So it may well be good to know that in an ever-changing market, there’s a resource that can keep you fully updated and perhaps close the gap of seclusion.  Here at Good Business we are aiming to inspire you with stories of other SME’s and what they’re up to, what’s driving them and keeping them motivated to keep on keeping on. 

We’ve also corralled a panel of experts – each representing the key fields of expertise we believe are necessary to be successful in your own business; like accounting, legal, marketing, logistics, people management.  Each week they’ll be providing blogs on relevant topics to help us all keep ahead of the curve.  If you have a question for them – you can head over and ask them something here.  Each week they’ll be responding to your questions.

The Good Business website is made up of core help-based content – aimed at giving you all the tools and guides you might need, no matter the phase of business life you’re in; start up, growth and learning, needing assistance or looking at the sunset for an exit.  We’ve created downloadable tools for every stage and created easy help guides to hopefully steer you in the right direction.

This is just the beginning of the refreshed Good Business website – over the coming months we’ll be introducing new interactive tools and further specialist information for a variety of core New Zealand industries.  If you have a question or would like to get involved – click here to send us a note.   We’d love to hear from you.

Here’s to doing Good Business in 2011

Jenene & the Goodbusiness team

• Make a difference.
  Before you can lead others, you have to believe that what you do counts for something.  It is not a question of “Will I make a difference?” Rather, it’s “What difference will I make?”  Interestingly, the leader who has the most influence over your people’s desire to stay or leave, their commitment to the company’s vision and strategy, and how well they do their job – is not the CEO – it’s their direct supervisor.

• Credibility is crucial.
  The believability of the leader determines whether people will willingly give more of their time, talent, energy, experience, intelligence, creativity and support. Only credible leaders earn the full commitment of their people.

• Core Values matter.
  People want to know what you will stand for and not stand for.  They need to see alignment between your actions and the company’s values.  

• Focus on the future.
  Being forward-looking is the quality that differentiates leaders from individual contributors. Getting your people focused on a brighter future is one of the leader’s unique roles.  This requires you to spend more time reflecting on the future, more time reading about the future, and more time talking to others about the future.

• You can’t do it alone.
  It is not about you.  It’s about the relationship between you and your people.  You must attend to their needs, and grow the capabilities of your people if you want to accomplish extraordinary things.  Rather than thinking that you have all the answers, you need to ask them great questions.  This communicates that you believe in their abilities.  Give them choices.  Give them discretion over how things are done.   However, you must then hold them firmly accountable for outcomes.

• Trust is earned.
  The level of trust others have in you will determine the amount of influence you have. You have to earn their trust, and to do that, you need to show that you trust them first.  Trust comes first and following comes second.  Trust motivates people to go beyond mere compliance with authority.

• Challenge the status quo.
  Great leaders are always associated with challenging the status quo.  Sometimes leaders have to shake things up. Other times they have to overcome tough industry conditions.  Whether your challenges come from the outside or the inside, leaders make positive change happen.

• Lead by example.
  You can’t ask others to do something you aren’t willing to do yourself.  Leaders have only two tools at their disposal; what they say and how they act.  What you say might be interesting, but how you act is crucial.

• Leaders are learners.
  The best leaders continually work on their personal development.  Leadership can be learned. It is an observable pattern of practices and behaviours.  Learn from your failures as well as your successes, and always be open to better ways of doing things.  You have to have a passion for learning in order to become the best leader you can be.  

• Conclusion.
  You must be honest with your people about the current reality – even if times are tough.  However, it’s your obligation as a leader to accentuate the positive.  Leadership is not about wishful thinking.  It’s about determined doing.  It’s not about telling others that they need to solve these problems. It’s about seeing a problem and accepting personal responsibility for doing something about it.

A final point – You will never be a great leader if you aren’t doing what you love. 

Please take this opportunity to join our complimentary business education webinar – www.RESULTS.com

Author:  Paul Coles, Partner at RESULTS.com

But you don’t have to accept volatile cashflow as a way of business life. Focus on the things you can control, from the most common reaction of cutting costs, to more creative ways – like retrieving payments owing to you, or encouraging earlier payment.

