NEW ZEALAND’S E-MAG FOR ENTREPRENEURS AND BUSINESS OWNERS
December 2014
SLEEPING BEAUTY The Sleepdrops story
Turning Passion intoProfits A Bigger Bang for your Buck Young & Hungry The Hidden Pains of your Exit Strategy www.nzentrepreneur.co.nz
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ABOUT / Short and sharp, New Zealand Entrepreneur is a free e-magazine delivering thought provoking and enlightening articles,
CONTENTS
industry news and information to forward-thinking entrepreneurs.
EDITOR / Justin Cunningham ART DIRECTOR / Jodi Olsson GROUP EDITOR / Richard Liew
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From the Editor
6
Sleeping Beauty: the SleepDrops story
14
A bigger bang for your start-up buck
18
Young & Hungry
24
Six Tips to Protect your Intellectual Property
28
Startup Weekend Produces a Basket Case!
30 34
The Hidden Pains of Your Exit Strategy
40
Turning Passion in to Profits Parting Shot
CHIEF FINANCIAL OFFICER / Alastair Noble CONTENT ENQUIRIES / Phone Justin on 0211355943 or email justin@nzentrepreneur.co.nz ADVERTISING ENQUIRIES / Phone Jennifer on (09) 522 7257 or email jenniferl@espiremedia.com WEBSITE / nzentrepreneur.co.nz
ISSN 2253-5683 NZ Entrepreneur is a GREEN MAG created and distributed without the use of paper so it’s environmentally friendly. Please think before you print. Thank you!
www.nzentrepreneur.co.nz • 3
EDITORIAL
WHAT DO YOU THINK persistence means? In this month’s issue we focus on three entrepreneurs who are taking on the world, have been dealt some harsh blows, but have persisted in the face of faith-shattering adversity. We look at the importance of banishing normality and standing up for your message, position and unique offering in the marketplace. We also reveal the painful truth about presuming your company will deliver you to the profitable promised land when you want to exit your business.
Upon reading this introduction, it sounds like a Rambo film. Against the odds, persisting in the face of the odds, we take the pain and move on, trying to figure out how we get out of this thing alive. That’s right − entrepreneurs are heroes and heroines trying to make this world a little bit better − and I salute you! I hope you enjoy this issue and the stories of overcoming the odds to make your mark. - Justin ‘ Rambo’ Cunningham
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www.nzentrepreneur.co.nz • 5
INTERVIEWS
Sleeping Beauty: the SleepDrops story
Kirsten Taylor is a mum-preneur on a misson to save the world from bad sleep and stress. Her journey hasn’t been easy, but now with awards, international sales and an ever-growing customer base the SleepDrops story is about to go to another level.
HI KIRSTEN, THANKS for agreeing to talk to us. Let’s start at the beginning with your incredible journey.
Why did you start SleepDrops? I had been making my sleep remedies for my private clients for years but had never taken them myself because I hadn’t had a sleeping issue and I hadn’t realised how important sleep is. Then in 2009, just as the global financial crisis hit, I had a business partnership go wrong which left me with literally nothing. After months of lying awake at night worrying about how I was
going to get back on track and feed my son and myself, I suddenly remembered I had sleep remedies. So I got up one night, made one, took some drops and woke up nine hours later. I was so surprised at how well it had turned off my anxiety, worries and fears from going around and around in my head and allowed me to sleep. About 10am that morning I suddenly realised I wasn’t the only person lying awake worrying about finances. I knew I had to offer my remedies to New Zealand and I also thought, “Gosh, this might be a way to feed my family”.
www.nzentrepreneur.co.nz • 7
Fantastic. How long have you actually been trading? I put my
I thought about all the reasons why people young or old are not sleeping and then combined all the appropriate remedies.
first ad in The Aucklander in July of 2009. I kept the business as an internet only operation. People could either call in or order on line. I kept it that way deliberately for three years while I proved to myself that I could take a naturopathically developed system to support stress and sleep and turn it into solutions that worked for everyone − without a consultation.
SleepDrops is a world first, holistic, 24 hour integrative, sleep and stress support system with a mix and match componentry for individualised solutions. The range combines herbs, homeopathy, flower essences and nutritional supplements.
I had to be sure that it would really work. More and more people started using the remedies and telling their friends and by November 2012 pressure was such that I knew it was time to move into retail to make them more available. By that stage we had five products − real solutions for babies, kids and of course our three products for adults.
