NZ Entrepreneur - Issue 45

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

10 QUESTIONS October 2016

with

Dr Hong Sheng Chiong ofoDocs

The dangers of discounting Get to market quicker with project management Term sheets - founder or investor friendly? ... and more! www.nzentrepreneur.co.nz

CONTENTS

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

4

From the Editor

6

10 Questions with Dr Hong Sheng Chiong of oDocs

14 18 22

How Much Will I Take, To Get What I Want?

Six Steps To A Good Content Marketing Story 7 Steps To Get To Market Smarter And Faster

28

Young Enterprise Trust

30

On the Fly: George Kyle or Reel Escapes

36 Pricing 38

Fear Of Punishment Will Not Make Workplaces Safer Long Term

42

Term Sheets

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EDITOR / Richard Liew ART DIRECTOR / Jodi Olsson GROUP EDITOR / Colin Kennedy CHIEF FINANCIAL OFFICER / Alastair Noble CONTENT ENQUIRIES / Phone Richard on 021 994 136 or email richardl@espiremedia.com ADVERTISING ENQUIRIES / Jennifer on 0274 398 100 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.

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EDITORIAL

ONE OF THE THINGS we enjoy most about publishing NZ Entrepreneur is the number of amazing people we get to meet.

From inspiring entrepreneurs and business owners to performance experts and business growth gurus, there is one key thing that stands out to me about these people almost without exception; they have managed to develop an attitude that seems to operate independently of external events and circumstances.

This doesn’t mean they blunder blindly and naively through life, ignorant of what’s going on around them, ending up successful through sheer luck. On the contrary, these people are very aware of what’s happening in the wider world.

They are very clear on how and where they fit in, constantly tweaking their approach to suit the current environment.

But they all have an amazing

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ability to block out thoughts and fears which don’t serve them and focus on the things that do. Such as what they want, what they’re going to give to get it, and what they’ve already achieved.

To the unfamiliar, this may sound like some wishful thinking or Jedi mind trick, but these people are so disciplined with their thoughts and have therefore overcome so many challenges that it has become not just a way of thinking, but the way they live their life.

They simply don’t know how to operate any other way.

To me, I suspect this is reflective of our readership in general.

I think the fact that you’ve invested time to read this says something very positive about the way you think and where you would like to be.

So all power to ya, #nzentrepreneurs!

Richard Liew

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INTERVIEW

10 QUESTIONS with

Dr Hong Sheng Chiong

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DR HONG SHENG CHIONG is a Dunedin based eye doctor on a mission to eliminate preventable blindness.

To do this, he founded oDocs a social enterprise start-up helping optometrists identify eye damage and restore eyesight to the blind with smartphones. oDocs builds physical iPhone attachments to help optometrists perform eye exams with smartphones, putting tens of thousands of dollar’s worth of equipment in their pockets for just a few hundred dollars.

In August, oDocs was awarded ‘Best Start Up – Social Impact’ at the prestigious Global Talent Unleashed Awards in Sydney,

as judged by a panel including Sir Richard Branson and Apple co-founder Steve Wozniak.

The oDocs story so far is an inspiring lesson in what happens when a founder’s vision collides with collaborators’ know-how to create a winning formula.

In the case of oDocs, this occurred when a group of makers based in Auckland’s K’Rd Biz Dojo, including now CEO Hanna EastvoldEdwins, were challenged to make a prototype for Dr Hong’s personal use.

We asked Dr Hong to elaborate on the journey so far and some of the lessons he and the team have learnt along the way.

www.nzentrepreneur.co.nz • 7

“

I don’t believe conventional medical equipment should cost that much. There is probably a huge markup on prices by the time those equipment get certified and get to the market. After discounting the markups, all you have to do is to dismantle the equipment and rebuild it using only the most essential components.

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Dr Hong what’s the story behind oDocs, how did you come to start it and why?

The whole idea behind using smartphones as a diagnostic tool for eyes started with a single research question: “Can we convert a smartphone into a retinal camera?”.

Within three months of research and development, we had managed to come up with a functional prototype smartphonebased retinal camera.

My clinical experience in various developing countries such as Kenya and Nepal is what motivated me to ask those research questions. I was looking for a cheap and accessible solution to bridge the gap for eye care in the primary sector. Access to tertiary eye care is limited even in a developed nation like New Zealand. Working as a junior eye doctor, far too often we see patients being mistreated for their eye conditions at the community level. I believe such tools would help primary care providers (GP's) to deliver better eye care. A picture of the eye is always better than a thousand words.

You’ve managed to pack tens of thousands of dollars worth of eye examination technology into your iPhone attachments, the oDocs visoClip and oDocs visoScope, which sell for under $US300 each. What made you believe such a feat was possible?

