NZ Entrepreneur Magazine - Issue 3

NEW ZEALAND’S E-MAG FOR ENTREPRENEURS AND BUSINESS OWNERS

November/December 2012

10 Questions with

Flox

Spotting the Gap Part 2 Holding Your Staff Accountable Customer Aquisition Advice for Tech Founders How to Deal with Price Objections

Plus heaps more inside!

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Contents 4

From the Editor

6

Spotting The Gap Part 2

10

Interview: 10 Questions With Flox

14

IP / Innovation

15

Entrepreneurial Intelligence with Sandy Geyer

16

Holding Staff Accountable

18

Profile: Cameron Priest

20

Your Price is too High

22

Its all about scale!

23

Smarter Systems

24

What’s in a Name?

27

Tomorrows Entrepreneurs

28

How to read our e-mag

30

Parting Shot

ABOUT /

iP is

Short and sharp, New Zealand Entrepreneur is a free e-magazine delivering thought provoking and enlightening articles, and industry news and information to forward-thinking Entrepreneurs.

EDITOR / Richard Liew ART DIRECTOR / Jodi Olsson GROUP EDITOR / Trudi Caffell CHIEF FINANCIAL OFFICER / Alastair Noble CONTENT ENQUIRIES / Phone Richard on (09) 522 7257 or email richardl@espiremedia.com ADVERTISING ENQUIRIES / Phone Richard on (09) 522 7257 or email richardl@espiremedia.com

From the Editor

A

ADDRESS / NZ Entrepreneur, C/- Espire Media, PO Box 99758, Newmarket, Auckland 1151, NZ WEBSITE / nzentrepreneur.co.nz

ISSN 2253-5683

s 2012 draws to a close it’s time to reflect on what you’ve achieved this year, what hasn’t quite lived up to your expectations, and most importantly, what you’re going to

commit to doing better next year. Whether you’ve just started a business, have just sold, closed or lost a business, or are several years

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!

into becoming an overnight success, it’s important we all learn from what we’ve been through.

It’s also vital that we take time out to celebrate our successes as all too often us entrepreneurs are too hard on ourselves. It’s important because building a business is a marathon, not a sprint, and with so many things to worry about, and so much work to do, seeking out and celebrating all the wins, no matter how inconsequential they may seem, will keep you motivated, energised and provide you with a feeling of control when you’re up to your neck in crap.

In this double issue, we talked to three inspirational #nzentrepreneurs, each of whom have taken up the challenge of bringing their business building dreams to life. These entrepreneurs are no different to many Kiwi’s, they don’t have any mysterious superpowers, they didn’t start with tons of money... but what they do have is a burning desire to live life on their terms, and to use the unique gifts, passions and abilities we all have inside us, to their full potential.

Have a great Xmas and New Years. 24/7/365 NZ Entrepreneurs...

Chur!

Richard Email richard@nzentrepreneur.co.nz LinkedIn http://nz.linkedin.com/in/richardliew

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ENTREPRENEURSHIP Had a great idea? Cool! But think carefully before investing your life savings trying to turn it into a business.

Spotting the Gap Part 2

HOW TO HAVE BETTER BUSINESS IDEAS

By Richard Liew

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In Issue 2 (http://bit.ly/NZE2p) we had a look at where some of the best business ideas come from. But even if you’ve found a problem that people want to solve, how do you know whether it represents a real business opportunity?

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nyone can have a good idea but turning a good idea into a successful business is another matter altogether. There are plenty of people with great

ideas out there, but far fewer with great businesses.

One of the problems is that when you’re just starting out, you can

2. Does a market exist for your product or service and is the

get so excited about the fact that you’ve come up with an idea that

market big enough?

you launch straight into trying to turn it into a business. Successful

This question speaks for itself. Are there enough people who will

entrepreneurs know that they will have plenty more ideas and

buy your product or service for what you need to charge to build a

therefore are happy to take their time to assess their ideas objectively

profitable business? No use building a business to solve a problem

and only act on those with the best chance of success. As Richard

only you and your friend care about. This part of the process is often

Branson says, “Business opportunities are like buses, there’s always

referred to as “market validation”. Google it!

another one coming.”

An add-on to this question is, “Is the market concentrated enough?”

In fact this is one of the biggest differences between successful

While there may be a big enough market nationwide or globally, are

entrepreneurs and others - successful entrepreneurs have an

there enough potential customers within your reach for you to build a

“abundance mentality” when it comes to ideas while most people

profitable business?

have a “scarcity mentality”. In other words, inexperienced entrepreneurs are often worried that they won’t have any other good ideas so they proceed with the only one they’ve got (often the first one they come up with) instead of taking the time to apply a stringent selection criteria to it. I’ve been there myself and have learnt some hard lessons as a result, so here are a few of the criteria I’ve learnt to adopt when assessing new opportunities:

1. Am I passionate about the product/service/industry?

Many people will say that you don’t need to be passionate about your product or service - just about building your business. For example, they say you don’t need to be passionate about paper clips to go ahead and build a paper clip business. In my experience, and from talking to other business builders, I have to disagree.

