, Jeffrey advises looking at the passions of the local community. Local sports organisations provide good channels for tapping into the community, he says.

Rather than just putting your logo on the program and handing over the money, take your product into the community and participate at a grassroots level. Demonstrate how you are adding value, Jeffrey suggests.

“Often, people think their product or customer is not suited to experiential marketing,” he says. “But, with some creativity and careful thinking, I don’t see why any product should be excluded.”

“We did an activity of creating some street theatre using clothes from a range for a fashion brand,” he says. “It was a pretty low-cost activation, but it turned heads … photos and video from the activation then went online. It’s just a matter of thinking outside the square.”

For businesses new to experiential marketing, Jeffrey advises, “Do some small test-and-learn programs.” Put a small part of the marketing budget aside to create some local programs and see whether or not the objectives are being met.

Engaging customers directly through experiential marketing can also deliver valuable feedback. Personalise the process, for example, by holding a coffee morning and inviting customers to come and discuss what they would like.

Research by Australian marketing company Mitchell Communication Group says customer feedback is key to consumer empathy.

Businesses can help consumers adapt to changing economic conditions by, for example, offering alternative forms of payment, such as PayPal online, or lay-by in store.

They can also adapt to customers’ needs by tailoring products more directly through marketing and in-store layouts. And most already have a potential wealth of information about their core customers, from basic demographics at one level to specific shopping habits at another.

Knowing what your customers don’t like can be as important as knowing what they do, as those who have had a bad experience are unlikely to tell you. But they will vote with their

“It’s not enough

just to have a Facebook presence. you have to engage with followers”

feet, and make sure their friends do, too.

In a 2010 survey of 12 countries, the American Express Global Customer Service Barometer found that Australian consumers came second only to Mexicans as the least tolerant of bad customer service. Fortunately, it also found customers to be more forgiving of a poor experience if they had generally had good service.

The key to recovering customer goodwill is to acknowledge a poor customer experience, offer an apology and assure the customer it won‘t happen again. Resolve the issue quickly and identify and correct the factors that contributed to that negative experience. Was it a staff-knowledge gap, a process failure or a systemic fault?

For experiential marketing, ensure staff on the ground are properly trained, Jeffrey says: as your representatives, they must be knowledgeable.

Whatever decision customers make about your products, taking these simple steps will help to make sure they reflect on the process as an experience rather than just a transaction.

READ A LONGER VERSION OF OUR INTERVIEW WITH sHOES OF pREY AT: telstra.com/smarter/ideas

FEATURE | funding

Beat the funding

crisis Raising business funds has become a huge problem in the wake of the global financial crisis. Banks are lending less and the alternatives can be expensive. So, what are the borrowing options, apart from hoping and praying ?

16

smarter business ideas

| FEBRUARY 2011

M

oney is too tight to mention at

Photo s : ge t t y i mage s

the moment – especially if you are seeking funding for your business.

While home owners have had every politician and consumer advocate screaming at every official and unofficial rate rise from the big four banks, little has been said about the fact that small businesses continue to pay more at a time when they are earning less.

Two years ago, interest rates on secured business loans and standard variable mortgage rates were roughly aligned. However, the outbreak of the global financial crisis saw the margin widen up to 1.73 per cent in January 2009.

While this margin has been declining, according to financial research house Canstar Cannex, “It’s unlikely that small business loans will reach parity with home loans anytime in the near future.”

Home owners may be rejoicing in the recent banking reforms, which included the abolition of exit fees (on new mortgages), but business lending continues to remain restrictive and expensive despite an inquiry by the Senate Economic References Committee confirming that it too would benefit from the abolition of exit fees.

So what’s a cash-strapped small business owner supposed to do? Or, more importantly, what have they been doing? The latest American Express business survey says they’re hitting the plastic.

The big banks adopted a mantra during the financial crisis that they were “open for business”, and, to be fair, the figures support them. But the banks have made no secret of the fact that they are more selective about who they will lend to.

They are cautious about the property developers on their books and wary of businesses in some discretionary retail sectors, such as fashion and consumer electronics.

Turning to credit cards or loans from friends and family has been a stop-gap measure to stave off cash-flow shortfalls for plenty of small businesses. Doors may have been opened, but lending has been tight and continues to be so.

“Over the past year, it’s been virtually impossible for me to secure cash-flow lending for small businesses,” Mortgage Choice broker Leeanne Scott says.

Business lending down by $40 billion The big banks tend to cop the blame for this draw back in their business lending. What the

to get finance and almost all will have to pay more for it.

And pay for it, you will. Under Basel II (the international recommendations of banking laws and regulation), Australian banks are required to set aside eight times more capital for small business loans then they do for a home loan.

That’s the reason for the high cost of commercial borrowing versus that of residential loans (see box on page 20 – Ross Greenwood on why businesses pay more). figures show is a mixed performance. Australia and New Zealand Banking Group increased commercial lending by 8 per cent last year, National Australia Bank’s business lending grew 1.8 per cent over the same period and the Commonwealth Bank of Australia reported that it had increased its lending to business by 3 per cent in the second half of its last financial year.

But Westpac Banking Corporation’s business lending book contracted 5 per cent last year.

NAB chief executive Cameron Clyne quantified the scale of the problem when he said in a speech in November that the sector had withdrawn $40 billion of lending capacity over the previous two years.

The NAB’s head of business banking, Joseph Healy, says that his business bankers want to do deals with their SME clients, but he concedes that businesses in some sectors will find it harder

UNCERTAINTY AND MARKET TURMOIL But, as Canstar Cannex notes, it’s important to recognise that the reduction in business lending is the result of changes facing both parties – lenders and business owners.

On the demand side, businesses have been faced with uncertainty of future trading opportunities and market turmoil. “Even the most adventurous of risk takers would have thought twice before racing off to borrow money,” Canstar Cannex says.

“Add to the fuel more businesses closing their doors, and it’s easy to see the reason behind a slow demand for new business loans.”

However Canstar Cannex does point out that there has been an increase in demand for overdrafts. “A useful money stream when

Improve your chances

If you want a loan, expect a grilling from the lender.

Here’s what every lender will want to see.

1

Operational strength: The Commonwealth Bank told us, “The aim is to ensure that the business is healthy and growing, or is a start-up with great prospects. Having up-todate information is important.

Customers with a financial year ending in June should be thinking about putting forward trading results to June 2010 and also management figures, if available, for the months between June and the current date.”

2

Cash flow: CBA says, “Your business banker will need to check that you can meet ongoing repayments and this can be an area where businesses have difficulty.

A good way to help overcome this is to put together a realistic cashflow forecast.”

3

Security: This is all about risk. You will enjoy a lower interest rate if you put up residential property as security.

4

Your experience. Your vision.

The reason for the funding – and what it will deliver.

5

The lender will check your past credit history.

Order a copy of your credit file at Dun & Bradstreet (www.dnb. com.au) or Veda Advantage (www.vedaadvantage.com).

Make sure you correct any errors on the file.

6

Tax returns for the business for the past two years, plus personal tax returns for the past two years.

7

Be prepared to deal with tighter credit terms. Lenders may cut the loan-to-valuation ratio or impose stricter repayment terms. Work out how you would manage with a smaller loan.

8

Be honest. A significant number of borrowers mislead credit providers (as many as 10 per cent of applicants, according to Veda Advantage’s 2010 Australian Debt Study).

Lenders are alert to the problem, and if you are found out, you won’t get the finance.

www.telstra.com/smarter

17

FEATURE | funding business reserves are drained and funding requirements still need to be met,” it says.

If your business borrowings are secured by a first mortgage, it makes sense to talk to your existing lender about your cash-flow needs before you shop around. That’s because a second mortgage to secure any additional finance is not looked upon too favourably. You’ll more than likely have to move your entire business needs over to the one lender.

But having said that, you don’t always need to offer security for a business loan.

“Contrary to popular belief, you don’t need to offer property as security for a business loan,” says Commonwealth Bank’s executive general manager for local business banking, Matt Comyn.

Unlike others, Comyn says the bank hasn’t changed its approach to rating.

“With a strong cash flow, you don’t need any security at all. That said, you will enjoy a lower interest rate if you put up residential property as security.”

Contrast AMP Banking’s secured overdraft with NAB’s unsecured overdraft, for example.

Canstar Cannex says both are stand-out facilities (see tables), but the annual cost difference on an overdraft of $10,000 is over $1000, so, Comyn says, the cost of funding is cheaper if you’re in a position to offer security.

“There are plenty

of independent lenders in the $2-5m bracket and below who are cashed up and ready to go.”

John Macalyk, AAA Commercial Mortgages

Get the right plastic For businesses that find themselves with the only option for borrowing money to be using a credit card, make sure it is a low-rate card, rather than one charging around 20 per cent.

According to Money magazine’s Best of the Best finance awards, at 10.98 per cent per annum, NAB’s Business Access card account wins gold in the banking category while Heritage Building Society’s Business Visa at an annual 12.7 per cent picks up gold in the non-bank sector.

TOP 3 OVERDRAFTS (SECURED $50,000) INSTITUTION

PRODUCT

NOM RATE*

ANNUAL FEE

TOTAL COST 1ST YEAR

AMP Banking

Classic Line of Credit

8.02%

$120

$4730

Commonwealth

Bus Line of Credit

7.81%

$275

$4780

Newcastle Permanent

Business Overdraft

9.39%

na

$4820

TOP 3 OVERDRAFTS (UNSECURED $50,000) NAB

Business OD Prime

9.46%

$600

$6080

Maitland Mutual BS

Business OD

10.8%

$500

$6750

Westpac

Business OD

11.71%

$120

$6795

*2% risk margin where applicable

TOP 3 TERM LOANS SECURED INSTITUTION

PRODUCT

NOM RATE*

ANNUAL FEE

TOTAL 10 YEAR COST **

Newcastle Permanent

Residential Bus Loan

6.37%

$120

$271,530

Suncorp Bank

Business Essential

7.43%

na

$284,807

AMP Banking

Classic Variable Rate

7.82%

$120

$290,708

TOP 3 TERM LOANS (UNSECURED) Bankwest

Business Edge

10.19

$420

$324,892

Commonwealth

BBL Variable

11.74

$384

$345,572

Mecu

Commercial

13.88

na

$371,909

* Assumes 2% risk margin where applicable. ** Based on $200,000 loan over 10 years Source: Canstar Cannex, December 14, 2010

18

smarter business ideas

| FEBRUARY 2011

Both of these cards offer a cheap way to ride through rough patches without paying through the nose for short-term credit.

If approval for business finance from a traditional lender proves difficult, then there’s always the option of turning to alternative lenders, although this may be easier said than done.

Australian SMEs have traditionally been wary of non-bank business lenders. The latest CPA Australia Asia-Pacific Small Business Survey reveals that business owners were torn between a desire to look for alternative funding arrangements and the inconvenience of switching.

The survey found that vendor financing, debtor financing and inventory financing were unpopular with most businesses.

Alternative lenders Canny small business leaders must use every available route to find the person or lender who believes in their vision and will back them with cash. They must be prepared to work hard to get the business in shape – getting their financials in order, and dealing with any outstanding credit issues – to give them the best chance to overcome any hurdles the lenders put in their way.

“Commercial lending is back, really back, and I want to stress that,” says John Macalyk, longtime commercial broker and partner at AAA Commercial Mortgages in Sydney, which has been operating since 1988.

“Business borrowers have options now and they don’t have to take no from a bank as the final answer. It hasn’t been this good for people looking for commercial finance since before the crisis.

“For deals over $10 million, you will probably be approaching the banks first, but, at the smaller end of the spectrum – especially in the $2-5 million bracket and below – there are plenty of lenders around who are cashed up and ready to go.”

Commercial finance brokers often work on a commission of about 0.25 per cent which is added to the repayments’ interest rate – usually expressed as a margin above a base rate, such as the 90-day bill rate.

Some brokers will widen their search for finance to lenders that don’t pay broker commissions if you agree to an alternative remuneration model for them at the beginning.

