NZ Entrepreneur Issue 15

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

February 2014

Why

Entrepreneurs Need Resilience

Advisory Boards Your Questions Answered

10 Questions with

Malcolm Rands of ecostore

Entrepreneurial Intelligence With Sandy Geyer Profile on #nzentrepreneurs Rentaholics Plus heaps more inside!

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Classic cars get better with age.

Software doesn’t.

Unfortunately, time takes its toll on technology.

Microsoft will soon end security updates for: •

Windows XP

• Office 2003 • Windows Server 2003 Without these updates, you leave your organisation at risk of harmful viruses and business disruptions.

Ensure your business is future ready.

Visit microsoft.co.nz/getmodern for great deals on software upgrades.

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Contents

4

From the Editor

6

Entrepreneurs Need Resilience

8

10 Questions With Malcolm Rands of ecostore

12

Taking The Plunge: Robb Huskinson - Rentaholics

14

Tomorrow’s Entrepreneurs

16

Taking The Plunge: David & Steven Hillier - Little Lot

18

Advisory Boards - Your Questions Answered

20

Inspirational Stories: Kate Hornblow - Natures Sway

22

Why Protecting Your Business Means Protecting Your People

23

Entrepreneurial Intelligence With Sandy Geyer

24

The end is nigh for Windows XP

26

Ecosystem: Record Prize Pool On Offer To Waikato Entrepreneurs

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Parting Shot

Subscribe to NZ Entrepreneur for free!

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.

EDITOR / Nick Harley ART DIRECTOR / Jodi Olsson GROUP EDITOR / Nick Harley CHIEF FINANCIAL OFFICER / Alastair Noble CONTENT ENQUIRIES / Phone Nick Harley on (021) 052 9770 or email nick@nzentrepreneur.co.nz ADVERTISING ENQUIRIES / Phone Jennifer Liew on (027) 4398 100 or email jenniferl@espiremedia.com

From the Editor

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

ISSN 2253-5683

How do YOU define success? It’s a difficult question, and the answer will be different for each and every one of us.

Finding your intrisic drivers and the things that motivate you is important for any entrepreneur looking to achieve great things in life, as it allows you to focus on your end goals, rather than be consumed by the inevitable problems you run in to as you’re trying to get there.

We often define a company as successful thanks to high revenues and healthy balance sheets, but we can be certain that reaching high profitability is not the only reason the founders started those businesses in the first place. They had personal goals they wanted to achieve, and a personal purpose behind why they chose to start that particular venture. Sometimes the business is secondary to a person wishing to achieve something they deeply care about.

In this issue we talk with several founders with deep personal motivations to make a difference in the world that surrounds us, while at the same time building amazing businesses.

Success doesn’t have to be defined in financial terms, it takes many shapes and forms, but if you don’t know what you want to achieve, you’ll find yourself driving along aimlessly without a map, or a destination.

Work out what you really want first, then go and get it.

Nick

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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!

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ENTREPRENEURSHIP

Entrepreneurs Need Resilience When you get to the end of your rope, tie a knot and hang on. - Franklin D.

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o be a successful entrepreneur you need to have resilience!

How often have you heard this? I hear it all the time, and whilst I agree with the sentiment, where does “resilience” actually come from? It certainly doesn’t just appear out of thin air when we need it and isn’t just given to some people and not others at birth.

Resilience is not as readily attainable as we might like, and many of us are not always sure of its exact meaning or relevance to us.

In an entrepreneurial sense, resilience simply means hanging on through the tough times (or until sometime after everyone else has dropped off). Tying a knot as suggested above certainly helps—but what do we tie it with?

We tie the resilience knot with the following five dynamic forces: 1) Purpose: There has to be something that becoming a successful entrepreneur will give us, and we have to really, really want it. Although one seemingly obvious “thing” is money, acquisition of money is an unlikely motivator.

Scores of unsuccessful entrepreneurs who embarked on a venture simply to make money have given up on their ventures when the going got tough and very happily accepted that “money isn’t everything”. Money might simply be the means to the end. What is your end? Purpose only works in the knot if it is really your own and no one else’s. If you have identified your own purpose and want it badly enough, that desire will function to strengthen your resilience when your entrepreneurial journey becomes very demanding.

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If you are not standing on t he edge, then you are taking up too much space 6

Very closely related to purpose and extremely helpful to those in the process of business building is vision, motivation, passion, and commitment. These are not listed separately because they are direct results of purpose and in my view cannot replace purpose or function independently of it.

2) Values and beliefs alignment: Have you ever reacted very strongly to something and wondered afterwards if your reaction was out of proportion and wondered why? When this happens it’s usually because one of your driving values was threatened, a similar feeling to a “hot button” being pushed. For many of us, our values are unconscious but strong drivers of our actions and behaviours. As such strong yet unconscious drivers, they might well get in the way of what we want. I have worked with a number of business owners who have had deep and completely unconscious issues about areas relating to successful entrepreneurship such as money, achievement, material wealth, and family time. Their unconscious attitudes have limited their actions, which have in turn limited their results. We need to be conscious of our values and have them aligned to our wants if we want to create resilience.

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The advantage of bootstrapping is that you can control the direction of the product.

3) Feedback perspective:

5) Experience:

Learning how we are doing allows us to plan further actions based on that feedback. Imagine playing a game of soccer and not keeping score. Having no score makes it all feel as if there is no point; we really need the score to tell us how we are doing. But our perspective on that score (how we look at and react to that feedback) is a crucial factor in what action we take. We can go home and give up, or we can practice harder on the skills that need the practice the most.