In a nutshell, I thought about all the reasons why people young or old are not sleeping and then combined all the appropriate remedies. This has been done in such a way that a synergy occurs with all of the ingredients making the remedies super effective without costing the earth and most importantly without causing herb/drug interactions or side effects for people.
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What are SleepDrops exactly, for people new to the product?
Why do you think SleepDrops has had such great success in a heavily competitive market? I think there are a few reasons why we have been so successful. Firstly, as a company we are completely dedicated to helping people control their stress and get them the best night’s sleep. We totally understand how stress and insomnia can affect peoples whole lives, taking away their joy, energy and vitality at all levels. Secondly, we have made exceptional products in a way that no other company has ever done before. Once people get introduced to SleepDrops they can easily understand our three adult products and how they can use them in their lives. We are not like other supplement companies simply making ‘me too’ products or one hit wonders. I have deliberately made each product to do certain therapeutic actions in the body rather
than trying to include everything in one product. Because of this, the results people get are absolutely lifetransforming. Our products work with the body to reprogramme and re-balance it rather than forcing it to do something or just tackling the symptoms. Our products address the underlying cause of stress and insomnia and so the results are long lasting. The third reason we have done so well is because of our marketing strategy. We have stayed focused on sharing information and letting people know why they need the products. Because of therapeutic advertising laws we are not legally allowed to focus on the benefits or tell them what the product is doing to help their body, or even how it is helping them. Drug companies are allowed to do that, but natural health companies are not. So our message had to be more about why they should take SleepDrops.
www.nzentrepreneur.co.nz • 9
What have been your greatest lessons on your entrepreneurial path? Ha, ha, ha. Business is not for the faint hearted. I have learnt that I have to be resilient, driven and committed. I am extremely lucky that I get to wake up every day and help make the world a better place. I take huge pride in the fact that SleepDrops is an agent of change for our customers and for the planet.
There are people out there (you know who you are!) that will bulldoze right over the top of me, and my company without a second thought. I have learned that business is very personal, and that I am only prepared to do business with people and companies I like. It’s too hard otherwise. I have also learnt that during tough times our relationships with suppliers, manufacturers and magazines become really important.
We all deserve to have a GREAT night’s sleep and wake up refreshed, ready to go and happy. This passion has kept me going during the tough times, and believe me, there have been many. I have also learnt that, unfortunately, I can’t trust everyone.
These people will go to bat for me or extend credit for me to help me get through a tough patch. That is incredibly humbling because it means that they can see our integrity and that they also want to be a part of making SleepDrops succeed.
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As a mother yourself, what wisdom would you pass on to mothers who are looking to start their own business dream? Wow, this is
him along to the Westpac Business awards night this year, which was great because we won an award!
such a big question. It is one that I wrestle with all the time. For a long time I didn’t have any money but I made sure that my son never knew how bad things were.
He got to be part of that, which is appropriate because he is very much a part of the SleepDrops story. Mothers should go for their dreams. Start it off part-time while continuing to earn money, make sure you have all the bases covered, and slowly build it up.
I think it’s very important for parents to portray abundance and not set up negative programmes in our children’s minds such as “money doesn’t grow on trees, you know”. There have been times when we have had to go without, but I have always shared with my son the highs of business, any milestones and big successes. I even took
Talk to your children about your dreams for your business. Get them to be a part of it. Be a role model and live by example. Show them that you have to be brave and work hard to achieve your goals. They will see you succeeding and this gives them the fuel to go on and strive for their own dreams.
Talk to your children about your dreams for your business. Get them to be a part of it. Be a role model and live by example. Show them that you have to be brave and work hard to achieve your goals. www.nzentrepreneur.co.nz • 11
You are a great marketer of your product with multiple strategies. What lessons can you pass on to other businesses in growth phase that you wish you knew when you started? The biggest thing for me was to work out how I would get my message to the best market, with the least amount of stress and with the tiny budget I had. A company website has to be the most important because it is the face of your company, it is the place that everyone will come to first. It doesn’t have to be fancy you can hire a Uni student to make it for you if you need to. You don’t have to have ecommerce hooked up to start with, but get something up there that will talk to your customers. The messages and feelings that your website portray are very important, so focus on that first. So many people told us that our home page was ridiculous, that it was too long and that it had too much information but I knew that insomniacs worry. They worry about a lot of things and I didn’t want them to worry about SleepDrops, so I talked to them on the page. I let them know I understood their situation.