It is common for commercial mortgage and finance brokers to collect a mandate from their client for a successful finance deal. The mandate

CASE STUDY BROUGHT TO YOU BY TELSTRA BUSINESS 1800 TSUITE (1800 878 483) | TELSTRA.COM/TSUITE

‘WE HAVE NO SERVER MAINTENANCE TO WORRY ABOUT. WE DON’T HAVE TO STRESS ABOUT BACK UP AND RECOVERY.’ Julian Lamb, Head of Technology, Tony Ferguson Weightloss Centres

SEE HOW MICROSOFT® EXCHANGE ONLINE FROM T-SUITE® KEEPS TONY FERGUSON TRIM

AN EFFORTLESS WAY TO KEEP YOUR SOFTWARE UP-TO-DATE AND YOUR DATA SECURE

Growing from two stores to nearly 1,900 stores across five countries in five years, Tony Ferguson Weightloss needed a reliable email system after suffering a number of serious outages.

As they discovered, cloud computing was the right solution for them, using Microsoft® Exchange Online from T-Suite.®

‘The T-Suite user experience is better because it’s running on the latest version of Exchange – it’s faster and more reliable,’ says Julian Lamb. ‘In the cloud, I’m assured that they are taking reasonable steps to secure my data.’

KEEP ALL YOUR EMAIL, CONTACTS AND CALENDARS OPERATING EFFICIENTLY ‘Frankly I was initially sceptical. But as soon as I saw how T-Suite worked and what it could deliver for us, I became very interested,’ said Head of Technology, Julian Lamb at Tony Ferguson. ‘Our company relies heavily on email but we don’t have a culture of storing data, so I expected significant disruptions with any solution. By going with T-Suite we avoided six weeks of ongoing disruption to the users.’

TRY CLOUD COMPUTING WITH MICROSOFT® EXCHANGE ONLINE FROM T-SUITE® ‘It’s the future of corporate computing solutions,’ said Julian Lamb. ‘For a small organisation like ours, the cost of infrastructure to run a business intelligence system is similar whether you’re a 250- or a 1000-person organisation, but the cost of providing it out in the cloud is significantly less.’

INCREASE YOUR EFFICIENCIES, NOT YOUR EXPENSES Julian Lamb estimates the move to cloud computing including Microsoft® Exchange Online from T-Suite has saved about $30,000 in efficiencies per annum and at least five hours-a-week in service management for the IT team.

FREE 30-DAY TRIAL THEN JUST $ .95 PER LICENCE PER MONTH

9

THINGS YOU NEED TO KNOW: All savings claims are based on particular user experiences and actual savings may vary. Accessibility and functionality may be affected by the internet connection, browser and computer system you are using. Microsoft Online Services trial via the Business Productivity Online Suite (which includes: Microsoft Exchange Online, Microsoft SharePoint Online, Microsoft Office Live Meeting and Microsoft Office Communications Online) or via Business Productivity Online Deskless Worker Suite (which includes: Microsoft Exchange Online Deskless Worker and Microsoft SharePoint Online Deskless Worker) is limited to 20 users and expires after 30 days. After the trial period, you may choose to convert your trial users to a paid subscription for the suite or any of the individual Microsoft Online Services applications. No early termination charges apply for not converting to a paid subscription. User information and data, including mailbox content, hosted data and other related settings, will be deleted from those Microsoft Online Services applications for which you have not converted to a paid subscription within 30 days after the expiry of the trial. ® Registered trademark of Microsoft Corporation in the United States and/or other countries. ® Registered trade mark of Telstra Corporation Limited. ABN 33 051 775 556.

BWMTBU0975

FEATURE | funding is an agreed fee or commission that replaces the broker commission paid by lenders.

Macalyk says that you will undoubtedly pay more with an alternative lender, but as long as you realise what you are up for and that your business can accommodate it, that may be the difference between having your own business and not.

“Getting a loan through a major bank requires the same level of detail and security as you would give to get a home loan,” Macalyk says.

“If you’ve got a good business story to tell, there are plenty of non-banks willing to lend against that.”

Lenders on AAA Commercial Mortgages’ panel include Perpetual and Australian Unity – both fund managers that operate mortgage funds and lend to small businesses that can offer property as security. Second-tier banks such as Bank of Queensland, non-banks such as Merchant Mortgages and Think Tank, in Sydney, and Banksia Financial Group in Melbourne are also active in the market.

Think Tank is a non-bank commercial lender trying to take market share from the big banks. Think Tank (www.thinktank.net.au).

It has been lending since 2006 and promotes property loans from $100,000 to $5 million with loan-to-valuation ratios up to 85 per cent.

It’s also another lender on AAA Commercial Mortgages’ book.

“For the past year,

it’s been virtually impossible for me to secure cash-flow lending for small businesses,”

Leeanne Scott, Mortgage Choice

Currently, Think Tank’s rates for a Full Doc commercial property finance deal – one in which the borrower is able to supply tax-return information and a financial statement – start within about 1 per cent of the big banks’ standard variable residential mortgage rates.

Think Tank’s Lite Doc loans start from 0.6 per cent more than the Full Doc variety and the nodoc, self-verified Quick Doc product is another small step up again.

“Think Tank is definitely open for business lending; we have been in the market strongly and looking to grow lending again since early this year,” managing director Peter Kearns says.

In Melbourne, the Banksia Financial Group (www.banksiagroup.com.au) is said

Why do business loans cost so much?

Ross Greenwood

Business loans are expensive – when you find them – and the reasons can be found beyond Australia’s shores, Australia’s best-known finance analyst and Smarter Business Ideas columnist Ross Greenwood says.

reason to jack up business rates and to be more conservative with lending.

Under Basel II, Australian banks are required to set aside eight times more capital for a small business loan than they do for a home loan.

“The plight of business has been compounded by the change in banking laws around the world, which makes lending to small and medium-sized business a lot more risky (and costly) to the big banks,” Greenwood says.

“More capital equals more cost, which in turn equals higher prices for small business borrowing. Yet, from memory, the catalyst for the global financial crisis was the US housing market – not its small business sector. Odd.”

“Since the global financial crisis, this conservatism has increased in banks around the world. Big international banks are reluctant to spread their credit (and their risk) too widely.”

But in the past six months things have started to change, Greenwood says.

“Despite higher official interest rates, the risk margins for big banks have started to contract, the Reserve Bank of Australia says. So far, this is only true of big business loans, and not for smaller businesses. Big business loans of $2 million or more are on average 1.3 per cent cheaper than they are for small business loans.”

Then there is the global banking reform. Greenwood adds, “Under Basel II (the international recommendations for banking laws and regulation), banks found another

20

smarter business ideas

| FEBRUARY 2011

by commercial finance brokers to be lending assertively on good commercial terms. Banksia’s standard commercial, retail, industrial facility for purchase, debt consolidation or refinancing is lending from $100,000 to $10 million on lending-valuation ratios of up to 70 per cent.

Banksia has commercial and agricultural finance facilities as well as lite and low-doc loans for low loan-to-valuation ratios, at rates within 2 per cent of the big banks’ standard variable residential mortgage rates.

Another non-bank business specialist lender is Liberty Financial. Its products range from commercial loans that enable the purchase of business premises to debt finance that provides cash-flow solutions.

Times are tough for businesses seeking funding, but there are still options out there.

See the sidebars to this story for some practical advice on how to prepare a loan application and to understand the differences between lenders.

Commercial lenders vs banks how do the loans compare?

Banks offer two types of loan to SMEs. In most cases, borrowers are offered a secured loan that is similar to a consumer mortgage product, with standard rates for principal and interest, interest only, variable or fixed options. For bigger borrowers, the bank will apply a margin (which reflects its rating of the risk of the borrower) to a wholesale money-market rate, such as the 90-day bank bill rate. Canstar Cannex says a 2 per cent margin would be standard.

Commercial lenders offer various pricing models, depending on where they are sourcing their funds. If funded by large commercial banks, they will offer standard rates. If they are getting funds from the capital markets, they will use the money-market-rate-plus-margin method.

This multiplicity of pricing models makes it very hard for business borrowers to shop around for rates in the same way consumers do. Much depends on the risk rating the lender attaches to the borrower, so expect to make more applications before a suitable deal can be found.

have you had funding problems? comment on this feature at: telstra.com/smarter/businessideas

FEATURE | CLOUD COMPUTING

cloud computing a down-to-earth guide Putting IT operations outside your business under what’s known as cloud computing offers big benefits to businesses. But while doing it with basic applications such as email can be straightforward, make sure you know what you’re signing up for before migrating more critical data…

STORY Beverley Head

Wine orders coming in by email required a rock-solid IT solution, so Paul Lenehan, ICT manager at Victoria’s Rathbone Wine Group outsourced to a “cloud”. It worked.

Read his case study on page 24.

22

smarter business ideas

| FEBRUARY 2011

Photo s : adr i a n Lam b ert / acor n p hoto

T

While moving email and some basic collaboration tools to the cloud is a relatively simple exercise, careful consideration must be given if more mission-critical data and applications are to be migrated.

It’s important to understand what’s involved and examine what different vendors are offering.

Questions that need answering include:

here is a lot of buzz about cloud

computing, the process whereby computing and telecommunications services are supplied as a utility via the internet. And with good reason: having a provider manage your business software, communications and data storage brings many potential benefits, not least of which are cost savings.

For starters, you get rid of the need to make any upfront capital outlay for servers and software. In theory, much like electricity, you pay for what you use, when you use it – and you can quickly scale your service up or down to meet shifting business conditions.

By hiring what amounts to a slice of a very large data centre, SMEs can access reliability and security far better than they might be able to afford if managing their own computer systems.

They also no longer have to tackle timeconsuming backups, or get involved in patching software or managing upgrades, as this is all handled by the cloud provider.

Another real benefit is increased mobility.

Cloud-based systems can be accessed from anywhere there is an internet connection. This is particularly important for SMEs with employees on the road and very small and highly mobile businesses.

Even the smallest businesses can access their data securely wherever they have internet access, knowing that their customer data is stored securely in the cloud when they aren’t using it.

“Security can be expensive and labourintensive and SMEs often don’t have an IT manager – the business owner has to handle technology,” says Kelly Innis, online product manager for Microsoft® Australia, which offers a range of cloud options. “Cloud services allow them to spend time on the business, not on IT.” According to a survey conducted by Springboard Research in September 2010, 60 per cent of Australian organisations now have some form of cloud initiative in place. Springboard’s research director, John Brand, says customer relationship management (CRM) applications and email are particularly attractive for SMEs. The demand for cloud-based accounting systems is also on the increase, with a range of accounting software offerings – such as Xero®, MYOB, Sage and NetSuite – now on offer.

What are the service-level agreements on offer?

Getting started

»

Most SMEs start by moving email and some basic collaboration tools to the cloud

»

Identify data that has low business value but needs to be stored and move this “peripheral data” to the cloud next

»Assess the

parts of your IT that are expensive and determine whether it would be cheaper to move it to the cloud. Backup can be expensive.

From time to time, all cloud services will have outages, when the system goes down. This means it is important to consider the cloud provider’s service record, how it compares with other providers, and what penalties or credits on costs of service apply when there are outages.

Microsoft applications sold through Telstra’s T-Suite® offer, for example, 99.9 per cent target service availability, plus service credits if service levels aren’t met.

What happens if data is lost or compromised?

How is data backed up? What are the provider’s disaster recovery and business continuity undertakings? Will you be compensated if data is lost?

Will it be easy to switch cloud providers in the future, or will you be locked in?

To date, there are few standards in cloud computing, so it’s worth checking if your supplier’s technical standards are also used by other providers.

What sort of latency, or lag, applies?

This varies and times can be slow, especially if the cloud is based overseas. For some businesses and services, delays will be critical.

Will moving to the cloud affect telecommunications bills?

If uploading or downloading a lot of data, this may prove expensive, so companies need to read the terms and conditions carefully and consider getting independent legal advice on obligations and rights. www.telstra.com/smarter

23

FEATURE | CLOUD COMPUTING

Rathbone Wine Group ICT manager Paul Lenehan has been so impressed with outsourced email that he’s considering outsourcing data storage, too.

Taking orders: why a winemaker joined the cloud Bottle shops or wine merchants running low on stocks often place orders by email. But when winemakers lose emails, they lose orders, too, and it was this problem that led Rathbone Wine Group, parent of brands such as Yering Station, Parker Coonawarra Estate and Xanadu, to cloud computing.

