The Australian Small Business Blog

Friday, November 30, 2007

Small's not so beautiful


AUSTRALIAN small business, in many respects, is recognised as the backbone of the economy. According to government statistics, there are more than 1.88 million small businesses, employing 3.6 million people. Their combined capitalised worth is $4.3 trillion -- more than four times that of the Australian Securities Exchange.

Yet the statistics mask the reality that most small businesses are very small, with many being home-based, and most of these micro-businesses never manage move to the next level, if they survive beyond the first few years.

"Running a business is a challenge: it's an emotional, financial and mental merry-go-round and it has become even harder with red tape, tax and professional standards being so much more complex," says Tony Steven, chief executive of the Council of Small Business of Australia. "However, the basics remain the same."

Getting back to the basics of business is one of the key themes explored by business coach Dr Greg Chapman, in a book he has just released, The Five Pillars of Guaranteed Business Success.

Chapman, who is also a Telstra Business Awards judge, says a high percentage of businesses stay small because their owners lack the vision, passion and skills to take them ahead. "What happens to most small businesses is nothing. They just stay small," he says. "Up to 98 per cent of small businesses are effectively 'micro-stayers', trapped inside a microbubble with little prospect of escaping, because they don't know how to grow."

Chapman says there are basically five reasons why micro-businesses don't move to the next level, with a lack of vision by the owner as to where the business is going to be in the future being top of the list.

"Without any direction, you really don't have any strategy, and strategy is the lever that lifts you from where you are today to where you want to be in the future," he says.

A second key reason is a lack of passion in their business, with many owners not having the commitment to take their business to a higher level. "You need the right vision to give you the passion, the commitment to stay the course and overcome the obstacles that do appear," Chapman says.

He says another reason why businesses stay small is that they don't plan, and therefore don't have the confidence to take the risks they need to take to achieve better results.

"It's not enough to have a vision and a passion; you actually need a plan to take you there. It's the roadmap; without a plan, all you really have is a dream, and we know how often they come true."

Chapman says the fourth reason why businesses stay small is that business owners don't value their time and are often working in their business rather than on their business, by performing tasks that can be delegated or outsourced.

Lastly, Chapman says business owners who fail to invest in education are also greatly limiting their growth potential. "When you value your time, you will also understand the value of knowledge," he says. "If an owner is not willing to invest in their own education and sees that as a cost instead, they have just resigned themselves to the school of hard knocks."

If business owners don't address these key factors, Chapman says, "they will be unable to grow beyond a certain level. The owner becomes frustrated and ultimately resigned to being a micro-stayer."

He says owners need to be open and honest that they are caught in a trap. "It's as if you've got a medical problem; you've got to diagnose the problem before you can do anything about it. Business owners have to be committed to really addressing their problems and doing something about it".

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The Australian Small Business Blog

Tuesday, November 20, 2007

Anyone Can Do It


How often have you seen the advertising for a great new opportunity:

For $99.95 (plus gst) I will show you how you can be a Millionaire.

Then they say:

It is so easy, Anyone can Do It. All you have to do is follow my simple system.

Then you put your money down, and you find out the system revolves around you putting ads in newspapers just like the one you read, and selling a ten page manual for $99.95 describing this strategy to others more gullible than yourself.

OR

The system is so vague and general that you cannot implement the information unless you buy the “Tell You Everything” $995 Pak and the $9990 “All My Secrets Exposed” seminar etc.

OR

The information is so technical and requires knowledge most people don’t have and is too hard for most people to implement.

OR

It requires you to do things you have never done before, such as cold calling, and which you will not persist with and will give up on before you gain any skill.

If anyone can do it, and it is such a great deal, why isn’t everyone doing it? It might be technically true that “Anyone can Do It”, but it is also true that Most People Won’t!

Where the occasional opportunity arises that indeed “anyone can do it”, for example some home business jobs you can buy, another issue arises. If anyone can do it with this system, everyone will be doing it the same way. So, why should they buy from you?

If you are making something that anyone can and is producing, you are producing a commodity. Typically, commodities have low margins.

To charge a premium for your products and services, you need a Unique Selling Proposition. Now the guy selling you the opportunity might have a Unique Selling Proposition in order to get you to buy, but do you really believe it is possible to BUY a Unique Selling Proposition? Especially if the opportunity seller is selling them as if there were no tomorrow?

Beware of those promising instant success. Invariably success is attained through discipline, perseverance and the taking of measured risks. If it wasn’t for these three factors, I am sure Anyone could Do It!

May Your Business be as You Plan It!

Dr Greg Chapman

Over to You. What do You Think? Post Your Comments Below.

Dr Greg Chapman is the Director of Empower Business Solutions and The Australian Business Coaching Club and is Australia's Leading Advisor on Emerging Businesses and provides Coaching and Consulting advice to Australian Small Business Owners in Marketing & Business Strategies Planning & Systems.

