BIGDEAL - Perth, WA, National & World News · 16/04/2013 · business incubators around Perth. Nest, in Victoria Park, is an incubator which takes the notion of “hot desking”

BIGDEAL

Find out why this

little coff ee

shop became a

Big DealP 6–7

Tuesday, April 16, 2013

THE MAGAZINE FOR WA’S SMALL AND MEDIUM ENTERPRISES

Q&A on IR • Harnessing social media • Tips to win a tender • Hitching a ride with Big Oil

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LETTER FROMTHE EDITOR

Kim Macdonald

I’m not sure who said that we shouldn’t worryabout failure, but about the chances we misswhen we don’t even try.

I could not help but think of this wheninterviewing teenagers as part of this edition’sfeature about teenage entrepreneurs.

The teens were not scared at the thoughttheir ventures could fall over, referring to thepossibility of failure as the chance to learn.

The great shame, in their eyes, would be noteven trying to get their businesses off theground.

It would appear that their overwhelmingcompulsion to take action, their positive outlookand the ability to quickly bounce back fromsetbacks, are scientifically validated qualitiesobserved in all entrepreneurs.

With more than 200,000 small businesses inWA, there must be hundreds of thousands oflocal people with the same inspiring outlook onlife.

Big Deal is the liftout for this impressivebunch of people who are involved in setting upand running small and medium enterprises.

In the masthead’s second edition, we coverissues affecting every stage of development ofan SME.

There is a feature about business incubatorsfor start-ups, information on how to crack intothe resource industry and the franchising sector,and a Q&A on industrial relations.

There are features on how to win a tender,give a speech and run a social media campaign.

This edition also looks at potential pitfalls forSMEs which make offers through group buyingwebsites.

The cover story spills thesecrets of cafe society. A lot of

thought has gone into Big Dealand I welcome your ideas forfuture editions.

CAFE CULTURE UNCOVEREDThe apparent rivers of cash generated by a good barista have got many would-be business owners thinking about taking the plunge into the cafe business. P6-7Cover picture: Rob Mayberry at Northbridge’s Bookend Cafe.

STRIKING OILHow small business can get a slice of WA’s energy riches. P8

NO DIRTBAGS HEREMeet the teenage entrepreneurs who hell-bent on succeeding in business and aren’t letting their ages stand in their way. P10-11

NEGOTIATING THE IR MINDFIELDExpert advice on how to deal with industrial relations issues and make the bane of small business manageable. P12

VIEW FROM THE TOPWA’s Small Business Commissioner outlines his priorities for the coming year. P13

TO FACEBOOK OR NOT TO FACEBOOKThe West Australian’s Marketing & Media editor, Daniel Hatch, on harnessing the power of social media. P14-15

TRY A LITTLE TENDER-NESSWinning a big tender can make or break a small business. Find out how to give yourself a competitive advantage. P18

457S: NOT JUST FOR THE BIG BOYSEmploying overseas workers is a political hot potato but could be a viable option for the smaller end of town also. P23

P6-7

P10-11

P14-15 P18

BIGDEALCONTENTS

BIG DEAL EDITOR & WRITERKim Macdonald9482 3104 [email protected]

ADVERTISINGElizabeth Poustie9482 3245 [email protected]

Production: Rebecca HollandCover picture: Astrid VolzkeGET IN TOUCH

David Liem can come andgo as he pleases from cell34 at Old FremantlePrison, despite the barson the window and a

spyhole on the door.But the fresh-faced young migrant

couldn’t be happier to be holed upon the first floor of the maximumsecurity wing at the old jail.

He is using one of the 103 cells asan office, after a section of theheritage-listed prison was turnedinto a business incubator when thejail was decommissioned in the1990s.

The incubator concept started inthe 1950s in the US and there arenow more than 7000 worldwide,providing typically cheap officespace and a range of businesssupport services for start-up andearly-stage businesses.

The Fremantle facility, run by thenot-for-profit agency BusinessFoundations, has two residentconsultants and a range of low-costseminars and workshops.

Mr Liem pays $320 a month for hiscell, which is less than a quarter ofthe price charged for a simple officein the area.

Executive director of BusinessFoundations, Phillip Kemp, said thefacility was believed to be theworld’s only incubator set in aformer prison.

In line with its heritage listing,the 1907-built new division wingretains its original features,including most of the caged sectionwhich once separated the twelveinmates who started the infamousprison riots of 1988.

The radial exercise yard is stillsurrounded by wire and old solitaryconfinement rosters adorn theinterior walls.

But the 7sqm single cells and the12sqm double cells are now filled byaspiring entrepreneurs.

Mr Kemp said that while theunusual environment often stole the

limelight, the incubator concept wasabout more than bricks and mortar.

He said it was about a philosophythat society was better off for havingfinancially self-reliant residents.

“Business incubation is amanagement training program thathappens to have a residentialcomponent,” he said.

“So what a business incubator isoffering is a two or three-yearengagement with the owners ofstart-up or an early-stage business,to help them grow and develop thatbusiness.

“What we know is that the bestway to achieve those results ofgrowth is to make it residential, sowe offer them an office.

“They are not paying rent, theyare paying for the managementtraining and it comes with anoffice.”

Mr Liem said that before movinginto the facility to set up hisbusiness, Creative Forte, he had

been working from home andscraping by on freelance jobs.

The Indonesian-bornbusinessman was not perturbed bythe fact some of the worst offendersin WA history once filled the walls,including serial killer David Birnie,whose former lock-up is only metresdown the corridor.

“We have a really friendly bunchof people here, and a lot of thementoring that goes on is doneinformally over lunch,” he said.

“And all my clients love my office,and they always want to see whereI’m working.”

Surveyor David Cadman, whoruns Innovative ComplianceSolutions from the second floor, saidhis architectural clients were alsofascinated by the iconic building.

In a new twist on theold-ball-and-chain marriage riff, heshares a double cell with his wifeIsabelle, who is the office manager.

The pair pay $600 a month for the

office, inclusive of utility bills, andmake regular use of support inareas such as marketing, socialmedia, digital enterprise andfinance.

“It’s been a great set-up and we’dlike to stay here for many years, butthere may come a time where wemove out just to give other people anopportunity,” he said.

BF’s operations manager GaborHernadi said tenants chose to moveout when they made the naturalprogression from start-up toindependent business.

He said the facility’s businessadvisors were also available to helpmembers of the general public, whocould book an appointment or walkin off the street.

The facility is one of dozens ofbusiness incubators around Perth.

Nest, in Victoria Park, is anincubator which takes the notion of“hot desking” to a new level.

Business owners can rent deskspace at the Nest office for a fewdays of the week.

Rental prices change according tothe amount of business, marketing,training and secretarial supportprovided.

Small Business Centres have morethan a dozen incubators, each oneaccommodating between 15 and 50businesses and tenants staying up tothree years.

Peak body Business Innovationand Incubation Australia said afacility with 20 to 50 tenants wouldcreate employment for up to 900people and turn over $200 million ayear.

JAIL BREAK FORSMALL START-UPS

Not so solitary: Sly grogging is no longer the main businesses at the old Fremantle Prison. Pictures: Michael O’Brien

Kim Macdonald sees a newcell culture growing in Freo as innovation finds a home

Happily holed up: David Liempays $320 a month.

4 April 2013 BIGDEAL

Iconic building:Surveyor DavidCadman saysclients arefascinated bythe office.


If you blink when you pass bythe Bookend Cafe inNorthbridge, you could quiteliterally miss it.

At only 1.5m wide and 1.8mlong, it is not much bigger than atelephone box.

It is not a regular-sizedcoffeeshop, but like the small barrevolution that preceded it, minicafés are finding a niche of theirown.

Co-owner Rob Mayberry said thatwhile the cafe was big enough foronly two chairs and a lightbulb, itdrew healthy sales of nearly 150coffees a day to passing pedestrians

“The main ingredient to runninga successful café is to keep itsimple,” he says.

“Provide good coffee at a goodprice. That’s it.”

The nation’s deeply entrenchedcoffee culture developed after WorldWar Two and has rolled with thetimes to cater to today’s grab-and-gocustomers.

Perhaps it is this resilience thathelped coffee shops hold their ownduring the global financial crisis,with IBISWorld research showingsteady growth in the sector even asdiscretionary spending dipped inthe restaurant, recreation and otherretail sectors.

Nationally, revenue in the sectorgrew by 2.2 per cent over the fiveyears to 2012-13, with WAaccounting for 13 per cent of thetake.

IBISWorld economists claim thisgrowth is due to coffee’s status as anaffordable luxury and daily ritual,with most people preferring to cutback on restaurant spending thantheir morning cup of joe.

The business consultancy firmforecasts the sector will enjoy astark acceleration from nextfinancial year, averaging 3.6 per centannual growth in the five-yearperiod to 2017-18.