Firstly, I don’t believe conventional medical equipment should cost that much. There is probably a huge markup on prices by the time the equipment's certified and gets to the market. After discounting the markups, all you have to do is to dismantle the equipment and rebuild it using only the most essential components.

We then realised the cost was actually 100 times cheaper than conventional equipment.

Assuming the clinicians have their own smartphone that comes with a flash and camera, the cost of the entire eye clinic is less than US$600.

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You met Hanna (oDocs CEO) and some of your other founding team members through the Biz Dojo in Auckland. Can you describe briefly how your vision became a design and then prototype, through this collaboration?

I first had the idea. But it was just an idea. The idea was the easy part. Executing and making an idea into reality is the hardest part. I know I lack the skills to build functional prototypes. In 2014, I started looking for individuals and companies who are capable of computer-aided design and rapid prototyping.

I first met Daniel Dillen, an industrial designer and 3D printing expert based in Biz Dojo. He was the one who introduced me to Hanna. Our collaboration led to several other major events such as the TEDx talk in Auckland and the release of the open-source files for the first generation of retinal camera known as oDocs Fundus.

Our designs were downloaded over 3000 times in less than three

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months. We knew we were on to something big. That is when we started gathering new founding members and registered the company oDocs Eye Care limited.

You started oDocs in 2014 and are only now raising some seed capital. Who or how has oDocs been funded to date? Surely there have been some significant development costs involved so far The initial rounds of funding came from the co-founders of oDocs. We have also received an NZ$20,000 grant from the Blind Foundation which is a huge fan and supporter of our work. We have also received smaller grants and contributions from Google New Zealand and Callaghan Innovation.

Our very first open-source retinal camera has also generated sales worth over NZ$20,000 in less than three months. We had to take down our online store for that version because we just couldn’t cope with the demand.

For you personally, what’s been the biggest problem you’ve faced in building the business so far?

In the past, we had to 3D print and hand-assemble these adapters individually.

Very quickly, we realised it is not sustainable to do. So, that is the reason why we have moved to high-quality commercial grade equipment which can be manufactured on a large scale. To do so, we needed a larger amount of funding, and that is why we are now seeking a seed capital of NZ$500,000.00 to NZ$750,000.00.

The biggest challenge I faced so far is getting the balance of my public service as an acute eye doctor (Dunedin hospital) versus my commitment in oDocs. Building a startup is never easy. It is like having a new baby that needs attention 24/7. However, by the end of this year, I will be reducing my clinical hours to focus on oDocs. I have accepted the fact that building a start-up, you will never have a work-life balance at the initial stage.

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In August oDocs was awarded ‘Best Start Up - Social Impact’ at the Talent Unleashed Awards in Sydney, as judged by a panel including Sir Richard Branson and Apple co-founder Steve Wozniak. Congratulations on such a great achievement. What was it like pitching to Steve Wozniak and do you have any advice for others when pitching/ presenting their business?

Pitching an idea and business is never an easy task. The best pitches always come from people who practice them a lot. Express it like a story, add a personal touch, not just numbers and statistical values.

We humans don’t connect because of numbers. We connect because we feel. My advice would be to catch the audience’s attention early on, deliver your most important information within the first few seconds. Set the mood and deliver your message by telling a short but powerful story.

What is your personal viewpoint on creating a social enterprise?

If you’re not a profit maximising entity because your underlying goal is ultimately altruistic, yet you’re not a charity because you

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have to make money for investors and shareholders, what are you?

What advice would you give to other founders in your shoes?

Personally, I don’t believe in pure charities or companies that only focus purely on maximising profits. I believe every business exists because of an opportunity to solve a problem. You might call it a social enterprise. For me, it is all about building a sustainable business that solves a real problem. Mine just happened to be in eye care and saving sight is part of my daily clinical duty.

People always say follow your passion and do what you love.

I believe a passion, hobby or an interest can be created.

Following your passion does not mean looking for something else or changing into a different field where you thought you might have a passion. It is about creating that mental space to goes beyond routines and conventions. It is a mental exercise to find a niche that you can work on. If that passion happens to turn to be a really good business opportunity, it then takes perseverance and hard work to execute it.

“

Success is a numerical term. So are ‘yes’ or ‘no’. It also depends on time. I don’t think I can call my venture a success at any point.

Failure at times is a great opportunity to learn and offers opportunities for success.

Between your job as an eye surgeon and building oDocs, you’ve got a lot on your plate. What do you do for fun and to blow off steam?

I have a toddler (boy), and he is my go-to to blow off steam.

We love fishing, family trips, videography, culinary-style cooking and travelling.

I love tinkering too. Building something new is always exciting and fun. At the moment, I’m learning how to develop iOS apps with swift codes and xTools. Learning is fun, and I never stop learning.

