Weekly pulse
Dynamic Business
Dynamic Business provides small businesses, startups and entrepreneurs with business news, inspiration and expertise.
Latest business stories:
1. Let’s Talk: Is there ever a ‘perfect’ time to start a business?
Starting a new business is one of the riskiest and most chaotic endeavours you can do, but it also has the potential to be one of the most satisfying and lucrative.
Many experts say starting a business, like having a child, will never be perfect timing. You can only imagine, plan, and scheme so much before you have to take the risk. Your website is flawless, your business plan has been completed, and you’ve even piqued the interest of a few investors.
So, is there a good moment to launch a business? Our experts offer advice on how to choose the best moment (if any) to start your business in this week’s edition of Let’s Talk.
Let’s Talk.
2. Founder Friday with Melanie Greblo: helping survivors of domestic abuse achieve long-term financial independence
Read on DynamicBusiness.com ??:
3. From unemployed to award-winning entrepreneur, here’s one immigrant’s message for multicultural Australia
Read on DynamicBusiness.com ??:
4. Female CEOs and board members are a huge step forward, but success now depends on much greater diversity
Over the past decade, Australian companies have done well at increasing the representation of their female leaders.
Women now make up?35.1 per cent of board directors of the ASX 200, up from 20.6 per cent in 2015 and?29 per cent of all executive leadership team roles. According to Chief Executive Women, though, more work needs to be done, as they only hold 7 per cent of CEO positions, up from 5 per cent six years ago.
Stakeholder expectations towards ESG are changing, an example being NASDAQ’s new requirements for disclosure of board diversity beyond gender. As a result, diversity and inclusion have now become part of today’s business vocabulary.?
Forward-looking companies today recognise the growing importance of making progress in diversity and inclusion that support these changing stakeholder views. Many focus on multiple dimensions of diversity. Yet, some leaders still think that the word diversity means gender.
Others believe that one dimension of diversity has not had its national movement even though nearly 28 per cent of Australians were born overseas; cultural diversity.
Australia’s got (diverse) talent
Earlier this month, the?Diversity Council of Australia?highlighted that 3,000,000 Australians are looking for or want more work.?
Yet, at the same time,?90 per cent of companies?say a lack of staff is holding them back, according to the September 2022 NAB quarterly business survey.
Australian companies can be better at leveraging their often-overlooked culturally diverse talent.
Numbers show that people with culturally diverse backgrounds leave their organisations much faster than the majority. For example, estimates in 2018 showed that Asian Australians hold only?3 per cent of senior management roles, even though they now make up close to 18 per cent of Australia’s population.?
Further, according to Watermark, only?7 per cent of directors of the ASX 300 companies?come from a non-European background.?
Sadly, many skilled migrants face challenges finding work in sectors such as?engineering, so they work in other sectors where their skills are not utilised.
This issue is not new, and “we must avoid the creation of a new class: a class of professional Asian-Australian coolies in the twenty-first century. A class of well-educated, ostensibly over-achieving Asian-Australians, who may nonetheless be permanently locked out from the ranks of their society’s leadership”, warned Tim Soutphommasane, Australia’s former Race Discrimination Commissioner, in 2014.
Further, to succeed in Asia, Australia should focus on rebooting its Asia literacy and championing its rich Asia talent, according to the?Asia Taskforce.??
Bringing into senior leadership ranks talent with these skills will be imperative to drive Australia’s future growth. They include Australians with Asian cultural and linguistic skills, Australian diaspora with Asia experience, and skilled migrants from Asia.?
Lead with cultural humility
Australian companies can definitely be better at more?inclusive recruitment, attracting people of all backgrounds to stay and providing them with the fair go they deserve. This requires employers to be more open to welcoming people with different backgrounds and perspectives to organisations rather than recruiting based on cultural fit.
However, they must also be better at retaining and supporting their culturally diverse talent. To do this, leaders should go beyond popular diversity initiatives, such as putting targets in place and unconscious bias training.?
Many of these traditional programmes seek to bring to awareness specific behavioural patterns in individuals. However, they don’t deal with sometimes toxic cultures that can lead people to behave in exclusionary ways. For example, companies’ deeply held beliefs, practices and basic assumptions can bond insiders and exclude others. At the same time, they expect new joiners to adapt to the company norms.