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I was also told that my video was too long and that no one would watch it. But I knew that they would watch it. So my lesson would be to trust your own judgment. You know your market, your customer better than anyone. Trust your intuition. If you think it takes six minutes to make your customers trust you then put the six minutes of effort in. Marketing companies don’t always know best. As businesses, there are so many bases we have to cover − websites, radio, magazines, TV, brochures, Facebook, Google ads, Twitter − it’s exhausting and it’s hard to do it all, and do it well. So choose something you like doing and that you can teach yourself and do that. Choose the right channels for your product, your market and your budget. For SleepDrops radio has always been really powerful.
You know your market, your customer better than anyone. Trust your intuition.
What has been your greatest obstacle as an entrepreneur? Lack of money. On the one hand it stifles creativity and on the other it forces you to be creative because you can’t just go out and hire a big agency. We are lucky we work with an awesome guy at Creativeguru.co.nz who understands our products, brand and customers and who doesn’t charge the earth. What has been your greatest moment as an entrepreneur? Carly Flynn from 60 minutes deciding she wanted to tell the world about SleepDrops. Actually being on TV as a real solution for people suffering from insomnia. Yes, that was a biggie.
What does the future hold for SleepDrops? I sincerely hope it holds great things. I want to get SleepDrops powder into every kitchen cupboard, SleepDrops for Adults on every bedside table and DayDrops in every handbag and on every executive desk in the world. SleepDrops for Babies handed out at birthing units and SleepDrops for Kids popped into little mouths every night, along with a good bedtime story of course. The sooner everyone becomes proactive and prioritizes their sleep the better. The science is overwhelmingly clear. Sleep is THE foundation for all wellbeing. I love that SleepDrops can do so much to help people of all ages and influence not only their health but their happiness too! ■
Go to www.sleepdrops.com for more informationeth Kirsten Taylor is qualified with a Diploma in Naturopathy (Honours), Diploma in Medical Herbalism, a Diploma in Nutrition, a Post grad certificate in Natural Fertility and Reproductive Care and is Certified in Homeobotanical Therapy. SleepDrops was awarded Best New Product at the prestigious Health 2000 Supplier Awards, and more recently the company won Best Emerging Business at the 2014 Westpac Auckland North Business Awards.
www.nzentrepreneur.co.nz • 13
TECHNOLOGY
BANG
A Bigger
for your Startup
Buck
We talk with Steven Male, founder of BigBangly
NZ Entrepreneur: In one sentence, how would you describe your business? BigBangly makes it easy for companies to grow. We understand companies are limited by two things, capital and time so we provide the analytics, information and advice you need to make the biggest difference to your company’s bottom line without any unnecessary time-consuming features or hefty fees.
Tell us a bit about how BigBangly came about? The idea for BigBangly grew after I started my first company. Sales were slow and we really didn’t understand what steps we needed to take to grow. I went on to make the mistake of asking search engine (SEO) agencies for their prices and they were ridiculous, nothing we could possibly afford, so
we decided to create our own software and to learn the ins and outs of growing a company ourselves. We focused heavily on the steps that weren’t overly time intensive or expensive and started tracking the results of everything we did. Before long we had created a whole bunch of useful software and came up with one of the most comprehensive guides to growing companies affordably and effectively.
What do you think differentiates BigBangly from other similar service providers? The biggest advantage of BigBangly is that we understand what startups and small businesses want. As a business you need to know what the exact steps are that will provide the biggest impact on your profit but won’t take too much time or cost too much money and that’s exactly what we provide.
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What’s been the hardest part of getting BigBangly to where it is now? The hardest part of getting BigBangly to where it is now was figuring out who our target audience was. Our initial target was large corporates. We started calling around and were offering them this awesome software which is more affordable and effective than what they were using but they seemed skeptical because the price was too low. It was then we remembered why we started in the first place, to help startups and small businesses and I guess it’s history from there.
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What qualities of BigBangly are you most proud of? We’re actually most proud of our new free tool that will be coming out in a few weeks which will allow companies to come on to our site and test their companies website instantly. The tool will analyse their website using 20 different tests and provide useful personalised tips to improve their score in each category. We also have a more comprehensive version of this as a part of our monthly packages.
What are you excited about in your industry at the moment? Our industry as a whole excites us! We started this company with a passion for helping small businesses and startups grow and the industry is booming. We are constantly surrounded by the best minds that are creating world-changing products and services. We’re pretty grateful to have started when we did and be able to surround ourselves with such amazing people.