Paul Lenehan, Rathbone’s ICT manager, explains that organisations with a sufficient volume of email traffic to manage each day probably need one IT staff member just looking after the email server. As one of a team of just three, Lenehan quickly worked out he needed an alternative.

24

smarter business ideas

Earlier this year, he moved all Rathbone’s email across to Microsoft® Exchange Online, which Telstra offers as a cloud service through T-Suite®.

With three huge data centres underpinning its cloud service, Lenehan knows someone else is managing the system and keeping it up to date. He feels secure that he’s getting better reliability than he would have been able to manage if he had been running a single email server himself.

Another benefit is that each email user can keep up to 25GB of emails in the cloud. If for some reason an employee’s laptop crashes or is stolen, their email records are still available.

“I think cloud is the way to go resource-wise, managementwise and for the reliability,” Lenehan says.

| FEBRUARY 2011

Buying IT software as a cloud service means a company gets access to the latest technology without having to pay for it directly. There’s no capital outlay, just a monthly operating expense. He’s been so pleased with the performance of email in the cloud, he’s now in the process of moving virus scanning to the cloud. “The client can run a script which installs the virus scanner, then we can push updates to the machines and monitor them that way – we don’t have to visit every machine,” he explains.

“I might look at storage next,” he says. Instead of performing daily backups and taking hard drives home every night for security, Lenehan’s considering accessing a cloud-based storage service so that all his data is securely stored off premises.

“I think cloud

is the way to go resource-wise, managementwise and for the reliability”

CloudSleuth is a new internet service for comparing the performance of different clouds.

At present, it mainly tracks the performance of the big international clouds of companies, such as Amazon, Google and Microsoft, but, over time, it’s likely more cloud providers will join.

When it launched in November, it showed Sydney users of Google Apps to be experiencing backbone network latencies of around 15 seconds, against 14.15 seconds for Windows Azure® and 18 seconds for Amazon’s EC2 cloud.

For some applications, that may be tolerable.

Companies need to consider how much data they must load to the cloud, as they could find uploading a large amount of production data into a business intelligence cloud each night and sending it overseas prohibitively costly.

And moving your data to a different cloud is now becoming a bit more straightforward than it had been. In October, an Intel-led initiative called the Open Data Centre Alliance was established to help avoid cloud lock-in by creating standards that would allow more secure, efficient, and simplified cloud data centres to emerge that preserve IT flexibility and choice.

Companies need to check a cloud provider’s fine print on its service flexibility. Kelly Innis says SMEs signing up for Microsoft applications delivered over Telstra’s T-Suite service sign a 12-month contract. “In the worst case, if they had to suddenly scale back their business, they would pay the balance of the contract,” she says.

Users of the RightNow’s cloud-based customer experience service can sign up for a premium contract that gives price certainty for three years, but allows them to terminate every 12 months.

They can build seasonality into each 12-month period by allocating a range of different “seat”, or user-months, so that access can be increased at busy periods, such as Christmas, for example.

SEE MORE TECHNOLOGY FEATURES AT: telstra.com/smarter/techfeatures

® R eg i s tered t rademar k of M i c ro s of t Cor p orat i o n i n t he U n i ted S tate s a n d / or ot her cou nt r i e s ® R eg i s tered t rademar k of Te l s t ra Cor p orat i o n L i m i ted A BN 3 3 0 5 1 7 7 5 5 5 6

Case study Rathbone Wines outsources to safeguard orders

p l e h o t e r e We’re h s s e n i s u b your Our team of experts at Harris Technology know which technology solutions small, medium and large businesses across Australia need to stay ahead of the curve. We’ve got all your needs covered with desktops, notebooks, monitors, storage, printers, ink and toner, servers, software, multimedia and more.

We’ll always give you our best price on all the big brands you can trust.

Let’s talk 1300 13 9999

Jose, Team Member

shop 24/7 @ ht.com.au

call 1300 13 9999

visit our stores

TECH-ZONE | Broadband

A

lmost every business in Australia

uses an internet service and reliance on online services such as email and bandwidth-hungry file sharing grows every year, increasing the need for faster connections and broadband.

Price is, as always, a big issue when selecting a broadband service provider, but buyers should also consider factors such as productivity, protection and service, Telstra Business segment manager Daryn Vanstone says.

“Given the importance of broadband connections to business, it is surprising that most SMEs make their choice of provider based on price alone,” Vanstone says.

The September 2010 Sensis e-Business Report says 94 per cent of SMEs now have internet access and a further 2 per cent will be connected

Cheapest is not always best Most businesses shop for broadband service on price alone, but there are other equally important factors to consider

26

smarter business ideas

| FEBRUARY 2011

within the next 12 months. Almost all SMEs with internet (96 per cent) have broadband access.

Businesses are upgrading their internet connections. More than 20 per cent of SMEs with a connection say they intend to get a faster one. And those who have moved to broadband say they did so for speed, increased internet efficiency and access to more applications.

According to Sensis, the single most important use of the internet remains email. Second comes searching for information about products and services, and third is seeking reference information or research data.

The biggest increase in the past year came from those using a web site to promote a business, and those using online directories and auction sites to sell goods or services.

Fifty nine per cent of SMEs reported using a web site to advertise or promote their businesses.

This was most common among accommodation, cafe and restaurant operators.

Vanstone says that as usage increases, business users must look at the productivity of their broadband service. With both of Telstra’s fixedline business broadband services – its ADSL and its premium Ethernet offerings – downloads count towards monthly usage but not uploads.

Telstra does not “throttle” its business broadband

Photo s : N i c k Cu b b i n

BRoadband:

By John Kavanagh

Pictured here on a business trip to Brisbane, fast broadband access has enabled Niels Bendixsen’s small Hobart-based design agency Three Squared to work for clients across Australia.

www.telstra.com/smarter

27

TECH-ZONE | Broadband

“Your broadband provider should give you locally based, businessgrade 24/7 support”

customers, which means their download speeds are not slowed as they reach their monthly limits.

SMEs also report that they use the internet increasingly for making and receiving payments, taking orders and internet banking.

Vanstone says that from a transaction-security point of view, Telstra can also provide remote backup from PCs or servers and has a full range of network security applications available that operate through its cloud service, T-Suite®.

Vanstone says, “Business users need peace of mind. Your broadband provider should provide locally based, business-grade 24/7 support.”

The Australian Interactive Media Industry Association reports that business mobile phone users now want data included in their plans.

AIMIA says the number of people using their mobiles for purposes other than voice and SMS increased to 83 per cent in 2010, from 71 per cent in 2009. One-third of users now regularly send and receive emails on their phones.

For users seeking faster download speeds, mobile broadband services are moving ahead.

Telstra’s fixed-line services offer speeds of up to 20Mbps (megabits per second) for ADSL in an ADSL 2+ zone and up to 8Mbps in many other areas, and an equally fast upload and download rate of up to 10Mbps for Ethernet**. While for mobile broadband, the company has launched a USB modem, the Telstra Ultimate® Device, that offers typical download speeds of up to 20Mbps in Capital CBDs and selected metropolitan and regional areas*.

Telstra’s Mobile Broadband service’s businessgrade support matches its fixed-line services.

Telstra Business Broadband includes an online service-management tool, CustData, that allows customers to track usage statistics and set up email alerts to when usage limits are being reached. Other extras include security tools to deal with spam and viruses.

MORE ON BROADBAND PACKAGES AT:

telstra.com/business/broadbandpackages

28

smarter business ideas

| FEBRUARY 2011

Case study

Three Squared

Technology and robust broadband have driven national business gains for creative consultancy Three Squared.

“I can be in Brisbane seeing a client, flick a file to Hobart and then have it worked on instantly,” creative director Niels Bendixsen says.

“In 2004, we worried about losing clients because we had set up a head office in Hobart,” says Niels Bendixsen, creative director of design agency, Three Squared, of his decision to relocate his company.

He had wondered what would happen if he had to tell the consultancy’s customers it would take him a couple of days to get to a meeting.

“The idea of working remotely was still pretty new then. It is much more widely accepted now,” he says.

These days, Bendixsen and his six colleagues are heavy users of communications technology, including broadband, mobile broadband and smartphones.

Recently, he switched his broadband ADSL account from BigPond to Telstra Business Broadband Ethernet, looking for the most stable and secure network he could find, and bundled all his other services into one account.

“Even though we are small, our business is national. Head office is in Hobart and we have a base in Sydney and a regional office on the south coast of New South Wales, where I live now.

“We have regional clients all over Australia. I have a client in Broken Hill, who I only

* Capital CBDs means within 5km from the GPO in each capital city. In other areas speed ranges will be less. Speeds vary due to factors such as distance from the base station, local conditions, user numbers, hardware and software configuration. ** Average speeds will be lower and actual speeds vary due to a

meet about once a year. The technology is critical. We email lots of files back and forth between our offices and to clients. We have an online jobmanagement system that I can log into to see what people are working on.

“The work is all electronic these days. I can be in Brisbane seeing a client, flick a file to Hobart and then have it worked on instantly.”

Bendixsen says his broadband service has been very reliable, with only a few interruptions.

“I think we have come a long way in a few years,” Bendixsen says with satisfaction. “Now, we are using the technology to acquire new clients all over the place.”

number of factors including network configuration, line quality and length, your exchange, your location, internet traffic, your equipment and software. ® Registered trademark of Telstra Corporation Limited ABN 33 051 775 556

Here’s an idea:

Surround yourself with dynamic sound

A phone with powerful in-built virtual surround sound.

Giving you full, dynamic, high-ďŹ delity audio for the ultimate music experience.

HTC 7 Mozart htc.com Available exclusively at your local Telstra store or Partner

The T Logo and Next G logo are registered trade marks of Telstra Corporation Limited. ABN 33 051 775 556. FOXTEL marks are used under licence from FOXTEL Management Pty Limited.

The HTC logo, the HTC quietly brilliant logo and HTC 7 Mozart are the trademarks of HTC Corporation.

REVIEW

SMARTPHONE PLATFORMS

Motorola DEFY

Which mobile platform

SHARE 3G CONNECTION WITH A LAPTOP

AN extremely “rugged and compact smartphone

”

iPhone™, BlackBerry®, Nokia and others are battling it out to get smartphones into our pockets but they all run on different systems which need to sync with those in your business.

Which system is right for you?

Smartphones have certainly come a long way since the early

days of mobile telephony. Where you once had to grapple with complex menu systems and multi-step functions whose mastery required a training course, the current generations of handsets are almost as easy to use as previous regular mobiles.

That extra layer of complexity is well worth it once you factor in the potential benefits. The email and web-browsing functions on modern smartphones alone have improved to the point that these devices are now a viable alternative to carting a laptop around – especially if you need to carry a phone with you to keep in touch with the office anyway.

In addition, smartphones offer features that aren’t commonly found in a laptop, such as persistent 3G internet connectivity, longer battery life and GPS navigation. Wi-Fi and GPS are par for the course, as are Microsoft® Exchange and web email compatibility and support for third-party applications.

For sales staff, field workers and mobile professionals, having all of these features on tap in a form small enough to fit in a pocket can make a substantial difference to a company’s bottom line, boosting outof-office productivity and improving interaction between team members and clients.

The only difficult part comes in deciding which smartphone and mobile platform will work best with your organisation. To that effect, we’ve reviewed five of the latest smartphones across all of the major mobile operating systems to make your decision easier.

30

smarter business ideas

| FEBRUARY 2011

Rating:

★★★★★ There aren’t too many smartphones you can take down to the beach, use while you’re in the bathroom, or that will survive those occasional bumps and drops, but the Motorola DEFY is one. It’s dust-resistant, waterresistant, and uses extratough Corning® Gorilla® Glass for its display.

operating system, but most of the newer 2.2 version’s features have been added to fill the gaps, such as Microsoft Exchange support and Wi-Fi tethering, which lets you share its 3G connection with other devices, making it handy to use with a laptop.

Unlike other ruggedised devices, the DEFY isn’t encased in rubber and made double the size – it’s actually smaller than any of the other smartphones on test, weighing a tiny 118g.