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The Australian Small Business Blog

Friday, November 09, 2007

First Impressions always Count


Does your branding link your business cards to your letterhead, to your displays and packaging, to your banners and to your Website?

Does each component of the brand come together to give a consistent message no matter what the situation?

If the customer does not connect the dots then how long does it take to loose someone if the branding is not giving the right message?

Consider the message below and then consider the speed with which potential customers make up their minds to connect to or leave your brand in any medium. Studies show Internet users make up their minds about the quality of a website in the blink of an eye. Researchers found that the brain makes decisions in just a 20th of a second of viewing a webpage. They were surprised, as they believed it would take at least 10 times longer to form an opinion. The study, published in the journal Behaviour and Information Technology, also suggests that first impressions have a lasting impact.

Speedy conclusions
The Canadian researchers showed volunteers glimpses of websites, lasting for only 50 milliseconds. The volunteers then had to rate the websites in terms of their aesthetic appeal. The researchers found that the speedily formed conclusions closely tallied with opinions of the websites had been made after much longer periods of examination. Gitte Lindgaard, lead researcher, of Carleton University in Ottawa, Canada, said, "My colleagues believed it would be impossible to really see anything in less than 500 milliseconds, Judgments were being formed almost as quickly as the eye can take in information".

Lasting impressions
The researchers also believe that quickly formed first impressions last because of what is known to psychologists as the "halo effect". If people believe a website looks good, then this positive quality will spread to other areas, such as the website's content. Since people like to be right, they will continue to use the website that made a good first impression. This will further confirm that their initial decision was a good one. Gitte Lindgaard warned "unless the first impression is favourable, visitors will be out of your site before they even know that you might be offering more than your competitors".
Richard Gill is the director of The Banner Lady.

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The Australian Small Business Blog

Wednesday, November 07, 2007

Selling a Business









The real test of business success is to see the value others place on your business. That is, how much they are prepared to pay you to own it. However, few owners see the return on their money and time spent building their business when they try to sell it.

Someone buying a business has similar considerations to someone buying a home. If the home is new or well maintained, and little expenditure is necessary to make it they way they want before moving in, the buyer will pay more. If the house is run down, and requires substantial renovation, they will insist on paying much less. Taking the analogy further, if buying a vacant block, they will have to also budget for the house to be built.

When buying a business, the comparison is between taking over a going concern, building up a run down business or starting a new business from scratch. Buyers will consider the saving in time and effort through buying a going concern that provides predictable incomes and operates smoothly when compared with one that has been managed poorly, or the effort of creating a new business.

Unfortunately, most businesses are totally dependent on their owners. When they aren’t there, nothing happens or sales drop. When a buyer looks at such a business, they will value it on its physical assets and its existing customer base. The value of the customer base may be heavily discounted if it is believed that the customers have a strong personal connection with the owner. Little or no value will be placed on the future growth potential of the business as the owner has basically done nothing to tap it. Why should a buyer pay for value that the current owner has missed. The buyer must put in the effort to unlock that potential and take all the risk if they are to be a success. They will also discount the value where it is possible key staff may leave soon after the existing owner. If there are no systems, all they are really buying is a customer list of dubious value, plus a few used assets.

Compare how a buyer values a well managed business. Along with the assets and the existing customer value, the buyer will see a marketing system which has allowed the existing owner to grow their business. They may see year on year growth in sales and profit. They will see systems in all areas of the business so if staff leave, they can bring in new staff and train them to run the business in the same way. The buyer in this case may pay 3 or 4 or even more times the annual profit of the business in addition to its other assets. (Highly successful listed companies sell for 20 times their annual earnings or more).

The difference between these two scenarios is business systems that ensure that the business runs smoothly, that there is a marketing strategy that provides predictable sales growth and systems that manage the people within the business. These systems make the success of the business independent of ownership. Whenever risk is reduced, price can be increased. The time to put in these systems is not when you are trying to sell the business. You can’t fatten a pig on market day, as one politician is regularly quoted as saying. These systems should be put in place now. They are part of your Exit Strategy.

The best time to prepare your exit strategy is when you start your business, but it is never too late.

Find out more about these strategies at:


This book, which has a forward from Tony Steven, the CEO of COSBOA, the peak small business organisation in Australia, comes with a $100 of business tools, and provides an easy to understand, step-by-step approach on how to improve your business, starting with your goals, right through to systems and sales.



Please visit Five Pillars for more information on “The Five Pillars of Guaranteed Business Success”

May Your Business be as You Plan It!


Dr Greg Chapman

Over to You. What do You Think? Post Your Comments Below.

Dr Greg Chapman is the Director of Empower Business Solutions and The Australian Business Coaching Club and is Australia's Leading Advisor on Emerging Businesses and provides Coaching and Consulting advice to Australian Small Business Owners in Marketing & Business Strategies Planning & Systems.





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Dr. Greg Chapman is also the author of
The 5 Pillars of Guaranteed Business Success

The Five Pillars of Guaranteed Business Success

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