But growth across the entiresector does not mean all coffee shopowners are in for an easy ride.

The Small Business DevelopmentCorporation said the low barriers tosetting up cafes meant debutantessometimes found themselvesoperating in an industry they didnot understand.

SBDC advisor Frank Green saidthe low barriers included relativelylittle set-up costs, especially whenequipment was leased and theproprietor took advantage of free,branded items from coffeecompanies such as windbreaks,umbrellas, uniforms and baristatraining.

The lack of formal qualificationsrequired to open a cafe also madefor easy entry.

IBISWorld figures show coffeeshops and cafes have an averageprofit margin of only 5.2 per cent,which is below the 8.6 per centaverage across the broader sectorincluding pubs, taverns, bars,catering services, fast food servicesand restaurants.

With little room for mistakes, cafeowners are searching for the elusiverecipe for success.

Business migrant Niall Lawlorcomes from a long line of Irishcoffee shop merchants. As the

owner of the three Tartine Cafes inthe city, he clearly knows how tonavigate the sector. His advice forrunning a modern day coffee shopcan be divided into six main areas.

1. KNOW YOUR DEMOGRAPHICThe Tartine Cafes all operate in thecity but the three venues attractdifferent types of clientele, and thiscreates some vital variations in howto best operate them.

The Westralia Square venue ismostly frequented by businesspeople and public servants who arepaid on the last Thursday of themonth.

This means special deals are mosteffective when they are further awayfrom a customer’s last pay cheque.The promotions are scaled downimmediately after pay day, whentheir wallets are flush with cash.

Mr Lawlor says the same patternexists on a weekly scale, withdiscounts having a bigger impact onMonday and Tuesday, whencustomers feel a little cautious aftertheir weekend splurges.

He says the industry appeared tobe turning away from customerloyalty cards in the belief they werepasse, but he has modernised thesystem to cater to his tech-savvycity clientele with an iPhone app.Paper cards are available for oldschool customers, like himself.

The Tartine Cafe on the corner ofWellington Street and WilliamStreet attracts a different type ofclientele, comprising backpackersand shoppers.

Mr Lawlor says these customersare not necessarily searching for acoffee shop, but could often beimpulsive if tempted by the rightoffer, such as a discounted icedchocolate on a hot day, or soup and ahot baguette on a cold day.

Mr Lawlor says all his cafes openbefore 6am every weekday, withoutfail, to cater to the early-morningcommuters who are traditionallyloyal customers.

But low pedestrian traffic onweekends makes it uneconomical toopen on Saturday and Sunday.

2. FRESH FOOD, GREAT COFFEEMr Lawlor says customers are fasttiring of heavily-branded 80s stylecafe chains that sell mass-producedprocessed foods.

While these cafes have longdominated Perth’s cafe scene, thenew style is for wholesome,nutritious foods which are bakedin-house or by specialist artisans.

He said the focus at his threeTartine Cafes in the city is aboutgoing back to basics, and the menusliterally include some of hismother’s own recipes.

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THE SECRETS OFCAFE SOCIETYThey are the small business du jour but life behind an espresso machine is not always frothy. Kim Macdonald looks at coffee commerce in Perth

Much loved: The Leederville cafe strip on Oxford Street. Picture: Michael Wilson.

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“We use a natural yeast in ourbreads, creating hand-made andstone-baked breads on site,” he says.

“The breads go through a wholefermentation process, so the breadfor tomorrow was started thismorning.

“The idea is to makepreservative-free sandwiches.”

If there is one thing he’s moreserious about than bread, it’s coffee,with Tartine Cafes offering a rangeof single-origin beans and a houseblend that all come with ethicaltrade assurances.

Mr Lawlor says educatingcustomers about different types ofcoffee helped to encourage loyalpatronage and to press home a pointof difference with his competitors.

“Sometimes regular customerscome to order a cappuccino, butthey’ll request it with asingle-origin bean from India,” hesays.

3. HIRE MOTIVATED STAFF“The number one priority at anycafe — number one — is motivatedpersonnel,” Mr Lawlor says.

He repeats himself to stress thepoint, for it seems it cannot beoverstated.

Mr Lawlor says staff who are ableto develop a rapport with customersand talk about the food with passionmake a big difference to the successof any cafe.

To retain good staff and to helpmotivate them, he matches every tipfrom customers and at Christmastime there is a “serious bonus” thatreflects performance.

“I don’t interview people when I

recruit staff, I just chat with them,”he says.

“I want to find out if they willblend with the team.

“At a lot of premises you don’t getthe time of day from the staff, noteven a thankyou.

“But I believe that going to a caféshould be a good experience forcustomers, and staff help to createthe ambience.”

Mr Lawlor’s philosophy appearsto be working, with five of his 15staff having been with his businesssince he opened his first coffee shopthree years ago.

4. VALUE FOR MONEY STARTSWITH SUPPLIERSCoffee shop owners benefit fromnegotiating prices with suppliersthat fall as their order grows.

Mr Lawlor says negotiatingcontracts in this way helps to utiliseeconomies of scale, especially wherethe owner has more than one cafe.

It also supports his preferredbusiness model, which is to sell highvolumes of food at low profits.

“We pay every supplier at end ofweek religiously, without fail, andfor a supplier that is a hugeadvantage to their cash flow,” hesays.

“Paying in a timely manner alsogives you that leverage in thenegotiation of prices.

“When we negotiate prices, we sayto them that if we hit a certain levelof orders, you must give us a returnback.”

Mr Lawlor says that developing agood working relationship withsuppliers was crucial not only to the

bottom line, but also to the qualityof the product.

He is vigilant about ensuringsupply contracts were upheldbecause the products were thebackbone of the business.

“If something is due in at minus18 degree temperature, we will sendit back if the temperature is notexactly at minus 18 degrees,” hesaid.

5. JUMP THROUGH HOOPSMr Lawlor may be flat out runningthree cafes, but he makes the time tohand deliver a single baguette to avalued client, because hisphilosophy is that coffee shopsshould do everything to please theircustomers.

His strong belief in providing apersonal touch means that he takeson the job of “delivery boy” forcorporate clients who orderboardroom lunches.

“We started out with a $50minimum order, but we have a veryloyal corporate market, and thereality is that if they need abaguette, I will deliver,” he says.

“If one of our corporate clientsneeds a single baguette, you’ll seeme sprinting across the city withit.”

Mr Lawlor says while it isimportant to have systems in place,a rigid system can drive awaycustomers.

A recent example involves acorporate client who did not meetthe order deadline of 3pm on theprevious workday.

The personal assistant got intouch with him at 9pm on a Sunday

night, and he had no hesitationsabout taking the order.

“If that’s what it takes, thenthat’s what you need to do to buildyour business,” he says.

6. DON’T NEGLECT THEPAPERWORKMr Lawlor says it is important toconduct a regular “root andbranch” review of all systemswithin an operation.

A review he is currentlyundertaking involves renegotiatingsupply agreements, and in somecases fixing prices for 12 months,as well as renegotiating insuranceand banking arrangements.

“One big mistake we made was toget insurance quotes when weopened the first cafe, and add onthe other two cafes when weopened them,” he says.

“But we stepped back this yearand redid our insurance, and wemanaged to get a 45 per cent savingby renegotiating.”

He said that like all businesses,he could feel the pinch of risingelectricity costs, and hadresponded by changing his energyuse.

“We used to have our displayfridge on 24 hours a day but we’vedecided to empty everything intothe big fridge at the end of the day,and turn off the display fridge.

“That means we are saving 16hours or electricity.

“We’ve considered every singlelight that we use, and whether itneeds to be on.

“This is a way to create savingswithout increasing prices.”

Hole in the wall: Rob Mayberry at Bookend Cafein Northbridge. Picture: Astrid Volzke

Expert advice:Cafe owner NiallLawlor at TartineCafe, WellingtonStreet, Perth.Picture: Dione Davidson

The number one priorityat any cafe is motivatedpersonnel.

7 BIGDEAL April 2013 7

Small business is increasingits fight to boost localcontent on major projects,as international companiesup the ante in the battle for

a slice of WA’s resource riches.In a sign of growing competition,

about 85 international companieshave moved to WA or upgraded anexisting local presence during thepast 12 months.

The statistics, compiled by theExport Finance and InsuranceCorporation, show that about half ofthese businesses are in theprofitable oil and gas sector.

The growing competitioncoincides with a long-term slide inlocal content on Australian projects,which were once almost entirelyAustralian-made but now contain aslittle as 50 per cent local content insome offshore projects.

While suggestions from someunions to mandate quotas isunpopular, industry and businessgroups as well as State and FederalGovernments have launchedinitiatives to help local companiescompete.