The only clues that it’s more durable than the norm are the oversized rubber stoppers covering its headphone jack and micro-USB port, and the screws along the edges that seal it shut.

In addition to Android’s standard suite of Google apps (such as Gmail and the new turn-byturn navigation app), Motorola has thrown in lots of useful extras.

These include a batterymanager app that can turn off data connections automatically at night to save on battery, and the Swype software keyboard that allows for faster typing speeds without lifting your finger from the display.

The Motorola DEFY runs the older Android™ 2.1

Many rugged phones sacrifice features for

durability, but not the DEFY. Its large 3.7-inch 854 x 480 LCD display is astonishingly bright and crisp, while the 800MHz processor with 512MB of RAM makes for fast performance. Its speaker quality is also fantastic, and the battery is good for up to six hours of talk time (double that of a standard smartphone) and 18 days of standby.

Price: $0 upfront on $49 Business Mobile Cap plan for 24 months with 1GB of data for use in Australia.

Min cost $1176.

Pros: Ruggedised features, extremely compact, lots of software Cons: Construction looks a little cheap, runs an older version of Android, 5-megapixel camera is mediocre Rating: 5/5

BlackBerry® and related trademarks, names and logos are the property of Research In Motion Limited and are registered and/or used in the U.S and countries around the world. Apple, the Apple logo, iPod, Multi-Touch, and iPad are trademarks of Apple Inc.® Registered trademark of Microsoft Corporation in the United States and/or other countries. Android, the Android Logo, Android Market and the Android Market Logo are trade marks of Google, Inc. Windows Phone is a trade mark of the Microsoft group of companies. Some features and services may vary by area, phone, carrier, network availability and service plan. Fees may apply. See windowsphone.com/versions and Telstra.com/windowsphone.

is right for your business?

by Jenneth Orantia

BlackBerry Torch 9800 In a world of touchscreens, the Torch™ is the first of three BlackBerry attempts to get it right. Its combo design incorporates both a 3.2-inch touchscreen and a slider QWERTY keyboard and will please users who prefer a tactile typing experience. Its upgraded BlackBerry® 6 operating system also features several touchscreenfriendly enhancements.

Rating:

★★★

As with previous BlackBerrys, a robust email platform (supporting both enterprise and personal accounts) is its central attraction. Its earpiece and speakerphone’s voice quality are also faultless.

The BlackBerry 6 OS’s key addition for business users is its upgraded web browser. It mostly renders web pages quicker, and supports tabbed browsing

Nokia N8 Nokia has hit a home run with the hardware of its latest handset. The N8 is a sexy smartphone, with features yet to be found in its competitors, including a class-leading 12-megapixel camera, a 3.5-inch touchscreen that uses Gorilla Glass (a material two to three times tougher than standard glass), a mini-HDMI port for outputting full HD video to a television or projector, and a USB On-The-Go port for connecting a keyboard, mouse or USB flash drive.

Rating:

★★★

Hardware aside, the N8 runs on Nokia’s Symbian^3 operating system, which lags Apple’s iOS and Google’s Android™ and feels more like a highend feature phone than a smartphone. Its web browser and email client (which supports Microsoft® Exchange) have most

TOUCHSCREEN AND QWERTY KEYBOARDS

Apple iPhone 4 – 16GB It’s the smartphone of choice for consumers, but updates to its operating system now also make the iPhone a viable device for business users. New features include support for multiple Microsoft Exchange accounts, a unified inbox for email, limited multitasking (which allows for VoIP, GPS and audio-streaming apps to run in the background), and a videoconferencing app that works over Wi-Fi.

and pinch-to-zoom gestures, but the Torch’s slower 624MHz processor can see it freeze when loading complex web pages – a tardiness echoed elsewhere in its operation.

Battery life with heavy usage is 24 hours, and the Torch is compact enough to sit comfortably in a pocket.

Just mind the screen lock as the button for unlocking the screen is too easy to trigger accidentally.

Price: $0 upfront on $150 Business Mobile PLUS Plan for 24 months with personal or enterprise BlackBerry service included. Min cost $3600.

Pros: Flexible input options, bulletproof email delivery

Rating:

★★★★

Cons: Trigger-happy screen-lock button, underpowered processor Rating: 3/5

SOLID HARDWARE, SOFTWARE LACKING

Cons: Operating system is behind the times, sluggish, primitive text entry with the on-screen keyboard Rating: 3/5

Rating:

★★★★

Continual updates have made iOS a feature-rich smartphone platform, and this makes for a potent combination when paired with the iPhone 4’s zippy 1GHz A4 processor.

Price: $0 upfront on $130 Business Mobile PLUS Plan for 24 months with 3GB of data to use in Australia. Min cost $3120.

Pros: Best-in-class web browser, intuitive interface, high-resolution display Cons: Fragile glass construction, signal degradation from external antenna, limited customisation options Rating: 4/5

RAM perform well. Also impressive are its 16GB of internal storage, 25GB of server space for photos and documents on SkyDrive (an online service), and its 5-megapixel camera with 720p HD video recording.

The 7Q’s 3.5-inch capacitive LCD touchscreen is paired with a landscape QWERTY keyboard, one of the best we’ve used on a smartphone, but for its shift and function keys, which, being much smaller than the other buttons, are annoyingly hard to press.

At 185g, the Optimus 7Q is overweight as smartphones go, but its 1GHz Snapdragon processor and 512MB of

The external antenna that makes the iPhone 4’s slim proportions possible also causes signal degradation when you hold it with your bare hands.

STRONG COMPATABILITY AND PERFORMANCE

With the Optimus 7Q – exclusive to Telstra – LG is leaving its niche in the “cheap and cheerful” smartphone segment. It is also one of the first smartphones to run Microsoft’s freshly baked Windows® Phone 7, with its out-of-thebox compatibility with Microsoft® Exchange, SharePoint® and Office.

Nokia has crippled the N8 with a weak 628MHz processor and 256MB of RAM, a flaw felt most when web browsing and running more than a couple of programs simultaneously.

Pros: Strong feature set, 16GB internal storage

The iPhone 4 is unmatched for its hardware, boasting the highest-resolution display in a smartphone (960 x 640 pixels), a modern glass and stainless steel design and a superslim 9.3mm profile. But good looks come at the expense of durability as its glass front and back are likely to shatter if you drop it on a hard surface.

LG Optimus 7Q

features expected in a smartphone, but the tiny text size used for messages and web sites will challenge older and longer-sighted users.

Price: $0 upfront on $129 Business Mobile Cap Plan for 24 months (3GB data for use in Australia and unlimited standard voice calls and texts in Australia). Min cost $3096.

HIGHEST-RESOLUTION SMARTPHONE DISPLAY

Windows Phone 7 is still very much a generationone product. There is no multitasking, no copy and paste function, no devicewide search and no VPN connectivity, yet all were in Windows Mobile® 6.5.

Price: $0 upfront on $79 Business Mobile Cap Plan for 24 months with 2GB of data for use in Australia. Min cost $1896.

Pros: Performance, comfortable keyboard Cons: Heavy, important features missing from its operating system Rating: 4/5

TO LEARN MORE ABOUT TELSTRA’S MOBILE PHONE PLANS GO TO: telstra.com/business/mobileworkforce

www.telstra.com/smarter

31

TECH-ZONE | mobile business

I

The sky’s not the limit Story Brad Howarth

Chest surgeon Dr Andrew Barling uses mobile technology to treat patients across a 100km region of Victoria.

The mobile computing revolution is under way and demand for internet access any time and everywhere is here to stay.

It’s time to weigh up how ubiquitous broadband can best be used to your own business’s advantage.

32

smarter business ideas

| FEBRUARY 2011

to see the potential benefit of mobile telephones when they were introduced in the late 1980s. Now they are showing a similar liking for mobile data services.

Australia is heading towards having 25 million mobile subscribers in 2011 – well above the population figure of 22 million. That rapid uptake is driven by a wave of business users taking a second service, usually a mobile broadband connection to the internet.

Making phone calls is now one of the lesser uses of a mobile phone, with the devices evolving into mini-computers called smartphones. The smartphone craze sprouted wings in the middle of the last decade thanks to the popularity of Canadian company Research In Motion’s BlackBerry® devices. But it took until the local launch of Apple’s® iPhone™ in 2008 for mobile web usage to really take off. The release of the iPhone also heralded the mobile applications era, with more than 300,000 “apps” now available on the iPhone for business and leisure.

The iPhone’s challenger, Google’s Android™ operating system, is now available on 95 smartphones. Microsoft® recently made its new play in the market with its Windows® Phone 7 operating system, and Nokia is getting into the smartphone game with its N8 device, and has a new range called MeeGo™ planned for 2011.

Smartphones often contain a number of features that regular notebook computers don’t.

Many of these are becoming vital on the road, particularly the ability to browse the web and respond remotely to email, and to take advantage of mapping services.

At the same time, faster wireless network data speeds and falling prices have seen business users flock to mobile broadband modems that plug into notebook computers to deliver web connectivity when they are out on the road that is similar – and in some cases better – than that which they enjoy in their office.

Such connectivity has been of huge benefit to Melbourne chest surgeon Dr Andrew Barling, who works two days of each week in the regional centre of Bendigo, and as a result finds himself treating patients who are spread over a distance of more than 100 kilometres.

Three years ago, Barling began using mobile data services through a USB modem connected to his laptop. High-speed data service enables him to send and receive high-resolution images, such as radiology images, while he is on the road.

“For somebody like me, who is travelling

BlackBerry® and related trademarks, names and logos are the property of Research In Motion Limited and are registered and/or used in the US and countries around the world.

Apple, the Apple logo, iPod, Multi-Touch, and iPad are trademarks of Apple Inc. ® Registered trademark of Microsoft Corporation in the United States and/or other countries.

Android, the Android Logo, Android Market and the Android Market Logo are trade marks of Google, Inc. ™ and ® are trademarks and registered trademarks of Telstra Corporation Limited ABN 33 051 775 556

t didn’t take Australian businesses long

Photo : J ame s b rau n d

around a number of sites from the eastern suburbs of Melbourne to regional areas, online access to the radiology has substantially helped the efficiency of the practice,” Barling says. “It puts me under less stress in terms of time management and striking a work/life balance as well, and in the time saved from going out in the car to look at an x-ray, which could take an hour each way.”

The technology also makes him much more accessible to people seeking opinions or advice.

“If someone has a chest full of pus, the sooner you can intervene, the better the outcome will be. This allows an earlier intervention and a much better outcome for the patient.”

Barling says the technology is also improving communication with colleagues, as multidisciplinary teams are able to work together more effectively and more easily share information to gain consensus on the management of patients.

“Patients are always the primary focus of what we do, so the application of beneficial new technology is something that we embrace with a fair amount of enthusiasm,” Barling says. “A lot of discussions can now be conducted online across a number of sites, which again leads to better outcomes for the patient.”

Telstra general manager business mobile solutions Casey Wright says his company’s Next G™ network boasts 99 per cent coverage of the Australian population today for both voice and data, which he says is appreciated by professionals such as Barling.

“It’s the assurance of knowing you are not going to be out of reach no matter whether you are in or out of the office,” Wright says, “and that is much more important than just the price.”

Another important consideration is the speed of the data network. Wright says Telstra offers typical speeds of up to 20Mbps with the Telstra Ultimate® device in capital CBDs and selected metropolitan and regional areas*, which is faster than many fixed-line connections, along with a faster-uplink back to the network, which is essential when sending large files.

“Sending files isn’t an issue any more for customers, as the uplink speed is far ahead of our competitors,” Wright says.

The other important factor is the cost of data, with many business users wary of so-called “bill shock” when they find out the cost of the data they have been using. For this reason, Telstra has worked to simplify its business plans, and alerts users nearing using up their nominated quota.

“Up until a year ago, people hadn’t thought

“It’s the assurance of knowing you are not going to be out of reach no matter where you are”

High-speed data links allow Dr Barling to receive high-resolution images – such as radiology data – quickly.

“This allows us earlier intervention and a better outcome,” he says.