What does success mean to you?

Success is a numerical term.

So are ‘yes’ or ‘no’. It also depends on time. I don’t think I can call my venture a success at any point. Failure at times is a great opportunity to learn and offers opportunities for success. I have had multiple failed ventures in the past, operating food and beverages businesses to fashion retail.

Some of these experiences led to other successful decisions in commodity and equity investment. These experiences are invaluable, and each time I fail, I learn new things. ■

www.nzentrepreneur.co.nz • 13

ENTREPRENEURSHIP

HOW MUCH WILL I TAKE, TO GET WHAT I WANT?

BY Richard Liew

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ANYONE WHO HAS ventured into the world of entrepreneurship will eventually ask themselves this question – over and over again. And while ultimately it is the answer to this question that will determine your level of entrepreneurial success, I believe there is a more empowering way for entrepreneurs to reframe this question.

I’m a great fan of books and movies about climbers and mountaineers, and it appears to me that setting out on your journey to entrepreneurial success can in many ways be compared to mountaineers attempting to climb Mt Everest.

Just plucking up the courage to declare to loved ones that you are going to attempt such an audacious notion is a battle many won’t win.

Then, once you’ve decided to go for it, the hard work of actually climbing the mountain begins. At any stage there are any number of cliffs, crevices and chasms lying in wait for the unwary or first-time climber. Just one wrong turn, one sub-optimal decision, lack of knowledge or skill can spell disaster.

Experienced climbers will know where these dangers lie and what to look out for.

But, as they say, experience is something you don’t get until just after you need it. The same is true for entrepreneurship.

Add to this the continually changing weather, which in business terms means things like the ups and downs of the economy, political and legislative changes, interest rate and currency fluctuations, and of course the ebb and flow of your competitors, and you will find yourself facing literally thousands of obstacles, big and small, on your journey to the top.

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All the while, anxiously watching your oxygen supplies (aka ‘cash’) dwindle as you fumble around trying to make progress. And don’t discount the mental and emotional strain you’ll need to endure along the way. Burnout, exhaustion and nervous breakdowns are responsible for many a would-be entrepreneur failing to ‘summit’.

Let’s be frank, those who want to climb Mt Everest must be prepared to take a lot of punishment. To expect otherwise is folly.

How much can you take?

Which one of these myriad obstacles is going to be the one that stops you?

The one at which you say, ‘No more – I am beaten. I can’t keep going. Entrepreneurship is not for me’.

Is it the one facing you right now? Or will it be the one after that or any one of the likely hundreds more in your way?

While this may seem like a rather grim outlook, the silver lining is that if the obstacle in your way right now does happen to be the one that turns you back, the beauty of ‘climbing Mt Everest’ is that it will always be there, and as long as you are willing to try, it doesn’t care how many attempts you make.

Most climbers have to give several attempts over many years before they reach the top. So too with entrepreneurs. The top is waiting for those prepared to learn from their previous attempts and keep giving their best, time after time.

So remember, nothing is in vain, everything counts. And instead of ‘How much will I take, to get what I want?’ perhaps a better, more empowering question for entrepreneurs is, ‘How much will I give?’ ■

Richard Liew is the founder of NZ Entrepreneur magazine and Espire Media.

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SALES & MARKETING

SIX STEPS TO A GOOD CONTENT MARKETING STORY

BY Colin Kennedy

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Content marketing combines the skills of marketing and journalism to create brand influenced editorial content that meets the information needs of your customers.

It educates, informs and entertains – just like mainstream media would.

ACCORDING TO THE Content Marketing Institute’s 2016 Benchmarks, Budgets, and Trends — North America, more than half of B2B marketers plan to increase their content marketing budget. Even 57% of those who are least effective at content marketing plan to increase their budget.

From the talk around New Zealand, it’s conceivable that many local companies are contemplating doing the same thing. With content marketing on the rise, it is important to understand what it is, and how to do it.

Definition: ‘Content marketing combines the skills of marketing and journalism to create brand influenced editorial content that meets the information needs of your customers. It educates, informs and entertains – just like mainstream media would.’

In this age of search behaviour and internet influenced buying decisions, content marketing is about using your intellectual property – experience and expertise – to help people with good advice, in an interesting and informative manner.

But how do you write a good value-added story that grabs attention?

www.nzentrepreneur.co.nz • 19

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It’s pretty clear that stimulating an emotional response in your target market and or customer is a very powerful way to call them to action.

Problems sell. Newspapers understand that. Journalists and copywriters know that people are more likely to be motivated by the prospect of pain than they are by pleasure.