I often tell my audiences how only months after starting our business our accountant told us that we were officially bankrupt. I then go on to say that we reacted by changing accountants. This always gets a laugh, but the reasoning behind what was one of our most important business decisions was simply due to our perspective. Whilst our accountant at the time only saw two columns of numbers with a negative balance on the side that needed a positive one, I saw that our sales were doubling almost monthly and that to further increase our market we needed to invest more in expanding our services. We changed to an accountant whose perspective was similar to ours, and we have never looked back. My message is that getting solid information back showing how you are doing is important, but how you look at that feedback and react to it is all about your perspective. Successful entrepreneurs tend to find resilience at desperate times through their unique perspectives.

I have always loved the saying, “If you are not standing on the edge, then you are taking up too much space,” but the reality is that finding oneself out on the precipice, in an entrepreneurial sense, is incredibly frightening. It seems so much easier to move to a more secure place, even if doing that means giving up instead of hanging on indefinitely. What creates resilience in such a situation? The simple answer is—having been there before! And having not only survived, but having built a bridge that got not only us across the precipice onto safer ground but a whole host of other people after us.

4) Physical endurance: Whilst it’s common knowledge that we need to be physically healthy to work efficiently, there is a significant link between physical, mental, and entrepreneurial endurance. Attaining the first functions to foster the other two. I deliberately have not used the terms “physical health” as being directly related to “mental health” because I often think that being just a little bit “mad” helps greatly in achieving the impossible!

The above four traits are critical to attaining the resilience to get through the first time, but when we have done it once it becomes easier to do it again.

Of course, there are no guarantees that we will be successful the second time or any of the times after that. Most entrepreneurs have the experience of many failures amongst the successes, but simply the experience of having been in such a situation before is very helpful to recognising the “road signs” and helping us to tough it out a second time.

I would highly recommend doing a “resilience knot check” and having a closer look at the contributing factors as listed above if you are feeling at all entrepreneurially weary and in need of a solid boost!

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 7

ISNETC ER W T VI IOE N

10 Questions with

Malcolm Rands

of ecostore

Great businesses are started everyday when people act upon an opportunity. We talk with Malcolm Rands of ecostore who providesvhealthy and sustainable skincare products, laundry detergents and cleaning supplies that have no nasty chemicals.

Tell us about ecostore, what’s the story behind the business, how did it get started and why?

When I first began thinking about starting my own business I was unemployed with a 1000 dollar overdraft, a broken down old car and a family to care for. It wasn’t all-bad though, I had an unfinished but mortgage-free home, and we were doing things we loved to do; creating a permaculture food forest in an ecovillage. We’d been living on the food we grew ourselves as well as the part-time wages Melanie my wife earned teaching at the local school, but it was never enough for us to get out of debt and the constant pressure was taking its toll. It was time to take action.

I started thinking about creating a business. I had some experience working for not-for-profits in the areas of marketing and event management, but at that stage I didn’t have any pure business experience. I knew that it had to grow out of an area that I already had knowledge and expertise in, and that it had to be in a field that was not already crowded but most importantly, it had to be something I believed in.

Being an organic gardener I was well aware of the harmful chemicals I needed to avoid in the garden, so that was a natural place to start, but I needed a bigger offering than 8

organic gardening products. We started looking at some of the ingredients used in the supermarket-bought products in our house and were horrified at what we found. We looked for safer alternatives but at that time it was impossible to find genuinely eco friendly cleaning and body care products.

It occurred to us that if we were finding it tough to get eco friendly products for our home, then other people would have the same problem.

Providing people with everyday household cleaning and body care products as well as organic gardening products gave me a much better offering and it satisfied my fundamental need to have my head and heart aligned. That’s where the idea for ecostore came from.

How did you survive those early days?

I did a local small business course and researched other successful brands. We left the ecovillage for a few months to stay with Melanie’s family in Kawerau where she taught for a term. I had precious time to crystallise my thinking about ecostore. I did this by creating a mind map to hold all of my ideas. It represented everything that I wanted ecostore to be, including the range of products, our Auckland store, our

A Rands family shot

factory, export, the not-for-profit Fairground Foundation with my family right in the centre which still holds true today.

In fact the mind map became our touchstone. Whenever I was unsure about next steps it had the answers I needed.

Those early days were tough, as I said, we were in debt but fundraising had become one of my core strengths working for not-for-profits so I set up meetings with potential contract manufacturers, designers and printers and persuaded them to take a chance on us by giving us credit. Then out of the blue my brother also offered me a loan of $30,000.

We used the money to dig out a basement room under our house and used it as a fulfillment centre for our small but rapidly growing mail-order company. We also bought a computer and had help from a Canadian Wwoofer (willing worker on organic farms) with IT experience, to set up a database of customers using DOS programming. I then started travelling around the country a lot, doing consumer shows (like the Ellerslie Flower Show) meeting customers and getting them to sign up to our mailing list.

What was the most painful lesson you’ve had to learn in business?

There were some bad times in the beginning. One of the lessons I learned was that real estate in a mail order catalogue is precious, yet I had used a lot of space to write articles about the things I cared about like guerilla gardening and seed saving. Another lesson I learned was that the best items to sell by mail order were small expensive ones, but here I was trying to sell one of the cheapest and heaviest commodities – dishwashing liquid – by mail order. It also became obvious that we needed to move the company to Auckland because that was (and still is) where most of our customers were. As you can imagine, that was quite a shock for the family. It had been a lot easier to live with less in the countryside than in the city. We moved into the back of the

shop in Freemans Bay with no proper bathroom or kitchen.

The kids had grown up in an ecovillage so they were used to being able to roam freely around the neighbours’ houses and to explore the native bush and beach nearby. Suddenly we were in an environment where there were no trees, no grass, we didn’t even have a backyard and traffic, roads and other dangers kept the kids closer to home. We were still going without so that we could put whatever money we made back into the business but we were seriously undercapitalised and we needed more skills and expertise to take us to the next level.