Building a business is hard enough without not caring about your product or service, or the problems it will help your customers solve.

When the going gets tough, as it surely will, and when even the potential monetary rewards aren’t enough to keep you going, as they surely won’t, what is going to make you do what it takes to make the business successful if you don’t passionately believe in the good you are doing?

3. Is there a gap for you to become Number 1 in?

My favourite strategy in business is not to compete. When you have the chance to create your business from scratch, why choose to make it harder than you need to? In terms of assessing ideas, the question to ask is this, “Can I make this business Number 1 in it’s category?” If yes, that’s fine.

If you’re not confident you can knock the incumbent off it’s Number 1 position in the category you are thinking of entering, the next question to ask is, “Can I create my own category in which I can be Number 1?” If yes, then go ahead. (For example, Burger Fuel created it’s own fast food category - gourmet burgers. Consequently it doesn’t have to compete with the price of burgers from McDonalds.)

Note: this is just my criteria - in reality there is often room to build a very successful business occupying the Number 2 or even Number 3 position. Think Coke and Pepsi; McDonalds, Burger King & Wendys; Telecom, Vodafone & 2Degrees... It’s just that the more competitors you have in your category, the more you need to compete in price and the harder you’ll have to work to achieve market share.

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4. Is it systemisable and can it run without me?

5. Cost and capability. Do I have the resources?

If the business you’re thinking of starting cannot be run by anyone

Do you have the capital, time, knowledge to turn your idea into a

else but you, or the products or services you’re producing cannot be

successful business? If not, can you get it?

produced or delivered by anyone but you, then it’s a fair bet you’ve

Turning a good idea into a successful business is all about execution.

come up with an idea for a job, not a business.

Many great ideas fail not because they weren’t a great idea, but

That’s not actually to say you shouldn’t go ahead with the idea,

because the entrepreneur is undercapitalised, doesn’t have the

just that your scope for growth will be limited by the amount of

man power, or doesn’t have the skills, knowledge or experience to

work you can do personally and that the value of the business will

implement it. It may well be a good opportunity for someone else, but

be intrinsically linked to you, limiting your ability to scale up, and

is it a realistic opportunity for you?

limiting it’s attractiveness should you ever want to sell it.

If the answer to any of these questions is “No” or “Not sure” then my advice would be to find another idea.

Richard Liew is the editor of NZ Entrepreneur

Having said that, we all have to start somewhere, so if you back yourself, and are prepared to learn some hard lessons, and to never quit, then go for it! Win or lose, the experience you will gain will be invaluable!

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INTERVIEW

10 Questions with

Flox

Even if you haven’t heard of the multi-disciplined street artist, painter and fashion designer Flox (aka Hayley King) it’s highly likely you’ll be familiar with her work, distinctive for it’s flowing and colourful bird and flora themed graphics.

Starting out with a weekend stall at the old Aotea Square markets in Auckland, and as a founding member of street art collective, Cut Collective, Flox is one of few artists who has learnt to turn her love of art into a paying, flourishing enterprise enabling her to build a business doing what she loves.

RL: When did you start your business and what made you want to start in the first place?

HK: I started Flox back in 2005 with a small seed of a business idea, but more so from a drive to work for myself and turn something that I was passionate about, into something that I could create a career out of.

RL: How did you actually get started? What did you do?

HK: I think what sealed the deal was doing a small business course through WINZ (after graduating with a fine arts degree from Unitec in Auckland). This really bought my business idea into perspective, and helped me financially, professionally and emotionally to prepare for the hard years ahead. Looking back, this really was a crucial point in my life; It was then, that I made the choice to make use of my fine art roots, within a commercial context.

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RL: People often say that starting their business was the hardest thing they’ve ever done - what part of building your business have you found to be the hardest so far?

HK: Well building it was hard, in the sense that I had to take care of everything myself. And of course, I never knew what was around the corner. My philosophy in the beginning, was to really take grasp of any opportunity that came my way, in the hope that keeping busy would not only push the name Flox, but open up new audiences and again create new creative and commercial prospects.

Nowadays, I have people who work for me, so I’m able to concentrate on the creative side of the biz and I’m much more selective about what I take on as an artist, from a reputation point of view.

Keeping fresh, and remaining forever on your toes is the toughest (and most rewarding) component of running a business. As an artist, you can’t be seen to look stale. I have a really in depth understanding of who my audience is now, so it’s up to me to honour them, and to keep them interested!

RL: What three achievements are you most proud of so far?

HK: I’ve really enjoyed this year, working with some really amazing charitable organisations such as Little Lotus Project, We Are 1, Greenpeace and Auckland City Mission.

I feel most proud of my work and achievements when I know that others are benefiting from the work also. I was particularly honoured to work with a bunch of volunteers in Samoa this year, helping to upgrade a a children’s shelter. It was a wonderful experience, and to walk away knowing that you’ve really made a difference to these children’s lives, was priceless.

RL: There seems to be an attitude by many in the art world, that if you’re making money from your art, you have “sold out” and that you have somehow compromised your artistic integrity. Where does this attitude come from and what’s your take on this?