The initiatives acknowledge thatmany WA companies cannot beatAsian manufacturers on price, withthe steel industry’s own statisticsrevealing the local sector was 80 percent more expensive than imports.

But the initiatives recognise thatlocal companies can win on highquality and flexibility in delivery.With some projects able to achieveup to 90 per cent local content, therewould appear to be plenty of optionsfor local operators.

Under the Royalties for Regionsprogram, regional companies canclaim up to 50 per cent of eligibleexpenditure to a maximum of$20,000 to help them break into theresource industry.

A separate national initiative, theIndustry Capability Network, seeksto promote Australian companies in

the resource sector through itsregister of 65,000 companies.Advisors actively spruik on behalfof local businesses during talks withmajor contractors.

Enterprise Connect, which is aFederal Government program,offers free advice and support toeligible Australian small andmedium enterprises.

Through its network of 100advisers, the program includesbusiness reviews and grantassistance.

At a more grassroots level, thenot-for-profit Business Foundationsagency is set to soon launch aprogram to help SMEs break intothe resource sector.

The program, which will involve afee, will include advice fromconsultants about how to meetrequirements such as safety andhow how to use technology to helpovercome the Achille’s heel of localbusinesses — high prices.

Director Phillip Kemp said theprogram could benefit businessoperators in fields as diverse coffeesupply to fence building andhigh-end engineering.

“We’ve found people whounderstand requirements and whohave worked in the industry before,”he said.

Incredibly, for Kewdale-based pipemaker called the Binder Group, thehelp that it required to win acontract on a WA project came froman unusual source — an exportagency.

As a local company bidding forwork on a local project, it did notexpect the Export Finance andInsurance Corporation would beable to help.

But EFIC was able to provideBinder a warranty bond for $547,000to cover its obligations for theGorgon project, in the State’s North West.

EFIC’s director of the SME andMid Market, Leela Hanson, said thecase met EFIC’s eligibilityrequirements because the Gorgonproject will be used for export.

The company was also deemedeligible for the financial assistancebecause its core work was deemed tobe “mission critical” to thedevelopment of the project. In other

words, the types of pipes that itdesigns and makes are crucial toconstruction.

EFIC’s charter is to help eligiblelocal companies fulfil contractualobligations by providing workingcapital guarantees, bonds, termloans or loan guarantees, whenbanks were unable to do so.

The Binder Group said thesupport was crucial in helpingprotect its financial obligations andenabled it to use its existing bankguarantee lines to fund additionalLNG export projects.

Sales and marketing manager IanDavey said Australian companiesgenerally needed help to avert the“concerning” long-term slide inlocal content.

He said he was concerned thatQueensland shale gas projects inareas such as Gladstone and CurtisIsland had recently turned to USmanufacturers for pipes, and fearedthe same could happen in WA.

EFIC’s increased focus on theresource sector is evident fromchanges to its own operation.

For several years Mrs Hansonvisited WA for one week everymonth but made a permanent moveto Perth a year ago in a bid to boostthe agency’s focus on the State.

EFIC had provided assistance tonine local companies working onresource projects.

The corporation was in talks with many more to help themtake advantage of opportunities.

GETTING SLICKWITH BIG OIL

Upping the ante: Competition is growing in the profitable oil and gas sector.

Kim Macdonald tells local companies hoping toservice the energy giants where to find support

Being ‘missioncritical’ opensnew fundingstreams.


WHERE TO FIND HELP

Industry Facilitation and Support Program bit.ly/14MUsx8Industry Capability Network icn.org.auEnterprise Connect enterpriseconnect.gov.au

Business Foundations businessfoundationsinc.com.auExport Finance and InsuranceCorporation efic.gov.au

Resource-rich: Statistics show along-term slide in local content

on Australian projects.

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It’s Friday night in Yokine, andthere is a lot riding on TysonVacher’s young shoulders.

He is hosting a party for 300people, among them a Beijing

businessman who is considering aninvestment in the fledgling partymanagement venture Tyson co-ownswith a friend.

To top it off, TV cameras and riotpolice are setting up across the roadbefore the guests have even startedarriving, amid fears theFacebook-advertised party willspiral out of control.

Tyson calls his lawyer to confirmhis legal rights and responsibilitiesin the face of police threats to closethe party down if anything goeswrong.

As he juggles the police, themedia, an investor, his lawyer, a DJand 25 bouncers, it is hard to believethat he is only 16 years old.

By day Tyson is a Year 11 student,but by night, he is the generalmanager of Rads Entertainment,and part of a growing breed ofteenage entrepreneurs, orteenpreneurs as they are known.

His business partner, RadomirKobryn-Coletti, is a 17-year-old

student at the University of WA.Together they have hosted about 30parties.

While they have previouslymanaged to only cover costs, theyexpect to earn profits now that theyare formally registering theirbusiness and seeking investors.

Dressed in smart black suits, theysay their party concept is centred onfighting back against the boganinfiltration of youth culture with“classy events” that have strictdress codes, good music andprofessional photos.

When Big Deal watched Tyson inaction at the Yokine party hisoperation appeared a class act.

He was not fazed when liquorcontrol police turned up at 10pm tosee if everything was above board.

In fact, he invites them inside thehouse to show that alcohol is notbeing supplied to minors.

But the officials find six of the 300primarily underage guests hadalcohol.

The underage drinking wouldhave been legal on private propertyhad either of the hosts been 18, butRadomir is a month shy of themilestone age.

Both hosts claim the drinks hadbeen smuggled in without theirknowledge but it doesn’t make adifference. The breach is enough tohave the party declared anout-of-control gathering and it isclosed down.

By his own admission, Tyson stillhas some major lessons to learnabout business, but clearly, he is onhis way.

He got an early start at the age of14, when he set up his own venture— Black Tie Waiters.

The idea came when a relativeasked him to serve food at her partybecause there were no independentwaiters in Perth that were not tiedto catering orders.

“She paid me $50 or $60 for a fewhours work,” he reminisced.

“I thought I could have paidsomeone else to do it quite cheaply.

“Then I thought I could start acompany out of this, so I did.

“I set up a website, and gotregistration, and I hired about 10people for various jobs.”

Tyson employed an adult licenseeso that his casual wait staff, all agedover 18, could seek permits to servealcohol.

He turned over $15,000 during theyear but gave up the venture when itbecame too much to handle on top ofhomework at his academic selectiveschool, Perth Modern.

Tyson said he hoped to own abusiness after finishing high schooland university.

He was so eager to learn life skillsneeded to succeed in business thathe has already moved out of home,after recently having himselfdeclared an independent minor.

“I want the power to changethings, and I just don’t think I willhave that power in a job where Iwork 9 to 5,” he said.

Naomi Henn is an 18-year-olduniversity student and thedeveloper of two phone apps.

The first, due out this month, is

called iConnect with Confidenceand is a virtual name-tagging toolfor the corporate world.

Naomi was only 16 when she cameup with the concept for the app,which helps users to know andcorrectly pronounce names ofstrangers at a meeting or event.

The app is designed so thateveryone in the room is linkedthrough their phones, with anindividual’s whereabouts displayedon screen, in real-time, through theuse of a GPS system.

“Simply by glancing down at yourphone as you go to the meeting,check the GPS location of yournetworks and read the namesattached to their pins utilizing the‘Unwritten Name Tag’ feature,” shesaid.

“By clicking on their pin, theuser’s company and other importantinformation will appear.”

The second app, called iConnectCatering, is still under development.It allows sports fans at stadiums toorder food from the venue’s canteento be delivered directly to their seat.

Alternatively, app users can opt tobe notified when their order isready to be picked up at thecafetaria.

Under her business model, thecost of the app would be charged tothe venue, not the spectators.

The South Perth student said shegot the idea from visiting stadiumsand noticing the frustration ofsports fans forced to miss out ongame time while waiting in line forbeer and pies.

When Big Deal spoke to Naomi

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she was in Sydney as part of atwo-week internship at a start-upventure group called Pollenizer. Shewon the internship through acompetition held by a global groupcalled Startup Weekend.

Naomi said that making herdreams a reality had taken a lot ofhard work.

Last year she worked fivepart-time jobs, while attendinguniversity as a full-time student, inorder to pay program developers.

With two part-time office jobs andthree hospitality jobs, her workweek was regularly 95 hours long.

“I would get paid for my jobs onThursday, and I would empty myaccount to pay the programmers onFriday,” she said.

“It was hard because I wasmaking $13 an hour but payingprogrammers $100 an hour.”

To save money she gave up partiesand nights out and squirrelled away$18,000 in three months. A $20,000bank loan on top of her savingshelped her to get her projects off theground.

Her work ethic has continued thisyear, with a four-day-a-weektraineeship in corporate tax and lawat PricewaterhouseCoopers. Atnight, she attends Curtin Universityas a dual scholarship winner inbusiness and sport.