After seven years building up the brand, range and IP, my From left to right: John Banks, Tim Alpe, Dan Alpe brother introduced us to some contacts he had, who offered us a very low price for half of the business that was based purely on book value with no value acknowledged for the authentic brand we’d been building, our market position or intellectual property. I knew in my heart of hearts that I should have held out for a higher price and that the shares were worth more at the time and this was proven when just over a year later our new partners sold their shares for considerably more than they’d argued they were worth. Still, that was a valuable lesson for me and they did bring some great structure and managerial skills to the business.

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You need to be optimistic about the fut ure

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INTERVIEW

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The ecostore shop

Is the business vision you have today the same as the one that you started with?

housing and sustainable living. My plan is to create a vibrant, healthy urban eco-village that’s so successful it’ll be copied by developers worldwide.

Absolutely, as I mentioned, the mind map I’d created back in 1993 has always been my touchstone. And in many ways I feel it’s become more important than ever. It’s easy to be overwhelmed by the enormity of the environmental problems that we face, or by the health problems that we face and feel that there’s nothing we can do about it, so I’ve distilled my original vision down to one line – ecostore’s aim is to make it easy and pleasurable for people to make a difference, and we don’t stop there. We also want to create enough money to fund our not for profit organisation called the Fairground Foundation which was set up right at the beginning to create projects that make a difference in people’s lives and to the communities they live in, particularly in the areas of health, culture and sustainability.

When your business is based around your core values, it’s easier to remind yourself of the bigger picture and the reason you’re doing the things you’re doing.

Fairground has started a consultation process with a wide group of architects, town planners, developers and building suppliers to look at high density eco housing close to the heart of Auckland city. With the population increasing and becoming more urbanised, I think it’s imperative to create practical, commercially successful green solutions for healthy

What are the three most important business skills you would advise up and coming entrepreneurs to develop?

Do entrepreneurs need lots of money or external funding to build a big business?

At some stage yes but not necessarily at the start while you’re still developing your ideas and expertise. The need for external funding comes at the stage when you need capital investment, to fund your inventory or a higher level of managerial support. But get advice, use a mentor and don’t make the mistake I did of selling yourself short.

You need to become an expert in whatever field you’re going into and become a leader in that field rather than following trends so you can offer that unique value to future customers.

The ecostore shop interior

You need to feel passionately about your business because you’ll be called on to go above and beyond what’s required of a person with a salary. It really helps if you believe in what you’re doing – almost to the extent that you’d be doing it anyhow, even if you weren’t generating an income from it.

Find mentors and don’t be afraid to ask for help. Surround yourself with good people and take on board the excellent ideas that others in your team will bring to the table.

What has been the lowest point you’ve faced in your entrepreneurial journey so far and what do you do to keep yourself going when it all gets too much?

Seeing no way forward and being constantly in overdraft. I am lucky to have a great family and a supportive partner in Melanie. When it all gets too much we both enjoy going home to the ecovillage and spending time in the garden and with nature. Have trust in your vision. Every entrepreneur goes through hard times, but its important to remember that any mistakes you make will give you valuable insights about the future, in fact they offer you the best education you can have.

If you keep making the same mistakes you’ll be in big trouble and you should l seriously rethink your current practices. It’s important to have a clear vision and keep referring back to it.

What does it take to be a successful entrepreneur?

It takes courage. You can’t afford to be risk averse and you need to be optimistic about the future. Develop a vision/ picture, have persistence and get the support of your team and of mentors.

What do you think are the things New Zealand needs to improve upon when it comes to creating more successful businesses?

We need to be unafraid of excellence. And when you’re starting out in business make sure that your idea is not only good enough for New Zealand but for the whole world. You really need a global approach. In the early days of ecostore I was travelling to natural product expos in Anaheim to learn about global best practice in our industry. We need to aim high and be committed. Visit overseas clients and don’t be afraid to spend time with them before you do serious business. Especially in Asia, good export is about the relationships and trust you have in each other. Don’t rush this part of the relationship. Invite them back to NZ and take them to nice restaurants and out into nature. I go to a restaurant on Waiheke. These venues are unique in the world, having a place like that so near to the major center..

You’ve already achieved so much in terms of business success. What’s next for you?

We still consider ecostore to be a startup in a global sense.

We need to strengthen our position in Australia – and really reach out into Asia and the US and the rest of the world. In five years time I see us as a global brand and I start stepping back from the CEO position in my company and putting more of my attention into the Fairground Foundation.

For more information about Malcolm and his businesses visit www.ecostore.co.nz and www.ecoman.co.nz 11

T SAEKCI NTGI OT H NE P L U N G E

Robb Huskinson

Rentaholic Each month, we talk to up and coming New Zealand entrepreneurs who have set about turning their idea into a real business. Here we speak with Robb Huskinson about Rentaholics.

Briefly tell us about your business.

How did you first come up with the idea?

Rentaholic.co.nz is New Zealand’s newest online peer-topeer sharing platform designed especially for people who want to rent things from each other and in its simplest form is the Trade Me of renting. Kiwi’s can rent everything from spare rooms, homes, tools, boats, water blasters, shoes and even dogs.

The initial idea was sparked from a conversation with an employee of mine a few years back but it took four years before I actually started the ball rolling. What really inspired me to start it was sitting next to a guy on the plane with an internet business heading to an Entrepreneurs Organisation event and sharing the idea with him. He was full of enthusiasm and mentioned how similar ideas were being rolled out in different formats in the USA. Right then I decided to make the idea a reality. I approached some other business friends of mine, formed a partnership and we started working on the site. I believe that Rentaholic can really offer Kiwis the opportunity to rent the life they want and give it back on Monday – to make and save money from idle assets.

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What is the big goal for your business?

Our primary aim at the moment is to focus on generating interest and excitement about nurturing the growth of a shared economy in New Zealand, although we do plan to grow the business and expand into other key markets in the future.

We also aim to positively impact on the community and environment by encouraging reduced waste and consumption.

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Do your research and surround yourself with people who share the same philosophy, values and drive.

The Rentaholics team. Noel Davies, Barbara Anderson and Robb Huskinson

What inspired you to take the plunge?