HK: I think this is a typical Tall Poppy Syndrome attitude. Of course everyone has to make money, it’s just a bonus if you actually enjoy doing it. This sort of comment makes me work harder, as I truly believe that you can have your cake and eat it too. Why should I have to choose, when I can do both.

RL: You’ve built your business while also raising a young son - what advice would you give to those who would like to start a business but who feel they can’t because they have kids?

HK: I actually think that being self employed is the best situation to be in, when raising kids. (Not that I have anything to compare by).

When you work for yourself, you set your own sechdule in a sense, so it means that time, although still very precious, is more flexible.

It’s amazing what you can achieve after you put them down to bed!

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RL: What are the three most important skills or qualities you would advise new entrepreneurs to develop?

HK: I think determination, confidence and not taking yourself too seriously are all important factors to have when running your own biz.

Determination is essential, don’t give up. There will always be bad days. Confidence in yourself goes such a long way, it’s that perception of yourself and your business that people really remember.

And keep smiling! Remember, in the grand scale of things, your problems are pretty insignificant to what some of the real problems are in this world.

RL: Have you ever felt like giving up and what do you do to keep yourself going when it all seems too much?

HK: I have never felt like giving up actually. However, I do realise that that day is still a possibility, so I guess it’s really all about avoiding complacency. I make sure that I have a good range of stuff going on within the business at one time. I might have two or three commercial jobs going on at once, but at the same time, if I’m not up for that type of work one day, then I always make sure I have other stuff to go on with. This variation of work is what keeps me motivated.

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RL: Many people put off starting a business because they don’t have any money. What are your thoughts on this?

HK: Hmm, this is a tricky one. To start a business, you generally need a bit of capital behind you, but then to acquire some capital, you need to get the business going! I think that this crucial time is all about networking, and perhaps doing stuff for free, as it really is all about immersing yourself into certain networking circles. We all do have the luxury now of pushing our brands through the use of social networking sites, in which case, your advertising budget can essentially remain at zero.

RL: What are your plans for Flox in the next few years?

HK: It really is a very exciting time at the moment. Flox is in the middle of a complete and comprehensive re branding journey. My focus has changed this year, and I’m more interested in pooling experiences and taking a breath gaining perspective of what Flox is, and where it’s going. I’m really excited about bringing other creative’s and professionals on board, to help me solve these questions. The business is eight years old now, so I think it’s grown up in a sense, and I’m trying to honour that along with my audience, and perhaps push it to that next level of brand perception. Watch this space…

Drop into Flox’s new studio and check out some of her awesome art and clothing at 13 Great North Road, Grey Lynn or visit www.flox.co.nz or www.floxapparel.co.nz. To discuss commission pieces or make an appointment, email hayley@flox.co.nz

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I P / I n n o vat i o n

Case Study:

Madeblunt IP IN ACTION

By Deidre Coleman for AJ Park

Our IP experts AJ Park share the story of Greig Brebner’s “Madeblunt”, a kiwi company reinventing the umbrella!

If you’ve ever nearly had your eye taken out by a carelessly wielded umbrella, you’ll appreciate the ingenuity of this Kiwi product.

The sharp corners are gone. There’s the special rib structure that keeps the canopy tight, ensuring the Blunt umbrella can withstand winds of more than 100km per hour.

Greig Brebner came up with the idea while travelling in the UK, and rolled it out several years later when he returned home to New Zealand to work at his family’s plastics manufacturing company.

Now Madeblunt, the company he formed with business partner Scott Kington, has distribution partners for its ‘pointless’ umbrellas in Japan, Australia, the US, the UK, several European countries, Russia and Scandinavia.

Patent attorney Matt Devine was impressed from the moment he saw the first prototype. “They’ve taken a pretty dull item and turned it into something sexy and revolutionary, and that takes some doing,” Devine says. “The beauty of it is that people understand it straight away. That’s good design. It works well and that makes people like it.

“Greig and Scott both have that energy, passion and enthusiasm to get their ideas to market - that’s so important. You can have a great product,

we couldn’t afford to protect them all. It was all new to us, so having your hand held through the process was great.”

Developments like this are vital to Madeblunt’s success, but the landscape is constantly changing, so any intellectual property protection in place needs to be relevant in five years’ time and beyond, Devine says.

“You always need to revisit your initial strategy and make sure it’s still aligned with where your brand, product and markets are now.”

but you still need that know-how and drive to get it market. Once people

The company’s branding is another vital component of the business.

are excited about their ideas, they’re excited about protecting them.”

Trade mark Partner Damon Butler is responsible for advising on and

Devine has been working with Madeblunt for the past five years, providing guidance on technology protection as the company applies

protecting Madeblunt’s main brand and more recently, the stylised umbrella-style logo on the handle.

for international patents and trademarks. Brebner says the timing and

“They have a great product and their distinctive branding will help them

rollout of this IP protection have been crucial.

stand out in the market,” Butler says. “We’ve been looking at the different

“Without that IP protection, your company’s not worth anything. AJ Park knows the systems around the world and they gave us really good advice.

They could break down our product, understand it and communicate

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what we had. There’s more than one invention within the product and

markets they’re interested in and helping the company weigh up the cost benefits of protecting their branding in each market.”

