Economic Conditions Are Gloomy
Some of the issues affecting the economy at present are:
- Sombre thoughts on China, Europe and some parts of Australia.
- The re-elected President Obama has a massive job to lead the American economy and the areas, devastated by the hurricane, back to prosperity.
- The Federal Treasurer has admitted that the Australian government cannot deliver on its small surplus commitment for 2012/13.
- Economic growth about 2% - not a recession, but not exciting.
- Many business operators are querying the viability of business.
- The Reserve Bank has left interest rates unchanged.
- Political "uncertainty" in Canberra.
- Interruptions/"pause" to government grant processing.
What can small/medium enterprise operators do?
- develop strategies to navigate through the "gloomy" conditions
- consider your interest rates - is it time to "lock in" a fixed rate?
New Government Grants Announced
The Australian government has announced some new government grants which could be of interest to some small/medium enterprise operators. The grants are:
Tourism Industry Regional Development Fund
These grants are available for tourism projects which are located in regions outside the Sydney, Melbourne and Brisbane tourism regions. Grants may be provided for projects which improve the quality of tourism accommodation and tourist attractions in regional areas (other than Sydney, Melbourne & Brisbane). The projects have to be innovative to attract interstate and international visitors. The projects should aim to extend the length of stay by interstate and regional visitors. Grants are available from $50,000 to $250,000, on a 50% funding basis, for eligible applicants.
Eligible applicants include:
- a private company
- an Aboriginal & Torres Strait Islander Corporation
- an incorporated association
- local government body corporate
- corporate trustee on behalf of a trust
- non-profit corporation
- regional tourism or economic development corporation
Applications close at 5.00pm on 14th December 2012.
Clean Technology Investment Program
This grant provides for projects which generate energy or carbon savings. An applicant must be a company or an incorporated trustee on behalf of a trust or a cooperative. The applicant must be undertaking manufacturing activities in Australia. The applicant must have a turnover of under $100M.
Grants of up to $500,000 are available, on a 50% funding basis. Applicants must be able to satisfy merit criteria including:
- demonstrate the extent of reduction in carbon emissions intensity that will be achieved by the proposed project
- demonstrate that they have the capacity and capability to undertake the proposed project
- demonstrate the extent to which the proposed project will maintain and improve the competitiveness of their manufacturing business
If you're interested in this grant, please contact us.
Export Market Development Grant - Application Reminder
If you expended more than $20,000 on eligible export market development activities in the year ended 30th June 2012 and you wish to lodge an application for an Export Market Development Grant, please note that applications must be lodged with Austrade by the 30th November 2012. No extensions will be granted by Austrade.
If you'd like our assistance with the preparation of an Export Market Development Grant application, please contact us.
Take A Fresh Look At Your Business - Part 1
Successful business operators continually review their business operations and, most of them, undertake a detailed review of their businesses, at least, once every three to four years. One way to have a fresh look at your business is to compare how you're operating with how a start-up company operates.
Successful start-up companies generally challenge pre-conceived ideas as to how businesses should operate. They search for market opportunities which have been overlooked by the established operators. They obviously don't do things the same way that they were done previously. They don't make comments like - "this is how we've always done it around here".
Because they're new to business they cannot blame competitors, neighbours, the economy, staff or suppliers. One of the benefits of having a fresh look at your business every three to four years is that it requires you to carefully analyse what has happened in the market place. For example, have you identified the threat that the internet might make to your business and have you already taken steps to effectively compete with online selling? What other similar problems are emerging because of the significant changes in communication and technology?
In what phase of the business cycle is your business e.g.:
- rapid growth?
- or is about to enter rapid decline?
Can a rapid decline be overcome by a reinvention of how your business operates? How does your business address the problems to which the market place requires answers?
So what does a successful start-up do? (Obviously not all start-ups are successful. We're trying to look at the ones that are successful). They look for opportunities. They analyse the market to see what services are required which are not being supplied by the established operators. This requires an identification of:
• what are the market needs?
• are they being serviced?
They then analyse what they, as a start-up, could do to deliver a great service for which customers will be willing to pay premium rates rather than determining the lowest price the customer would pay. In other words... a successful start-up is closely evaluating the market and identifying market opportunities. Are you doing that regularly in your business?
Successful start-up operators are identifying commercial opportunities, preparing feasibility studies and business plans to enable them to successfully market their product/service or process to meet the market-identified requirements. This requires a fair amount of homework on the market opportunities. This will involve an analysis of competitors to ascertain who is successfully servicing the market and who is not and which areas are being fully serviced. They then focus on the delivery of good service, at high quality, at premium prices in an expectation that profits will follow.
Next month..... what can be learnt from "failure of start ups".
Pricing Strategies - Do You Have Procedures? - Part 1
What happens when customers stop calling? Do you blame your marketing section, the economy or your competitors, or might the cause of your problems be your "pricing strategies"?
There is an art and science to getting pricing right, however many businesses see pricing as merely a "cost recovery" exercise. You are not limited to only charging what, you believe, the market will bear. To create an effective pricing strategy, businesses need to communicate the value they deliver. Some people believe pricing strategies are easily reversible in that, if their price point decreases, they think that they can easily raise prices later. This is a trap and causes many businesses a lot of problems.
At present there is a widespread discount philosophy, especially for consumer markets. This requires business operators, who are involved in the consumer markets, to look at strategies for price optimisation, but also to ensure that the business has a system of "discount management and containment" and that the business highlights, on an ongoing basis, its "non-price points of differentiation", such as:
- pre-sale service
- availability of product
- knowledge of product and services
- well informed staff
- good website
- after market service
These are the areas that a business can introduce so as to maximise its ability to implement a sound pricing strategy.
Next month..... what should be avoided?
Ingredients For Business Success
Preparing a plan and then monitoring it on an ongoing basis is a very important ingredient for business success. The other key ingredients for business success include:
- being concerned about your staff
- communicating with your staff
- letting staff know your business plan
- having concern for customers
- establishing databases
- having an ongoing communication strategy to keep customers informed about developments within your business and having concern for suppliers, having open and frank discussions with suppliers in relation to your customers' demographics and preferences
- arranging to purchase products suitable for sale within your business
- supported by extraordinary service from your suppliers
The key is to keep on reviewing the plan. When you start in business, you should find a "difference" in your offerings. If you're already in business, why not adopt the strategy of having a fresh look at your business and identify what your "difference" is today. Have you still got one? Does your team know what it is? If you haven't already identified niche markets, identify niche markets for your business. Small businesses can't attempt to solve all of a market's problem.... it's too big. Therefore, concentrate on niche markets.