Time Magazine tipped the shared economy to be one of the top 10 trends to change the world. It was off the back of this research that Rentaholic manifested and after further exploration of the market, we knew New Zealand was ready for Rentaholic to be launched.

At Rentaholic, we believe that there is more than enough stuff in the world and its time we ease back on consumption and think more about sustainability.

Renting and sharing allows people to enjoy life, without living beyond their means. It also allows people to make money from things they are not using. So, I guess we’re creating a host of Kiwi Rentrepreneurs.

What have you found to be the most challenging aspect of building your business so far?

It is a new concept to New Zealanders and although a huge million dollar industry in the U.S, it’s a case of providing enough information to Kiwis so they are comfortable enough to take the plunge. We’re very used to renting our homes, so why not extend this to other unused items.

What keeps you going when you feel like giving up?

My team, who are incredibly smart and inspirational and we all hold a wholehearted belief in what we’re trying to achieve.

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

Do your research and surround yourself with people who share the same philosophy, values and drive.

To find out more visit www.rentaholic.co.nz Would like to tell our readers your own story? Get in touch with Nick at nick@nzentrepreneur.co.nz

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T o m o r r o w ’ s E nt r e p r ene u r s

Young Enterprise Terry Shubkin, CEO Young Enterprise Trust

O

ver the next six weeks, we will get to meet thousands of students who are taking on The Lion Foundation Young Enterprise Scheme this year. We had such an amazing year in 2013 and are looking forward to bigger and better ideas from the ‘Class of 2014’.

These students are taking on a huge challenge – they will set up a small business and bring a new product or service to market by the end of September.

This all takes place alongside their school studies, extracurricular activities, part-time jobs etc.

The next generation of entrepreneurs need your help, and there are two easy ways to get involved:

•

Join us for 90 minutes in a Speed Coaching session at your local Enterprise Day in February/ March – this is a one-day introductory workshop for students taking part in The Lion Foundation Young Enterprise Scheme.

•

Mentor a team taking part in The Lion Foundation Young Enterprise Scheme – this generally involves 1-2 meetings per month from February to October.

Students get the maximum benefit from our programmes when they get to connect with the local community – email our Support Team to put volunteering with us on your list of New Year’s Resolutions.

Social enterprise continues to grow among youth

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tudents are passionate about creating new businesses that support their communities, and the evidence was clearly on display at the Young Enterprise National Awards which were held at the end of 2013.

The awards celebrated the achievements of students taking part in The Lion Foundation Young Enterprise Scheme, a year-long programme where students set

up and run a small business. It is run nationwide by the Young Enterprise Trust, with over 2,500 students involved.

“Many of the award winners have a strong social aspect to their business,” says Young Enterprise CEO Terry Shubkin. “We see that strong passion a lot among young people – they want to make a positive difference through their businesses.”

Students from St Thomas of Canterbury College developed a personal 4 safety1 alarm for use at workplaces throughout New Zealand.

Five students form Westlake Boys’ High School developed this range of water bottles. Consumers could choose which charity to support, with 100% of the profits going to that charity.

National Champions ‘Exposure’ from New Plymouth Girls’ High School created a UV monitoring wristband that changes colour when it’s time to reapply sunscreen. The company has been promoted in various national and international newspapers and websites, and has attracted interest from large organisations such as the Australian Skin and Cancer Foundation.

“The two students in this company, Sarah Mount and Danielle Watt, wanted to develop a product that solved a problem for people of all ages,” says Terry.

“Their wristbands are an amazing new tool in the battle against skin cancer.”

Canterbury-based team ‘Shepherd’ (from St Thomas of Canterbury College) focused on workplace safety and developed a personal alarm that automatically sounds if a worker falls below an angle of 45 degrees. As well as placing second overall, the team also collected the Unitec Award for Excellence in Enterprising Technology.

A number of other student companies were also recognised. ‘LiquidChange’ from Westlake Boys’ High School sold a line of bottled water that supported four different charities – KidsCan, the SPCA, Canteen and St John. Consumers could choose which charity to support, and 100% of the profit from each sale went to the nominated charity. ‘LiquidChange’ water bottles were stocked in Z Energy stations throughout Auckland. The team picked up two awards for marketing and the use of ICT.

Aorere College team ‘Lunches for Less’ also had a strong social focus. They ran free healthy eating workshops which taught 7 and 8-year-olds how to make healthy sandwiches for less than $2. Each student received a lunchbox and drink bottle, along with healthy eating information to take home. Parents were also invited to take part in after-school seminars with a Heart Foundation representative, where they were taught about healthy recipes, label reading and cooking on a budget.

The focus was not just on social issues in New Zealand. ‘The Cashew Company’ was formed by students from Springbank School in Northland, and worked with a small community in Mozambique.

The Kiwi students imported cashews from Maziotela Industries and developed a cashew nut butter. One dollar from every sale was donated back to the New Zealand World Outreach programme, which helped to build the factory in Mozambique.

Young Enterprise Trust is dedicated to growing a more prosperous New Zealand through enterprise. Our aim is to ensure all New Zealand students participate in experiential enterprise education and financial literacy programmes. Young Enterprise also runs the NZ Business Hall of Fame, which recognises New Zealanders who have made outstanding contributions to business and the community.

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T SAEKCI NTGI OT H NE P L U N G E

David and Stephen Hillier Each month, we talk to up and coming New Zealand entrepreneurs who have set about turning their idea into a real business. Here we speak with David and Stephen Hillier about their business - Little Lot Briefly tell us about your business.

How did you first come up with the idea?

75% of our revenue to charity meaning as our audience scales up this becomes an amazing new stream of donations - and literally has the potential to change the world.

Little Lot is the social enterprise seeking to change the way people connect with the brands they love and causes they care about. We place branded wallpapers on our audience’s mobile lockscreens and their computer desktops. They welcome this content into their personal space as we make a clear promise to donate 75% of the advertising revenue we receive to the cause they have chosen. The beauty of Little Lot is that it enables the user to give to a cause they care about at no cost to themselves.