She trains most mornings and hasmultiple records in State, nationaland international hurdles. Naomidevelops her apps in the twilighthours and at weekends.

She credits her success to herdrive, persistence and hard work,

claiming it wasn’t natural talentthat had got her this far.

In her early primary school yearsshe had been at the bottom of theclass academically and the last tocross the finish line in a race.

She soon learned that it waspossible to push to the front, if youhad the drive to succeed.

It is a motto she has lived by herentire young life.

“If you want to do something, ifyou want to make a difference in theworld, why should you wait untilyou are 21 or 30?” she said.

“You might make some mistakes,but you will learn from them.”

Richard Thorning, from CurtinUniversity’s Centre forEntrepreneurship, said

entrepreneurs were best describedas individuals who took calculatedrisks for the rewards of startingsomething new.

Mr Thorning, the centre’sdirector of entrepreneurship and

executive education, said there werethree scientifically validated coretraits associated withentrepreneurial aptitude: the needfor achievement, an “internal locusof control” and a propensity forrisk.

The need for achievement isexhibited by behaviours such ascompetitiveness, strong selfmotivation and high personalstandards and goals.

The internal locus of controlmeant entrepreneurs had a strongbelief that they created their owndestiny.

“Entrepreneurs never seethemselves as victims,” he said.

While successful businesspeoplealso share a strong drive and aninternal locus of control,entrepreneurs are set apart by thethird characteristic — theirpropensity for risk.

“This doesn’t mean thatentrepreneurs are big gamblers, butthey are comfortable takingcalculated risks and have theconfidence to back their judgmentwith a commitment of their time,capital and their reputation,” MrThorning said.

“Many entrepreneurs willinglyaccept high levels of personal debtto get a business off the ground.”

Mr Thorning claims that peoplepossess entrepreneurial qualities todifferent degrees, and these wereoften evident from a young age.

“Entrepreneurs are doers, whowould rather do something and seewhat happens than sit aroundplanning it forever,” he said.

“It’s all about taking action, andthis is something that you can see invarying degrees in young children.

“Entrepreneurs have anattitudinal mindset that there is nosuch thing as failure, because ifsomething goes wrong, it is alearning experience.”

Mr Thorning saidentrepreneurialism was equallyprevalent in introverts andextroverts, and was often tied to astrong sense of independence.

“They do not feel a strongrequirement to conform. They arepeople quite comfortable doingsomething different to everyoneelse,” he said.

Mr Thorning identifies the “threePs” — positive outlook, persistenceand pattern recognition — as traitsoften observed in entrepreneurs.

He said entrepreneurs had anability to see emerging patterns,trends and hidden meaning amidthe daily data overload, and usedthis information to create businessopportunities.

Positive outlook and persistencewere key traits behind successfulentrepreneurs, and also thequalities which helpedentrepreneur Richard Branson.

“Entrepreneurs are noted, not forbeing successful at the first attempt,but for their ability to repeatedlybounce back from failure,” MrThorning said.

“For their ability to learn fromexperience, to keep believing inthemselves and their future successand to try again, and again, andagain.”

SIGNS OF AN ENTREPRENEUR� Strong need for achievement� Internal locus of control� Willingness to take calculated risks� A compulsion to take action� Can accept high levels of personal debt� Positive outlook and belief in themselves� Persistence� Ability to recognise patterns and trends quickly� Doesn’t feel the need to conform� Ability to bounce back after failureSOURCE: CURTIN UNIVERSITY CENTRE FOR ENTREPRENEURSHIP

Innovator: Naomi Henn, founderof iConnect Catering andiConnect with Confidence.Picture: Ross Wallace

Secure: Tyson Vacher with door staff Jevon Procter,left, and Wesley Majeks. Picture: Ben Crabtree

If you want to dosomething, if you want to make a difference inthe world, why shouldyou wait until you are 21 or 30? NAOMI HENN

Facing page: Party organiser Tyson Vacherwith some of his crew. Pic: Ben Crabtree


QI run a small aged-care facility andthe nurses are threatening to go

on strike unless I agree to their payclaim. When is it legal for myworkforce to strike and what can I doto prevent this?

A Employees generally can lawfully takeindustrial action as part of

negotiations for an enterprise agreement.However, there are some steps that needto be taken first. This includes a formalvote of employees, usually conducted bythe Australian Electoral Commisson. Theworkforce must provide three days noticeof any action, they must show they aregenuinely trying to reach an agreementand they can only take action after anyexisting agreement has expired. There arevery few legal options for employerswhere industrial action is lawful, andemployers need to prepare for thispossibility. The downside for employees islost wages. If industrial action is unlawfulemployers can seek return-to-workorders, injunctions or even orders fordamages.

Q I run a graphic design businesswith 12 staff. One of my

employees is a mediocre performer.While she doesn’t do anything wrong,she is a very average worker and hasno plans to leave the job. I would loveto replace her with someone moredynamic. Can I legally sack her?

A The unfair dismissal laws only allowfor termination due to poor

performance or improper conduct. In asituation where an employee is meetingyour minimum requirements, they cannotbe legally sacked in order for you toemploy a better performer. However, thisdoes not mean that employers have toaccept mediocrity. One option is toestablish clear and achievableperformance targets that hold employeesto a high level of performance. Activelymeasuring employees against thesestandards allows employers to recogniseand reward those employees who meetthese standards, and take steps toimprove the performance of those whodon’t.

Q I own a metal workshop withabout 50 workers. Only a few of

the blokes are in a union, and theywant me to negotiate an enterpriseagreement with their union. Theyclaim I am legally required tonegotiate with the union. Is that true?

A Under the national industrial relationssystem, employers are not obliged to

bargain for an enterprise agreement tocover the entire workforce unlessemployees obtain a majority supportdetermination from the Fair WorkCommission. The determination providesproof that the majority of employees wantto bargain for a collective agreement. So,unless these employees can convince themajority of their co-workers to supportbargaining, the employer is not obliged tonegotiate. However, where negotiationsare occurring for a different type ofworkplace contract, such as an individualagreement, the employer is obliged tonegotiate with a union — but only onbehalf of that employee.

Q My part-time store salespersoncurrently works 25 hours a week,

three days a week, from Monday toWednesday. She wants to change herworking days to Thursday to Saturday,to fit in with her husband’s new workroster. Do I have to pay her extrapenalty rates for working onSaturday? She said she would behappy to change shifts for the sameamount of money. She is on an awardwage.

A The bottom line is that there is noclear answer at the moment. All

modern awards have an individual

flexibility provision that allows anemployer and an individual employee toagree on alternative arrangementsprovided that the employee is better off.However, it is currently unclear as towhether non-monetary benefits, such asaccommodating family arrangements, canbe taken into account. The FederalGovernment’s independent review of theFair Work Act raised the need to providegreater clarity regarding non-monetarybenefits. The Government has failed toimplement this recommendation, but hasproposed to increase the obligations onemployers to meet employee requests forflexible work arrangements toaccommodate personal circumstances.

Q I am a bricklayer, and want toexpand my team. Is it legal to only

hire people who have their own ABN?A lot of contractors hire this way, butthere are rumours that it’s not legal.

A There are a number of factors thatneed to be taken into account when

determining whether someone can beengaged as an independent contractor oran employee. The relevant legislation andcase law have established a complex testfor determining whether a worker is anemployee or an independent contractor. Ifsomeone is improperly labelled then thebusiness is generally liable to compensateemployees for benefits not provided, suchas superannuation or leave entitlements.This is made more complicated because aperson may be deemed an independentcontractor for one piece of legislation butan employee for another. Businesses needto seek appropriate advice beforeengaging workers as independentcontractors.

TOP 5 THINGS TOCONSIDER WHENEMPLOYING STAFFSmall businesses face myriadregulations, which makes it difficultto convert your dream business intoreality. Most businesses need goodemployees to be successful, which iswhy you need to have a goodunderstanding of employment law.

1. What rules apply to you?WA is the only State to have two setsof employment laws applying toprivate sector businesses. For mostbusinesses the national systemapplies, however, a small proportionof employees, mostly sole traders, arecovered by the State system. Therules are different with manyemployers penalised for complyingwith the wrong set of rules.

2. Understand your minimumemployment standardsMinimum employment standards,such as pay rates, allowances, hoursof work, overtime and penalty ratesapply through industrial awards andlegislation. These costs not onlyaffect the number of staff that can beemployed but when you can afford toemploy them. Sunday work generallyattracts a double time penalty, whichmakes operating on this day a moreexpensive proposition.

3. What types of employees?A decision needs to be madebetween employing full time, parttime and casual staff. For mostbusinesses, a core of full or part timestaff provide quality of service withcasual staff adding flexibility to meetfluctuations in demand.