* Capital CBDs means within 5km from the GPO in each capital city. In other areas speed ranges will be less. Speeds vary due to factors such as distance from the base station, local conditions, user numbers, hardware and software configuration.

about data, and there weren’t many plans that had data included in them – you always had to pay extra,” Wright says. “At Telstra, we’ve really gone down the path of simplifying our plans so that customers are prepared as they move into the smartphone space and start using email and running their own business applications.”

He says a key factor is when they can actually use the data.

“Some of the competitors’ offerings look really impressive when they offer 20GB at a low price, but half of that may be in off-peak times when none of our business customers would normally be accessing their data.

We don’t put those restrictions on data usage.”

Besides the network, business users need to think carefully about which device they choose.

Tablet devices such as Apple’s iPad®, which give users a much larger viewing surface and accept a mobile SIM card to connect to networks, are increasing the adoption of mobile data services. Telstra has two tablet devices available: the Samsung GALAXY Tab and its own T-Touch Tab™.

Telstra marketing specialist – mobiles, Stephen Haynes, says the larger screens make it possible to edit documents and use more complex applications, and the devices are ideal for displaying web pages and

multimedia content, including images and video.

“Doctors can use them to enter patient notes at their bedsides, or mortgage brokers can go out to a client site and enter all their data on the spot,” Haynes says. “The way customers are using their data and mobile experience is changing and they are getting more effective and more efficient with it as they find out more things it can do for them.”

Telstra has also developed a range of solutions to ensure that remote workers can get access to applications and information easily, such as a web-based version of Microsoft’s Exchange® email system. Its T-Suite® cloud computing service gives remote workers access to applications and data through mobile devices.

Mobile data gives access to web services designed for mobile use.

Google, for one, is creating mobile versions of products and services that take advantage of all the capabilities that smartphones offer, such as its Gmail email and calendar services; Docs for creating and viewing documents, spreadsheets and presentations; and its Google Maps tools.

“It will really take off is when we start getting business-specific applications for these devices,” Haynes says. “As more apps get written, they’ll become invaluable.”

FOR MORE IDEAS ON HOW MOBILE TECHNOLOGY CAN DRIVE YOUR BUSINESS, VISIT: telstra.com/business/mobilesolutions

www.telstra.com/smarter

33

TECH-ZONE | SERVICE

You’ll save the forests, save your time and get a range of other top-value benefits by getting rid of your paper bills

Why switch to online billing?

There are a number of reasons to switch to online billing, including: ●● Greater flexibility. Get access to a

bill at any time from your computer or smartphone.

●● View a full history of account activity, a

complete list of all services on an account and the charges for each service.

D

espite the many developments in

electronic commerce over the past decade, take-up of online transaction services has not been uniform.

Large numbers of Australian households and businesses prefer to do their transaction banking online, but still like to receive a paper statement.

A similar situation exists in the telecommunications market, where customers wait each month to receive a bill in the mail before making their payment online.

Telstra Business marketing executive Wayne Howorth says the company has offered online billing for the past four years but has observed that a lot of customers still like a physical bill.

To address this, Telstra has recently upgraded the presentation of its online bills. Customers can now view their bill online and download a summary or detailed version in a PDF format that reproduces the printed document.

Besides the environmental impacts of printing and mailing so much paper, paper bills can be a nuisance to archive or dispose of, and even more painful to wade through when looking for specific billing items.

34

smarter business ideas

| FEBRUARY 2011

●● Minimised environmental impacts

by reducing paper usage in billing.

●● Increased privacy, with no need to dispose

of physical bills.

●● View a list of calls made but not

yet billed.

●● Get access to an archive of previous

bills at any time.

●● Add subsidiary accounts to the online bill

view, effectively amalgamating all your accounts in one place.

Features Available Online Mobile ●● Retrieve your PUK/PIN code

quickly and easily

●● Turn on international roaming ●● Set call-barring

Mobile Broadband ●● Check your data plan allowance

and data usage.

Fixed ●● Update your billing address ●● Set fixed phone features and

MessageBank®

●● Set call-barring

FOR MORE ON BUSINESS SERVICE ONLINE, GO TO: telstra.com/business/onlineservices

Photo : B R U C E DA LY

Top billing for online service

Telstra’s online billing web site for business has many useful features. You can view your company’s activities holistically, since all accounts linked to your business can be seen in the one view. And you can also drill down into the fine details of the individual services.

Those details incorporate full bill itemisation, including a log of every call made on the service (including the local and 13 numbers that you may not see even on a detailed paper bill). This feature allows you to sort calls by date, duration, cost or number, and is an alternative to wading through paper bills for call histories. You can also search calls by number and link called numbers to names through an address book.

Howorth describes online billing as a feature in an expanding array of services that Telstra offers via its business web site (www.telstra.com/ business). Visitors to the site will find a range of self-service tools, such as a meter to check mobile data usage, a facility to add features to an account or to change a plan, to retrieve lost mobile PIN numbers and to set up call-barring.

“What we are offering is convenience,” Howorth says. “People can attend to these things in their own time and they do not have to sit in a telephone queue. We find that about over 20 per cent of our customers are using online service after business hours.”

Another online feature customers are finding convenient is our Live Chat service. The Live Chat service is available during business hours and allows customers to chat with a sales consultant in real time, in an online medium.

You can even search on product frequently asked questions (telstra.com/business/livechat).

Telstra Business head of customer marketing Mary Scopas says a key present customer concern is bill shock. As businesses distribute smartphones among staff many are finding that users often exceed their download quotas when they first get mobile internet access.

The Telstra Business web site has usage meters that allow customers to manage their costs by monitoring their downloads. Telstra will send out alerts if customers are about to exceed their limits.

“Managers can use these facilities to get a look at their whole mobile fleet,” Scopas says.

Expert advice: Communications

Getting your web site to pop up at the top of the list on an internet search engine is sales gold. But what affects who gets top ranking?

Rev up your search engines

ILLU ST R ATI O N : ge t t y i mage s

When your customers are looking for a

product or service online, they will often use a search engine, such as Google or Bing.

Most searchers only visit the results towards the top of the list, so for the chance to snare a customer you want your web site to be up there on page one or two.

There is no single magic formula for appearing at the top of search result lists without paying. (All search engines have a section of paid-for advertisement links at the top of the page, ahead of the unpaid standard list of results.) But there are free ways to tweak your web site’s content with the potential to move your site up the list. To explain how, it’s best to start by understanding how search engines work.

One key way in which search engines measure the importance of a web page is by seeing how many other people like it enough to link to it from their own web sites.

KEY INFO Google designed a system called page Consider the key rank which works on the idea that if words which those searching something is being recommended by for your site are others it is more likely to be good. likely to use It follows then that you should Make a list of those make sure you get other people to words – they will be useful to you link to your site from their own and Use those key put links on your site to relevant and words in the first important sites in your field.

100 words Besides cross-linking, search of your web page engines index web sites automatically Make sure they are in by reading their content and using your “title” bar sets of rules called ranking algorithms Make it easy for search engines to to determine what web sites are about see all of your and how useful and reliable they are. site by creating a This information, covering trillions site map of pages on the internet, is stored Get plenty of other in an index, which is constantly sites to link to yours updated and then used to determine Ask advice from a web site designer the results returned whenever a new who knows what search is performed. they are doing You can attempt to influence those algorithms through a process

Maureen Henninger is the program coordinator for Information and Knowledge Management, University of Technology Sydney

called search engine optimisation (often abbreviated to SEO).

However, the ability to do this is often overstated.

Search engines make money by selling advertisements, a model which depends on their sites having large audiences.

That audience will turn to rival services if the results they get appear to be heavily influenced by advertisers, rather than providing useful listings. For those two reasons, search engines keep their precise algorithms a closely guarded secret, and they tweak them regularly. So, if anyone tells you they know exactly how to get your site to the top of the rankings – even a professional search engine optimisation consultancy – take their claims with a reasonable pinch of salt.

But there are a few things we do know.

Search engines rely largely on the words you use on your web site and they count how regularly words appear across each page on your site. Words which appear frequently in your content are considered key words by the ranking algorithms. When the searcher types a request into a search engine, it picks out the key words and delivers the results which best match them.

To raise your site’s profile with the search engines, think like a customer and work out what their key search terms will be. List the words which searchers would use. If you are a plumber, for example, common searches could be emergency plumber, boiler repair or leaking pipe. Common search terms will produce millions of web results, though, so be as specific as possible, perhaps including your geographical area, or business specialisation. Once you have your list of key words, there are a number of places on your web site you can put them, so search engines can find them.

The search engine will almost always look to see what words are in the “title” of your web page. This isn’t the headline on the page, though that can also have an important influence on how indexing works. To put it simply, if you look at a document in your browser, at the top of the document, right at the very top of the browser above the address line, there is a bar across the top. Whatever is in that bar is the title.

Because of the importance of the title in ranking pages, your key words should be in your title. Your web site designer will be able to change the words in your title easily.

A search engine also reads the words on your web page. So make sure that the key words from your list are prominent.

Another thing to consider is how the search engine reads the pages of your site. It moves through each page, following every link. So, make it easy for the search engine and ensure each page of your site is linked. Include a site map which shows all the content on one page. Once again, your web site builder can do this for you.

READ more EXPERT ADVICE AND COMMENT AT: telstra.com/smarter/columnists

www.telstra.com/smarter

34

10 FEATURE | IMPROVE YOUR BUSINESS

exercises to whip your business into shape

It’s been a tough year for Australian businesses.

Here are 10 ways to get fighting fit for 2011 – with five award-winning companies sharing their tips for success STORY John Kavanagh

36

smarter business ideas

| FEBRUARY 2011

T

here were 2700 business failures

in Australia in the September quarter of 2010, according to credit reporting agency Dun & Bradstreet. That’s lower than the number of failures one year earlier, but still 73 per cent higher than the number of business failures reported in the September quarter of 2007.

While the fortunes of business are affected by economic conditions, they are also driven by management decisions. Australia’s peak accounting body, CPA Australia, reports in its latest SME survey that just 47 per cent of SMEs regularly follow up on late payments, only 24 per cent review their marketing and 19 per cent reduce excess or obsolete stock. Only 13 per cent of SMEs offer discounts to customers to encourage early payment, 9 per cent negotiate an extension of payment terms with suppliers and 5 per cent sell business assets to fund business activities. The smaller the business, the less likely it is that the owner or manager will do any of these things to rectify problems in their business.

No one has time to do everything but focusing on the big-ticket items can save you time and increase profitability. Here is Smarter Business Ideas’ 10-point plan for success.

1

Use your business plan

Most businesses start with a plan, but often it goes into a top drawer as the day-to-day work takes over. Now is the time to work on the business, not just in it. The key to making this happen is to establish a system of review that will deliver accurate data in a usable format.

Sue Hirst, director of financial control consultancy CAD Partners, says most business owners are so busy that unless they set up a reporting system, they will often find it hard to fit it in around other jobs.

Financial reviews highlight problems – and they most often lie in accounts receivable – the cash businesses are owed. “What we often find is that there is no system for following up unpaid accounts and no one with responsibility for the task,” Hirst says.

“In most businesses, it is not hard to halve their accounts-receivable days by arranging systematic phone and email follow-ups.

“That makes a huge difference to the business.

It reduces bad debts; the longer you leave an unpaid debt, the more likely it is to go bad. And because it improves cash flow, it reduces the

need to borrow to fund working capital. When the business has a financial reporting system in place, it can see these things. Budgeting is a business lifesaver.”

There are a number of places you can go to get help in creating a business plan. Your bank will have a small business advisor who will be able to give guidance in planning. Your accountant or business advisor will be able to advise on the key issues which need consideration. Each state government has a business-development office focused on providing advice for SMEs. Search online for their details.

One company which has won success through planning is Kelly Engineering. Its chief executive, Shane Kelly, says: “Business planning highlights mistakes that are not obvious until you have the numbers in front of you.”

Case study

Kelly Engineering plans for success

See case study, right: Kelly engineering plans for success

2

Photo : R A N DY L A RCO M B E

Get into the numbers

CPA Australia says there is room for “significant improvement” in the financial management of SMEs in Australia. On the to-do list are more frequent bank account reconciliation, chasing late payments, more regular preparation of financial statements and cash-flow forecasts and greater use of financial ratios to measure the performance of a business.