On the flip side the business is very capital intensive and we’ve reached out to shareholders to fund the significant investment required to develop the initial versions of the product. But the returns when the business scales up are attractive too.

Our business is all about delivering great content that users actually enjoy receiving. This means having wallpapers from fresh, cool, relevant brands that are targeted based on the user’s profile and interests. Users can rate each wallpaper thumbs up/down, and choose their wallpaper for the day. Basically we are saying: This is your space, so you tell us what you want in it.

The business started as ‘Donate Your Desktop’; one of our founders Nelson Rayner conceived the original concept to incentivise people to view advertising by donating a portion of the revenue to charity.

What is the big goal for your business?

We’ve got some super ambitious goals for Little Lot; ultimately we’d like to scale the business internationally and create a social movement that deeply engages people with charity while generating substantial ongoing donations.

What inspired you to take the plunge?

Little Lot is a social enterprise - it has charitable and profitable outcomes, both of which inspired us to pursue this venture. It is a powerful concept, we give 16

What have you found to be the most challenging aspect of building your business so far?

We developed the business in our evenings and weekends initially, and for the first year at market we ran it around our full time jobs - this was extremely challenging. Not having our team all working together in one office gave us some serious headaches pulling it all together!

What keeps you going when you feel like giving up?

We’ve had some serious highs and lows working on this business, but we’ve persevered by keeping positive and concentrating on the next milestone. We know we are creating something amazing and I guess we just have to take a step back and recognise this when times get tough.

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

Don’t underestimate the amount of self motivation and determination required to start and run a business!

To find out more visit www.littlelot.com Would like to tell our readers your own story? Get in touch with Nick at nick@nzentrepreneur.co.nz

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ENTREPRENEURSHIP

Advisory BoardsYour Questions Answered A tailored, low cost governance programme such as an advisory board may not solve the world’s problems, but it’s certainly a step in the right direction. Aaron Wallace gives some important advisory board advice to business owners who want to get it right.

T

he good news is that in the last six months more SMEs have picked-up on the importance of advisory boards and the benefits this leadership discipline brings. Business owners are asking more questions in an effort to get it right. Sitting on a number of advisory boards, both SME and corporate, I have encountered the questions below and helped a number of businesses work through them. So let’s crack into it.

Where should advisory board members spend their time?

It is easy to generalise and say that the goal of introducing a governance framework is to focus on the strategic vs. the operational, but how do advisory boards balance their function as compliance officers with their function as shapers of the future? This is a question I’m often asked by clients. To give them some direction I often introduce them to Richard Westlake’s FICKS™ model, which injects some discipline and keeps the board from veering off track.

Staying focused is important. Think of the board of a well known chain of DVD stores: where is the value in making sure every building regulation is complied with and every figure compared against last month’s results, if they miss the fact that the industry has been reinvented. Human behaviour and expectation has changed. People no longer want to go out of their way to visit the DVD store when they can rent the latest movie or TV-show via iTunes, or use the conveniently placed vending machines popping-up at major supermarkets.

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As a business grows additional expertise can be plugged in if and when needed 18

Little to no rent and no staff salaries makes for a profitable model. Suddenly these stores don’t have a business. These are the types of issues boards need to be thinking about!

The question of liability regarding advisory boards Choosing to introduce an advisory board member who fulfils certain absent skill sets or a role missing from the business is important. However, contrary to popular belief, because of the advisory nature of the role they are legally labelled ‘deemed directors’ and are therefore not free from liability. But don’t panic as it is simple to add them to your existing Directors and Officers Insurance without any additional expense. In fact most professional advisers will already have this insurance. When I accept a position on a new board the relationship is formalised via a simple one-two page agreement, which typically includes indemnities and insurance, plus: •

My time commitment, term of engagement and fees.

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My role and what is expected of me.

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Outside areas of interest and confidentiality.

What’s the magic number? How many should be on your advisory board?

How many people should I have on my advisory board?

This question comes up all the time. Given the relative size and complexity of businesses in New Zealand I’m going to put a stake in the ground and say on average 4-6. In my experience any good advisory board needs four key pillars: •

The entrepreneur (usually the owner)

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The technician (understands the industry and the ‘coal face’)

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The marketer, and

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The numbers person

As a business grows additional expertise can be plugged in if and when needed. Most businesses will automatically default the accountant to ‘the numbers person’. As the ‘numbers person’ I have to say this is only okay if they have a strong backing of strategic

and commercial know-how. Using a ‘highly qualified bookkeeper’ is like trying to bash a square peg into a round hole; in short you are wasting your time.

Remember to do your due diligence when filling any position externally. As the business grows in size and complexity your advisory board may evolve into a formal board of directors. While this might not exceed 6 members the key difference is all members will now actually have a stake in the business vs. advising from the side-lines. Finally make sure you have a governance and accountability framework in place, this will help set out the roles of the different members.

Spoiled for choice? Who should be on your advisory board?

Once we have identified the skill sets missing from their advisory board, clients then tend to ask me how they go about finding someone to fill that gap. As a member of the Institute of Directors I typically use this network to help find potential candidates. I then assist clients with the due diligence process to ensure they find the best fit. At a basic level some important questions to ask potential candidates, include: •

What other boards are they on?

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What scars and medals do they have? (experience is key)

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Are they ‘giants’ in your industry? Do they know your market?

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Are they a member of the Institute of Directors?

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What are their qualifications? (presentations and/ or publications)

The bonus of bringing in a strategic professional is that they will bring structure to the meetings and therefore augment the use of models such as FICKS. Pedigree is important and will inevitably be linked to remuneration. Contact me to find out more about the skills matrix and board selection criteria we use with clients.

Another popular question: How much do you pay advisory board members?