For cultural diversity, given many people’s behavioural patterns are developed in them when they are young and are deeply rooted, additional sensitivity is required. A critical way to start the change journey is for leaders to go beyond cultural intelligence and embrace cultural humility.?
This includes permitting people’s anxieties and vulnerabilities to be welcomed in group discussions. Moreover, companies should allow employees the space to be curious and open to learning about each other, including race and ethnicity.
The first step is to create psychologically safe spaces where people don’t feel threatened if they share their views. To find out more on this topic, Karen Loon’s new book?Fostering Culturally Diverse Leadership in Organisations?provides an essential roadmap of actions for HR Leaders looking to build a more inclusive workplace and is now available to purchase via Routledge. For more information, visit?https://karenloon.com/.
5. How to build an 8-figure brand: The 50/30/20 e-commerce finance rule explained
In today’s world, it’s not easy to stand out from the crowd – especially when you consider how easily distracted, we’ve become. While the seven and eight-figure marks tend to represent significant milestones in measuring a startup’s success, they also tend to reveal immense changes that are needed for both strategy and processes to sustain success and continue growing.?
This is something that Paul Waddy, e-commerce author, coach, investor and advisor to some of the country’s biggest brands, has experienced first-hand.
While there is economic turbulence unfolding around us – coupled with the cost of living crisis – according to Waddy, e-commerce benefited from inflation, not just in Australia, but in many parts of the world, including Europe – so despite the troubling outlook, some brands may have, there is still opportunity to grow and scale. In e-commerce specifically, it’s fallen back to where it was pre-pandemic, accounting for only about 20% of total retail. This means that online storefronts are still very much in their infancy, providing an abundance of opportunity for brands to take a chunk of that sales pie. It all comes down to finding a way to innovate, display value and solve a problem with your product.
Here are Paul’s tips for building an 8 figure brand:
Understanding The Numbers
The most important metric in e-commerce is gross profit, and if you can’t tell me your gross profit margin, then you don’t know how much to safely spend on marketing, which means you won’t be in control of your growth. One reason that I see online retailers fail is that creative types often want great brands – but they neglect the fact that they also need to have great businesses. I always say we need to be known for being as good a business as we are a brand.?
The 50/30/20 E-commerce Finance Rule
For e-commerce businesses, you’ve got to be aiming for a 50% gross margin, spending 30 per cent or less in running the business, which will leave you with a 20 per cent net profit. This is a good benchmark for e-commerce businesses – big and small – to aim for. If you’re finding that you need to spend more than that, you’re probably not getting the cut-through in your product. There are so many businesses I’ve seen – ranging from start-ups to $50M a year – who are operating on 40 per cent margins in the hope that scale will fix their numbers. However, the scale never fixes the margin. I would always say go back to the drawing board and delay your start until you get your margin where it should be.
The Product
One of the most important things to understand as a business owner is that the game is won or lost on the backend. It’s not just about selling that one product; it’s about repeat purchases and average order value. If you’re going to scale to 8 figures, then you need to increase your repeat purchase rate, and the best way to do that is to expand your product line, and offer upsells and cross-sells.?
However, it’s important to make sure that your product(s) is in demand, or trending, as the best online businesses are always driven by incredible products – followed by well-thought-out operations, great people and effective marketing. I strongly advise against diving head-first into a product that you?think?is going to work; instead, focus on a product you?know?is going to work. A favourite saying of mine is to fish where the fish are. In other words, dangle your products in front of the people you know want them rather than trying to convert cold leads that aren’t really that interested in what you’re selling.
Build For Mobile
Businesses do not focus enough on optimising for mobile usage – why are we still designing in desktop view? In my data, more than 50 per cent (closer to 75 per cent) of sessions come from Mobile over Desktop. Apps are also under-utilised. Businesses with apps can convert at up to 20 per cent higher than on desktop or mobile. Apps also require less marketing spend due to the use of push notifications, while paying with mobile is so much easier, i.e. Apple Pay, so it makes sense that you focus more on this. To give you an idea of growth, mobile commerce sales were $360 billion in 2021, up 15% from the previous year in the USA alone.
Being Aware Of Trends
The key to progressing as a business owner is to be aware of emerging trends. You need to be fast to be first, and the sooner you get in on new segments of your market, the faster you grow. You face fewer roadblocks when you’re the first to infiltrate a new market. Your path to establishing a foothold or a dominant industry position is a straightforward shot without being hindered by the costly prospect of positioning your company in an already overcrowded industry.