Only 56 per cent of SMEs reconcile their bank accounts at least once a month. Twelve per cent never do it. CPA Australia found that the number who never reconcile their account has increased over the past couple of years.

Forty seven per cent of SMEs contact their customers about late payments on a regular basis (once a month or more). Twenty per cent never do it. The association says, “In difficult economic times, it is hard to understand why a business would not chase up late payments on a very regular basis.”

Only 26 per cent of SMEs prepare a financial statement at least monthly (16 per cent never do), 34 per cent prepare cash-flow forecasts at least quarterly (36 per cent never do) and only 21 per cent prepare a financial ratio analysis at least quarterly (49 per cent never do it).

Sue Hirst, the director of financial consultancy CAD Partners, says all businesses have goals but to be achievable they must be measurable. Hirst says: “Even the smallest SME needs to recognise that if you can’t measure it, you can’t manage it.”

Chief executive Shane Kelly says a remote location has proved no barrier to the growth of its thriving export business for Kelly Engineering.

“We started the company to diversify our income and as a succession plan for the farm’s management.

“Dad was interested in fixing and modifying equipment,” Kelly Engineering’s chief executive, Shane Kelly, says of the smallscale hobby business started by his father in the 1980s.

Today, the company, based at Booleroo Centre, three hours north of Adelaide, is an agricultural machinery manufacturing business employing 38 people with annual revenue of $11 million, and is an exporter with highly

developed business planning and financial systems.

After a few years, the business employed six people and was manufacturing attachments to harvesters for pea-picking.

“This is undulating, stony country and there is often not much equipment to suit the conditions. We were designing for it, and we started to get a good reputation,” Kelly says.

Other lines, including a harrow for stubble management, followed in the 1990s and the company started selling in other states to spread its risks. In 2006, it started exporting.

As the company was dealing in bigger facilities with its banks and approaching Australian government trade and investment development

agency Austrade for export market-development grants, it needed a more formal management structure. It also had a growing workforce and needed systems for training, human resources, and so on.

Kelly says business planning highlights mistakes that are not obvious when you don’t have the numbers and the analysis in front of you. “We used to focus our attention on the profit and loss and the balance sheet. But you can have a good P&L and assume things are fine until you find you can’t pay your bills.

“We focus a lot more on cash flow now … [and] managing our inventories so we are not tying up too much working capital in stock, by keeping an eye on payment terms and sharpening up our accounts receivable.”

www.telstra.com/smarter

37

FEATURE | IMPROVE YOUR BUSINESS

As marketing channels such as newspapers, magazines, radio and TV vie for your promo bucks, there are good deals to be had. Here are 10 tips for promotional success, from online SME advisory web site AllBusiness (www.allbusiness.com).

1 Target a defined group Find your target market and gear your marketing to that group. Trying to appeal to everyone does not work.

2 Be consistent Your business needs to have the same look and feel across all ads, promotions and other marketing initiatives.

3 Diversify Sticking to one marketing channel, whether it is print, radio, television or online, will limit the potential audience your business can reach.

4 Focus on repeat business In most

Case study

5 Start early Time the marketing campaign to coincide with the launch of new products, services or upcoming events. Many companies start planning too late.

6 Keep it simple Have a clear message and tell it simply.

7 Don’t go overboard Too much hype can make people think it is too good to be true.

8 Listen Use focus groups or some other means to test a campaign before launch.

9 Don’t bet everything on one campaign Marketing must involve building a brand and a reputation over time.

10 If it ain’t broke, don’t fix it Business owners get bored with their marketing campaigns but here’s the real question: “is it still working?”

EzyPay makes it pay

“Turning large payments into a number of more manageable amounts is a valuable sales tool,”

chief executive of Sydney direct debit service provider EzyPay, Trent Brown (below), says of the tools it provides for customers such as vets, cosmetic surgeons, dentists, childcare centres and private colleges.

Brown says the range of businesses that use direct debit

Chief executive Trent Brown says EzyPay helps its clients sell by giving more convenient payment options to their customers

services such as those EzyPay offers has grown in recent years.

The benefits of using such services are certainty of payment and the potential attractions of more convenient payment options to customers.

EzyPay’s clients sign up for its service as a way of helping customers manage large payments, such as gym memberships. But, although collecting payments on time is the best way to maintain cash flow, many SME owners remain cautious about handing over the management of their receivables to a third party for fear of losing control of their relationship with their customer.

Brown says EzyPay’s success results from adding value to the process. “The bank sends you data on honoured or dishonoured payments. You need systems to manage that. There is a big DIY element to it.

“We sort that data for the client, set up systems for alerting their customers about dishonoured payments and assist with reducing bad debts.”

38

smarter business ideas

| FEBRUARY 2011

4

Make sure you get paid

One way to increase the likelihood that your customers will pay their bills is to run a credit check on them. Australia has two creditreporting agencies that can provide information about the creditworthiness of businesses.

However, many SMEs never use the services of either Dun & Bradstreet (www. dnb.com.au) or Veda Advantage (www.vedaadvantage.com).

The Institute of Internal Auditors Australia says one in five businesses reported a significant loss in the past year due to customer debt defaults and that 20 per cent of respondents to its September survey of businesses had never checked a creditor’s ability to pay. Seventy per cent do not insure against bad debts.

Chief executive of Dun & Bradstreet Australia, Christine Christian, says most businesses fail because they run out of cash. “Conditions get tight and margins are squeezed, but they are afraid to call in debts because they are afraid to lose a customer. They are carrying overdrafts at exorbitant rates and they are, in effect, being banker for their customers.”

She says SMEs should, “Always assume that the worst will happen and make it a primary objective to get paid for every job you do.”

Telstra Business Award-winner EzyPay has built a profitable company around making it easy for consumers to pay big bills – and for businesses to collect what they are owed.

See case study, left: EzyPay makes it pay

5

Think mobile

New technology can revolutionise doing business on the road and mobile workforces can respond faster to customers, work more flexibly and cut office overheads.

Widespread take-up of 3G phones means that a large number of companies now have staff permanently connected to email and the internet through their mobiles, and more than one-third of Australian SMEs now include plans for mobile communication in their digital business strategies.

This opens up opportunities for companies to review their policies on teleworking.

As this trend develops, companies have to look at the handsets their staff are using and at the quality of their mobile broadband.

Photo : n i c k c u b b i n

3

Remix your marketing

instances, repeat custom makes up 80 per cent of a company’s business, yet too often marketing campaigns focus heavily on bringing in new customers.

“ensure firewalls,

intrusion-detection and intrusionprevention systems are in place and up to date”

Case study

stratsec keeps it simple

IT security firm stratsec has grown from two to 56 staff in just seven years, says chief executive Peter Lilley.

6

Don’t be a computer fraud victim

If your business is in financial services, you are a prime target for computer fraudsters, while those in health care, arts and recreation, mining and construction are less likely to be the victims of a computer-security crime.

This type of crime is costing Australian business around $600 million says a recent report by the Australian Institute of Criminology into the prevalence, nature and impacts of “computer security incidents” in Australia.

While big business is the preferred target of cyber-criminals, SME owners, it says, are less likely to be able to identify if their businesses have been subjected to cyber attack, or to know if they have been victims of computer crime.

The report says businesses should consider the following strategies to prevent loss from cybercrime: “Maintain tight regulatory control over computer security functions that are outsourced.

And ensure that basic security tools, such as firewalls, intrusion-detection and intrusionprevention systems are in place and up to date.”

The key to being protected is using adequate, updated and suitable security software. Your IT provider or software seller can give you details of what is required to keep your business safe.

Canberra information security firm stratsec is last year’s Telstra Australian Business of the Year.

Its chief executive Peter Lilley says: “Problems come if IT security is not maintained.”

Photo : G E R R IT F O KE M A

See case study, right: stratsec keeps it simple

7

Save on rent

The past two years were great for rental bargains in office, industrial and retail property markets.

Property analysts describe 2011 as a recovery year, when rents will start to rise and incentives such as free fit-outs will be harder to find.

“We always say to clients that security works best when it is simple. That way, staff understand it,” Peter Lilley, chief executive of Canberra information security consultancy stratsec, says.

Lilley, whose business has grown from two to 56 staff since it was established in 2003 and was last year’s Telstra Australian Business of the Year, believes many consultants in the field represent technology vendors and will often

push complex products that businesses don’t need.

Yet, Lilley says, “The problems that affect a business are not that different from what people experience at home: phishing attacks, and so on. The key is to maintain anti-virus software, making sure that employees are aware of threats.

“Problems typically come when investment is not maintained, if a company does not add new patches. Start neglecting antivirus management, and you have problems.”

Its positioning in the market as an independent consultant has been a key to stratsec’s

business success. It has expanded from Canberra to open offices in Sydney, Melbourne and Perth.

Last year, it moved offshore, opening an office in Singapore in February and Kuala Lumpur in July. Its KL office has grown from one staff member to 10 members since.

Lilley says awareness of security issues varies considerably from industry to industry. “In financial services, awareness is very high. People in that industry accept that online banking has to be secure.

But in the resources industry, it does not get the management attention it deserves.”

www.telstra.com/smarter

39

FEATURE | IMPROVE YOUR BUSINESS Case study

Viridis E3 cleans up

“Rather than only working on individual projects, more of our work is now at a higher level within client companies,” chief executive Warren Overton says of the way Viridis E3’s consulting work is changing. Clients want to change the way they do things, and we are implementing these new processes.”

His Canberra company is three years old and last year won a Telstra Business Award for its work in evaluating buildings’

environmental impacts. Since the middle of last year, building owners have been required to disclose the energy efficiency of their buildings.

The rating used is the National Australian Built Environment Ratings System, administered by the NSW government.

NABERS measures outputs from buildings – energy and water consumption, emissions and the handling of waste.

It is only one tool for measuring building efficiency, and for the past seven years, the Green Building Council of Australia has applied its Green Star rating to the design of new buildings.

Viridis E3 has developed as a result of the creation

Evaluating the environmental impact of buildings is a growth area for Viridis E3’s Greg White (left), Warren Overton and Gesa Ruge (right).

of these environmental measurement tools. Viridis E3 has 20 consultants – architects, designers and engineers – who sit on the design teams of building projects and coordinate the environmental elements of those projects.

Another change is that consulting groups like Viridis E3 are being asked to undertake more post-occupancy evaluation. Overton says, “NABERS can tell you how much energy and water the building is using but it does not tell you about the productivity benefits of having your business operate out of a sustainable building.

We do satisfaction surveys, but they are very subjective. That is an area we are working on.”

But property cycles are slow, meaning there will still be opportunities in the coming year to save your business money on rent.

Respondents to a Jones Lang LaSalle survey of property-investor sentiment in September last year said they thought the market had bottomed and that transaction activity picked up in the first half of 2010.

Rents stabilised in the Sydney and Melbourne financial centres during the second half of 2009, while the decline continued in Brisbane and Perth through the first half of 2010. Vacancy rates are highest in Brisbane, followed by Canberra, Adelaide and Sydney.

Recoveries take time and they are not uniform.

The property team at Westpac Economics reports that outlying areas, such as North Sydney and Parramatta in Sydney, and St Kilda Road in Melbourne, have maintained much higher vacancy rates than those cities’ CBDs. Businesses renting CBD space should consider a move to non-CBD areas such as St Kilda or North Sydney, where there are still bargains.

Business managers can keep on top of developments in the commercial market by reading regular market reports at: www.joneslanglasalle.com.au www.cbre.com.au www.westpac.com.au/about-westpac/media/ reports/property-market-information/ www.anz.com.au/corporate/economicsmarkets-research/australian-industryeconomics/australia-property-outlook/

8

Three years ago, a group of large Australian property owners joined a project coordinated by the Total Environment Centre to upgrade the emissions performance of their office buildings, in a bid to lower operating costs.

This enabled TEC to draw up a checklist of measures for building owners seeking to increase energy efficiency. It is also a useful checklist for SME tenants looking for energy-efficient buildings which are cheap to run. For more information on the Total Environment Centre project, go to www.tec.org.au/home.