Remember people do not join advisory boards for money and fame; they generally do it because they want to add value somewhere. If the member is a venture capital investor or shareholder, then the answer is simple: nothing. Their incentive is maximising the value of your company and their investment is incentive enough, but you absolutely need to compensate external members.

It is human nature not to value what you get for free, I’ve seen it time and again. You are more likely to take action on advice you pay for, plus this also makes the member more accountable. The amount of pay and the mix of cash vs. equity (if there’s any equity at all) are highly variable. Most professionals will charge an hourly rate between $200 and $400. While others (what we in the industry call serial directors) prefer a flat annual fee ranging between $25k and $35k.

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Remember people do not join advisory boards for money and fame Take a deep breath. It is a leap of faith for many SMEs but I can promise you that the value gained far outweighs the cost. I’ve seen this first hand.

When is it time to introduce new blood to your advisory board?

After a period of time a board will become comfortable with one another. This could be a signal that the company has hit optimal performance, but is more likely an early warning sign of complacency.

Introducing a new member will keep a board on its toes by injecting fresh debate. Given the speed at which information, communication and technology (ICT) is evolving complacency is a sure company killer. As our reliance on ICT increases we will see more companies establishing separate governance committees to focus just on ICT. Good governance produces higher quality decisions that can drive an increase in sales and margins, plus a reduction in costs. Fact.

Aaron Wallace is the cofounder of Bellingham Wallace; an accounting and advisory firm that promises fresh thinking, expansive strategies and the insight you need to make positive change. www.bellinghamwallace.co.nz

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Good governance produces higher quality decisions 19

I N S P I R AT I O N A L S T O R I E S

Kate Hornblow

Nat ures Sway NZ Entrepreneur talks with Kate Hornblow about her business - Natures Sway, which Kate has built up to become a leading wholesaler and online retailer stocking premium quality, New Zealand made baby slings and ergonomic baby carriers.

In retrospect I was always a bit of an entrepreneur, I just didn’t know it! In 1990, after completing a Social Science degree at the University of Waikato, I found myself somewhat frustrated with the way people working within the system were often stymied in their efforts to implement change. I went to Northland to live an organic lifestyle – I wanted to walk my talk.

I learned that businesses based on organic growing and cultivation are hard yakka, and I take my hat off to people like Ecostore’s Malcolm and Melanie Rands who started around the same time I did. I had a go at sourdough bread-making and basket weaving, but found I had to return to Auckland for the markets and to take advantage of the larger population base.

It wasn’t until 1993, when I had my first baby, that my winning product was discovered – quite by accident. I was selling my other wares at the Titirangi Market with my newborn daughter, who was in a baby hammock I’d sewn from calico. I had it suspended from a tree behind me and it created a lot of attention. Soon I was taking orders for hammocks, rather than the baskets and plants I was trading! A couple visiting the Market sent a hammock to some friends in Switzerland, who, after sampling bought 100 units off me. Within a year they

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were buying around 200 from me every second month.

These quantities of scale transformed our cottage industry. I employed outworkers to do the sewing and learned the processes involved in exporting to Zurich.

The Swiss are very strict on quality control, and from the outset Natures Sway had stringent procedures in place. This arrangement continued for over six years – until they began manufacturing their own. Fortunately, we had also started trading with a Danish couple who were branding consultants and keen to promote Natures Sway in Scandinavia. My early experiences taught me that a good business relationship is not just based on a legal contract, but requires mutual respect and values as well. It is very difficult to stop someone from copying your product but what I protect and value most is our name and our brand identity.

Natures Sway was initially supported as a part-time venture, until it was able to hold its own. This meant that growth levels were slow but steady. The ethos of Natures Sway revolves around healthy infant development through gentle nurturing and attachment parenting. I wanted to balance spending quality time raising my children with being what is – nowadays – known as a ‘Mumpreneur’. I was in the position of

having to create a home for us all at our factory, so I didn’t have two sets of outgoings and could still be there for my children while I worked. Natures Sway was built on the idea that the early months and years of a child’s life need to be a welcoming and wholesome experience.

Having emotionally intelligent citizens with the ability to think outside the box is important for the future of our planet.

Happily, over the last two decades the business has become established as a reliable brand. During this time I’ve been able to make gradual refinements to the products, in line with consumer demand, and I’m pleased with the results to date. In order to grow more now, we need to access the geographic areas which have been highlighted by our internet traffic. The old model of distributorships has changed with web sales, but getting your products out there and running day-to-day operations at the same time is challenging.

My personal strengths lie more in the creative and hands-on production side yet I appreciate the privilege of being a director. I like to keep learning and challenging myself with projects and tasks. My team has a diverse range of skills and I love seeing us running like clockwork, with everyone pulling together to make the best quality products we can. I’ve been fortunate enough to employ and do business with people of many nationalities, who have chosen to live and work in our beautiful country. I feel proud of our #8 wire mentality and the fact that I can bring this to Natures Sway. Our customers are very pleased to be purchasing New Zealand-made, locally sourced products and I love seeing their enthusiasm at events like the Baby Show.

Currently, I count surviving the recession as one of our biggest successes. Natures Sway is a wellestablished brand with steadily growing internet sales and a good reputation for customer service. Our organic growth has meant we have never had a lot of financial exposure, so were mostly sheltered from the effects of the Global Financial Crisis. I feel that New Zealand needs to support more businesses that utilise Green technologies, and it’s a shame that some of the

enterprise courses and schemes that were being run in the 90’s no longer exist. Most of our workers are self-employed contractors, who work from home and choose their own workload. In-house we recycle, use natural packaging and keep plastic components to a minimum. We have a hemp/organic cotton blend fabric in our range as hemp is a naturally organic, sustainable crop. We endeavour to make products that last for successive babies, and even generations. In my opinion there’s more to life than the profit-driven motive.

This is what Natures Sway represents, and people are coming back around to this idea.