Collecting The Right Big Data
Applied knowledge is power. Gathering data about your customers is essential to engaging them and optimising performance. You can continue to communicate with each website visitor over time, proving your company is trustworthy and here to stay. This may be the most powerful and high ROI of your advertising budget outside of a specific referral-generating strategy for your customers. The most important thing to remember when designing strategy and communications is that a customer is never more excited than when they first visit your website. Retargeting allows you to keep their excitement high as you reveal new information to them over time.?
6. Revenue is vanity; profit is sanity
As the old saying goes, ‘revenue is vanity, profit is sanity, but cash is king.’ Getting cash flow right should be the north star of any business, but it’s unfortunately all too common for business owners to get blindsided by revenue at the expense of all else.
Over the last 20-plus years, I’ve had the pleasure of speaking with business owners big and small about how they manage the money side of their business. The one thing that never fails to amaze me is the lack of understanding of the importance of good business cash flow.?
Worse still are the many business owners without a strong understanding of the financial position of their business, caught in what I like to call a ‘revenue race’, where actual profit is given a backseat to impressive-sounding revenue stats. You could have the most impressive revenue in the world, but if it’s all being eaten up by the business, you might as well start from zero.?
So, if you’ve been living on a cash flow struggle street, here’s how you can begin to understand the financial position of your business better and prevent yourself from getting caught in a revenue race.
There is such a thing as bad revenue
Revenue is only part of the story of a successful business. Sure, you could argue that without revenue, there is no business. But there is such a thing as bad revenue.?
I have witnessed small businesses chasing millions in corporate or government accounts, leaving themselves with a less than 10% margin to ensure they secure the revenue. Match this with long or late payment terms; these kinds of ‘big deals’ are a recipe for disaster.?
Here’s what more businesses need to learn: it is more than okay to turn away revenue when it is not profitable for you. Revenue doesn’t always equal profit, especially if that revenue can only be achieved at great expense.
The 10% rule
If you have a new deal you are considering, the 10 per cent rule could help to ensure your business’s cash flow remains healthy, enabling you to invest back into the business and your staff easily.?
First, make sure you are operating at the correct gross profit for the category you are in. Every small business needs to operate at a minimum of 10% net profit. So if you are a $2 million dollar business, you should have a net profit of $200K.?
Bear in mind that after all COGS, COS, wages, loans and expenses go out, with 10% going back into the business. This should happen first before anything else.
Let’s say you have completed a new deal worth $100k, you have just received payment of $100k, and you know you have suppliers, lenders and staff to pay. The first payment is to your business, with $10k going straight into the business’s profits account. You should have a separate account set up for business profits. This should be the case with every single deal or invoice that gets paid. Even if it’s a $100 invoice, $10 must apply to the profit account.?
The business profit account should get paid first, closely followed by payroll (including paying yourself), along with lenders and suppliers.?
Since small businesses often neglect to factor in and allocate their profits, this ‘10%’ habit will ensure that your profits are turning into cash assets, which you can use to pay down a loan, invest in capital or even expand at the end of the year.?
Try it out for a month, and you will be amazed at how quickly your profit account grows. If you find yourself falling short or extending a timeline for a loan or a supplier, you may need to adjust your pricing to ensure you are, at a minimum achieving 10% net profit.
领英推荐
Ultimately, the key to successful cash flow is to avoid getting starry-eyed about revenue without the profit to back it up. If you can’t save 10% into your profit account, it’s time to make some changes.
7. SMEs are struggling to fill positions as the national skills shortage persists
There is a significant gap in the Australian labour market, with small and medium-sized firms finding it difficult to fill positions as they contend with the ongoing skills shortage.
According to a poll by Localsearch, more than half of the SMBs surveyed had trouble filling open positions over the previous 12 months.?
Findings:
The results also showed that more than 40 per cent of questioned SMBs are experiencing limited business growth, and more than 60% are discovering that they are unable to keep up with regular business operations because of a lack of skilled workers.
These discoveries highlight the urgent need to address workforce shortages and build long-term capacity in priority sectors. According to data from the Australian Bureau of Statistics, Australia is in the middle of one of its largest-ever labour shortages, with more than 480,000 job vacancies across the country and almost a third of businesses struggling to find suitable workers.?
