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Big challenges for small businesses
- 1. SMALL BUSINESSES AND 5 BIG CHALLENGES Secret Womens Business Presented by Ember Consultants
- 2. Five challenges • Plan first • Understanding costs • Raise capital • Find your people • Own your brand
- 3. 1. Plan first – sort your business plan • Define your purpose, vision, values • Business registration • Insurance and legal considerations • Company structure • Operations • Competitor analysis • Finances
- 4. Competitors Do your research •Google + examine their social media presence •Make an enquiry •Pay a visit
- 5. Finances • Start-up costs • Accounts, record keeping • Balance sheet • Profit and loss • Cash flow forecast • Break-even analysis
- 6. 2. Understand your costs • What to look for? – Real cost of production and distribution – Cost of employees – not just an hourly rate – Ongoing running costs • Marketing, leasing, bank fees, accounting software
- 8. Investors • Do you have security to offer your investor? • Do you have a loan agreement? • Do you have a pitch to sell your business? • What are you willing to give? profit share? ownership? • What are you willing to pay them? a fixed rate? a interest percentage?
- 9. 4. Find your people • A contractor can be engaged directly as a person or through a trust, partnership or company • Have engagement agreement for both employees and/or contractors • See the Employee/Contractor tool on the ATO website
- 10. How to find your people • LinkedIn, SEEK, Career One • Tailor your job add towards the type of employee you want to attract • Number one rule: do not over promise and under deliver • Phone screen your candidates • Interview 2 to 5 of the best candidates • Reference check when you’re ready to hire • Onboarding, induction, training • Roll description • Culture
- 11. 5. Own your brand • Marketing plan – Vision statement – Goals + objectives – Target market – Marketing strategy (how you intend to attract customers) – Budget – Business overview – SWOT – Product, price, place, unique selling position – Competitor analysis – Communication channels – Tactics – Evaluation: targets ensure you achieve your goals
- 12. Brand strategy • Purpose Make people happy
- 13. Brand strategy • Visual identity • Consistency • Employee involvement
- 14. Barb@emberconsultants.com.au www.emberconsultants.com.au Follow us LinkedIn Ignite your business today
Editor's Notes
- Hi there! Let’s look at the top 5 challenges many small business owners face. If you’re just starting out or have been running your business for a few years but are ready to take it to the next level, this presentation will help you make sure your systems are set up, you have money in the bank and have a solid business and marketing plan ready to grow. If you have any questions drop us at line at admin@emberconsultants.com.au and we’ll be in touch.
- The business plan Your business plan validates your idea and helps ensure your business model is viable. Writing a business plan helps define your purpose, goals, structure, costs, risks, competition and budget. The Why? - Purpose, vision, values – I’m sure most of you are familiar with these. Business - Business elements included recording your business and registration details, insurance and legal considerations. As well as your company structure. Operations - This is also where you map out your operations. What’s involved in producing your product. Who are your suppliers? How will you communicate with customers? What are your trading hours and payments? So even if you’ve already started, why not revisit your operations method and see if what you expected you would do, is what you’re actually doing? Market – this involves a little research (A lot) – so don’t be afraid to spend some quality time doing this part. Research! The Australian Bureau of Statistics can tell you how your industry performed in previous years and there’s some helpful tips on the Australian Government business website. The Australian Bureau of Statistics can tell you how your industry performed in previous years and there’s some helpful tips on the Australian Government business website.