For more info check out www.bluntumbrellas.com.

P E R S ONA L T R A I N E R

Entrepreneurial Intelligence with Sandy Geyer Security vs Freedom?

By Sandy Geyer

I have been tempted many times to start my own business

of costs in reserve and an idea. My husband asked me to go back to a

but I am concerned about the lack of security as an

corporate position if we hadn’t made a profit in 6 months.

entrepreneur and wonder if it’s just best to stay employed

It took us 6 years to do anything more than cover the bills but our

so that I can be sure of my ability to provide for my family.

What do you think?

growth became exponential and the returns have far exceeded his wildest expectations ever since. One of the most important steps to becoming an entrepreneurial thinker is learning to accept full

I think that the feeling of security as an employee is an illusion.

Even those who are obviously brilliant at what they do, and valued very highly by their organization, are never completely secure. All

responsibility for your outcomes and understand that you will look after yourself and your loved ones with more dedication than anyone else will.

employees are vulnerable to outside influences such as buyouts,

Being in business is about making money by providing necessary

restructures, economic influences and even emotionally based

services and learning to adapt as the market shifts, as it will. If you are

influences such as nepotism.

clear on what you want and have a good idea of how you are going to

I have felt more secure as an entrepreneur since the day I started my first business in half my garage with no more than the next two months

do it, I say go for it. You have more motivation to succeed than any job could give you.

In each issue Sandy will be answering commonly asked questions from new entrepreneurs. If you have a question for Sandy to do with entrepreneurship, building successful businesses or the challenges and difficulties faced by entrepreneurs, email the editor at richard@nzentrepreneur.co.nz

Sandy Geyer is an entrepreneur and mentor and teaches the principles of entrepreneurial intelligence (EnQ), to entrepreneurs in New Zealand, Australia and South Africa.

You can visit Sandy’s website at www.enqpractice.com

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"

GROWTH/MANAGEMENT/LEADERSHIP

Holding Staff Accountable THE KEY TO EFFECTIVE BUSINESS EXECUTION

By Stephen Lynch Many business leaders complain about a “lack of accountability” in their company. Indeed, accountability is one of the major pillars of effective business execution.

A good starting point is to clearly document the performance standards for each role - namely: •

The key outcomes that each role is accountable for

•

The Key Performance Indicator (KPI) number(s) that will be used to measure successful performance in the role

Every role should have at least one tangible measure of successful performance - ideally one that can be tracked every week (or at least monthly).

Assuming you have recruited the right person for each role who; (a) “fits” with your company Core Values; and (b) has the necessary competencies to succeed in the role - the onus is now on the manager to provide the necessary training and support – AND to hold the person accountable for meeting the required performance standards.

This is where many managers struggle. Accountability requires the discipline of giving your people regular feedback on their performance. We recommend this is done every week.

Every week KPI performance must be measured, and the execution of key action priorities tracked.

Poor performance must also be confronted every week. If there are no consequences, the manager is implying that poor performance and lack of accountability is acceptable.

Every week, when your people execute their agreed action priorities and meet their KPI targets - the consequence should be that they receive genuine praise from their manager. Good performance must be recognized and reinforced.

Poor performance must also be confronted every week. If there are no consequences, the manager is implying that poor performance and lack of accountability is acceptable. The consequence should be that both the manager and the employee discuss the poor performance, identify the cause, and agree the specific actions that both parties will take to improve the results before the next weekly meeting.

Holding your people accountable for performance “early and often” drives effective business execution. It helps prevent poor performance from becoming the norm - and (where appropriate) aids the removal of poor performers from your team.

Are you good at holding your people accountable? What are the consequences for failing to perform in your company?

Stephen Lynch is Chief Operating Officer of business execution and growth specialists, Results.com

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One simple search and I’m in business!

Get your business off to a great start Securing a business name is simple with the new ONECheck online tool from Business.govt.nz Simply enter your proposed name, hit search and you’ll find out immediately if your name is available as a company name, website address and trademark.

ONECheck

It’s quick, easy and one of the most valuable things you can do for your business.

Check it out at www.business.govt.nz/onecheck 17

TAKING THE PLUNGE

Profile: Cameron Priest

Each month, we talk to an up and coming New Zealand entrepreneur who has set about turning their idea into a real business. TradeGecko is an online inventory, ordering & sales management application for small to medium sized wholesale & distribution businesses.

Briefly tell us about your business. How did you first come

What is the big goal for your business?

up with the idea?

The big goal is to build a large, B2B SaaS platform that powers the

The background of the idea is that one of our co-founders, Carl

backend office of tens of thousands of wholesalers & distributors

Thompson, previously had a wholesale clothing company (Crowded

worldwide (there are millions of these companies).

Elevator) based in Auckland and selling to retailers throughout NZ & Australia, and online.

Running the business became more hassle than it was worth, due to the quantity of administration work that stopped him from being able to focus on product development and getting more sales.