What advice would you give to anyone else looking to set up their own business? To anyone else who is out there looking to start their own company my biggest piece of advice is to always keep your customer first. The harder you work towards your goal, the easier it is to forget why you’re doing what you’re doing and who you’re doing it for. As I mentioned before, right after we launched our first piece of software we started targeting the wrong audience and this one mistake almost was the end of BigBangly, so keep focused, work hard and have fun. ■
Find out more at: www.BigBangly.com Facebook: www.facebook.com/ bigbangseo Twitter: www.twitter.com/ bigbangly
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INTERVIEW
Young & Hungry What happens when you get kicked out of your own business when you just get it going? We hear from young entrepreneur Adel Shahin on his challenging path to kicking the door down on his game changing dreams WHO IS ADEL SHAHIN? Adel has experienced working on all aspects of a start-up, ranging from technology management to customer development and sales.
users on-going lunch and dinner specials.
Adel is also an avid supporter of the local community. He has led various new projects and youth camps, he was He was the co-founder of recently a project manager Parrot Analytics and helped the for Auckland Eid Day – an early stage company fundraise Islamic bi-annual festival that the largest seed round to date attracts around 10,000 people in New Zealand. He went onto nationally. We asked Adel establishing Food Lookout; a a few questions about his mobile application that shows turbulent journey
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What inspired you to become an entrepreneur? I’ve always been fascinated with entrepreneurship and the concept of starting your own company from scratch. Coming from an Eastern background, my parents really pushed me towards pursuing a higher qualification before taking the leap into the entrepreneurship world. I am really glad I went through that path as I met some amazing people through my studies and went on to starting my first company.
Why did you start Food Lookout? While working at my office job in the city. I realised very quickly that eating out every day is not financially sustainable. At the very least, I should be looking for cheaper restaurants so I can justify spending less money over wasting more time preparing a homemade lunch.
Is this your first start-up? No, I co-founded Parrot Analytics with a few friends from university in 2011.
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What is your vision for Food Lookout? My short term vision is for Food Lookout to be the ‘go to’ app when your friends are wondering where they should eat. I personally love to travel, but I’ve found it very difficult to find authentic local restaurants (non touristy) at the bigger cities. I would love for Food Lookout to become an insider’s guide for the best deal restaurants to try when visiting a new city (or exploring your own city).
What have been your greatest lessons on your entrepreneurial path? Things never go as you plan! You really need to understand at an early stage that you don’t know what you don’t know. And that’s perfectly fine, you can start learning more about any topic or skill as long as you don’t think you’ve mastered it! Whether it’s design, sales, team culture or anything really. I was lucky I had very supportive network around me and they were more than happy to mentor me when I asked for help.
What do you think is the #1 thing that has contributed to your success? I think the biggest contribution to becoming successful is the people you surround yourself with. I am very lucky to have very supportive family and friends for the path I’ve taken, and they continue to support me in any project I undertake.
What are the top 3 things you would teach a start-up to get results? 1. Make sure your team knows how to work hard, as well as play hard. There will be ups and downs during your journey; you need to ensure that everyone gets along regardless of those bumps. 2. The great thing about being in New Zealand is how easy it is to reach the right person. Don’t be afraid to send out an email or pick up the phone and ask the CEO of ABC company for a coffee. 9 out of 10 times they’re more than happy to meet you and advise you about your idea. 3. Make sure you talk to your customers from day 0. There’s no point in all your friends telling you it’s a great idea if you can’t convince a stranger they’re benefiting from using your company. Your customers know what they want best, talk to them first then build them what they want.
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What has been your greatest obstacle as an entrepreneur? Focusing on a single project has been really tough to do. Naturally there are a million ideas and projects that interest me. I seem to always volunteer myself into new projects without realising how much time it will take. Thankfully I’m still managing and I haven’t collapsed from lack of sleep yet.
Who inspires you and your entrepreneurial vision and why? Hearing about great Kiwi success stories really inspires me. Companies like Xero and Wildfire prove that even
a country as small as New Zealand can compete in the IT space globally. These companies didn’t become where they are overnight, but they did do it by starting in New Zealand.