- Competitor analysis - First steps, Google your competitors – check out their website and social media pages – see how they’re engaging customers online - Mystery shopping – send them an enquiry and see how quickly they responded, how they responded, what did they offer and do their costs compare? - Visit their store – purchase the products and see first hand what they offer Be accurate do not downplay your competition the more you understand their strengths and your weakness the better you can mitigate long term problems and focus on solutions
- Finances Start up costs – Make sure you have done a correct Budget to ensure you have adequate capital to start your business. Ensure you include some cashflow for the first month of Trading to cover for Wages, start up stock and the cost of connecting Utilities etc. You might have a bank loan or leases on equipment so ensure your Budget allows for these things. What is your Break even point How much do you need to earn to cover your costs. Make sure you know this to ensure you are always exceeding your minimum requirement. Account & Record Keeping I’m going to list some necessary tasks that are required to prepare your financial statements. Financial statements give you critical information to help you understand how your business is performing and also highlights possible areas for improvement. Don’t be complacent in this area! Make sure you have an up to date financial software package for recording your data – I use Xero which is a great easy to use online solution. Enter your purchases and Issue your invoices promptly to ensure you have accurate reporting Do a stocktake and review how much value of stock you are holding Review work in progress and what value it is worth to your business Check your Debtors balance monthly – How much money are you owed? Check your Creditors balance monthly – How much money do you owe? Make sure Debtors always outweigh the Creditors to stay solvent Reconcile your bank account – Balance your bank entries with your bank statement Review your assets list – Make sure any assets you purchased are on this list so that you can claim depreciation Reconcile your GST account and lodge your BAS statement with the ATO Review your loan and equity accounts – Make sure your balance sheet it correct Review your employee leave entitlements and know what value this is Review and Lodge superannuation and PAYG for your employees on a monthly basis Report and lodge workers compensation declaration for employees yearly Prepare and Lodge employee group certificates at the end of the financial year For companies lodge your annual return with ASIC On a monthly basis the two most important documents should be reviewed by all owners Balance Sheet – Lists your Assets, Liabilities and Equity – This is your nett worth. Profit and Loss Report – Lists your Income and Expenses - Know what your expenses are know how much money you are making. Cash Flow Forecast – Know what’s coming up and make allowances for it. If you know someone is taking leave allow for extra wages, if its time to pay GST have it in an offset account ready to pay. In summary be organised and be prepared with your accounts and this will put you in a good position for borrowing money if and when you require it.
- PART 2 - COSTS What to look for? Real cost of production and distribution Cost of employees – not just an hourly rate Ongoing running costs Marketing, leasing, bank fees, accounting software Direct costs – the obvious things Other costs – holding costs, internet, eftpos machine, software cost – costs we don’t usually So what are the real costs – do it monthly or daily – get clear on what does it cost you on a whole Lots of people over look your employees – understand the costs of your employees Hiring, productivity, training, loose a staff member, uniforms, bonus structures in place, growth opportunities Marketing, banking, leasing If you would like a real example – email Alice@emberconsultants.com.au and we can share how a simple oversight can quickly make a business no longer viable. And then how to fix it!
- PART 3 – RAISING CAPITAL In business one thing is for certain - you’ll need to spend money to make money. When starting a business it’s helpful to know that there are two basic types of funding strategies: Debt finance Loans – we’re all familiar with these – we usually go to a bank or financial institution ask for the amount of money you’ll need to get started and set some terms for when you’ll pay it back. In a minute – we’ll show you want Banks want to see when you ask for a loan. You may have heard of bonds… as a small business you’re unlikely to use bonds to raise capital but… bonds are just another common type of debt instrument issued by governments or businesses. Investors pay the issuer the market value of the bond in exchange for guaranteed loan repayment and the promise of scheduled coupon payments. Equity finance Self-funded Investors: An investor will want a share of your business. You’ll need to work out what you think your business is worth and how much you are willing to give a share in your company. Remember if they own a part of your business, they have a right to make decisions. A really good friend – Yes this happens and frequently. So whether it’s a family member or a friend if you’re going to borrow funds make sure you spend the time to set some ground rules – what do they want in return for their investment? Set out a strategy for how you’ll pay them back.