Viridis E3 is a growing company which advises on making new-build projects energy-efficient – and also looks at the productivity benefits of running a business out of a sustainable building.

See case study, left: Viridis E3 cleans up

40

smarter business ideas

| FEBRUARY 2011

Photo : G E R R IT F O KE M A

Cut your energy bills

“a digital strategy

allows you to address digital business challenges before they become problems”

9

Get a tech plan

A Sensis e-business report published in September says 96 per cent of SMEs use computers and 94 per cent have internet access.

But only 17 per cent have a digital strategy – despite SMEs almost doubling their spending on computers in the previous 12 months.

The digital business strategies of SMEs that have them most commonly cover internet and web sites (both were found in 80 per cent of cases). Less common features of a digital strategy included those for mobile communications (found in 36 per cent of cases) and for social media (found in 33 per cent of cases).

Creating a digital strategy allows you to address digital business challenges before they become problems. For more information on how to create one, start by discussing the issues involved with your IT provider.

Melbourne Medical Deputising Service is a company which has put its digital strategy at the centre of the business and built a new opportunity around technology.

Case study

Healthy systems make for efficient practise

“There was panic.

Everyone who had a cold thought they had H1N1 [bird flu] and called their GP,” says director Adam Wilson of Melbourne locum service Melbourne Medical Deputising Service of the biggest challenge to date to its technical systems.

Sophisticated IT may not be something usually associated with medical general practice, but Wilson’s company has

become a leader in tracking, monitoring and communicating with its doctors and patients.

Melbourne Medical Deputising Service makes out-of-hours calls on behalf of 650 general practices. Up until eight years ago, the 30-year-old business relied on pagers to alert its doctors to a patient call.

But Wilson says there were problems with pagers; they dropped out in black spots and suffered other network problems. The company decided to look for a system that could use SMS messaging with a secure web portal. When it

could not find one suited to its purpose, it built its own. The system allows the company to monitor its doctors’ attendance times. The doctor uses their laptop to feed data back to a secure portal, which forms the basis of a report back to the patient’s GP. The organisation faced its biggest test in 2009, when bird flu hit Melbourne.

“We had calls from 500 patients in one 24-hour period,” Wilson says. But, he says, “A high level of calls was maintained over six to eight weeks, and the system coped.”

Melbourne Medical Deputising Service survived bird flu – and so did its communications system, says director Adam Wilson.

See case study, right: Healthy systems make for efficient practise

10 Photo : eamo n ga l l agher

Get help from government

Government provides a range of grants. A common theme among the stories of successful SMEs is that they have received a business development or export market-development grant, or some other assistance along the way.

Visit the Australian Business Funding Centre, a government web site all about grants for SMEs, at http://australiangovernmentgrants.org/.

for more ideas for your business, go to: telstra.com/smarter/businessideas

Enter the Telstra Business Awards All the case studies featured in this article are 2010 Telstra Business Award winners.

Nominations for the 2011 Telstra Business Awards are now open. It is free to enter and every business which successfully completes an online entry will receive a free 90-page Business Health Check report, developed by Telstra Business

together with the NSW Business Chamber.

Visit telstra.com/smarter to complete your nomination. Click on the ‘nominate now’ tab on the home page.

Any more questions? Call the awards team on 1800 262 323 during business hours.

www.telstra.com/smarter

41

Expert advice: superannuation

Self-managed superannuation funds can now borrow money to invest in property or other assets. John Kavanagh investigates the benefits and limitations

limitations on gearing by super funds were included in the first rules in 2007 and further restrictions have been imposed since.

An important inclusion in the rules governing gearing in super is that the assets of a fund have to be protected from loss if a loan goes bad. To achieve this, loans must be “nonrecourse”, which means that if the borrower defaults the lender can take possession of the property being offered as security, but no other assets of the fund.

Another peculiarity of gearing in super is that the law requires that any borrowing be used to acquire “a single acquirable asset”.

AMP technical analyst Fabian Bussoletti says super fund trustees could still acquire a collection of assets, such as a stock portfolio. Yet, this would be regarded as a single asset were the assets all acquired and disposed of at the same time.

Bussoletti says, “It will limit the use of borrowing to invest in shares, but our understanding is that the vast bulk of the borrowing is being used for commercial property investment, anyway.”

Another change the government made last year was to rule that money borrowed by super funds would be treated as financial products under the Corporations Act. This means that superannuation lending is covered by consumer protection law and that only licensed financial advisers can sell gearing products to trustees.

Finally, what are the risks involved in borrowing against your retirement fund? As always, you need to be aware that any asset can lose value and that property and share markets are volatile.

Also, borrowing to acquire an asset is an additional risk as you still have to repay the loan and, if you can’t afford to repay, you will have to sell the asset.

The government’s 2010 decision to allow Australia’s

500,000 self-managed super funds to borrow to acquire assets has precipitated a wave of new lending products and borrowing activity by their trustees.

The trustees, most of whom are SMEs, can “gear” their funds’ assets to take on loans to acquire bigger – and potentially more lucrative – assets, including property or portfolios of shares.

Most people have heard of “negative gearing”.

It means that income from an asset, such as rent from a building, does not cover the costs of borrowing. This creates a loss but yields a tax benefit.

Positive gearing is the opposite, borrowing to create an income.

Trustees of super funds can arrange their funds’ assets either way, allowing for a range of different investment models.

You can invest in a variety of assets with your lender’s agreement (and within the rules: see sidebar, right, “Know The Rules”), although it is likely the most popular investment will be small commercial or residential properties which can be rented out.

It is also possible to buy the property your business is based in and rent it back to the company, which can give a tax benefit.

There is no requirement to sell the asset when you retire, although the rules state that the fund must be able to afford to pay out a certain amount each year, which may lead to having to sell it.

Another advantage is protection from capital gains tax. Sell the asset when your fund is in the accumulation stage – that is, you are still at work and paying into your fund – and you will have to pay CGT. However, sell the asset when you are retired and drawing from the fund and you will not.

Over the past year, financial planners and self-managed fund advisers have learnt the new rules and lenders have created a number of new loans specifically for this market.

However, you don’t necessarily need to use an off-the-shelf product – you could find other lenders, or you can even lend to your own super fund, which may create a tax advantage.

However, trustees need to be aware that they do not have a free hand when it comes to borrowing. A number of specific

42

smarter business ideas

| FEBRUARY 2011

john kavanagh is a veteran business journalist with expert knowledge of the banking and financial services industries

Know the rules The Australian Taxation Office has issued a taxpayer alert stating what it will be watching for as trustees get into gearing contracts.

✔ Trustees must ensure that in entering into a loan contract they do not breach super rules that prohibit the acquisition of in-house assets or that require that the sole purpose of superannuation investment is to accumulate benefits for use in retirement.

✔ In-house assets. A maximum of 5 per cent of a fund’s assets can be lent, leased to or invested in a related party – a family member or business associate. Business real property is exempt from this rule.

✔ Sole purpose. Superannuation savings cannot be used to provide pre-retirement benefits to members and related parties.

✔ If the asset is residential property, the fund members cannot live in it. If it is commercial property, the fund members could lease it, as long as rent was struck on a commercial basis.

READ more EXPERT ADVICE AND COMMENT AT: telstra.com/smarter/columnists

i l lu s t rat i o n : ge t t y i mage s

Leverage your super fund

This card really means business.

Rewards

Earn 1 Qantas Frequent Flyer point for every AU$1.50 of business cardholder spend

Flexibility

Up to 44 interest free days on business purchases

Convenience

Simple monthly statements providing easy tracking of cardholder spend.

To apply talk to a NAB Business Banker today or go online to nab.com.au/businessrewards Interest free days on purchases if you pay your account in full by the due date each month. To be credited with points earned from use of a NAB Qantas Business Card you must be a Qantas Frequent Flyer member and a nominated Points Earner. Points are earned in accordance with the NAB Qantas Business Card Terms and Conditions. Qantas Frequent Flyer membership and points are subject to the Terms and Conditions of the Qantas Frequent Flyer program. For more information, go to qantas.com.au/frequentflyer. ®MasterCard and the MasterCard Brand Mark are registered trademarks of MasterCard International Incorporated. ©2010 National Australia Bank Limited ABN 12 004 044 937 AFSL 230686 TBNAB1131

Get back to work with GREAT DEALS Phone 1800 729 382 to order your Reflex today!

HOT PRICE

4

$ 99

per ream

Reflex A4 White Copy Paper* 44651

Bulk discounts available on Australian made packaging products To find out more visit an Australia Post retail outlet or call 13 POST (13 76 78)

4GB

1-99 reams: $4.99 per ream 100-399 reams: $4.95 per ream 400+ reams: $4.89 per ream

12

$

99 each

Memorex 4GB USB Flash Drive 24670

Our financial services make your everyday business easier

At Australia Post, our comprehensive financial services mean that you can conduct multiple transactions with just one visit. With over 3,200 retail outlets, you can pay bills with Postbillpay (including your tax), do your banking with Bank@Post, send money anywhere in Australia or overseas, and even arrange your pre-travel needs.

It’s all designed to make your everyday business easier, so drop in today and save time, stress and money.

Available at participating Australia Post retail outlets. Phone 13 POST (13 76 78). On sale 24 January 2011 unless otherwise indicated or unless sold out. All prices are GST inclusive and are recommended. While stocks last. The Australia Post trademark and their associated device marks are trade marks (registered or otherwise) of the Australian Postal Corporation. All rights reserved. *Not available to dealers for re-sale.

Expert advice: selling your business

No matter how successful, eventually almost everyone will wish to sell their business.

Michael Derin advises that effective succession planning demands a long-term strategy

The long goodbye

Photo : ge t t y i mage s

There are many reasons why business

owners think about succession. It may be that they wish to cash the business in on retirement, to hand it over to a family or staff member to ensure its safe continuity, or simply to take advantage of a good opportunity and move on to new business interests.

None of these outcomes should be rushed. It takes many years of hard work and dedication to build a successful and sustainable business, yet many owners leave decisions about succession to the last minute.

When aiming to get the most out of your exit, you should begin planning at least two years before your intended departure and include its consideration within your annual and monthly strategies. It is also important for owners to manage their exit in the best interests of the business, sustaining relationships with clients, staff and suppliers throughout the process.

Controlling your departure from your business can only be achieved by targeting a time and value for your exit. But the benefit of early planning is that you can control and build the business to a point where you’re happy you have maximised its value.

A two-year exit strategy starts with a conversation between the business owner and their accountant or financial adviser. If the intention is to sell the business, you will work together to set a target price and work out how to get there.

The business will be priced on a multiple of earnings, so you need to set revenue-growth and cost-reduction targets that will get to that earnings target. Once you have set those goals, you should write a budget and stick to it. You need to review client contracts. Get rid of those that are not providing a return and lock in the profitable ones for longer terms.

Next, you need to look at whether the business’s systems need to be changed so that they are sustainable. In other words, they need to ensure the business is able to continue without missing a beat when you are no longer there.

Then it’s time to scrutinise the company structure, how the ownership is set up and how it affects your tax position when you sell. SME owners can claim capital gains tax relief when

Michael Derin is a corporate adviser, virtual CFO and CEO of Chartered Accounting firm, Azure Group

they sell their business but not if the value of their personal assets already exceeds $6 million (excluding the family home and superannuation). Some restructuring of personal assets may be required, and your accountant can advise on that.

When planning your exit, there are two value propositions that buyers look for: either a financial sale, which is based on profitability, or a strategic sale, which is based on selling the potential of the business.

Most owners seek a financial sale as their businesses have been built on sound profitability over many years.

In order to create more value in your business, your focus should be on demonstrating a history of reliable and/or increasing profitability while also targeting the right buyer. You need to promote opportunities that may be created through a merger, so that your business offers a stronger value proposition to the buyer.

While there are various valuation methods, the common approach is a multiple of annual profits. This multiple can be anywhere from one to 10, depending on the type of buyer you’re targeting. Three tends to be the market’s average. To achieve a higher multiple, the business will need to promise significant future profit and strong strategic potential for a new owner.