Carl and I then founded a design / development agency in Auckland, from which we spun out a mobile sales application for the iPad. When this product floundered due to not having a decent backend to plug in to, we took both these experiences, and decided to solve the obvious problem that occurred in both situations by building TradeGecko.

What inspired you to take the plunge?

There was never any chance I wasn’t going to take the “plunge” - I don’t think at any point since high school I haven’t been in the process of taking the plunge. It’s just that previous ventures hadn’t worked out as planned.

I like to define it as all of the previous ideas, half-baked startups, businesses etc., were just my way of building momentum - I also believe that TradeGecko is just the product of that momentum and will undoubtedly teach me a lot regardless of its outcome that will make additional business ventures even greater successes.

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What have you found to be the most challenging aspect of

If the hypothesis you’ve formed about your idea doesn’t organically

building your business so far?

come from your customers, you’re probably heading the wrong

The most challenging aspect has been, and continues to be, the

direction. But guess what - you’ve just had 50 different

acquisition of customers. The famous Paul Graham quote, “Make

people tell you their biggest problems - that sounds like

something people want,” is fine, but how do you acquire said people,

entrepreneurial gold to me!

en masse at scale in a repeatable, cost effective manner?

This is the one thing I try to do daily. Talk to customers, attempt to

Answer: No idea yet - we’re working it out!

better understand their businesses and industries. Not pitching them on our idea or product, but stepping back and listening to them -

What keeps you going when you feel like giving up?

really trying to grok how our customers live’s work, and how we can make them better.

Simply the belief that giving up is not an option. If I’m not building this company, I’ll build another. I think for the first time out of the many startups I’ve worked on, that we’ve got a real chance to build a $100 million plus business.

What advice would you give to any people reading this who are thinking of starting a business?

I can repeat the old adages an infinitum - but seriously, pick the smallest possible part of your idea that you think could work, and then use Linkedin, Google, get warm introductions... do whatever

For more information check out Cameron’s business, TradeGecko at http://tradegecko.com

Are you a New Zealand entrepreneur that has recently “taken the plunge?” Would like to tell our readers your own story? Get in touch with Nick at nick@ nzentrepreneur.co.nz

you have to do to get meetings with as many of your hypothetical target customers.

At those meetings just hammer them with customer development questions. “What do you hate, what do you love, what do you spend time on daily, what is the biggest problem you face day to day,” etc.

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SALES/MARKETING

Your Price Is Too High!

How to handle price objections

By Paul Newsom

If the talk around your coffee machine is ‘we are too expensive’, and ‘we can’t compete on price’, then read on, as it may be a symptom of how you are selling rather than what you are selling.

I

often find that when sellers complain that ‘it is all about the

When the buyer says ‘the price is too high’ it will generally be for one

price’, all too often it is all about price because they are only

of five reasons:

competing on price! Price is the easiest criteria for people

to use in the buying decision. Price comparison is quick and something we all understand.

When the features of competing products look the same to the buyer, price quickly becomes the primary factor for the buyer to consider. I

1.

You have quoted the wrong thing to meet the need

2.

You have not understood how and why the customer buys

3.

The value of the benefit of your solution/product has not been understood

see many proposals and quotes where the only criteria given for the customer to decide on is price, yet sales people complain that it is all

4.

discount

about the price! Discounting then starts (what else is there to talk about?) and continues until the customer says yes.

They do want to buy from you, but want to feel they have got a

5.

Your price really is too high.

If this is you, in the long term you can’t win. Someone will always drop their pants on price lower than you are prepared to.

20

Let’s have a look at each one of these in a bit more detail.

1

You have quoted the wrong thing to

Buyers want to get a discount

meet the need.

Many buyers like to feel they have to get a

It’s an old cliché but offering a Rolls Royce when the customer needs a Mini is just plain bad selling. You won’t win this time and probably won’t be invited back. Your customer will not trust you.

If you don’t have the right solution for the customer, then say so. If you can, recommend where they will find the right solution.

4

discount each time they buy (like me!). The problem for the seller who discounts is that if you offer a discount the first time, the customer will be expecting a discount the next time they buy. Your first price is then never the real price.

You must either understand the opportunity well enough to know that your first price is your best price and will win, and make sure the

2

You have not understood how and why the customer buys.

Understanding the buyer motive is a widely taught selling skill, yet when in front of the customer, it is often done in insufficient

manage the expectation of discounting for the life of the relationship.

Before rushing to discount until the customer says ‘yes’, pause for a moment and find out what ‘too high’ means. Too high compared to what?

detail. In your eagerness to make a sale, the Your price really is too high.

trap is to present the solution far too early

– so the customer judges you on price only. Put the customer’s needs ahead of yours, start listening to your customer and stop talking.

Your value is not understood.

3

customer knows that it is your only price. Alternatively be prepared to

You have a solution that is differentiated from your competition, yet the customer doesn’t ‘get it’, and won’t pay for it.

Whole books are written on this.

Here’s step 1 in two sentences... First understand what issues and problems

5

If there are lower priced alternatives in the market that offer the same or more value, and the customer does not value the relationship, then the product is commoditized in the mind of the customer. Your price really is too high.