4. Put it in writingWritten contracts of employment areessential. They don’t need to becomplex and for most smallbusinesses a one or two pagedocument will suffice. Employers alsoneed to keep written records of thehours worked by employees andwhat has been paid to them.Increasingly, the role of unions hasbeen replaced by Governmentinspectors who enforce compliancewith workplace rules.

5. Avoiding unfair dismissalUnfair dismissal claims can reallydisrupt the operating of yourbusiness. Good recruitment practiceshelp prevent hiring the wrong personand are a worthwhile investment ofyour time. In the national system,employers have a grace period of sixmonths (12 months for business withfewer than 15 employees) toterminate underperforming staffwithout the risk of an unfair dismissalclaim. The rules and regulationsassociated with establishing abusiness are complex and getting theright information is critical. SmallBusiness Centres are a good place tostart. Most employer and industryassociations, including CCI, are ableto provide hands on assistance onnavigating the employment process.The Government’s Fair Work Infolinecan provide information aboutminimum employment standards.............................................................................■ Paul Moss is the manager ofemployer relations consulting atthe Chamber of Commerce andIndustry, WA.

Picture: Thinkstock

INDUSTRIALRELATIONSQUESTIONSANSWERED Paul Moss, from the WAChamber of Commerce andIndustry, fields some commonworkplace relations queries


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WA is the envy of thenation with a strongeconomy, lowunemployment,generous amounts of

disposable income and the highestbusiness confidence levels of allStates.

But while the small businesssector in WA is a major contributorto this economic success, it rarelyreceives its fair share of accolades.

Over the coming year, I’ll beworking with the sector tostrengthen the voice of smallbusiness, to bring about the changesneeded for the sector to thrive.

From the independent position ofCommissioner, I’m looking forwardto working with other governmentagencies to help removeimpediments to the growth anddevelopment of small business inWestern Australia.

A recent Small BusinessDevelopment Corporation surveyindicated that compliance had

increased over the past five years for62 per cent of small businesses inWA.

They said that complying withgovernment regulations was timeconsuming, difficult and confusing.

I want to ensure the interest ofsmall business is considered whengovernment is designing andimplementing regulations and Iwant to see compliance burdenskept to a minimum.

I also want to ensure that smallbusiness operators have access to allthe information they need to makeinformed decisions. Informationshould be delivered in a form theycan freely and easily access, at atime and place that is convenient tothem.

Making sure business owners getthe right information before signingcommercial leasing agreements orfranchise agreements is also anissue I am passionate about.

Since establishing the AlternativeDispute Resolution service at the

SBDC last year, I have seen, toooften, the result of small businessowners in WA signing agreementsthey don’t fully understand, andsuffering greatly as a consequence.

In general, small businessoperators are time poor. Betweenthe day-to-day demands of theirbusiness and the after-hourspractice of “catching up withpaperwork”, there’s little time forupdating business skills.

I advise any small business ownerentering into or renewing a leaseagreement or business contract toensure they understand the detailsbefore they sign. The SBDC canprovide that information.

I do not believe it is the role ofgovernment to hold the hand ofbusiness owners, or to make theircommercial decisions for them. ButI do believe in providing access toinformation and to create anoperating environment that is fairand conducive to small businesssuccess.

SMALL BUSINESS TSARBATTLES RED TAPE Small Business Commissioner David Eaton revealshis priorities for the coming 12 months

Voice of small business: Commissioner David Eatonwants compliance burden slashed.

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For small business, socialmedia is like skydiving: alot of people seem to bedoing it, many of themclaim to get a lot out of it,

but you can’t help but think itwouldn’t take much for it to all gohorribly wrong.

Parachuting isn’t for everyone.Just because your friends are usingsocial tools like Twitter, Facebook,Tumblr, Pinterest, Blogspot,Instagram, WordPress or LinkedIn,doesn’t mean it is right for yourbusiness.

Gemma Tognini, managingdirector of strategiccommunications firm gtmedia, saidthat for many businesses there issimply no reason to use it —especially in thebusiness-to-business space.

“Social media is simply another

channel by which wecommunicate,” she said. “If thepeople we need to communicatewith are not using that channel,then it makes zero sense to try touse it.”

Think about whether social mediawill provide you with tangibleoutcomes when considered in thecontext of your overall business andmarketing strategy.

It’s just like a helicopter. You don’tinvest in a chopper because it isgoing to make your business lookcool, you invest in it because it isvital technology for effective servicedelivery.

If you don’t need it and you don’tuse it, it becomes an expensive andembarrassing adornment.(Although Twitter will take up lessroom in the car park.)

Andrew Mathwin, digitalstrategist for ClarityCommunications, said that for theright business, social media was anopportunity to get closer than everbefore to customers andstakeholders.

“Done well, it means your

helicopter one) you need to committo it.

Ms Tognini said the biggestmistake businesses made wasunderestimating the time andresourcing needed to effectivelymanage social media.

“For one thing, you need anexperienced person whounderstands the role of social mediain a strategic context and someonewho is mature enough to manage

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Losing face on Facebook orbeing a twit on Twitter arerisks. Daniel Hatch explains

HOW TO ENGAGESOCIAL MEDIA

supporters can carry andspread your message for youand provide useful feedback onyour performance as a company,”he said. “Done badly, it can escalatebusiness deficiencies and drivenegative word of mouth.

“Businesses committed to usingsocial media are finding it cansuccessfully build customer loyalty,be used for recruiting like-mindedstaff, create collaborationopportunities with staff, drivereferral sales and even act as anearly warning system should anissue or crisis break.”

The next crucial step is choosingthe right one — the one yourcustomers are using.

Mr Mathwin’s rough guide is thatLinkedIn is great forbusiness-to-business interaction,Facebook is very successful forfast-moving consumer goods brands,Pinterest is good for fashion anddesign, and Instagram is perfect forvisual industries such as tourism.

Having decided to take the plunge(let’s assume we’re back with theskydiving analogy, not the

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the difficult situations when theyarise,” she said.

Like the helicopter, it’s animportant tool that can’t be drivenby someone without the right levelof experience and skill.

John Cooke, social mediastrategist for public relations giantPPR, said the potential pitfalls couldbe avoided if you planned ahead.

“The biggest killer for socialmedia is infrequent use — you need

to use it or lose it,” he said. “There are plenty of people who

can build you a Facebook page but ifyou’re not sending out qualitycontent on a frequent basis andengaging people in conversation,you’ll make about as much onlinenoise as the sound of one handclapping.

“Think ahead about what youwant to share with your new onlinecommunity. You also need to have

some rules in place about what yoursocial media team can and cannotsay, which includes how to respondif someone attacks your business inthis very public forum.

“Never pick a fight and alwayslook to defuse the situation. Most ofall, be honest and transparent,because telling a lie online can beforever.”

Illustration: Toby Wilkinson

The biggest killer forsocial media is infrequentuse — you need to use it or lose it. JOHN COOKE, SOCIAL MEDIA STRATEGIST

Franchises are tipped to wina growing share of theretail dollar as uncertaineconomic times roll on,according to research by

PricewaterhouseCoopers.The PWC report forecasts that

franchisees around the country willenjoy an average of 10 per cent profitgrowth in each of the three years toSeptember 2015, and 9 per centrevenue growth.

In comparison, profit forindependent businesses which turnover between $10 to $100 millionannually is expected to grow 9.3 percent and revenue by 8.6 per cent inthe same period.

While the research does notcompare actual profits, the fasterrate of growth for franchiseesindicates increasing success in thesector.

Executive director of theFranchise Council of Australia,Steve Wright, said this was due tothe ability of outlets to draw onproven business strategies duringchallenging economic times.

One of the State’s leadingfranchise brokers, Steve Finn, saidit was difficult to compare actualprofit and revenue, becauseindependent businesses had a muchbroader range of returns.

Mr Finn, of Finn FranchiseBrokers, said that someoneoperating a well-run, full-formatfranchise, which is a full-timeoperation employing staff, canexpected to make 10 to 20 per centprofit on their yearly sales.

Smaller, one-person franchisees,often known as a “man in a van”operation, can expect averageprofits of 50 to 60 per cent on yearlyturnover.

However, in real terms, thetake-home pay for the man in thevan is likely to be lower than thefull-format franchisee.

Despite the growing success of thesector, franchises were not suited toeveryone.

“Franchising is not for peoplewho are not good at being in arelationship,” Mr Finn said.

“The franchisee is virtually in apartnership with the head office.

“If you are the kind of person whoalways wants to do it your own way,if you want to be a lone ranger andtry your own ideas, then you will getmore joy out of an independentbusiness.”

Under the franchising system, thefranchisee is responsible for servingcustomers, running local marketingcampaigns and dealing with staff.

The mother company isresponsible for matters such as

national marketing campaigns, theco-ordination of product and supplysales, brand protection, legal issues,operational support and training.