- How to find an investor When you’re looking for an investor, here’s what you need to think about first. Do you have security to offer your investor? Do you have a loan agreement? Do you have a pitch to sell your business? What are you willing to give? profit share? ownership? What are you willing to pay them? a fixed rate? a interest percentage? From Alex: When I started my renovations and styling company, I was looking for investors to lend money of between $100,000 and $500,000. To allow me to complete more renovations than I could no longer self-fund. I created a slideshow presentation on what I do, what I can offer and what I was looking for from a investor. I then I found potential investors through my current contacts in my phone. Anyone I thought had money, or know someone that had money I organized a sit down with them. These included people such a lawyers, accountants, friends etc. If you’d like more information on finding investors get in touch! Alex@emberconsultants.com.au
- So in your business plan you’ve identified that you can’t go it alone – or better still you’re now at a stage in your business that you need help. It’s time to hire people Contracting has emerged as an alternative to the traditional employment relationship. A contractor can be engaged directly as a person or through a trust, partnership or company. Sometimes contracting is necessary where you require specialist skills that cannot easily be optioned by recruiting an employee. Some individuals prefer only to be engaged as contractors particularly where they service multiple clients. Contracting can also prove more cost efficient than employment. Ensure you know your legal obligations as a contractor could be deemed to bean employee through the eyes of Fair Work. Always ensure that an engagement agreement is drawn up for both employees and/or contractors. If there is a dispute for any reason as long as both parties have signed the agreement before the engagement commences this can be enforced. However you should be aware that simply calling an individual a contractor on paper or the fact they have an Australian Business Number (ABN) or a registered business name does not mean that is nature of the relationship. Courts still look behind a contract to define the true relationship between the parties. Check out the Employee/Contractor decision tool on the ATO website to determine if your worker should be an employee or contractor. https://www.ato.gov.au/Calculators-and-tools/Host/?anchor=ECDTSGET&anchor=ECDTSGET/questions/ECDT#ECDTSGET/questions/ECDT When hiring employees you must register for PAYG payments through the Tax Office These are the tax deductions from employees paid to the tax office on a Monthly or Quarterly Basis – This payment forms part of your BAS Statement once registered and is submitted with your BAS. We also have lots of templates and examples of interview questions we can share just email barb@emberconsultants.com.au
- Recruitment 1. Posting your add Many first steps employers are taking is to reach out to candidates who are currently working, is searching LinkedIn. You can see their job history and what they’re interested in by the types of articles they like or respond to. If you buy the premium version of LinkedIn as a recruiter you can reach out to anyone and invite them to have a conversation with you about the role you’re looking to fill. Tailor your job add towards the type of employee you want to attract. If you want to offer a part time role. Its great to target maybe new mums. You could possibly get a highly qualified employee at a affordable rate if you offer flexible hours, ability to work from home occasionally, also career progression along with potential for the workload to increase as the business grows. If you want to attach someone that in a management position that handles high stress, phases such as someone who leads by example, works well under presser in a fast paced environment. A can do attitude what is solutions orientated approach. Job adds should not only be based around the job description and role responsibilities but also what other then a salary will this employee gain from working for you. For example if a employee gets 2 jobs offers both around the same annual salary although one company includes, workplace culture, flexible working hours, KPI and career advancement opportunity. All of which might not even cost the company any extra money. The employee is very likely to choose the job with the additional benefits even in some cases if the total pay package is less. The value may be more valuable to them as a whole. Number one rule when recruiting is do not over promise and under deliver. Recruitment is costly and time consuming ensure that you maintain your staff longterm by ensuring you do not over promise through the recruitment phase and then under deliver during their employment. 2. Phone screen and Interview A. Phone screening: It is crucial to ensure you firstly phone screen your top 10 candidates. This will give you usually a immediate indication if they will fit in with the company. Within 2 minutes it is likely that you will be able to confirm if they are professional, polite and well spoken. Please find example phone interview questions below. B. Interview questions: You should target a maximum of 5 interviews for 1 role. If you are interviewing more it is unlikely that you completed the first step correctly. If you could only find 1 or 2 potential candidates that is ok, its better to only interview people you believe are right for the role. Interviews should take about 15-35 mins to conduct. We can share some sample interview questions with you. 3. Reference check Once you have chosen your final successful candidates from the interview the next step is to do a reference check. This is to gain a better understanding of how they previously performed while also giving you the ability to ask direct questions for anything that you may have concerns about. For example: If someone you interviewed seem great except they were late to the interview. You could ask there previous employee about there attendance, how punctual they where or if they ever missed a deadline.