The best advice is to fix it or go and sell

somewhere else. For top salespeople, price is rarely an issue because of how they sell. You will notice that reasons 1- 4 above are fixed by how you sell.

your customers would have in the

absence of your solution. Only when you can quantify this, will you be able to begin to define value in a way that will be understood by the customer to the extent they are prepared to pay for it.

Talking “Price” With Your Customers

price range that is based on what you know at the time. Then qualify

Many sales training manuals will advise to keep off the price until

this with a comment such as, ‘I expect it will be significantly less than

everything else has been discussed and agreed, yet many buyers want to

the cost of the problem’, or ‘It will be a small investment to solve what

get quickly onto price. Put yourself in the buyer’s shoes for a moment.

seems to be a major problem for you’.

When you are buying you want to know what the price is don’t you?

Get agreement before you proceed. If you’ve had the

How do you feel if you can’t get to the price, or the sales person won’t

conversation about price early on, price is less likely to be a

tell you the price? You become suspicious. You lose trust, are likely to

big issue at decision time.

be put off and go and talk to the next supplier. So don’t do it to your customer – if you do, price will become an issue before you want it to.

When asked about price, you have to manage expectations around price, rather than sidestep the customer’s question.

It is true that as the sale becomes more complex, getting on to specific price too soon will result in you being judged on price alone and value will be left on the table. Being able to answer the question with credibility requires good consultative selling skills.

Bear in mind that as part of your qualification, it will be in your

In summary, price will remain an issue for the self serving sales

interests to set a price expectation early on so that you are not

person who is focused only on their own interests and when the

wasting your time. If the customer is only prepared to shop at The $2

sales conversation does not go beyond the product or service they

Shop, then it is best to find this out early in the piece and let them go

are selling. When top sales people stand in their customer’s shoes,

to The $2 Shop.

understand their business, help them to make good buying decisions,

If you have a solution of value and you want the customer to pay for

and differentiate their product or service, company, and themselves

this value, then manage these expectations by quoting a reasonable

from their competitors, then price is rarely an issue.

Paul Newsom is an expert in the field of solution selling and complex sales and is the editor of NZ Sales Manager magazine.

21

W E B / S O C I A L / ON L I N E

Its all about scale!

Customer acquisition advice for tech founders

By Dan Khan

I

run into quite a few technology entrepreneurs who have spent

my UVP, understand the proposition, pricing, features, and still

much of their career selling services (web or otherwise), and who

manage to sign-up, now I’m getting a lot closer to making my direct

have finally put together the workings of a product, which they

salesforce (aka me) redundant and start earning money in my sleep.

now want to call a ‘startup’.

Ultimately this is the formula for a good startup - its not really about

Almost always these entrepreneurs have gathered their customers

the technology, or the problem space, or even your neat high-UX,

through direct sales and don’t quite get what an online startup is

web 2.0 solution to this problem. It’s about reaching your market in a

usually about. So here’s my advice in one sentence:

scalable way where the long term value of that customer outweighs the

Most consumer online startups are really about finding a way to

cost it’s taken to acquire them, and usually by about 40%. Once you’ve

profitably acquire customers at scale.

got this and found a channel that allows you scale up, then much of

Many of the ‘startups’ I see, don’t quite get this - when I ask them “how

your startup journey is done and you can focus on other things like

are you going to get your next ten customers on board”, they think that’s

competitiveness, conversions, and making money.

easy - “I’ll cold call or tap my network”. But when I start asking them,

Every startup should therefore be profiling its customer acquisition

“How are you going to get your next ten thousand customers on board”,

channels and determining the cost of acquiring users through that

or “how are you going to even get your next one thousand customers on

channel versus their expected long term value. These channels could

board by the end of the month” - then they falter.

be direct sales (hard), or could be email marketing with optimized

You see, in my mind, by using direct sales, you bypass the scalable

conversion funnel after click through, or could be a series of Google/

selling process and also bypass the learning about what’s the right

Facebook ads attached to a similar funnel, or even a referral mechanic

message and conversion flow in your marketing site to get people to

from other satisfied users. Either way - if you’re still out there

sign-up scalably. If I tell you all about my great product and convert

manually selling your internet-scale tech startup then (in most cases)

you manually, then you only need to go to my site and register (in a

you’re focusing on the wrong thing - start focusing on those scalable

simplistic case) - if you have to find my site in the first place, navigate

channels now!

Dan Khan has created, advised, and co-founded several high-tech startup businesses in the UK and in New Zealand. He now helps technology startups with ideation and commercialisation using lean startup and customer development methodologies. http://about.me/dankhan

22

B u si n ess M ec h a n ics

Smarter Systems Adding value to your business with a user-manual Business coach Jerome Jacobs looks at what kinds of things you can (and should) systematise, and the importance of evolving your systems as your business changes and grows.

A vehicle needs its engine and chassis to be kept in good working order if it’s going to reach its destination safely. That’s why new cars are sold with a user’s manual; this tells the owner how to perform key maintenance tasks.