What does the future hold for Adel Shahin? Starting a company has a special thrill to it. I think I’ll still be making ideas into realities 10 to 20 years from now. I also want to get more involved in introducing entrepreneurship courses to high schools students, as well as mentoring them into creating a business while they’re in high school. ■
To find out more about Adel and his new startup go to: Foodlookout.com
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MIKI SZIKSZAI CEO, SNAPPER
NEW ZEALAND’S SMARTEST BUSINESS PEOPLE ARE SWITCHING TO 2DEGREES. “We were saving between 35% and 40% off our telecommunications bill right off the bat. It also has opened up the opportunity for us to potentially reduce our reliance on landline phones in the office, which we’re now exploring. And again, that will probably take another 20% to 30% off our comms bill.” To see the full story about Snapper, and hear about other companies who have made the move to 2degrees Business, visit: 2degreesmobile.co.nz/business.
MC2527A
Andrew and Kim Baird run their business from their home in St Heliers in Auckland and have helped many NZ businesses design winning marketing and sales results. Contact them by going to: www.amazingbusiness.com
Talk to one of our Business Consultants today and we’ll help drive your business forward. Call 0800 022 249 or visit 2degreesmobile.co.nz/business www.nzentrepreneur.co.nz • 23
IP IN ACTION
6 Tips to
Protect your Intellectual Property How do you stop people from stealing your game changing ideas and intellectual property? Lynell Tuffery Huria from AJ Park shares her inside knowledge with six simple steps.
AS A BUSINESS OWNER, your attention is often focused on competing priorities such as perfecting your product or service, servicing and building your customer base and, of course, paying the bills. But taking time to ensure you are protecting your intellectual property will go a long way to helping secure your business’ long-term future.
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Business value today is found in intangible IP assets like client lists, trade secrets, trade marks, and branding. While business owners make time to move or renovate new premises, many owners do not spend enough time putting a framework in place to protect their IP assets. Protect your intellectual property with these six tips.
1
Choose a brand that you can protect and enforce While it’s easy to choose a brand that tells you exactly what the product or service is, these brands are difficult to protect and enforce against others. Choosing a unique and unusual brand will provide you with a strong trade mark that you can easily enforce.
2
Check to make sure others are not using the same brand Launching your brand without checking others’ rights is risky. If someone else has protected or is using your brand, then your investment in signage, posters, and promotional material could be lost and/ or you could be required to defend a court action against you. Checking to make sure you can use and register your brand before you launch your product or business is important.
Taking time to ensure you are protecting your intellectual property will go a long way to helping secure your business’ longterm future. Business value today is found in intangible IP assets like client lists, trade secrets, trade marks, and branding. The key to patent or design protection is secrecy If you think
3
you have a new product that could be protected by a patent or design, then do not show the product to anyone unless you have a nondisclosure agreement in place. Disclosure of your patent or design to a third party without a non-disclosure agreement will destroy any novelty in the product and could prevent you from securing patent or design protection.
Check to make sure your www.nzentrepreneur.co.nz • 25
4
product is not protected As with brands, launching your product without checking others’ rights is risky. Even if you do not think you will file any patent or design applications, carrying out a freedom to operate (FTO) search to make sure you can sell your product in a particular market or territory is important.
5
Copyright protection is free Copyright is a form
of IP protection that is free in New Zealand and Australia, and automatically exists in any copyright work created. Protection is best achieved if you ensure you include the © symbol, date, and author of the work on the work when it is created.
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6
If you need help, contact an IP advisor An IP advisor can help you develop an IP strategy that is right for you. A good IP advisor will ensure you invest only where you need to. Obtaining the right advice that fits with your business strategy can help safeguard your business for the future. ■ Contact Lynell on lynell.tufferyhuria@ajpark.com Lynell is a special counsel trade mark advisor at AJ Park in Wellington. She helps business owners maximise their brand assets in New Zealand and overseas.
iP is about igniting passion Great ideas shape our world if they are harnessed and protected in the right way. At AJ Park, we work with you to understand your business and where you want to take it. Our experts specialise in helping you identify, protect, commercialise, and manage your intellectual property. If you’re looking for clear IP advice, call us today. 0800 257 275 I www.ajpark.com I New Zealand + Australia
AJ Park is about iP • intellectual property • igniting passion • ideas pervading www.nzentrepreneur.co.nz • 27
STARTUP WEEKEND
Startup Weekend Produces a Basket Case! The crazy team at Startup Weekend Auckland have done it again. 54 hours of idea crunching, wmarket validating, product producing, pitch creating awesomeness. Let’s see how they got on.
AN INTENSE 54-hour weekend culminated on Sunday night with the winners named for Auckland’s sold out Startup Weekend. In a close race, BasketTrack won first prize. BasketTrack provides shopper information to retailers so they can identify cold spots in real-time and optimise store layout.
votes are taken and teams formed to work on these ideas over the weekend.