Typically, the franchisee pays themother company five to ten per centof their turnover each week for thebenefit of these services and the useof the brand name.

Mr Finn said another majorbenefit for franchisees was theeconomies of scale that came frominclusion in a big chain.

A small coffee shop, for example,may buy only $20,000 worth of coffeebeans but as part of a chain, itwould get the group-buying power ofa company which purchased $10million of the product every year.

“So while you as the franchiseemay only be taking $20,000 worth ofcoffee beans, you get them at therate you would get for a $10 millionpurchase,” Mr Finn said.

“This could be two thirds of theprice that the independent guydown the road pays, because hedoesn’t have the group buyingpower.

“So he sells a coffee for $4 and itcosts him $1.50.

“You sell for $4 and it costs you90c.”

While the economies of scale setout a compelling case for franchises,it was by no means an assurance ofbetter profits.

Mr Finn said there were plenty ofexamples where an independentcoffee shop was far more successfulthan the many nearby chain stores,after creating a winning formulathrough its ambience, menu andlocation.

Franchises hold strong appeal forinvestors, but Mr Finn saysfranchisors usually reject requestsfor franchisees to run the outletsunder management, at least in the

first 12 months of the contract.He said this was because

franchisees were required to provethat he or she could run the outlet ina way that upheld the company’sname and maximised turnover.

Once satisfied that the ownercould enforce the same standardsfrom a manager, the franchisor wasusually happy for this to happen.

Under the franchising system, themother company typically sells a

franchise outlet only once. The purchaser then owns the

business and has right to resell toanother party and retain profitsfrom the sale.

The franchisee can sell at the endof their lease, which typically lasts10 years, or part-way through thecontract. A new owner, who must be

approved by the mother company,buys the business from the sellingfranchisee but pays ongoing weeklyroyalties to the franchisor.

Mr Finn said the cost of buying afranchise could sometimes bemisunderstood, because the right tooperate under the brand wassometimes separate to the cost ofsetting up under the brand.

A Boost Juice franchise forexample, typically cost $80,000. But

it could cost a further $300,000 to fitout a store in line with the BoostJuice brand. This money was paidto tradesmen, not to the mothercompany.

Mr Finn said franchisees did notget the automatic right to renewtheir contracts once they expired.

Southern River MP Peter Abetzsaid there been some isolated caseswhere the mother company hadrefused to renew a contract, and,under an unusual clause in aspecific contract, the franchisee wasalso denied the right to sell theoutlet.

Mr Abetz said the mothercompany then moved in to theoutlet, changed the locks, and beganoperating it as its own store,without paying any compensation tothe original franchisee. He warnedfranchisees to ensure theircontracts ruled out such behaviour.

Mr Finn said he was aware ofsimilar events occurring on onlythree occasions during his 15 yearsexperience, claiming it was a rareexception rather than the norm.

The Small Business DevelopmentCorporation has called for better

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SECURITY OFTHE HERDBuying a franchise gives you the muscle of a bigplayer with the nimbleness of a small business

Familiar fruit: The Boost Juice franchise brand is strong in WA.

Franchising is not for people whoare not good at being in arelationship. STEVE FINN, FINN FRANCHISE BROKERS


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protections for franchisees, throughtough new penalties in the nationalcode of conduct, which is underreview by the Federal Government.

Martin Hasselbacher, actingdirector of policy and advocacy atthe SBDC, wants financial penaltiesin line with those for breach ofconsumer laws, in the order of$100,000 for individuals and $1.1million for corporations.

The code seeks to preventproblems which have previouslybeen perpetrated by a franchisor,such as bullying franchisees tocontribute to a marketing campaignthat does not advertise in the sameState as the franchissee.

Other problems encounteredinclude inadequate disclosure of fullcosts and potential revenue topotential franchisee buyers.

PROS AND CONS

ADVANTAGES� Franchisee operates under a

name and reputation of awell-established brand.

� Franchisor trains franchisee, andoften staff, in areas includingmanufacture, preparation,accounting, business controls,marketing and promotion.

� Franchisor can help franchiseeobtain location and zoningrights, prepare plans forshopfitting and refurbishment,and to calculate stock levels forlaunch.

� Franchisee benefits from groupbuying power.

� Franchisor may be able to getbetter rates of finance fromfinancial institutions on behalf ofthe franchisee.

DISADVANTAGES� There are restrictions over who

a franchisee can sell to, as theymust be approved by thefranchisor.

� The franchisor’s business modelmay support high turnover,which can often be morefinancially beneficial for thefranchisor, at the expense ofhigh profit margins, which canbe better for the franchisee.

� The franchisor may makemistakes with their policies, suchas the introduction of a newproduct range, which may bedetrimental to the franchisee.

� The good name of thefranchised business and itsbrand image may become lessreputable for reasons beyondthe franchisee’s control.

� A potential franchisee may findit difficult to assess the quality ofthe franchisor, and whether thatcompany can provide thecontinuing service that is neededto sustain the outlet.

SOURCE: FRANCHISE COUNCIL OF AUSTRALIA

Michael McDonnell saysbuying a franchise is likejoining a new family.

He was happily ensconced in theSubway family for several years, butafter moving to WA from NewZealand, he decided to join somelocals — the Pastacups.

His Busselton Pastacup franchiseis due to open later this month,making it the 16th store in thegrowing local chain.

The 32-year-old says he decided tobuy another franchise after movingwest because the system appealed tohis business sense.

While reluctant to reveal the exactsums behind his venture, he expectshis initial Pastacup investment ofabout $300,000 will provide a$100,000 annual income.

He said he paid between $280,000to $360,000 as a franchise fee, whichalso covered the cost of fitting outhis Kent Street store.

The fee includes an intensive,

three-week training course forhimself, and some short-term staffto help train employees.

He is required to pay a separatelease to his landlord, a proportion ofhis turnover to the franchisor, andregular payments to a Pastacupmarketing fund.

He expects to put in 40 to 50 hoursa week for this six-figure salary.

Mr McDonnell said his set-upcosts were lower than they would beif he set up an independentbusiness, because he was able todraw on group-buying power whenpurchasing ingredients andequipment.

Access to credit was easier, withsome banks willing to loan up to 70per cent of the initial lease andset-up costs.

He was also pleased that headoffice took care of big-picture issuessuch as marketing.

While he believes an appreciationfor the food industry would benefit

anyone considering a similarfranchise, he claims a passion forsmall business is even moreimportant.

So, does a franchise really providehim with a sense of owning his ownbusiness?

Or do the processes involved inrunning a franchise make him feellike the system owns him?

“I definitely feel like I own myown business,” he said.

“I’m not obligated to work 9 to 5and I choose my own staff.

“My goal is to own multiple storesthat will let me have a fantasticlifestyle where I can go surfingevery morning, and oversee thefranchises.”

His Kent St store is expected toemploy about 15 people

Pastacup said 10 of its stores werefully franchised, three were ownedby the franchisor and three werejoint ventures between the mothercompany and the franchisee.

Busselton business: Pastacupfranchisee Michael McDonnell.

Picture: SaraStorm Photography

PASTA PASTIME DOWN SOUTH

WELL KNOWN WA FRANCHISES� Dome� Bedshed � Muzz Buzz� Pastacup

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1Get ready for tendering. You don’tjust wake up in the morning andrun a marathon. It takes

training, nutrition, advice andcareful preparation to succeed. Thesame applies to writing tenders andproposals. For example, find outwhat information you typically needto provide and how to get it. Makesure you are familiar with theterminology and processes. Ensureyou have the necessary skills towrite clearly and prepare attractiveprofessional documents. Ensure theright computer support andsoftware.

2Target opportunities and investwisely. Tendering isn’t likebuying a lotto ticket every

week. Writing mountains ofproposals, crossing your fingers,and rejoicing when one eventuallywins is wasteful. Savvyorganisations know that they arebetter off focussing on prospectswith a high likelihood of successbased on how well the project fitswith their strategies and plans.Theyuse a clear method to help themwork out when to tender, ratherthan spreading themselves thinlyover a wider range of projects wherethe likelihood of success ismarginal.

3Winning happens before writing.While the business communityis concerned with eliminating

unfair biases in the tenderingprocess, those bidding for the workshould not take this to the extremeby ignoring potential clients. It isimportant to build relationships,understand client needs and buildyour company profile before tendersare put on the market. This wellhelp you to become positioned towin before the written tender orproposal is required. However, beaware that many organisations haveclear rules regarding how, when andwhat contact can be made withpotential buyers, and theseguidelines must be respected.