Whether the succession entails the sale of the business, the handover to a family or staff member, a merger or a buyout from shareholders, the steps to increase the multiple remain the same. See our checklist below.

succession checklist ✔ Improve the efficiency of internal operations. ✔ Make sure the business can operate without your involvement. ✔ Legalise key client and supplier contracts and increase the use of longer term agreements.

✔ Boost the business’s online presence by updating the web site. ✔ Consider how the business is structured.

You may need to restructure to allow for new owners, investors or shareholders.

✔ Ensure the business is compliant with all necessary rules and regulations.

✔ Work on reducing liabilities and debt. ✔ Make effective succession planning a priority.

READ more EXPERT ADVICE AND COMMENT AT: telstra.com/smarter/columnists

www.telstra.com/smarter

45

Win a Telstra Business Makeover valued at

5000

$

Telstra Business is offering eligible companies the chance to win one of 10 business communications prize packages valued at $5000.

The package enables you to link your office and mobile communications – so you can manage your business more efficiently in the office, from home or out on the road. The prize includes a Telstra Digital Business 150GB Core package and cutting edge hardware provided by Cisco®, valued at $5000.

Entry is open to Telstra Business customers who have less than 5 employees.

Enter online now a t

telstra.com/ smarter/ competition

Entries clos e March 1

EACH prize package includes: ■ 2 4 month service on a Telstra Business 150GB Core package, valued at $3600 ■ A Cisco SRP-527W router (RRP $400) ■ 2 x Cisco SPA-504G IP Desk Phones (RRP $254 each) ■ P rofessional installation, cabling and remote mentoring valued up to $500

How to enter: Visit the Smarter Business Ideas web site at telstra.com/smarter/ competition and tell us, in 200 words or less, how your business would benefit from shared access to your company’s data while staff are in the office or on the road. Entries close 1 March 2011.

Photo : G E TTY I M AG E S

Things you need to know: Entries open 10am AEST 1 February 2011 and close 11.59pm AEST 1 March 2011. One entry per customer. All winners will be notified by email on 18 March 2011 and names published on the Telstra web site by 20 March 2011 and in The Australian newspaper on 25 March 2011. Full terms and conditions available at telstra.com/ smarter/competition.

Cisco and SMARTnet are registered trademarks of Cisco Systems, Inc and/or its affiliates in the US and certain other countries. www.telstra.com/smarter

47

NEED MORE STORAGE? Let NETGEAR® ReadyNAS® Business Storage products solve your data backup and storage needs. Simply buy one for work and get one free for home!

The ReadyNAS® family of products provide reliable, affordable and simple solutions for data management.

Our ReadyNAS® business products offer: t 5 Year warranty t VMware® and Hyper-V™ ready t Complete 3rd party backup software compatibility for physical, virtual and mixed environments t Up to 100GB free cloud based storage Purchase a fully populated NETGEAR® ReadyNAS® Pro 4, Pro 6 or 1500 Rack

GET A FREE

NETGEAR® ReadyNAS® Ultra 2 with 1TB*

Purchase a semi populated NETGEAR® ReadyNAS® 2100/3100 Rack

GET A FREE

NETGEAR® ReadyNAS® Ultra 4 with 2TB*

Purchase a semi populated NETGEAR® ReadyNAS® 3200/4200 Rack

GET A FREE

NETGEAR® ReadyNAS® Ultra 6 with 3TB*

NETGEAR® Storage Solutions. Simply Smarter.

Visit www.netgear.com.au/smarter to claim your FREE ReadyNAS®

*Terms and conditions apply. Not valid in conjunction with any other offer. NETGEAR, the NETGEAR logo, and Connect with Innovation are trademarks and/or registered trademarks of NETGEAR, Inc. and/or its subsidiaries in the United States and/or other countries. Information is subject to change without notice. © 2010 NETGEAR, Inc. All rights reserved. NET12464/SYN

ASK THE EXPERT | q&a

Ask the Expert In each issue, we provide expert answers to your business questions

» Do not overuse the urgent option (the red flag button). If you overuse the high-priority option, it will lose its significance when you really need it and it can make your messages come across as slightly aggressive. » Don’t leave out the message thread.

When you reply to an email, you should include the original mail in your reply, in other words click “Reply”, instead of “New Mail”. Having the thread of the email further allows the reader to follow the context of the email conversation.

Expert: Mike Spykerman, chief executive, Red Earth Software, Boulder, USA Taxation

Q: “What sort of guidelines should I be setting my staff for email use?”

Eric Hall, Brisbane, Queensland

A: If your company can communicate

professionally via email, it will give you a competitive edge. Also, by educating employees as to what can and cannot be said in an email, you might be able to protect your company from liability issues. Here are some email etiquette rules to consider.

» Do not make an email longer than it

needs to be. Remember that reading an email is harder than reading printed communications and a long email can be very discouraging to read.

» Use proper spelling, grammar and punctuation. Emails with no full stops or commas are difficult to read and can sometimes even change the meaning of the text. Try not to use abbreviations

such as BTW (by the way), IMHO (in my humble opinion) and LOL (laugh out loud). And, if your program has a spellchecking option, use it.

» Make it personal. The email should be personally addressed and businesslike but can include personal content if appropriate. » Use templates for frequently asked questions. Some questions you get over and over again, such as directions to your office or how to subscribe to your newsletter. Save these texts as response templates and paste these into your message when you need them.

You can save your templates in a Word document, or use pre-formatted emails. » Answer promptly. Ideally, each email

should be replied to within 24 hours, and preferably within the same working day. If the email is complicated, just send an email back saying that you have received it and that you will get back to them. This will put the customer’s mind at rest and usually customers will then be patient.

Expert: Michael Derin, corporate adviser, virtual CFO and CEO of chartered accounting firm, Azure Group director payments

Q: “I have read that the rules on payment of dividends have changed.

How will they affect my business?”

Patricia Forrester, Wollongong, NSW Q: “I own a printing company which had a A: The old accounting rule said that directors of a company could only turnover of $1.5 million pay dividends out of net profits. If a in the last financial year company reported a loss, even if it was because of a “non-cash” loss, such as an and of which I am the asset being written off, it could not pay sole shareholder. The shareholders a dividend. business has been valued Now, directors must satisfy three tests: at $2.75 million. I’m 1. The assets of the company must exceed its liabilities and the excess considering selling the must be sufficient for the payment business in the next 12 of the dividend; months. What capital gains 2. The payment of the dividend must prejudice the company’s ability tax implications will I need not to pay its creditors; to take into consideration?” 3. The payment of the dividend must Patrick Stores, Ballarat, Victoria

CLIENT LIAISON

advantage of them. Structuring a sale of a business requires substantial planning, so I recommend you get in touch with your accountant or business advisor.

A: Providing you meet the criteria,

be fair and reasonable to all the company’s shareholders.

you may be eligible for small business capital gains tax exemptions. The core elements are that you need to be in control of the business and your investment wealth needs to be less than $6 million, excluding the family home and superannuation.

These rules apply to even the smallest of companies. Companies can pay dividends up to the value of their net assets. There is a positive side to the changes, as they mean directors will be able to pay out smoother and more consistent dividends.

These exemptions may mean a significant reduction in the CGT payable on the sale of your business. There are a number of tests. An exemption is available if your gain from the sale of the business is to be used to fund retirement income. An exemption is also available if the gain is to be used to fund the purchase of a new business.

For the assets and liabilities test, the balance sheet must be prepared in accordance with accounting standards.

This applies even to small companies that are not required by law to prepare financial statements.

Many people miss out on these exemptions as they don’t do enough planning to ensure their business and its sale are structured in a way to take

Companies may find a need to update their constitutions if the constitution has been drawn up in reference to the old profits test.

Expert: Carolyn Patman, Mann Judd Accountants, Sydney

to ask our experts a question, go to: telstra.com/smarter/asktheexpert

www.telstra.com/smarter

49

Ross Greenwood’s Viewpoint

Government is pressing on with free-trade agreements while exports are booming. But, Ross Greenwood asks, how well are SME interests being looked after?

are continuing to explore free-trade agreements at a time when people are questioning the value of existing agreements, such as the one we have with the United States.

Within government ranks, there is some disagreement about the value of these agreements. Labor Senator Doug Cameron has called the Australia-United States Free Trade Agreement a lemon, suggesting its promised benefits have not been realised.

Lately, we have seen challenges coming from a different direction. Last December, we read reports that China had stopped accepting our lobster exports. The boats were stranded as a result of a decision not to allow them to unload.

While there was no official ban, Australian lobster fishermen reported they could not get their catch to buyers in China.

It appears they were caught up in a Chinese crackdown on exporters using Hong Kong to enter China, to avoid tariffs.

Free trade has its price

Australia’s economic health has everything to do with

international trade right now. Our terms of trade are in good shape, which means we have more money coming in from export sales than we have going out in import purchases. That translates into prosperity for the nation.

It is not just the big minerals exporters that are contributing.

Australia’s Trade Minister, Craig Emerson, has pointed out that an estimated one in five Australian jobs is directly dependent on international trade. Trade is an SME issue.

The government is pushing ahead with its policy of trade liberalisation. Prime Minister Julia Gillard spoke about a free-trade agreement with Korea when she was in Seoul last year. An agreement with Japan is under consideration.

The Prime Minister was also in Europe last year, where she talked about a new treaty with the European Union that would include a more open trade agreement.

But are small business interests being looked after in all this?

Australian tariffs (the tax the government puts on imported items) have come down from an average rate of 7 per cent in 1996 to 3.5 per cent in 2009, the government says. Other countries in the region have average rates around 14 per cent.

During that period, we’ve lost a good rump of local manufacturing industries. It’s pretty hard to make a sock, a shoe or a suit in Australia these days, certainly against Asianimported competition and with tariffs are as low as they are.

Australia presses on, but many Australian SMEs don’t really understand where they get a benefit from this. If nothing else, the government needs to do a better job of explaining why we

50

smarter business ideas

| FEBRUARY 2011

Ross Greenwood is Australia’s most prominent finance analyst. He is the Nine Network’s business and finance editor and hosts the top-rating radio program, Money News, on Sydney Radio Talkback 2GB in Sydney and Melbourne Talk Radio

Our lobster exports are worth $500 million – revenue for SMEs in Tasmania, South Australia and Western Australia.

What this case suggests is that trade policy is not clear-cut in the way the government would like us to think. It also suggests that we need government on the side of our SME exporters.

Agriculture is a sector with a lot of opportunity for smaller growers of premium produce to export to the emerging middleclass economies of Asia. But the government must help farmers realise this potential by coordinating land and environment, water-resource and trade policies.

It also needs to be seen to be supporting the interests of exporters. When the lobster crisis hit the news, I spoke to Neville Perryman, the vice-president of the Seafood Industry Council of Tasmania. Perryman says the industry has done a lot of work to make sure it runs on a sustainable footing.

In return, the industry wants strong government backing in what can often be the grey areas of trade policy.

The government needs to recognise that policies like a freetrade agreement with South Korea are not universally popular.

Emerson says much of the strength of our economy through this deep global recession is attributable to the fact that we are an open, competitive trading nation. He argues that farmers would be hurt by higher costs for farm machinery and other imported goods if tariffs went back up.

Tourism used to be one of our big foreign-exchange earners, as well as being an industry that supports a lot of employment and individual family wealth. That industry is struggling now and is another sector that requires some coordinated government support.

The government must do everything it can to get cost out of that industry and help our tourism operators compete.

DO YOU AGREE WITH ROSS? COMMENT AT: telstra.com/smarter/columnists

ILLU ST R ATI O N : RO N M O NNI E R

“We need government on the side of our SME exporters”

www.telstra.com/smarter

51

Take a closer look at Suncorp Bank.

We make it our business to understand yours, inside and out. With this in-depth understanding, we can tailor a lending solution to help you build or grow your business and keep your cash flow moving. And because we know the value of good service too, you’ll always have the chance to talk your options over with a real person, not a machine.

Contact us today to discuss your business lending needs.

1800 093 080 suncorpbank.com.au/lending Visit your local branch Banking products are provided by Suncorp-Metway ABN 66 010 831 722 to approved applicants only. Terms and conditions apply and are available on request. Fees and charges apply.

SUN1394_SB

52

smarter business ideas

| FEBRUARY 2011