The neuroscience book, ‘How We Decide’, by Jonah Lehrer, tells us that a person who has damage to the emotional centre of their brain will be unable to make decisions because their rational mind will repeatedly debate the pros and cons for even insignificant decisions, such as a choice between white and brown bread.

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Findings from research conducted by Antonio and Hannah Damasio (reported in part in A. Damasio’s ‘Descartes’ Error’, Grossett/ Putnam, 1994) suggest we are unable to make decisions having personal relevance unless we have been motivated by our emotions.

“Reason, they say, plays an analytical role, not a decisionmaking role, and emotion is needed to motivate somebody to act” (as reported by Jim Gilmartin).

It’s pretty clear that stimulating an emotional response in your target market and or customer is a very powerful way to call them to action.

HERE ARE SIX STEPS TO PROMPTING AN EMOTIONAL RESPONSE IN YOUR AUDIENCE – STEPS YOU CAN USE TO PUT TOGETHER A PRESENTATION OR PROMOTION:

11.

Acknowledge their emotion e.g. frustration, anxiety

22. Tell them why they are feeling like that i.e. what the problem is

33. Tell them why they will continue to feel that way e.g. why the problem persists

44. Explain why your product or service alleviates their problem

55. Paint a picture of how good life will be after applying your solution

66. Back it up with proof to appeal to our logical brain.

Colin Kennedy is Head of Content at Espire Media.

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LEADERSHIP/MANAGEMENT

7 STEPS TO GET TO MARKET SMARTER AND FASTER

Here’s how to get your app/product/service to market smarter and faster. If you are clear with what you want to achieve then project management can help you make it happen..

BY Sarah Dean

IN THE LAST FEW months, I have been speaking to people that have a great business idea that they would love to pursue. They have a vision and enthusiasm; have done their business plan and customer research and are ready to get cracking on their idea. Then they hit a wall.

does project management fit into my business?’.

Typically, the comments I hear are ‘I don’t know where to start’ or ‘I’m not sure how much time and money I can commit as I am still working full time’. I ask them if they have considered using a project management approach and surprisingly I usually hear a ‘no’, and ‘how

The Project Management Institute (PMI) defines a project as ‘a temporary endeavour undertaken to create a unique, product, service or result. It has a distinct beginning and end, and the end is reached when the objectives of the project are achieved, or it is decided to cancel the project’.

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Using project management within your business can enable you in getting an app/ product/service to market smarter and faster. Before we get started, it’s really important to understand what a project is.

• Turning your business idea into a reality

To undertake a project, there are seven crucial steps you must take to get your app/product/service to market smarter and faster.

• Having a clear and structured approach to realise a business objective.

The seven steps below will help you take a holistic and mature approach to launching your app/product/service:

• Launching your app/ product/service to take advantage of your market at a particular time of the year to make use of consumer demand.

Understand your project boundaries.

Being clear about what your app/ product/service specifications are is super important as it means you won’t deviate from the core specifications.

This clear understanding of what work you need to do will assist you with budgeting and figuring out how long it will take to get market, as you will know what is and isn’t included.

The benefits of undertaking a project within your business are numerous and can include:

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1

Being clear about what your app/product/service specifications are is super important as it means you won’t deviate from the core specifications.

You can of course always change the specifications in the future by reducing or adding to your project boundaries. If you are adding to your specifications, perhaps you can consider this as a new version for a future release (and a future project).

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Break the work down into chunks Some of you may have heard the terms work breakdown structure (WBS), well this basically means breaking down the work you need to do into manageable chunks.

You can start this by understanding each specification or need to develop your app/product/ service. For example, this can be; research the app, source an app developer, design the app, test the app, etc.

Understand the deliverables of each chunk of work, for example with researching the app, deliverable one could be: understand market demand for the app and deliverable two could be: complete research and development (R&D).

Deliverable one for design the app could be: Create a storyboard, deliverable two would be design to 50%, etc.

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2

Some of you may have heard the terms work breakdown structure (WBS), well this basically means breaking down the work you need to do into manageable chunks

With sourcing an app developer, the first deliverable would be to select an app developer and deliverable two to sign a contract with the app developer. For testing the app deliverable one would develop the app ready for testing and deliverable two is app ready for release once any bugs identified in app testing are rectified.

“ Identify resourcing needs

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3

Write up a list of whom and what you need to make the chunks of work identified above happen.

Take into consideration who is available to you at the moment and where there are gaps in resourcing needs as you will need to mitigate these needs.

Do you have staff? What commitments do your staff Write up a list of whom and have with their existing what you need to make the workload and do they chunks of work identified have enough time to work above happen. on this project without Take into consideration who is getting stressed out? Will available to you at the moment you need to hire a service and where there are gaps in provider such as an app resourcing needs as you will need to mitigate these needs. developer or a graphic designer to make up any Ask yourself these questions: lack of skills or knowledge Are you working on this project within your business? yourself? If you are, then what Once you have asked yourself are your time constraints?