4Follow the rules. If you departfrom tendering conditions andrules, you are putting your bid

at risk. If the buying organisationwants you to fill in a form, do it. Ifthey want your prices presented in aparticular way, do it. If you need tolodge your tender at a particulartime and location, do it. Rememberthat it is really easy for buyingorganisations to eliminate yourtender or proposal because it hasn’tcomplied with their “rules”irrespective of your offer.

5Time is your enemy. Writingeffective tenders and proposalsrequires early planning. Figure

out exactly who is responsible forwriting each part of the tender andhow long it will take to write draftresponses. Estimate how long it willtake to do internal reviews andapprovals and ensure you haveup-to-date pricing figures. And then

double the amount of time you needto write the tender becauseeveryone underestimates.

6It’s all about your client. Many ofus find it easy to talk aboutourselves but this is not the

way to win work in a tender process.Tenders, proposals and quotes areactually about your client, not you.Have you shown you trulyunderstand the client’s needs?What’s in it for them? How will theybenefit from choosing you? Bangingon about how good you are,especially with unfoundedmotherhood statements regardingyour products, history andperformance does not show that youare focussed on the client, and it is asure way to lose that next sale.

7Win the work first, then do it. A tender, proposal or quote is asales document that is designed

to convey your offer to supply insuch a way that it convinces yourclient to choose you above all others.Many organisations go into minutedetail to describe how the work willbe done but forget they actuallyneed to win the work first. Whileyou need to prove that you can dothe job, do not explain how you willdo it at the expense of showing thatyou understand what the clientactually wants.

8Ignore competition at your peril.Many tendering processes arepurposefully designed to

maximise participation bycompeting businesses. So preparingtenders, proposals and quotes mustbe undertaken in light of

competitors. Figure out who theyare, and what they are likely to say.Find a way to set yourself apart. Atender or proposal that is preparedwithout an understanding ofcompetitive alternatives is unlikelyto be persuasive.

9Price is always important.Sometimes price is thedominant decision criteria and

sometimes it isn’t. But it is alwaysimportant. You need to understandhow the price (or total cost) of whatyou offer is likely to be being judgedand make sure you not only price tosuit — but that you describe yourprice in this light as well. If youknow you are low cost, explain why.If you offer higher value, higher costservices then describe this so thebuyers understand and don’t makeill-informed comparisons. Maybeyou should provide options to givegreater price/value choice. Realisetoo that an obviously low price isoften treated by buyers with thesame suspicion as a price muchhigher than others. A good guide isthat to win, you need to pricereasonably, sustainably and be “inthe ball park”.

10One size does not fit all.Clearly, a simpleprice/availability quote is

different to a big, multiple volumetender submitted to a resource gianton a mega-project. So businessesneed to tailor the tender to theopportunity. A well-designedtemplate should only be used wherethe quote is small, or when thebidder gets full control on how it isprepared and structured.

Keys to success: Follow the adviceof experts to get results when

writing tenders and proposals.

AVOID ATENDERBENDERHANGOVERBid Write, which specialisesin tender and proposalmanagement, offers 10 tips tomaximise results whenbidding for a tender


Your audience needs you toKISS.*

Many in the medicalprofession describepneumonia as the old

man’s best friend and, as I recalledthat euphemism recently, I realisedthat pneumonia and the acronymhave much in common — they canlead to death.

Dying on stage in front of anaudience, large or small, isn’tpleasant.

A dodgy microphone, a videofailing to play or a script out of order.

The slightest stumble can feel likean eternity to correct, but losing anaudience’s attention — when you’retrying to persuade and convincethem to your point of view — is awaste of your time and theirs.

The voice and its intonations arethe master keys to success in anypresentation but language, and howyou use it, comes a close second.

We live in an ever expanding worldof word contraction.

It was with some surprise that Iheard not one but two commentatorsrecently describing a one dayinternational cricket match as anODI. I don’t remember ever hearingabout a TM in the gentleman’s game.

While text messaging has beenlargely responsible for ourcontracted writing standards (thinkLOL, OMG and countless others) thattrend should not be allowed toinfiltrate “real speak”.

All professions have their

traditional acronyms and it’s fair toassume, in the business world, thata large percentage of your audiencewill know what you mean.

But just one or two may not — andthey could be the investors you’relooking for.

There has to be some deference tothe acronym (think RSVP, PM, MP)and in the business world shortforms like KPI, CCI, CME have allentered the lexicon.

But the key to retaining yourlistening audience’s attention is tobreak down the not so familiar ones,on first reference. Then, use theacronym as you need it — perhapsdropping in its full definition onceor twice again, for good measure.

There are three key componentsto any presentation — engage, hold,persuade. If your audience can’tunderstand what you’re sayingyou’ll instead alienate, frustrate andexclude.

The temptation to show off with aplethora of acronyms must give wayto the realisation that simpleremains best. Break down theacronyms, leave the FIGJAM athome and relate to the one or two inyour audience who might justinvest, if they know what you’retalking about.

*Keep it simple, stupid......................................................................................■ Deborah Kennedy is principal at

Speak Write Communications —[email protected]

AVOID ACRONYMSIN PERFECT PITCH

Complicated business language can bethe death of a killer presentation,writes former television newsreaderDeborah Kennedy

Picture: Thinkstock

We also offer a range of practical workshops

to help you start or build your business.

Specialist advice for small business

If you are a small business owner, or planning to start your own business, the Small Business Development Corporation has a team of experienced business advisors who can provide free and low cost advice and information on:

Phone 13 12 49 or visit smallbusiness.wa.gov.au

Business licences and permits Dispute resolution

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Leasing commercial premises Aboriginal business support

Groupon, Spreets, Cudoand other “daily deal”sites can help make abusiness, but as onePerth entrepreneur

found out, the voucher deals havethe power to break a business too.

Brenda Duncan-Smith haswarned other small businessoperators to enter deals withcaution after an offer she madethrough Groupon late last yearalmost sent her beauty service tothe wall.

For the uninitiated, group buyingwebsites sell heavily discountedgoods and services for a set period oftime and usually to a limitednumber of customers.

The rise of the three-year-oldindustry has exceeded expectations,with one million vouchers soldacross the country every month.

But while the deals haverevolutionised online shopping, andbecome a hot new marketingmedium for small and mediumbusinesses, Ms Duncan-Smith saidthey could be dangerous if notstructured properly.

She claimed her Groupon dealwent awry because the companyfailed to follow instructions torestrict the number of $149cosmetic tattooing packages,worth $450 to $900, to only 50vouchers.

The Nedlands-baseddermal technician saidGroupon sold 185vouchers, or nearlyfour times morethan agreed.

“The

next two days were horrible,” saidMs Duncan-Smith.

“I had clients ringing non-stop tomake appointments.

“It got to the point where I wasbooked up until March and Icouldn’t fit anyone else in.

“I had clients who were sofrustrated that they were crying andyelling down the phone.

“They were taking out theirfrustration on me because I was theonly point of contact.”

Ms Duncan-Smith withdrew fromthe deal after servicing about 80clients, claiming Groupon hadbreached contract by allegedlyfailing to make two of the threefinancial instalments it wasrequired to make to her.

“I simply could not afford toservice another 100 customers forfree,” she said.

“Physically and financially, Icould not cope. I had hoped that thiswould help get my cosmetictattooing business off the groundbut it turned into a very stressfultime for me as I tried to figure outwhat was right for the customersand what was right for me.”

Groupon Australiaconceded therewas a

misunderstanding about the termsof its contract with MsDuncan-Smith, claiming itunderstood the sales limit was 200vouchers.

It has paid all outstanding moneyto Dynamic Skin Services, andrefunded 109 customers who boughtvouchers.

“Groupon apologises for our partin any misunderstanding of the dealterms thatoccurredafter thecontract

signing,” said a spokeswoman.Stories about botched deals have

some analysts questioning whetherdaily deals are based on afundamentally flawed businessmodel.

This is because businesses oftentake a loss on the deal in a bid tomarket their wares, and sometimestake on more than they can handle.

Some businesses are left with aslittle as a quarter of the usual valueof a product or service, after

discounting it by half and payinga further 25 per cent of

the total

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HAVE I GOT A DAILYDEAL FOR YOU . . .Kim Macdonald is told thatgroup buying sites should bemarketing tools, not core partsof any business model

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value to the group buying site.Researchers at the US’s Rice

University claim Grouponexecutives have privatelyacknowledged the heavy cost tosmall businesses and plan to givethem a greater share of the cut.

As concerns over thesustainability of the business modelhave grown, shares prices havedropped.

Groupon’s price has dropped from$20 when it went public in 2011, to$5.62 in late March, dragging down

the company’s value from $13 billionto $3.7 billion.

There is also some suggestion thatinterest from existing customers iswaning, with Groupon’s own globalfigures showing the average spenddropped to $64 in September lastyear, down from $77 a year earlier.

However, analyst Sam Yip, fromSydney’s tech consultancy Telsyte,warns small businesses againstwriting off the sector.

