Interest Rate Reduction Good For Business
The decrease in the Reserve Bank of Australia's cash rate by 0.5% to 3.75% is great news for small businesses. Hopefully the reduction in interest rates will give consumers more confidence to spend. The reduction in interest rates however is also an indication that the economy is not performing well; although it is in some isolated areas, primarily driven by the mining industry boom. Now is a good time to review budgets and cashflow forecasts to determine how you expect your business to perform during the balance of 2012. When you're preparing budgets, it's a good idea to prepare three forecasts:
- the first being your best estimate;
- the second a more optimistic; and
- the third a more negative budget.
You can then determine how you can best manage your business.
Carbon Tax Is Just Around The Corner
Another very important consideration is the commencement of the Carbon Tax from the 1st July 2012. Whilst it is true that the Carbon Tax is directed at the 500 biggest polluters in Australia, these businesses will be passing on their extra costs incurred through the Carbon Tax, through their supply chains which will affect a wide range of businesses. Prices of goods affected by the Carbon Tax will increase. The increased costs will primarily be felt in the cost of electricity, but it is also expected that there will be significant increases in some other business expenses including fuel, bricks, cement, steel, aluminium, glass and other construction materials and in carbon rich refrigerants for air conditioning, fridges and freezers. An obligation for some small businesses will be their reporting requirements. If a business is supplying to a facility which is subject to the Carbon Tax there will be no government compensation for the extra costs incurred by the small business in meeting the Carbon Tax compliance obligations.
What all this highlights is the necessity for businesses to review components of your purchases, try and estimate what prices are likely to change and then calculate the effects, so you can determine adjusted prices to charge to your customers. Obviously if you already have contracts in place, you will have to check the contract wording and perhaps have negotiations with some of your customers. The other problem that many businesses will have is whether their customers will accept the higher prices for your products? Some experts believe that, in some industries, there could be price rises from 5-10% because of the impact of the Carbon Tax.
Marketing Will Help You Succeed
To develop a Marketing Plan you will need to ask yourself some questions:
- What do you want to achieve in your business?
- What are your personal goals?
- What are your business goals?
These types of questions need to be answered before undertaking the task of preparing a Marketing Plan:
- What are your strengths and weaknesses?
- What are your differences?
- What makes you unique?
- What is your business' "unique competitive advantage"?
- Why do people deal with your business?
Many people consider marketing to be just advertising or promotion, however marketing is much more. Marketing is a number of related activities which start from producing products/services that meet people's needs, making those products/services available and letting potential customers know about the existence of these product/services. The key strategy is to concentrate on keeping the customers and clients coming back again and again. Marketing is concerned with everything that is involved with the transfer of goods or services to the customer. The aim should be to provide the right products/services, at the right price, at the right place, with the right promotion, using the right team. The key questions to be asked, as part of the deliberations on the preparation of a Marketing Plan, include:
- What is your product or service?
- How do you determine its price?
- How have you planned a marketing campaign?
- Are you using a Customer Relationship Management (CRM) system to assist in co-ordinating the marketing campaign?
- Are you utilising social media (Linkedin, Facebook,, Twitter, You Tube etc) to promote your product?
- Are you using your website as an effective promotional tool?
- How are you going to sell your product? Directly through your own sales team or through agents over the internet?
- What is your strategy for promotion of your products/services to potential customers?
The marketing review is a very important prerequisite to the actual preparation of a Marketing Plan and a Marketing Plan is, in turn, an essential component of a Business Plan for a business.
Point of Sale Promotions
About one third of customers will take up a special offer linked to their current purchase. How can you package products to include companion sales items to increase the total sales value from the sale transaction?
You can assist your customers or potential customers to make a decision if they can access copies of testimonials from current customers. This will give them some reassurance that your business is selling sound products or services.
People like receiving something for nothing, so why not throw something in that they did not expect to receive. It might be a free product, an invitation to an event or even a "white paper" on a particular subject in which you perceive the customer will be interested.
Have you checked the condition of your packaging when it arrives at a customer's residence/business premises? Is it still attractive? Is the product securely bound? Is the packaging colour conducive to the type of products and market to which you're trying to sell?
If you have been awarded certificates and business awards, display them at your premises because they can convey to customers and potential customers that you are a good corporate citizen and you're interested in quality and service to your clients.
Re-Print Media Articles
If you have had a good article written about your business, in a newspaper or magazine, reproduce it and send it to your current customers and have it available for potential customers to read. A newspaper article can give your business a "credibility status" which all helps in the value proposition that the customer, or the would-be customer, is trying to form about your business.
Government Grants For SMEs
Commercialisation Australia – Proof Of Concept Grant
Commercialisation Australia has funding for "proving the concept" of an invention or new product, relating to testing the commercial viability of the business, model or idea for a product, process or service. Grants of between $50,000 and $250,000 are available to eligible applicants, with grants being made, on a 50% subsidy basis, for eligible expenditure for the Proof of Concept Project. Applicants for Proof of Concept Grants can include:
- A company which has a turnover of $10 million or less in each of the three preceding years.
- Researchers, who are eligible to apply through their Australian University Commercialisation Office.
- Individuals who may apply through an Eligible Partner Entity. (An Eligible Partner Entity is a body corporate whose primary purpose is to assist individuals or companies in commercialising their ideas or research. It could be a business incubator). An applicant must have ownership or legal access to the beneficial use of any intellectual property necessary to carry out and/or commercialise the project.
Proof of Concept funding does not include Research and Development.
To successfully apply for a grant under the Proof of Concept category, the entrepreneur must have concluded their basic research.
Leaders Need To Develop People Skills
Leaders need to be decisive and firm and must also develop the people skills that will enable them to create an environment, irrespective of management level, in which their team members work willingly together to support the vision and achieve common goals. The best outcomes and long term successes come from leaders working with and through others. Old ideas of making achievements simply through command and control by a dominant hierarchy have lost their effectiveness and relevance today.
Various researchers have indicated that many managers are reluctant to become involved in Leadership Development. For the successful development of any business, it is important that the leaders understand that their power rests with the people for whom he/she is responsible. A leader should work closely with the team to achieve the business' vision but at all times ensuring that all members of the team are on the "same bus". One critical aspect of leadership is ensuring that team members are seated in the right seat on the "bus".
Risk Management Review
As we approach the end of the financial year, it is a good time to give consideration to the risks that might affect your business. If you believe that a particular risk poses a real threat to your business then it is a good idea to prepare a short commentary on the exposure and consider a Risk Mitigation Strategy. In the unfortunate event that the risk does occur, you will then have a well thought out action plan to minimise the damage from the risk. Some of the potential risks for a small business include:
- If you sell products on credit or supply property to other organisations, have you considered the benefits of registering under the Personal Properties Securities Legislation which commenced in January this year?
- Have you reviewed your Workplace Health and Safety procedures to ensure you are complying with the new regulations that commenced in January 2012?