Consider your commitments to these questions, you can then apply the time available to maintaining existing business you, your staff and service cash flow, family time and providers in the next step. recreational time.

www.nzentrepreneur.co.nz • 25

4

Understand timeframes

Now that you have done the first three steps above you can take the clearly defined app/ product/service specifications, the defined chunks of work with deliverables and the resources available and come up with a timeframe to make your project happen.

Look at each chunk of work and break it down to activities to meet the deliverables you created earlier. Understand which activities are being done step by step to meet your deliverables. To know how long each activity will take you will need to take into consideration how long you would like each activity to take.

You will then need to consider the resources available to you (including yourself), the service providers needed and determine whether there are enough hours available to meet the timeframes. If there is sufficient time for you and your staff, this makes things much easier for you. If not, you will either need to look at making the timeframes longer or hiring additional people. With hiring service providers, you can articulate to them delivery deadlines when you negotiate their service.

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5

Understand costs Getting your costs right is crucial. Failure to get your costs right may mean reducing the specifications in your app/product/service and ultimately reducing its quality or desirability.

To understand your costs, take your timeline above and apply the costs of yours and your staffs time to each activity. If Sally costs you $50p/h and you assign her to an activity that takes 10 hours, then that activity costs $500. Your time is really valuable too so work out how much you cost to your project especially if it means you aren’t doing any chargeable work to anyone else. This is also the time to get quotes from service providers so you can determine a cost and apply to your timeline.

Once you have done this, you will have a good idea of how much your project is costing you per week/month.

It will also give you a heads up on when you can expect to pay your service providers or suppliers and how much, which will support you understanding business cash flow.

6

Know what can go wrong Even the best laid and well thought out plans can go wrong. Employees leave, people get sick, or suppliers go out of business.

To avoid your project going off track and delaying your business objectives, take a good look at what can go wrong and analyse the likelihood of it. If there is a fair chance of it happening then forewarned is forearmed, and you can monitor the chances, and ultimately avoid it happening if possible.

Understand the consequences of anything going wrong as well, just because something is likely to happen doesn’t mean it has to be a significant impact on your project. Or something else is unlikely to happen and if it does then what does that mean.

Perhaps this means the app you wanted to get out for Christmas may have to wait until five months later.

7

Wrap it up into a brief Summarise what you have created in the seven steps above into one document.

The benefit of putting it all into a brief is so you have an easy to access plan that you can refer to throughout your project so you can monitor your performance and see any deviations.

You can also use this project brief to share with your staff or any suppliers, so they can understand what it is you wish to achieve as it supports them buying into your vision.

Following the steps above will enable you to understand what you do, by when and by how much it will cost you to meet your business objective.

It will help you focus and get your business to market smarter and faster. ■

Sarah Dean is the founder of EmineoHub which supports entrepreneurs and small business owners meet their business objectives with project management. You can learn more here or like us on Facebook

www.nzentrepreneur.co.nz • 27

ECOSYSTEM

Young Enterprise Trust

What do Xero founder Rod Drury, Newshub anchor Mike McRoberts and Eat My Lunch’s Lisa King have in common? They all took part in the Young Enterprise Scheme at school, along with thousands of others. Young Enterprise CEO Terry Shubkin recaps the programme as it celebrates 35 years.

Lisa King

Rod Drury

Mike McRoberts

AN ESTIMATED 60,000 New Zealanders are Young Enterprise alumni, which has been running since 1981.

To celebrate the milestone, Young Enterprise is creating two new awards to celebrate alumni achievements.

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Anyone who took part in the Young Enterprise Scheme can be nominated.

Finalists will be announced in October, with the winners to be named at the annual Young Enterprise National Awards in December.

Nathalie Whitaker

We’re so proud of our alumni and their achievements. Here are just a few who could be in the running for the awards: • Sarah Meikle, director of New Zealand’s largest food festival, Visa Wellington On a Plate.

• Shay Wright, founder of Te Whare Hukahuka and part of Forbes Magazine’s 30 Under 30 list • Anna Guenther, founder of crowdfunding platform PledgeMe • Nigel Bamford, founder of Escea gas fireplaces • Paul Brock, Chief Executive of Kiwibank • Stefan Lepionka, founder of Charlie’s • Nathalie Whitaker, who created Givealittle

Paul Brock

We know there are more alumni out there doing great things and we want to hear about them! So talk to your friends and colleagues and find out which ones are Young Enterprise alumni (we guarantee some of them will be), then please share your stories and make a nomination on our website.