Cash is king

For many businesses across New Zealand, success is still more a matter of survival than anything else. And it’s likely to remain that way for some months to come. Against such a turbulent backdrop, it’s important for businesses to remember this fundamental business principal: cash is king.

Whatever’s happening with the economy, the health of any company comes down to a number of factors. Key among them is cashflow – the ability to meet your monthly expenses and payments required to continue operating. It seems obvious to state that cashflow is vital for any business to survive. If your business has cash, it has a far greater ability to develop and grow.

So careful management of cashflow is critical to your ongoing success. Even businesses that are unprofitable at times can survive the tough periods and emerge back to profitability if they have cashflow. On the other hand, a consistently profitable business can still falter through poor cash management.

Controlling cashflow

First things first – make sure your accounts are up-to-date and accurate. Because you can’t manage what you can’t measure. Carrying out the following pointers might take some creativity and courage on your part, but it’s worth it.

You can try to boost the cash flowing into your business, by doing things like:

• Raising prices and increasing sales
• ‘Freeing up’ cash by selling off surplus equipment
• Getting rid of slow moving stock.

For the sales that you already have:

• Invoice as soon as possible
• Chase invoices the moment they’re due. Chasing money owed to you is perfectly acceptable, and in fact some businesses will never pay until they’re chased!
• Monitor your debtors – naturally you’ll look at the amounts outstanding after 30, 60 and 90+ days, but also identify your chronic late payers by name. If they’re slow payers, change the way you bill them or stop dealing with them until they’ve cleared their account. Don’t be afraid to walk away
• Make payment terms a central part of the contract
• Enforce your terms – stop lending your customers interest-free money
• Cash cheques as soon as you receive them.

Early payments

An effective way to release cash quickly from your invoices is to encourage your customers to pay-up more promptly. Offering an incentive can help – perhaps a discount on the overall payment owing, in return for payment within seven days. Over the longer term, this may not be something you want to keep going with, but it could help with any short-term cashflow problems.

You may also be able to stagger your product and/or service so that you receive progress or advance payments. These can be used to cover things like setup costs, sign-on fees, retainers, etc. You may even find customers like the security this approach brings as they feel it’s like a down payment to secure a priority place in your schedule.

Cut cash flowing out

As well as cash flowing into a business, there’s always cash flowing out. Unfortunately, it’s often an aspect of a business that’s neglected. It seems obvious but many business owners can be so busy running their business, that they become guilty of not properly assessing costs. After all, who goes into business to cut costs?

Nevertheless, controlling and, if possible, cutting costs, is an area that’s well worth focusing your attention on. For example:

• You may not like the idea but, as a stopgap measure, business owners could reduce drawings to a minimum amount.
• Review wages as a percentage of sales. If appropriate move people from salaries to performance-based pay.
• It pays to look at non-income generating expenses like buying stationery in bulk to receive discounts
• Try to negotiate better terms with your own suppliers.

Attention to cash management

Managing cash in any business is important. Many profitable businesses end up closing down simply because they could not get the cash to carry them in the short-term.

You won’t be the first business to experience cashflow problems, and you definitely won’t be the last. Whether you have an increase of cash coming in, or a reduction in cash going out, the thing to remember is that with the right management, you can really make a positive difference.

Profit and cashflow

Profit and cashflow are often considered the same, when in reality they are two quite different things. Profit supports growth of the business, contributes to the value of the business and pays back long-term debt. Cash pays for everyday expenses (suppliers, employees, administrative costs) and pays back short-term debt. Both cash and profits are required for a business to survive.

Now, more than ever, it’s important for your business that you focus on what can be done to help cashflow. All too often, thoughts turn to the darker side of bills and inadequate sales. But if you’re serious about doing all you can to improve cashflow, your thinking needs to be more positive. Focus on things like sales opportunities, payment terms, increased profit margins, return customers, and investment opportunities. Be positive… and take action!

Good Business magazine, 4th Quarter 2008

As part of Westpac’s commitment to sustainability we would like to encourage our business customers to receive Good Business via email.