I think that striking the right balance between being innovative and responding to customer demand is the key to having a successful business. It is my passion to educate people about the importance of supporting infants naturally early in life, so as well as creating a demand for Natures Sway products I am now able to capitalise on the growing trend towards more conscious living. My future focus is on continuing to get the message out there. I am now in a position of being able to take more risks; my kids are grown and I have an established brand to promote. With a continued focus on expanding our international markets, hopefully we will just keep going from strength to strength.

To find out more visit www.naturessway.co.nz

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ASD ORIAL EV CE TR I OT N

Why protecting your business means protecting your people It’s commonplace to insure your business assets – premises, machinery, computers. These are all seen as integral parts of a functioning business and important to its smooth running. But have you considered what effect the loss of a key member might have? Could losing them be just as devastating as losing that integral piece of equipment?

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n 2008, it was estimated that 1,880 businesses in New Zealand ceased operation due, at least in part, to an injury to the owner or a key staff member.

You might well say the chances of it happening are slim and not worth worrying about. Well, the statistics say otherwise. It’s estimated that 5 in ten males and 7 in ten females are likely to become disabled due to an illness or accident before they turn 65, preventing them from working for at least a month.

There are 450,000 enterprises in New Zealand, of which 68% have no employees and 30% employ between 1 and 19 individuals. So, given the prevalence of small to medium-sized businesses and given that it is common for these businesses to have a reliance on key people (the director, the sales manager or maybe a specialised sales person or technical staff member) it makes sense to consider being covered for their loss. After all, the loss of someone with specific, nontransferable skills can be every bit as damaging as a fire or burglary.

Having Business Continuity insurance, provides just that – continuity. It can be set up for businesses of any size and affords the owner revenue protection, debt protection and ownership protection. It should be an essential part of your business planning.

For those businesses with multiple owners, then consider the above in lieu of something unexpected happening to a shareholder. If you or one of your business partners is unable to continue working due to illness, injury or death even, what are the implications to the ownership and indeed, future of your business?

Will you or your business partner suddenly be replaced

by your/their family or estate and will they have the same input to and/or intentions for the business? What will the impact of this be and should it not likely work, then how does one buy the other out? Can a price be agreed and how is this afforded?

Of all the things that can go wrong in business, most do not contemplate anything happening to the owners themselves and yet, this is likely to have the biggest impact on the success or failure of a business should something happen to a shareholder.

When it is common for a business to hold the majority of a business owner’s wealth, it is imperative to have an agreement in place, which covers all scenarios however unlikely A simple review and agreement can ensure the best interests of the business, its shareholders and their families are maintained. Following this, the process of establishing what should happen to the business ownership and how this is transacted becomes a relatively simple process should the worst happen.

Again, this should be an essential part of your business planning with appropriate advice sought to ensure what you want to happen actually does occur.

Jon Collier is an Authorised Financial Adviser assisting business owners protect themselves and their businesses from the unexpected happening. All NZ Entrepreneur subscribers are eligible for a free review so whether you own a business or would just like to review your personal protection plan - you can contact Jon via email: jonc@apexgroup.co.nz or via mobile: 027 524 7970.

We make business insurance easy, leaving you to focus on what you do best Click 2 2 here and let us show you how insurance is done the easy way

PERSONAL TRAINER

Entrepreneurial Intelligence with Sandy Geyer

WILL SOMEONE WILL STEAL MY IDEA?

By Sandy Geyer

I have a great idea for a product and need some help developing it. I am worried that if I tell people about my idea they might steal it, but at the same time I need to tell them enough to get them interested. What do I do in this situation?

There are two considerations to this scenario. The first consideration is the nuts and bolts of patenting, trademarking, or copyrighting your product/ idea if you think (1) the investment of such a precaution is necessary, and (2) the restrictions legally imposed will be capable of protecting your product and/or various copycat versions of it. The second consideration is around your thinking about your role in exploring an idea and bringing it to fruition as an entrepreneur.

There are two types of thinking you can adopt. The first is one of protection and precaution, and the second one is of one of expansion and contribution.

I would like to suggest that you lean towards the second type of thinking and view yourself in this situation as a well-placed conduit to a possibly great idea instead of the owner of it. When we feel we have to own something, we keep it under lock and key and we can suffocate it unintentionally. In other words, by trying to maximise and limit the benefit from the thing to ourselves, we actually minimise the benefits to everyone, ultimately including ourselves. When we function as the conduit to something, we allow it to come through us and expand exponentially into the universe with all the assistance we can give it.

Based on the assumption that your idea is indeed one of those rare and remarkable ones in its potential, then to my mind its your job not to protect it but to expose it to the right people, who can help you to grow it exponentially, way beyond what you could achieve on your own.

It is said that no one single person can whistle a

symphony, and trying to go completely solo into any venture will in all likelihood produce a similarly unremarkable result. Collaboration is one of the biggest success drivers behind profitable ventures and successful people. Successful people have many common traits, and in my experience one of the most common of these traits is generous and expansive thinking. On the other side of this is the reality that our ideas are most often not really as unique or good as we tend to think they are. They also tend to require a lot more work and involve a greater financial and skills investment than we might envisage or be capable of.

Again, collaboration with those with a vision and a good work ethic will be key. I speak from experience in this matter, as I own an educational publishing company where we partner with our authors as profit-sharers in place of taking ownership of their copyright. From a strictly business perspective this wasn’t a smart move, as our company isn’t worth much as a saleable entity because we don’t actually own the intellectual property.

My reasoning for this ownership structure was that the authors would very likely take more pride and effort with their material if they owned it and if their income was based on its quality. Whilst the company might not be structured in the best way to be sold (one day), it outperforms its sale value on income for all parties every year and has done so for the past 15 years.

Also, every time the curriculum changes the authors cheerfully adjust their work at no cost to us. Other publishers who obsess about ownership consistently produce lower-quality material at a much higher cost.