Young Enterprise Trust works with schools throughout the country, encouraging young New Zealanders to develop their entrepreneurial talents.

You can find out more and volunteer with them here. ■

www.nzentrepreneur.co.nz • 29

ENTREPRENEUR PROFILE

ON THE FLY George Kyle ReelEscapes.com

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Being a keen New Zealand outdoor enthusiast has led to the development of Reel Escapes - an online marketplace that enables fly fishing tourism service providers to list their services and be booked by tourists who want to include fly fishing when they come to New Zealand.

HAILING FROM NEW PLYMOUTH but residing in London, George Kyle’s passion for fly fishing lead him to launching Reel Escapes a website connecting international fly fishing enthusiasts with leading New Zealand fly fishing guides and tours.

George’s story is a great example of how valuable skills learned as an employee, can lay the foundation for opportunity as an entrepreneur.

Originally from the ‘Naki and now residing in London, #nzentrepreneur George Kyle shares his learnings so far in launching Reel Escapes an online marketplace that showcases New Zealand’s best fly fishing tours to UK and US tourists.

George, to start with can you please tell our readers a bit about yourself and Reel Escapes?

I am originally from New Plymouth, Taranaki but now based in London. Being a keen New Zealand outdoor enthusiast has led to the development of Reel Escapes - an online marketplace that enables fly fishing tourism service providers to list their services and be booked by tourists who want to include fly fishing when they come to New Zealand. Reel Escapes is in beta and has been live for four weeks. My background is in digital analytics which is useful, but the need to wear many hats is challenging.

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What entrepreneurial experience if any did you have before starting Reel Escapes and how did the business come into being?

I would bear the standard list of failures of any entrepreneur.

I perhaps started off well buying and selling magazines at school and making reasonable profits. But, I won’t get into the detail of that. My mum is probably reading this!

The idea for Reel Escapes was seeded simply by talking to fly fishing guides and the challenges/problems they had when dealing with overseas tourists or agents.

Such problems include things like overseas bank transfer issues; travel agents breaking down communication between the guide and the client; and little control or protection when cancellations occur.

I wasn’t clear how to solve these problems, and I didn’t feel compelled to, as I certainly wasn’t going to be another guy peddling travel packages to New Zealand.

It all struck me when I was at a talk given by Sam Shank – the Hotel Tonight entrepreneur - where he spoke about the value added through marketplaces. Not only are marketplaces scalable, I felt a basic model would iron out some of the problems guides were facing.

Furthermore, not only could I solve problems for guides, I could solve them for fly fishing tourists as well with a service like Reel Escapes Concierge.

A complimentary service that assists all customers with licensing, location information, equipment queries and more.

www.nzentrepreneur.co.nz • 33

What have been your three biggest challenges in getting the business to where it is now?

1. Nailing down what our minimum viable product should be. This is difficult and subjective, and I still bear the scars of that decision-making process.

There are a lot of moving parts when it comes to marketplaces and drawing a line is hard. But, I guess we are fortunate to have an exciting product map as an aftermath of that decision.

We look forward to bringing that to life as we begin the iteration process.

2. Payment processing. This nearly brought me to tears on some occasions.

Marketplaces and travel related industries easily get binned by payment service providers. We would get sucked into a payments platform feeling like we had been approved to use it and build out what we need within the sandbox. However, when it comes to going live, all of a sudden you put through the gauntlet.

34 • www.nzentrepreneur.co.nz

I would admit though we could have handled this better and should have been more flexible around what our payment flow should be.

3. Providing a great experience, but minimising the risk of disintermediation.

Disintermediation (being cut out of the loop by customers dealing direct with suppliers) is the fear of any marketplace model, but we don’t want to put up walls between people.

AirBnB has a more innate protection against this as very few accommodation providers are branded contactable businesses with shopfronts. We believe disintermediation is minimised through creating value – not making communication difficult between two people.

“

“

The main goal is to get more and more people using the platform as we adhere to our process of measurement and learning. This is as we establish ourselves in multiple global markets over the next few years.

And what have been the achievements you’re most proud of so far?

Seeing all the hard work going into design, development, guide onboarding and then launching the website into something real. That was a great night out in London.

What is your main business goal over the next few years and what are your immediate key objectives?

The main goal is to get more and more people using the platform as we adhere to our process of measurement and learning. This is as we establish ourselves in multiple global markets over the next few years.

It is early days so our immediate objectives include raising awareness and getting feedback from customers and service providers. Then taking that feedback to keep tuning the product into something that gets better and better.

We are in talks already with high-profile brands and organisations regarding partnership opportunities.

Given everything you’ve learnt so far, what would your advice be for other Kiwi’s thinking of trying to turn an idea into a business?