Events have been run in Auckland, Wellington, Christchurch, Queenstown, Tauranga and over 200 countries worldwide.This weekend’s judges Vaughan Rowsell, CEO and founder of Vend, Sue de Bievre, CEO of Beany. Biz, and Rod The key features of the Snodgrass, CEO of Spark product include integration Ventures, were wowed by 13 across sales, dwell time teams at Sunday Night pitch and shopper geo-tagging, enabling retailers to maximize time.As the winning team, profits and enhance customer BasketTrack will receive: experience. Startup Weekends the Startup Law pack from Lowndes Jordan (valued at aim to inspire collaboration $2000), TradeMe advertising between entrepreneurs, (valued at $10,000), 12 designers and software developers. Participants pitch months Big Pipe broadband thanks to Spark, one month’s ideas on the Friday night,
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hot-desking and meeting space from GridAKL and one month’s meeting access from BizDojo.The quality of the teams this year was outstanding and the judges decided to award two runnerups - Xignal and OnMyGame. The judges felt that Xignal was an app just waiting to happen. Xignal offers real-time feedback from the audience to the presenter. In a completely different field, OnMyGame is an app developed to support people at risk of developing post-traumatic stress disorder (PTSD). It engages users in a positive and fun way to provide feedback on their current state and tools for relaxation. Vaughan Rowsell, CEO of Vend, said “it was great to see an app that made peoples lives better”. The Microsoft Top Developer Award went to Peter Sellars from Me!Social, who took home a brand new Microsoft Surface Pro. The Spark Big Data Award went to BasketTrack, who will receive a consultation with big data scientists from Qrious.
Alan Froggatt, National Director of Startup Weekend NZ, was delighted with the results – “We run these events to build up the New Zealand startup community. These are grassroots events and are essential for the health of our ecosystem, and support our social and economic footprint on the global stage.” Auckland Startup Weekend facilitator Rowan Yeoman was impressed with the high level of capability in the teams across every area – development, design and business. – “It is a great sign for the development and maturity of the Auckland Startup ecosystem and bodes well for the future.” If you missed out on the Auckland Startup Weekend and want to be involved, go to www.startupweekend. co.nz to find out more. Startup Weekends could not take place without the support of sponsors and volunteers. ■
For more information please contact Jenny Xu, email: jennyxu.nz@gmail.com, mobile: 021 169 0637. As a non-profit organization, Startup Weekend is supported internationally by the Kauffman Foundation. National sponsors of Startup Weekend NZ are BNZ, TradeMe and Massey University. Local sponsors for this event include Microsoft BizSpark, Lowndes Jordan, Big Pipe, Spark, Teamwork, GridAKL and ATEED.
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The Hidden Pains of Your Exit Strategy With 83% of baby boomer businesses not having an exit strategy there is big problem coming our way. If this problem is not met, a lot of business owners will face a bleak future. We talk to small business financial specialist Warwick Russell on how we can address this issue and turn the problem around.
WHY IS HAVING an exit strategy important for business owners? And how bad is this problem? You really need to begin with the end in mind if you want to exit your business successfully. The best results for you will be achieved when your planning starts at the same time as your business, or certainly well ahead of your planned exit.
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Here’s the truth behind the reality of exiting businesses for you to consider. • Often the decision on when to exit the business is driven by events beyond the owner’s control with one of the four “Ds” (death, disease, disability, divorce). • We hear from business brokers that three out of five business owners coming to them get turned away. This is because the business is not making any money and has a low value, or the business owner has unrealistic ideas of what their business is worth. That’s right, 60% of business owners face getting zero return when they intend to sell! • It is estimated that 60,000 baby boomer owned small and medium businesses will come onto the market in the next 10 years. But only about 17% have formal plans in place for succession or to transition out of the business. • Entrepreneurs live for the challenge of launching their business, but forget that decisions made on the day can have huge implications to the value of the business, and with how they get their money back to move on to their next challenge.
WHAT IS THE TRUE PROBLEM FACING BUSINESS OWNERS, AND WHAT CAN BE DONE ABOUT IT? Most people go into business not only to earn an income, but also to build the value of their business to ultimately sell. That sale will often be the
primary source of funding for their retirement. But most business owners never take enough time to develop and implement a plan to sell their business, and risk not realising the full value of their investment. This is the single biggest mistake a business owner can make.