The Good Business e-zine is the greener option, and there are many other benefits to receiving an email update

• anyone can sign up for the e-zine – any number of your staff can also receive the email
• you can easily forward the email to any staff members (particularly if there is something relevant to them)
• it’s easier for you personalise your reading experience by only clicking on articles that you are interested in.

Many of you already receive an e-zine copy of Good Business but for those who would like to in the future, please register now.

> register now for Good Business e-zine

As an elite sponsor of the event, we’re giving you the chance to join us there on Thursday 23 September 2010 for the Westpac Red Collection.

Westpac Red Collection is an exclusive fashion show, including some of New Zealand’s top creative designers including Angela Lewis, Annah Stretton, Huffer, Liz Mitchell, Trelise Cooper, Adrienne Winkelmann, Pearl and Zambesi – all together on the catwalk.

We’re giving away three prizes that each include:
• a double pass to the Westpac Red Collection
• two return flights to Auckland from anywhere in New Zealand, plus transfers (to/from Auckland Airport)
• one night’s accommodation for two in the Westin Hotel – Auckland viaduct…
 

Enter before Wednesday 8 September 2010 by visiting: 
www.goodbusiness.co.nz/fashionweek

The shift from a 12.5% to 15% rate is the biggest change in GST for more than 20 years. So successfully navigating this transition means getting to grip with the details.

You’ll need to make some decisions around how the increase will be accommodated in your pricing structures – whether they’re carried, passed on or a mix of both.

Changes to office and accounting systems will not only have to reflect the adjusted rate, but handle what could be a tricky transition period.

There are some questions you’ll need to ask yourself. Like how will contracts spanning the two GST regimes be managed? Will your business need additional resources to cope with the required changes? How will you best cope with the spike or drop in market demand these could create? Inevitably there will be potential fishhooks in the transition process.

For example, businesses could be left out of pocket on transactions priced out under the existing regime, but delivered under the new. For instance, inbound tourist operators could lose out on existing contracts with overseas agencies.

So how best to tackle the changes? First, don’t panic. Approach the changes positively and follow some key steps.

Here are our top tips:

Be proactive

Identify which aspects of the change are going to impact most on your business and put strategies in place to deal with these.

Be aware of the scale of extra activity involved in the changes and then resource accordingly. Retailers in particular will have a lot of price tag adjustment to do on September 30 – unless they can come up with a viable dual tagging system.

The last GST rise in 1989 prompted a shopping surge – particularly for pricier items. That has implications for staffing levels and cashflow.

Get systems sorted ASAP

Big companies with their own in-house expertise are better placed for a smooth adjustment to the new regime, but small to medium sized businesses will need to be proactive and seek help from key suppliers and advisors.

If you’re running proprietary software, you can go to your vendor to get the necessary software adjustments or updates.

MYOB general manager Julian Smith says the transition should be straightforward for businesses using its accounting solutions. But he warns: “October 1 brings a number of significant tax changes, so it’s important to keep your details up-to-date with accounting systems like MYOB and business advisors like Westpac.That way they can keep you in touch with everything you need to know to avoid being out of pocket.”

Communicate with your customers

While most consumers are aware GST is rising by 2.5%, price hikes can still come as an unpleasant shock.

It’s best to prepare people in advance, provide clear information as to how pricing on your goods or services will be affected, and promote positive angles.

Access good advice

The Government has set up a GST Advisory Panel to act as an intermediary between Inland Revenue and business people with GST queries or problems. Its comments and clarifications – particularly on how to deal with supplies of goods and services that span 1 October – can be found at www.gstadvisory.govt.nz.The site includes a submission form for specific enquiries.

More information can be found at www.taxpolicy.ird.govt.nz and on the websites of most major accounting firms (for example, KPMG).

An easy guide to doing the math The general rule of thumb is that a GST rate is based on time of supply i.e. 12.5% prior to October 1, and 15% after. “Time of supply” generally means the date when an invoice was issued for the supply, or the date when any payment was made, whichever occurred first. However the GST Act does provide special time-of-supply rules for specific transactions.