Making people happy. The guides love it. And our customers, well… even though they haven’t had their trips yet (as of writing), I am sure they will have a great time with the calibre of guides we have on Reel Escapes.

To be disciplined in defining an MVP and holding that path whilst separating the big picture idea. It’s easy to get carried away with all the bells and whistles in the initial stages, and I can attest to this. ■

www.nzentrepreneur.co.nz • 35

FINANCE/ACCOUNTS/ADMIN

PRICING

The real impact of discounting

By Paul Newsom

PRICE PRESSURE IS an everyday reality of doing business and setting prices can drive an entrepreneur crazy.

Not to mention the consternation faced by sales managers everywhere, being asked to sign off on discounted deals by sales reps and customers alike.

Price will be one of several buying motives for most people. If you are not competing in the bargain price market, but the price is the only motive you are responding to, then the price will be all people will judge you by.

36 • www.nzentrepreneur.co.nz

Find ways of maintaining your price by adding value in other ways.

It is perhaps timely to remind ourselves to resist the temptation to discount as our only tactic to win business.

While reducing the price to get the sale might help grow the revenue, it has a significant impact on the bottom line profit. Did you realise that if you typically sell a product for $100 and make $40 profit, then if you discount by 10%, you will have to sell 1/3 more product to make the same amount of profit that you did before you started discounting?

Here’s how it works:

profit will be $40 x 10 = $400

Gross Margin = the % of sale price left after deducting costs

Now, if you take $10 off the price, (a discount of 10%), then the sale price will become $90, the cost remains at $60.

Gross Profit = Total sales less direct costs Example: Your product has a sale price of $100 and direct cost of $60 Gross Profit per item is $100 - $60 = $40 Gross Margin is ($100$60)/$100 = 40%

Profit per item is now $90 $60 = $30 Maintaining your $400 profit at this discounted sale price will require sales of $400/$30 = 13.3 units or 33% more units sold.

There is a useful table which will help you to calculate this:

So if you sell ten units, the

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First work out your product margin at list price, which is shown on the top row of the table. Then work out the percentage discount you are offering.

Go down the margin column and along the percentage discount row to calculate the

percentage increase in sales you need to make to maintain the profit you would have been making at list price.

The table stops at 25% discount. The numbers get too scary above this. Hopefully, you are not discounting more than 25%! ■

Paul Newsom is a Change Agent at Young Enterprise Trust and is the former Editor of NZ Sales Manager magazine

www.nzentrepreneur.co.nz • 37

LEGAL

FEAROFPUNISHMENT WILLNOTMAKE WORKPLACESSAFER LONGTERM

38 • www.nzentrepreneur.co.nz

MANY ENTREPRENEURS, managers and directors are completely oblivious of their responsibilities under the new Health and Safety at Work Act 2015 which came into force in April this year. While health and safety may be the last thing on the mind of a tech start-up founder, it’s an essential compliance and risk management consideration that business owners and managers in all industries need to understand to keep themselves, their staff, contractors and customers safe and on the right side of the law.

Editor’s note: If you’ve never heard of the Health and Safety at Work Act 2015 we firmly recommend you make some time to check it out here or seek professional advice to understand your obligations as a business owner.

Chief Executive of BWARE – a health and safety cloud management solution since 2002 – Kevin Haskins, says that fear of the consequences of contravening the Health and Safety at Work Act 2015 will only achieve minimum legal compliance.

“While the big stick approach will achieve short-term changes, it is distracting owners and managers from building a truly positive bottom up safety culture.

“We’re getting calls from people who are worried about whether they’re in the gun or not, and what their responsibilities and accountabilities are as individual persons conducting a business or One of New Zealand’s most established providers of health undertaking” (PCBU’s). and safety management “At the moment it is all about software is warning that the punishment avoidance, and emphasis on the punishment not enough about the benefits aspects of new workplace that a culture of safety offers safety legislation won’t make every single person in the workplaces safer long term. workplace,” he said.

www.nzentrepreneur.co.nz • 39

New legislation more holistic Mr Haskins said the old health and safety legislation was very vertical because PCBU’s only had to worry about their direct employees and contractors. The new legislation, however, requires all parties in a mutual relationship to consult, cooperate and coordinate on their overlapping duties, which in theory is a positive development.

“For example, in the construction sector, a housing developer must make sure that the builder complies and has all the necessary paperwork, as well as the plumbing and electrical trades the builder brings on board.

“It’s all about compliance and responsibilities, which is important and necessary, but a simple safety discussion between the various parties and all of their workers – at every morning meeting – will help to shift culture and thinking beyond ticking the boxes.

“This will allow them to plan ahead, think about the work, the risks and who is affected, and together plan who is best placed to control the risks,” he said.