This issue was also addressed at the recent 2022 Jobs and Skills Summit, where it was made clear that immediate action was required to address the national skills shortage facing Australian businesses.?
With a footprint across regional and metropolitan areas supporting SMBs across the Australian Capital Territory, Queensland, New South Wales, Victoria, Tasmania and Northern Territory, digital presence provider Localsearch has been supporting more than 28,000 SMBs (while also providing free support to a further 300,000 businesses) for almost 30 years. The company is highlighting the need for greater support for small to medium businesses, which make up more than 99.5% of businesses in Australia today.?
Executive Chairman at Localsearch, Daniel Stoten says: “Our mission at Localsearch is to continue helping the mum and dad businesses of Australia grow their businesses and their online presence. We’re doing all we can to support our clients’ online growth, visibility and development; however, as the survey results illustrate, it’s clear that more needs to be done to ensure they can continue to prosper.?
“We operate in the technology industry, specifically through providing digital marketing presence solutions, which are also being affected by the national skill shortage issues. What is more prevalent, though, and might be currently overlooked, is that the skills shortage issue affects all Australian businesses across all sectors regardless of the size of those businesses. A construction firm up in the Gold Coast will need more labourers, while a bakery down in Melbourne might need more SEO and website development assistance to be seen online and help sales. We must continue to support and service these businesses with the available tools, and we at Localsearch will continue to champion those small and medium businesses.”?
Director at Red Centre Technology Partners, Craig Reid says: “As Central Australia and remote Northern Territory’s leading integrated solutions provider for IT and Technology, we have a number of businesses that rely on us to provide fast and effective support. As we continue to work through the skills shortage, we’re finding it increasingly difficult to do this.”?
8. Federal budget 2022 summary, critics, and more
9. Most Australians still indifferent about sharing private information online after data breaches
Even after recent incidents like the?Optus?and Medibank data breaches, it seems most Australians aren’t too worried about corporations collecting their personal information.
When it comes to sharing information like age, gender, relationship status, and even address, around 60 per cent of Australians remain indifferent, a Money.com.au survey has found.
However, concerns are raised when users are asked for further financial information. At least 68 per cent of Australians said they’d hesitate to give tax file numbers, passport details, or other banking information.
“I am surprised by the level of comfort that the majority of survey respondents have around sharing their private information,” said Helen Baker, licensed financial adviser and?Money.com.au?spokesperson.
“Considering recent major customer data breaches, I think we need to start questioning why some service providers request personal information that is not relevant to their provision of the service. It may feel ‘safe’ to share personal details such as date of birth, gender and home address, but a company holding a combination of these can leave individuals vulnerable in a data breach.
“Malicious hackers, if armed with a few personal details about an individual, can steal their identity, sell their identity, create fake accounts or passports or incur debt on behalf of the individual.”
As part of the survey, respondents were asked how concerned they are, if at all, about sharing personal details when signing up for services like utility plans, accommodations, or other subscriptions. The details that flagged the highest concerns among users were bank transaction history (68 per cent), bank account details (65 per cent), tax file number (58 per cent), photo of their face (58 per cent) and passport details (57 per cent).
Interestingly, younger respondents were more likely to provide fake details when signing up to services. A third of under-30s say they have faked at least one personal detail online. The most common fake detail was date of birth, followed by home address, and name.
A higher proportion of men, too, tend to falsify personal details (31 per cent) compared to their female counterparts?(25 per cent).
Overall, the survey found just 40 per cent of Australians, on average, are worried about corporations collecting their personal information.
According to Ms Baker, this makes online safeguards even more important for Australians to protect their information and accounts.
“For instance, using a different password for every account and updating those passwords regularly, while setting up two-factor authentication, can provide an additional layer of protection,” she added.
“In light of recent data breaches that have made headlines, I believe large corporations will also become more diligent by updating their security systems regularly to prevent future data breaches.”
10. What Australia’s new workplace bill means for your business
Since gaining office earlier this year, the federal government has introduced one of its most ambitious—and divisive—bills in parliament.?
The Secure Jobs, Better Pay Bill, the first part of the Albanese Labor Government’s workplace relations reforms, intends to modernise Australia’s industrial relations system and raise wages.?
According to the government’s Secure Jobs, Better Pay bill, many Australian employees, particularly women, will benefit from a long-overdue pay raise. Meanwhile, business organisations are already organising to oppose it, alleging that it will only lead to further strikes and job losses.