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 nick@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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ADVERTORIAL

The end is nigh for Windows XP! Is your business ready?

April 8, 2014, will be a moment of truth for businesses that run Windows XP as their IT’s main operating system. After this date, Microsoft will no longer be providing security updates for the Windows XP operating system which patch vulnerabilities that may be exploited by malware.

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hat this means is that after April 8, businesses still running the old XP operating system face increased security risks to their data, increased costs and lack of technical support. It is critical then that businesses of all sizes begin planning and move off of Windows XP prior to this date.

However, with less than a month left before this ‘End of Support’ (EOS) point, many business owners are still wrestling with how to make the jump from Windows XP to a modern operating system. For many small and medium-sized businesses with little to no IT budget, the process may fall on one employee or the owner themselves and upgrading 5, 25 or 250 computers can seem daunting.

Windows 8.1 devices are all about choice, and you’ll find many of them offer the power and productivity needed for a more mobile workforce with the specs and price point to meet any of your business needs.

The problem is, some business owners may not know what computers in their business are running Windows XP and how to migrate them to a newer OS, or if they need to purchase new devices. To help ease the process, Microsoft has developed a handy checklist that covers the key steps small and medium-sized businesses need to take to be ready well before April 8.

Prepare Your Data

Evaluate Your Hardware Needs

As you map out your migration strategy, include a plan for how you will both backup sensitive files and securely transfer your company data across PCs.

First, you need to check to see if you are running Windows XP. If you are, odds are that you are using an older desktop PC or notebook. That hardware did a great job providing a powerful Windows XP experience, but technology has improved dramatically since then.

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Migrating to hardware with a currently supported operating system – such as Windows 7 or Windows 8.1 – will mean you will receive regular security updates to protect their computer from malicious attacks. Older hardware is simply not designed to support a modern operating system like Windows 8.1 or the mobile demands of the modern workforce, so the sooner you upgrade the smoother will be your transition before support ends.

Once you know which devices make sense for your organization, you’ll need to think through how you are going to move your company data.

It’s common to feel a bit nervous when it comes time to move years of sensitive company data across devices, but advances in cloud technology make it easier than ever to backup, store and transfer files.

If you are unsure as to the most efficient way to do this for your organisation, Microsoft has resources to help you sort through the various options.

Check Your Apps Few things are as frustrating as picking a new device, moving over your data and sitting down to work, only to discover that a critical business application is not compatible with your new operating system.

To avoid this, evaluate your applications before starting your migration. Not only should you check the applications you have downloaded directly onto your PCs, you should also double check any web-based applications that your business uses to ensure they will work with an updated version of your internet browser.

Deploy a modern operating system With your new hardware in place, your data safely transferred and your applications up and running, your business is ready to take full advantage of a modern operating system.

Windows 8.1 is the operating system that Microsoft designed for modern business. It builds on Windows 7 fundamentals like increased speed, reliability and security, while creating a modern platform designed for a new generation of hardware experiences

Because it works across everything from tablets and innovative touch devices to traditional desktops and laptops, Windows 8.1 is great for business because it is designed to deliver the experiences your people will want, with the enterprise-grade capabilities they need.

Microsoft originally announced that support would end for Windows XP in September 2007. Since that time we have been working with customers and partners to help them migrate existing Windows XP PCs to a modern operating system.

If your business still has to attend to this issue, don’t worry; there is still time – but if you want to ensure your business remains free from data security issues associated with Windows XP, now is the time to think about how your business will ‘get modern’.

Visit www.microsoft.co.nz/getmodern for information and to take advantage of current discounts in market.

You can also follow us on Twitter @MSNZBusiness and sign up to our newsletter for updates.

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E CC O TS IYOSNT E M SE

Record prize pool on offer to Waikato entrepreneurs Waikato’s entrepreneurship hub, SODA Inc., has announced a record prize pool on offer to entrepreneurs who are able to build a business in 48 hours.

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he Innes48 Hour Business Startup Competition, organised by SODA and hosted by Wintec, will take place on 2-4 May. Competition entrants team-up to design and launch a start-up business within just two days.

and help develop business in the Waikato,” Netvalue CEO Graham Gaylard said.

A record $60,000 is being raised for the popular competition, much of which will be provided as prizes and equity contribution toward winners’ business development costs.

SODA’s acting CEO Petr Adamek says he is excited to see a growing community of companies prepared to support SODA’s key entrepreneurship event of the year.

Communication manager Rachel Adams said the competition has grown rapidly from the $5,000 cash sponsorship, 15 mentors and 48 contestants it attracted when the competition launched in 2012.

“This year we aim to select the top 15 teams, attract 35 mentors and raise up to $60,000.

“Already we have raised $35,000 and have over 10 mentors signed up. So we are really confident we will hit our target,” Rachel said.

SODA has also landed Hamilton-based software development company NetValue Ltd as its $10,000 naming rights sponsor.

“Being a partner to SODA and supporting Innes48 is tremendously important to us. SODA provide a valuable incubation structure that we can contribute to

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“The synergy between NetValue and SODA highlights our commitment to each other and to growing business locally.”

“The contributors already committed include great brands, such as ASB, 2degrees, Stainless Design, Deloitte, MEA Mobile, Enterprise Angels and LearningWorks Ltd,” he said.

As well as sponsors, Innes48 is looking for up to 35 experienced mentors to help guide and advise competing teams through the process of developing a scalable business over the weekend.

“It’s all about supporting start-ups. Who knows; we might get a global success out of it,” registered mentor and Marketing Brainiacs director Wayne Attwell said.

“It’s an incredibly exciting event to be part of.”

Registrations for Innes48 mentors and teams are now open at www.startup48.org.

For more information about Innes48 sponsorship and mentoring, email Rachel Adams at rachel@sodainc.com.

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One of the huge mistakes people make is that they try to force an interest on themselves. You don’t choose your passions; your passions choose you.”

Jeff Bezos, Amazon

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