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Mr Haskins said after compliance comes cultural change, which is more deepseated and enduring and the best way to cut down on workplace incidents and injuries and health issues.

He suggests that companies that want to comply with new legislation, as well as ensure that the workplace is safer for all concerned, should consider taking these steps:

1. Understand the risks associated with the work you are carrying out “Establish a Hazard and Risk Register that will give you a better understanding of the risks – the level of risk and the likelihood of the risk occurring.

Rather than having to concern yourself with managing all significant hazards (as was the case under the old legislation), a risk management model allows you to prioritise the high to critical risks.

“Putting in the right systems and processes is an essential first step – but it should not end there.”

3. Win worker participation and engagement

2. Verify the competency of your workers Once your business risks are known, this will give you a better understanding of the training needs of your employees.

“Training is the next important step to achieving cultural change. Evaluate what training each individual on the team has had – don’t take it for granted.

“Overestimating competency is a mistake that can lead to under supervision that puts your workers at risk. Make sure you can verify the competency of your workers, and that each person understands the risks associated with the task or equipment that they are using”.

“Ensure your people know how to manage those risks and that they are carrying out the job appropriately to the correct standards either set by yourself as the employer or to WorkSafe NZ or industry guidelines and standards,” Mr Haskins said.

“Involve your workers in health and safety. It’s not just about ticking the boxes. Do it for the right reasons! Get the whole group – for example, everybody who is working on a construction or building site – talking together, collaborating and consulting.”

Make sure everybody is on the same page and that they have the right plant and processes to do the job safely – you will save time and won’t have to do things twice.

4. When an accident occurs, talk about it “When an accident occurs, even a small one, talk about it and how it might have been avoided. People are your biggest asset and injuries cost your business money, and your workers pain and discomfort.

“No matter what systems and practices you have in place, incidents and injuries will, and do happen, so don’t hide it; talk about it, learn from it and ensure that the same mistakes don’t get repeated,” Mr Haskins said. ■

www.nzentrepreneur.co.nz • 41

INVESTMENT CORNER

Term Sheets: Founder Friendly or Investor Friendly?

By Suse Reynolds

IT’S A UNIVERSAL TRUTH that we achieve much more working with each other, than against each other. What’s more, very few of us achieve as much on our own, as we do together.

This is certainly true for early stage investment. In this endeavour, no one ever achieves success on his or her own. No one! That’s why I struggle to the point of getting pretty vexed with the whole ‘founder friendly vs. investor friendly’ thing. I can’t see how it helps either side in the deal, especially founders.

Pitting ourselves against each other is not a great way start to a relationship.

As angel investors, we are backing founders because we think you and your business are unbelievably awesome.

We want to be part of the inspirational story you are telling. We believe we can add value. We want to help.

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We know investors become members of our networks for the following reasons: • To lift New Zealand higher – economically and socially; • To be involved in doing this – by contributing money, expertise and connections; • For the cool company – to be involved with likeminded, optimistic, creative people; and • For the rich rewards – of course, we hope for a financial return, but the ‘psychic return’ of doing good and contributing to lifting New Zealand higher is a key reason why people become angels.

When angel investors are negotiating the terms of a deal, they are not looking to ankle-tap the founder or give themselves an unduly, unfair advantage over the founder.

Negotiating a term sheet is

Ideally negotiating a term sheet is front footing discussions around economic and control rights to establish three key things: • What expectations do we have about the venture’s future?

• What expectations do we have about each other’s involvement? This should be based on an honest appreciation of each other’s strengths and weaknesses and how the terms of the deal and our relationship with each other address these; and • What happens when things go wrong?

Both investors and founders must fully understand the implications of all the terms of any deal. They need to be realistic about the needs of the business at that particular point in time, with an eye to positioning the business to be in the best position for securing more investment in the future.

“

As angel investors, we are backing founders because we think you and your business are unbelievably awesome. We want to be part of the inspirational story you are telling. We believe we can add value. We want to help.

“

about aligning the founder and investor to give the business the best chance of success.

High growth companies invariably need more capital.

There is no such thing as a stupid question in early stage investment. So whether you are an investor or a founder, be sure you understand the implications of all the terms, know the impact they will have on future funding rounds, understand the implications they have when things go wrong and when things go well.

To be success focused we need to be founder friendly AND investor friendly. ■

Suse Reynolds is Executive Director of the Angel Association of New Zealand and a Director at Wellington’s Angel HQ and Creative HQ.

www.nzentrepreneur.co.nz • 43

PARTING SHOT

“If it flies, floats or fornicates, always rent it.

It’s cheaper in the long run” -Felix Dennis

Founder of Dennis Publishing and author of How to Get Rich

44 • www.nzentrepreneur.co.nz