- Just like writing a business plan, it’s also really important to spend time writing a marketing plan. While you may not know the best tactics or ways to communicate to your customers, but by writing out a plan, gives you a clear focus on your vision, goals, stakeholders, competitors, and your marketing budget Once you have a solid understanding of who your stakeholders are, and where they shop or how they interact with you and your customers you can then work on putting together an action plan. An action plan maps out your tactics, whether that is A user friendly website, with SEO so when people search for products like yours in your region, your website is right at the top Building a social media profile – pick 2 and work at them. If your B2B (business to business) marketing seriously consider LinkedIn premium if your B2C (business to consumer) Facebook and Instagram are essential – but you’ll need a separate plan and schedule to keep these up to date and not feel overwhelmed. Buying digital ads – Facebook, LinkedIn, Build an email database to send eDMs Don’t forget DMs are also still valuable – although costly. News stories and blogs are also really important – but if you want PR remember it has to be news - really work out what’s the human interest angle or link your story to a national day or campaign. But what ties all of these tactics together is your brand. So once you’ve worked out how you want to communicate and engage your customers, you need to implement a brand strategy if you want your business to live long and prosperous One of the challenges businesses face when communicating to their customers and converting that engagement to points of sale is not having a clear plan for doing so. Building a brand strategy will give you the clear direction your business needs to build a loyal customer base, trust and differentiation in the market. By definition a brand strategy is a long-term plan for the development of a successful brand in order to achieve specific goals. The brand strategy unites functions such as marketing, sales, product development outlining what each group needs to do for the brand to be successful, while setting goals that operations and finance need to support. So in the interest of time I’ll just pull out a few points essential components of a comprehensive brand strategy. Understanding these components will help you create campaigns to communicate to your customers and drive sales.
- Purpose Having a defining purpose separates one brand from another – lets look at IKEA: IKEA's vision isn't just to sell furniture, but rather, to "create a better everyday life." This approach is appealing to potential customers, as it demonstrates their commitment to providing value beyond the point of sale. Disney – Make people happy Again it’s simple and concise but it allows for scope – whether that is to launch a new product, create a new business
- Visual identity Your purpose will help to guide your visual identity. It’s really important to do your business and marketing plans before you just go an ask a friend to whip up a logo. A good graphic designer will take your plans, understand your direction and not only produce a logo that you can use on your products and materials, but will give you a suite of colours and guidelines for how to use your logo and overall visual identity. Having a style guide will put you on the right track to defining and promoting your brand and as you attract customers they will start to associate, understand your brand and hopefully become loyal customers. Consistency The reason you need guidelines, is consistency. But consistency for a brand is not just for how you use a logo or colours, it’s also the key to help you and your team avoid talking about things that don’t relate to or enhance your brand. Added a new photo to your business' Facebook Page? What does it mean for your company? Does it align with your message, or was it just something funny that would, quite frankly, confuse your audience? Defining key messages and consistently use them when you communicate to your customers also helps with consistency. Employee involvement –your people are your biggest advocates and a communication channel that should never be missed. How do your people talk about the place they work for - your business? Achieving a sense of consistency is important if you wish to build brand recognition. And while a style guide can help you achieve a cohesive digital experience, it's equally important for your employees to be well versed in the how they should be communicating with customers and representing the brand. Creating a brand is much like developing a personality. It’s what people come to know you as, understand and trust you, and most importantly make you stand out from others. So no doubt you have a website, some of you may be buying Facebook ads and building your email databases, which are all very important marketing tactics. But if you’d like to better understand how you can strengthen your messaging, be more effective with your marketing tactics, I’d be more than happy to help you with your strategy and refine your brand – admin@emberconsultants.com.au
- Thanks! If you would like some practical tips for your business or if you have any questions, get in touch anytime! Follow us on LinkedIn www.linkedin.com/company/emberconsultants