Unfortunately businesses don’t come with a ready-made user’s

Seven steps to systemisation

1

a must. Effective systems can save you and your team both time and money. By ‘system’, we’re not talking about computer systems or programmes. No, this kind of ‘system’ is about the various tasks

2

required in running a business - but doing those tasks in an organised,

doing if it were systematised? Or is there anything in your business you hate doing, and would love to hand over to

Prioritise the processes to systematise. In most cases, it won’t be feasible to systematise every process in the business at once. In that case, it makes sense to review the list of processes you’ve written and identify the priority tasks to systematise.

planned and co-ordinated manner.

Remember, systems run your business. As the business owner, you

a regular basis that a lower-paid team member could be

someone else?

manual, you need to write your own! This might seem onerous, but if you’re serious about keeping the wheels turning (profitably), it’s

Identify all your processes. What are you doing on

Flowchart your processes. This involves identifying

•

New product development

•

Manufacturing and inventory control

•

Processing and tracking orders Invoicing and accounting

•

Customer service

•

Sales and marketing

3 4 5 6 7

•

Human resources

You will be amazed at the improvements in your business when you

•

General operations.

start to implement systems and procedures. What’s more, if you

have invested in the system. People run your systems. It’s up to you to choose the people who implement these systems.

You lead your people. It’s your vehicle ... so drive it well!

What kinds of tasks should be systematised?

Systematise the routine tasks. Not all processes will be relevant to all business types - and there could be something really crucial that isn’t listed here. It’s up to you to brainstorm what’s important, these are just ideas to help you get started.

each major step of the processes you’ve identified, and in which order these tasks happen.

Document how it gets done. This is the detailed stage. Get the team member who is currently doing the job to write down every step in performing the task.

Test the documented steps. The person who’s written the steps in performing a task should then get a colleague to follow their instructions to see if they can do the job.

Measure using key performance indicators (KPIs). Typically, these KPIs will be the top five measures that show system performance.

Allow the system to change and grow. Any systems documentation needs to be a ‘living’ document, i.e. it should grow and evolve with the business.

intend to sell your business in the future, you’ll be adding value by having all your processes systematised and documented as it will make life so much easier for the new business owner.

Be in to win a copy of Jerome’s book “Business Mechanics - Can You Fix It?” an informative and easy read for new business owners and entrepreneurs. Simply email richard@nzentrepreneur.co.nz with Business Mechanics book comp in the subject line by 30 December and you’ll be in the draw!

23

Getting It Done

What’s in a Name?

How to choose the right name for your business

By Adrian Nacey

What’s in a name? We talk to Business.govt.nz e-Business advisor Adrian Nacey about the correct way to choose a name for your business.

A

n effective business name needs to do a lot of things. It

These databases can normally be split into three categories:

needs to roll off the tongue, lodge in the brains of your

•

target market and be a crystal clear distillation of all your

incorporated in a country, such as The Companies Office here in

points of difference into one succinct, catchy title. However, above all

New Zealand or the US Securities and Exchange Commission in

these things, an effective business name must also be metaphorically

the States.

bullet-proof.

•

Settle on a name similar to, or the same as one already in use, and you may find yourself in hot water quicker than a lobster at a Michelinstarred restaurant.

Domain name registries – which you can search to find available www. addresses.

•

Intellectual property (IP) office registries – which publicly list all the business names which have

So it really pays to perform a background check on your chosen name

been trademarked as IP in a country, like IPONZ (The

before you start the ball rolling on your business. The best way to do this

Intellectual Property Office of New Zealand).

is to check out the databases relevant to your markets.

24

Company registries – which publicly list the companies

“

An effective business name needs to do a lot of things. It needs to roll off the tongue, lodge in the brains of your target market and be a crystal clear distillation of all your points of difference into one succinct, catchy title.

Remember, trade-marking a name doesn’t reserve it as a web address

Reserving a company name simply stops other future companies from

– available domain names the same or similar to trademarked brand

using it – only a trade mark will give you blanket IP protection against

names can be reserved by anyone.

competitors of all shapes and sizes, including sole traders.

Fortunately, here in New Zealand, entrepreneurs can check the three

Which brings us on to the final point. A sole trader won’t be registered

core registries regarding business names in one swoop thanks to

with The Companies Office, while there’s a good chance they won’t

ONECheck.

have trade marked their business name, and might not have their own

This unique, free-to-use online tool - found at Business.govt.nz -

website either.

allows users to check the availability of a name as a company name,

If this is the case, the best defence you have against picking a name a

domain name and trade mark at the same time.

sole trader is already using is simply to check all the relevant business

Simply type in the name you want to check and ONECheck carries out a simultaneous search for you with The Companies Office, the Domain Name Commission and IPONZ. The results give you a definitive verdict on your name selection’s availability as well as a list of available alternatives to help you find the most effective available name you can register across the board.

You can then click on a button to learn more about registration in each context or simply go ahead and licence the name for your business.

directories in your market.

This may mean performing online searches on Google and Bing, looking in your local Yellow Pages, or even scouring the ads in important publications read by your market.

If you find the name’s already in use, go back to the drawing board. The sole trader won’t be able to say you’re infringing on their intellectual property, but that’s not the point – the last thing you want for your business is it to be confused with another, regardless of its size or type.