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The key questions to consider are: • When do you plan to exit? • Can you be removed from the business without affecting its operations? • Do you want to remain involved and exit gradually while continuing to earn from the business? • Who are the potential buyers for your business and what are their perceptions of the risks and opportunities of the business? • What is the business worth now, how that can be enhanced and how easy is it for a purchaser to fund?
HOW CAN YOU FIX THIS PROBLEM?
Identifying the value of the business is a bit like reverse Identify the value of your due diligence. It is a review business now and the gap of the risks and opportunities between that and how much of the business including the you need or want on your exit. following elements:
• The attractiveness of the industry • Business factors including financial track record, customer base, key staff and existence of business plans • Business growth factors: existing customers, new customers, new products and services and ability to support growth • Buyer risk around owner dependence, supplier dependence, customer concentration, performance compared to industry benchmarks and ability to raise finance.
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Develop and implement a plan to lower these risk levels and improve the financial performance and attractiveness of the business to a potential purchaser. It may take one to three years.
reduces risk. Identify who an ideal buyer may be, and understanding the buyer’s view on value will enable a business to target what is attractive to a buyer.
The readiness level of your systems and documentation to be opened to scrutiny by a potential buyer also
Get the right advisors on board at the start. Include your accountant, business advisor, business broker and lawyer.
CASE STUDY: What happens if you get it wrong?
CASE STUDY: What happens if you get it right?
Last year we assisted a client to purchase a competitor’s business for 25% of what the business could have been sold for if there had been an exit strategy in place. The owner had passed away due to illness. Opportunities are out there for existing businesses to grow by targeted acquisitions of poor performing or ill-prepared businesses in their industry.
We have assisted two business owners to make an exit by targeting potential purchasers in similar industries that could recognise the strategic addon value. Both businesses sold for profit multiples that were significantly greater than the norms for these types of businesses. ■
To find out more about Warwick and how he helps businesses go to www.smetric.co.nz Warwick Russell has over 20 years of experience in a diverse range of businesses as an owner of SMEs in manufacturing, exporting, hire equipment, horticulture, and as a senior financial executive with large businesses. These experiences have given Warwick a thorough understanding of the many challenges facing SMEs undergoing rapid growth or change, including making an exit. Warwick is the owner of SMEtric.co.nz based in Auckland offering Virtual CFO services and consulting on financial turnaround and business planning.
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INTERVIEW
Turning Passion in to Profits
Discover how a PR queen and an Engineering maestro left the bright city lights to create a world first product that is now taking on the industry major players
WE SPEAK TO FIONA AND JASON McIntyre about their journey bulding a worlds first product and how they got here.
How did you two meet? We were introduced by mutual friends at Canterbury University where we were both students 34 • www.nzentrepreneur.co.nz
during our early 20’s; Jason was studying engineering and Fiona was studying Commerce and Public Relations. We hit it off straight away but didn’t start dating until eight years later when we met up again in Auckland after our separate travels.
When did you decide to turn your love for strawberries in to Passionberry? We are both
strawberries and we wanted to add value to our existing customer offering.
‘corporate turned country kids’: Jason was an electronics engineer servicing Team NZ Racing Yachts and building Sir Peter Jackson’s personal home cinemas. Fiona has a background in Superyacht event management and also ran her own public relations consultancy for nine years working with clients in property development, Maori relations and retirement industries. We had no prior experience of growing strawberries but when we married in 2006 we moved to the countryside and decided to give strawberry growing a go as it presented an opportunity to make a somewhat decent living off a small land holding.
Fiona also had too many martini glasses from her former entertaining years on yachts (the duo had been partying and experimenting with berries in the blender). It wasn’t long until we struck upon the perfect recipe that all our friends loved and after five years of cocktail parties and everyone telling us we should bottle the stuff, we seriously started considering it. The only available strawberry cocktail mixers on the market at the time consisted of sugary syrupy lolly waters and we quickly identified a gap in the market whereby consumers were beginning to demand less sugars and more natural ingredients in their drinks.
We had been growing strawberries for about six years and always knew there was more value in strawberries - we had already created a thriving business whereby we had a reputation for producing New Zealand’s finest most sought after
So late one night (when all good ideas come to fruition) we got quite excited dreaming up the possibilities for a unique strawberry cocktail brand and decided that it was definately something we wanted to explore further.