He believes the daily dealsphenomenon has a bright future.

Mr Yip says reduction from 80sites to 40 is a sign the sector isconsolidating, not dying, and heexpects technological advances willfurther boost the sector’s popularity.

He predicts the sites will soonutilise technology to better targetsuitable customers based onprevious buying patterns andgeographic location, rather the“spray and pray approach” of massgroup emails.

Mr Yip said the overall success ofthe deals for individual businesses

depended on how many couponholders returned as full-payingcustomers.

He said too many businesses blewtheir first chance of making a goodimpression by failing to properlyhandle the surge in telephone callsto book appointments when a dealwent live. He suggested hiring ananswering service or call centre fora week could well be worth themoney.

It was also important forbusinesses to record email

addresses for their vouchercustomers, so they could becontacted about new offers.

But this too would be counterproductive if the company could notcope with the surge in demand.

“These deals can be like a firehose because the amount of extratraffic it can bring in isphenomenal,” he said.

“Businesses have to considertheir capacity to cope and whetherthey need to put on extra staff whilethe deal is hot.”

Complaints made to WA’sDepartment of Consumer Protectionindicate many businesses arestruggling to meet the additionaldemand from group deals.

Acting director of retail andservices Lainie Chopping said mostof the 185 complaints made aboutdaily deals in the six months toFebruary were from consumersangry they could not redeem in atimely fashion.

“We understand that voucherproviders claim that only 40 per cent

of customers are likely to redeem, sothey sell 300 thinking only 200 willbe redeemed,” Ms Chopping said.

“But in WA the uptake is muchhigher.

“We spend a lot of time dealingwith complaints from people whocan’t get service.”

The Small Business DevelopmentCorporation said the deals siteswere usually profitable for smallbusinesses in the long term, ifproperly managed.

Business advisor Sonja Kanbansaid most operators took a loss onthe initial deal in a bid to increasethe pool of customers.

Profits came if they weresuccessful in getting coupon holdersto return as full-paying customers.

“The deals don’t make any moneyreally,” she said.

“It should be seen as marketing oradvertising because what happens isyou sign up to do a deal for a serviceor product, you discount it by about50 per cent, then you give the dailydeal website another 25 per cent.

“This leaves you with about 25 percent of what you would ordinarilysell for, so you’re not left with muchat all.

“If you can’t convert thesecustomers into regulars, then youare losing money.”

I had clients who were sofrustrated that they were cryingand yelling down the phone. BRENDA DUNCAN-SMITH

TIPS� Work out your break-even figure before committing to anything.� Limit the number of vouchers and the period in which they can be

redeemed.� Read the fine print on the terms and conditions and seek legal advice if

needed.� Negotiate for better terms with the deal website. � Set conditions so the products/services are redeemable during off-peak

times.� Treat the exercise as a marketing/brand awareness campaign. � Consider hiring a call centre and extra staff when the deal is hot.� Get contact details for all voucher customers and follow up by sending them

promotional material.

SOURCE: SMALL BUSINESS DEVELOPMENT CORPORATION, TELSYTE.

Bargain buys:Technologyadvances willfurther boost thepopularity of thedaily dealssector, accordingto Telsyteanalyst Sam Yip.


Brenda Duncan-Smith, owner-operator of Dynamic SkinServices in Nedlands, disputed Groupon over a groupdeal she entered into. Picture: Lincoln Baker

Offshoring is no longer thesole domain of bigbusiness, withtechnologies such asvideo conferencing,

cloud computing and skype helpingsmaller operators to send workoffshore.

Nicolle Jenkins, the owner ofmarketing firm The Hub, said sheused these technologies to sendabout 10 per cent of her graphicdesign work to foreign workers inAsia.

Like many small business people,she said she had initially beenreluctant to take the step becauseshe strongly believed in investing inlocal workers and supporting the

local economy. But the realities ofrunning a business in the currenteconomic environment, especiallyin light of the payroll tax that shewould have been made to pay if shehad hired another local worker,meant she had to find a cheaperalternative.

Ms Jenkins said the key tosuccessful offshoring was to buildrelationships with key contactsabroad who could help localbusiness operators tap the globaltalent pool.

Hiring workers based on whooffered the cheapest rates could endwith poor results, she warned.

MicroSourcing Australasia, whichoutsources work for Australian

companies to its headquarters inthe Philippines, claims the trend isnot killing local jobs.

It claims that 43 per cent of itsAustralian clients — almost all ofwhich are small businesses withless than 200 staff — have expandedtheir Australian workforce sincetheir first offshoring experience.

The Export Finance andInsurance Corporation, whichprovides help to local companieswanting to expand operations bysetting up an office abroad, is awareof the potential dangers of the trend.

The Federal Government agencystresses that it only providesassistance when a company is usinga foreign office to expand its

operations, not where the offshoreset-up is being used in lieu of a localpresence.

The potential gains for opening anoffshore office are high, with theAsia Pacific region forecast to behome to 3.2 billion middle classconsumers by 2030.

Graham Hornel, owner ofQuestbay Migration Services, saidoffshoring may be a suitable optionfor companies which cannot findlocal workers and cannot importthem through a work visa.

Mr Hornel said the subclass 457visa was available to small businessbut some were reluctant to use thesubclass because of the uncertaintyaround recent proposed changes.

FISHING OFFSHORE FOR WORKERS

Tech push:Nicolle Jenkinssends graphicdesign workoffshore.

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We are a boutique accounting fi rm based in Mundaring specialising in accounting and taxation for small businesses and have been servicing the Perth hills for the past 10 years.Our services include: business coaching and planning, secretarial services, bookkeeping and MYOB supply, install, support and training, tax planning assistance and preparation of BAS, taxation and fi nancial reporting, Business structure advice, setup, general ongoing business services and support. New clients are welcome.

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Chamber of Commerce and Industry of Western Australia (Inc)

The number one priority forsmall and mediumbusinesses is to have BASand GST reportingprocesses simplified.

The 2013 MYOB Business Monitorfound 70 per cent of respondents putthe policy change in their top 10priorities.

The monthly or quarterly reportswere seen as a major burden fortime-poor business owners, withmany complaining they weredrowning in paperwork.

MYOB chief executive Tim Reedsaid respondents felt so stronglyabout the issues that their vote inthe Federal election would likely goto any party which supported theproposed policy changes.

Mr Reed said the proposals, whichbroadly call for reforms of thebusiness taxation system and areduction in red tap, could help turnthe election on it head.

The sector has major votingpower, with more than 212,000 smallbusinesses in WA, which employabout 45 per cent of the State’slabour force.

The policy proposal with thesecond-most support in the MYOBBusiness Monitor was the abolitionof the carbon tax (61 per cent),followed by calls for more FederalGovernment investment intransport infrastructure in majorcities (60 per cent)

The sector wants more help forstart-up businesses in their first two

years of operation in the form ofwaiving penalty interest charges onlate tax payments (58 per cent).

The fifth most popular policychange was the provision of freegovernment-funded training for allsmall businesses on how to use theinternet to grow and enhance theiroperations (54 per cent).

This was followed by call for areduction in payroll tax, which got53 per cent support as a top priorityand was consistently nominated asthe number one priority by WAbusinesses in separate polls beforethis year’s State election.

The MYOB survey showed half therespondents wanted further cuts togovernment expenditure in a bid tofacilitate a quicker return tosurplus.

The survey shows only one in fiveSMEs (19 per cent) were totallysatisfied with efforts by the StateGovernment to improve the sectorover the past six months, which ismarginally better than the nationalaverage of 17 per cent.

But the good news, according tothe survey, was that WA SME’s werethe least dissatisfied in the countrywith their State Government.

The survey showed 31 per centwere totally dissatisfied with theWA Government, compared to a 43per cent national average. The restof the respondents did not agreewith either sentiment.

But local businesses were lessimpressed with the FederalGovernment, with the surveyshowing one in two WA SME’s (48per cent) were totally dissatisfiedwith the Federal Government’sefforts to help the sector. Thiscompares to a 54 per cent nationalaverage.

About 13 per cent were totallysatisfied with Canberra.

CALL TO CUTPAPERWORK SMEs drowning inred tape outlinetheir gripes in anew business poll

Things you should know: For a limited time. Conditions apply and are available at www.sgio.com.au/smallbiz Applies to current, genuine competitor quotes or renewals on comparable small business insurance. Written proof may be required. Cover is subject to standard underwriting guidelines and policy terms. Cannot be used with any other offer. To see if a product is right for you, always read the Product Disclosure Statement from the product issuer, SGIO.

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Documents

BIGDEAL - Perth, WA, National & World News · 16/04/2013 · business incubators around Perth. Nest, in Victoria Park, is an incubator which takes the notion of “hot desking”