In all three cases (company name, domain name and trademark), the name isn’t permanently owned by you or your business, but regularly

Further resources:

renewed as a temporary licence.

•

on how to protect intellectual property.

Not every entrepreneur aims for the growth opportunities company registration invites, so you may not want to reserve a company name in

•

WIPO – the World Intellectual Property Organization, which offers searchable international IP databases and information on

preparation for registering your business as a company.

the international IP treaties different territories adhere to.

However, regardless of the business structure you choose, you should always trade-mark your business name in the markets you

Business.govt.nz – the home of ONECheck and a host of articles

•

NZTE – New Zealand Trade & Enterprise, which offers Kiwi exporters a wealth of advice on protecting IP overseas.

plan to operate in.

This is a brief overview of the subject so if you’d like a more detailed look, head to the business structures section of Business.govt.nz (http://www.business.govt.nz/starting-and-stopping/business-structures) and then consult your accountant and advisers before making your final decision.

Adrian Nacey is an e-Business Advisor at Business.govt.nz.

25

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T o m o rr o ws E n t repre n e u rs

Young Enterprise

Celebrating Success Caring & Co wins Young Enterprise Company of the Year

Terry Shubkin, CEO Young Enterprise Trust The year is fast coming to an end, and many of our students are now beginning their summer holidays. It’s been a huge year for the Young Enterprise team. We have developed and introduced two new enterprise programmes, which means our suite of programmes now covers every year of school. This is a major step forward for us and we hope teachers will embrace enterprise at all levels.

I often get asked about the terms ‘enterprise’ and ‘entrepreneur’.

There are a couple ways to think about the word “enterprise” or “enterprising”. One is as a trait that all entrepreneurs have. However, while all entrepreneurs are enterprising not all enterprising people or entrepreneurs. Being enterprising is about the ability to generate and assess opportunities, adapt to change and manage risk. For businesses to grow, these skills are needed for everyone in the company – not just the entrepreneur who started it.

Another definition is that an entrepreneur sets up and runs an enterprise. Traditionally, this has been associated purely with the business world. But in reality, an enterprise can be a social enterprise, a not for profit organisation or event a school. The traits needed to set these up and grow them are the same.

This is why we’re so proud of the work we do, and why we’re so grateful to the schools that invite us in to help develop New Zealand’s next generation of entrepreneurs.

Manurewa High School’s Caring & Co have been named Lion Foundation Young Enterprise Company of the Year for 2012. These students created their own Extra Virgin Olive Oil, called “Unique Drizzle”. The olive fruit was handpicked on Waiheke Island and the oil is of a very high standard - winning “Gold” and “Best in Class” in the Los Angeles International Olive Oil Competition.

Caring & Co teamed up with one of New Zealand’s biggest charities, Life Education Trust. For every bottle of Unique Drizzle sold, one child got to experience the ‘Harold the Giraffe’ Programme. The olive oil was a huge success which enabled Caring & Co to fund the whole of Homai Primary School (their neighbouring school) through the programme.

The announcement was made at the National Awards for the Lion Foundation Young Enterprise Scheme, which were held at Te Papa. To take out the title, Caring & Co had to beat off challenges from 19 other regional champions. Each team had just five minutes to pitch their business to a panel of judges that included Trilogy co-founder Sarah Gibbs, Mark Vivian from Movac and Xero’s Graham Shaw.

Each team was asked to demonstrate how their business has operated this year, what their goals were and how they articulated their point of difference to their target market.

Managing Director Lar Su’a says the company will continue to operate with his four fellow students – Ryan King, Kulgan Flynn, Kayla Picknell and Guang Liu Chu – staying on as directors.

“We’ll be tripling our stock of Unique Drizzle next year, and also launching a honey product called Unique Buzz. We will also have our products on the shelves at Nosh supermarkets next year.”

The full list of winners is available on www.youngenterprise.org.nz

27

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HOW TO READ OUR EMAG

B

eing an emag has some great benefits. We can get content

pump out more issues with just the right amount of content. But

and news to you far quicker than a print magazine as we

most importantly for you, it’s free! We’ve put together a bit of a guide

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Print the PDF If you must get your hands on some ink, you always have the option to print out the PDF. While this isn’t overly encouraged, as we love that our emag is so clean & green, if you simply must you can always print the PDF out.

Download the PDF The easiest option is to simply click the “Download PDF” button in the email that we send out. This will download the PDF to the device you are on, and nearly every device these days can open a PDF with ease.

Read on iPad or other tablet

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Our favorite method of reading is downloading the PDF to an iPad (or other tablet) and then reading it when it suit. Simply install the free Apple app called ‘iBooks’ and when you click on “Download PDF” you will be given an option to save this into iBooks. You can save and organise all the issues easily within iBooks.

Read on Issuu Issuu is a wonderful service that allows you to read our emag with as much realism as a print magazine. You can flip through pages or jump to a specific page. The emag can be embedded into Facebook, emails, and any other website for you to share, and can be read full screen to get the full user experience.

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P A R T I N G S HOT

“

You are never too old to set another goal or to dream a new dream.”

C S Lewis 30