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What has been the response nationally and internationally to your product? Passionberry What is unique about Passionberry? Passionberry is the only premium strawberry cocktail in the world that is made with 50% real natural strawberries and pure distilled alcohol 9%. A truely versatile product, Passionberry can be served straight over crushed ice or as a cocktail base mixer to create truely authentic strawberry drinks such as Strawberry Daiquiris, Champagne Bellini’s and Summer Spritzers. Unlike other artificial substitutes, Passionberry is made with only our best naturally sun ripened and sweet strawberries and has no added sugars. Because of this we have essentially created the world’s lowest calorie alcoholic beverage that has a tiny 59 calories per 100ml straight serve. It is the perfect guilt free cocktail for discerning customers that want more natural tasting ingredients in their cocktails and who are demanding low calorie drink choices.
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is a unique and premium world first brand to come out of New Zealand. We have select key retailers nationwide and a constantly growing base of online fans who love and support the product here in New Zealand but we acknowledge that the real opportunities for the brand are offshore. We have already had great success and far greater appreciative response for the brand overseas doing export trade within the first 12 months since launching the brand in New Zealand. It’s a big world out there and we are focused on targeting international markets where there is an already established cocktail culture. Passionberry’s point of difference is that we can offer real genuine strawberries in a bottle where previously there have only been artificial substitutes available and this is very appealing to offshore markets where they cannot readily source fresh authentic ingredients such as strawberries.
Who do you look to for inspiration in your business? We acknowledge that every entrepreneur’s journey is different so don’t like to compare or benchmark our product and successes against other brands that have gone before us. Geoff Ross’ 42 Below story has resounded with us as we have encountered many of the same challenges he also dealt with. His book, Every Bastard Says No, has been a source of inspiration for us. We also have a piece of artwork on our office wall that keeps us going that reads “Many of the world’s greatest achievements were accomplished by tired and discouraged people who kept on working”.
The great part of living and working together as a couple is that we intuitively know how the other is likely to respond so we are able to respond quickly and make fast decisions that help advance the business
What has been the biggest challenge with doing business as a couple, and the greatest payoff? Learning to switch off at the end of the day and stop yourself talking about the business has been a real challenge as it becomes so automatic when you are passionate about what you do. Because we live and work together we have had to set boundaries around when we talk shop and when we actually have a life outside of work - it’s a constant struggle but we are forever in pursuit of the ideal work/life balance. The great part of living and working together as a couple is that we intuitively know how the other is likely to respond so we are able to respond quickly and make fast decisions that help advance the business. It’s also nice to be able to juggle personal commitments around a hectic business schedule without having to consult the boss!
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What is your vision for the future of Passionberry? Ultimately we want to grow Passionberry to become an internationally recognised strawberry alcoholic beverage brand name. Whenever people want to make a strawberry cocktail we want them to think of Passionberry. We want to showcase the best of NZ’s fresh natural strawberry produce and offer a genuinely authentic strawberry cocktail drinking experience to people the world over. We know we have created something truly unique and the game plan for the next five years is to invest in the growth of the brand in foreign offshore markets where there is a real cocktail culture.
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What have been your greatest obstacles as entrepreneurs? We had all the drive and energy to get the business idea started, and put all the necessary business functions in place − but some of the hardest challenges have been learning to identify our weaknesses − and finding the right people to help fill those gaps and advance the brand as we push forward into new markets. As the Maori people say “He tangata, he tangata, he tangata” - it’s always the people, the people the people.
Always stand back and look at the big picture and where you want to be heading - it’s a big wide world out there full of opportunity and adventure and unless you give it a go you will never know how far your invention will take you! What has been your greatest moment as an entrepreneur? When you take a New Zealand brand like Passionberry and sell it for the first time in a foreign offshore market and you can claim that it is in fact your own invention, and people actually want to buy it - that is a big moment. It really confirms that you have created something truly unique and have successfully showcased a little piece of New Zealand to people of the world. It’s a feeling of great achievement and pride after all the hard work that goes into getting to this point in business.
What wisdom would you pass on to other couples looking to launch a business together? Whilst it’s great to be passionate about what you do it’s also important to remember to have a life outside of work, otherwise you can get burnt out if all you do is think, dream, and live for work. Make sure you schedule some down time and take regular breaks. And identify your strengths and what you love to do and apply them to divisions within the business. It’s easy to get caught up in the day to day running of the business and start to loath the job because you are not doing what you truly love and started in the first place. Always stand back and look at the big picture and where you want to be heading - it’s a big wide world out there full of opportunity and adventure and unless you give it a go you will never know how far your invention will take you! ■
To find out more about Passionberry go to www.Passionberry.co.nz
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PARTING SHOT
“Things do not change, we change” - Henry David Thoreau
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