The bill amends the Fair Work Act (2009) in five areas to implement enterprise bargaining outcomes from the Australian Jobs and Skills Summit.
The amendment bill proposes changes relating to the following:
Bargaining and workplace relationships, including:?
Job security and gender equity, including:
Compliance and enforcement, including:
Workplace conditions and protections, including:
Workplace relations institutions, including:
Minister for Employment and Workplace Relations Tony Burke said: “Australian workers have been doing it tough.
“For a decade they had a government that deliberately kept their wages low and did nothing to close the loopholes that have made Australian jobs less secure. That has left people struggling to make ends meet as the cost of living has gone up.”
For more information on what is proposed in the Bill, visit the?Parliament of Australia?and?DEWR?websites.
Link to announcement: https://www.aph.gov.au/Parliamentary_Business/Bills_Legislation/Bills_Search_Results/Result?bId=r6941
11. Inflation a ‘dragon to slay’ says Treasurer Chalmers as CPI hits new high
Treasurer Jim Chalmers has termed Australia’s soaring inflation a ‘dragon’ to be slayed even as the Consumer Price Index (CPI) records its highest figures in more than three decades.
According to data released by the Australian Bureau of Statistics today, the country’s CPI rose 1.8 per cent in the September quarter to now stand at 7.3 per cent year-on-year.
The increase has been largely attributed to rising energy costs (+10.9 per cent). Other significant contributors were furniture (+6.6 per cent) and new dwellings (+3.7 per cent).
The figures come a day after the Albanese government’s first federal budget announcement, where cost-of-living pressures remained front and centre.
“We see what rising prices means for families taking more from hip pockets and pushing people closer to the edge,” Treasurer Jim Chalmers told reporters in a National Press Club address.
“Whether it’s food, whether it’s electricity, whether it’s rent, inflation is public enemy number one. Inflation is the dragon we need to slay.”
The annual CPI movement of 7.3 per cent is the highest since 1990.
Goods continue to drive inflation, accounting for a little over three years of the rise in the past year. Meanwhile, high construction costs, along with labour shortages in the construction sector, continue to drive up the prices of new dwellings.
In the last quarter, dairy products saw the largest price hike at 6.8 per cent, followed by fruits and vegetables at 4.5 per cent.
Per recent projections, inflation will peak at 7.7 per cent by the end of the year.
12. $50m fines for Australian businesses subject to major data breaches
Under new legislation to be introduced this week, Australian companies with serious or repeated privacy breaches could face financial penalties of at least $50 million.
As announced by Attorney-General Mark Dreyfus, the maximum penalty for companies that fail to protect customer data as per privacy laws will increase from $2.2 million to whatever is higher – $50 million, 30 per cent of the company’s adjusted turnover in the relevant period, or three times the value arising from misuse of the customer data.
This could mean fines of up to $300 million for a business with revenue of $1 billion in the year before the data breach.
The move follows major data breaches of companies like Optus and Medibank in recent weeks. Hackers were able to allegedly access personal health information, Medicare card details, as well as passports and drivers licenses of up to 10 million users.
“When Australians are asked to hand over their personal data they have a right to expect it will be protected,” said Mr Dreyfus?in a statement.
“Unfortunately, significant privacy breaches in recent weeks have shown existing safeguards are inadequate. It’s not enough for a penalty for a major data breach to be seen as the cost of doing business.
“We need better laws to regulate how companies manage the huge amount of data they collect, and bigger penalties to incentivise better behaviour.”
The Privacy Legislation Amendment (Enforcement and Other Measures) Bill 2022 will also equip the Australian Information Commissioner and the Australian Communications and Media Authority (ACMA) with greater powers to share information; strengthen the Notifiable Data Breaches scheme; and provide the Australian Information Commissioner with greater powers to resolve privacy breaches.
In recent weeks, cybersecurity concerns have been a top priority for numerous businesses. Since the breaches, Minister for Cybersecurity Clare O’Neill has been vocal about the need for an overhaul of information and privacy protections in the country.
“This is the new world that we live in, we are going to be under relentless cyber-attack, essentially from here on in,” she said. “And what it means is that we need to do a lot better as a country to make sure that we are doing everything we can within organisations to protect customer data, and also for citizens to be doing everything that they can.”
These amendments will be introducing during a busy week in parliament,?with Labor’s first Budget?expected to be announced later today.