These range from instalment payments (like rates), to betting and gambling. Even the sums have an inbuilt challenge.

For example, when it comes to checking out the GST component, simple division by 9 is replaced by 7.66 (repeating), but that doesn’t always work out correctly.

People are instead advised to use the fraction method – multiply by 3, then divide by 23. Tricky!

Growing pressures on inflation will keep the RBNZ working towards normalising monetary policy settings, while high export commodity prices and a directionless USD support our view of a higher NZD by year-end.

Recent data shows that New Zealand’s economic recovery has continued at a steady but unspectacular pace.

GDP expanded by 0.6% in the March quarter, softer than the 0.9% recorded in the December 2009 quarter, but broadly in line with forecasters’ expectations.

A two-speed economy is now clearly evident: global demand for commodities and Australian demand for manufactured goods is leading a surge in goods exports while stagnant real wages and the soft housing market have resulted in weak growth in most of the service industries, including a 0.8% fall in retail trade.

Still, a year after the recession officially ended, GDP has expanded by almost 2%. That is about average compared to the major recessions in New Zealand’s post-war history.

Growth typically accelerates in the second year after a recession, and we think that’s achievable this time as the recovery becomes more broad-based.

Our forecasts see GDP growing by close to 3% in calendar 2010, with exports leading the charge. In calendar 2011, we expect growth to accelerate to an above trend pace of 4.4%, as strong income growth brings consumers out of hibernation and a solid investment cycle (both residential and business) gets under way.

Thereafter, we forecast growth to ease back toward 3.5%.

The risks to this view are many and varied. Internationally, European sovereign debt woes and talk of a double-dip in global growth are key sources of concern.

Back home, the major sticking points centre around the weakness in the housing market and ability of the consumer to pick up the pace of spending when faced with falling house prices and high household debt.

As was widely expected, the RBNZ was confident enough in the recovery’s progress to begin lifting interest rates in June, and quickly followed that up with a further 0.25% increase in July.

The accompanying Statements by the RBNZ have made it clear that these hikes are the first in what will likely be an extended tightening cycle.

Indeed, the interest rate projections in June Monetary Policy Statement were consistent with the cash rate rising to 5.5-6.0% over the next couple of years. And, while the July Statement was a little less emphatic about the pace and extent of tightening (implying that the end point may be lower and/or there could be some pauses along the way), our view remains that the RBNZ will continue to work its way towards a peak in the OCR of 6% by early 2012.

The key reason for an extended tightening cycle is that underlying inflation pressures are gathering momentum along with the rest of the economy.

Annual inflation is expected to peak at 5.2% in the middle of next year, with a range of government charges – e.g. GST, the Emissions Trading Scheme – adding 2.8 percentage points to the annual rate at their peak.

The RBNZ is able to look through the direct impact of these charges, and is assuming that the pass-through into wage and price setting behaviour over the medium term will be minimal.

But excluding these charges, underlying inflation is still expected to return to the upper region of the 1-3% target range by next year – and that’s even under the assumption of an extended series of rate hikes.

The escalation of concerns around sovereign debt in Europe and the emergence of fears over a double-dip in global growth, sent markets into a panic through late April early May, with sharp declines in equity markets, commodity prices and risk currencies such as the NZD.

A renewed financial crisis would undoubtedly undermine global investor confidence, de-rail the global recovery, and hit our commodity prices and the NZD hard.

However, we put low odds on such an outcome.

As such, we continue to see the New Zealand dollar rising through this year, reaching around USD0.74 by year end and around 0.76 in early 2011.

Our expectation of a stronger US dollar through the remainder of 2011 will see the NZD ease back slightly later in that year.

A growing business force

Quantifying franchise growth is the aim of a major survey currently underway that will provide the first complete picture of the sector since 2003.

Led by Massey University with input from Queensland’s Griffin University and support from Westpac, it coincides with an Australian survey that will allow trans-Tasman comparisons.

Although results won’t be available until later this year, the survey is expected to show a sector growing at a significantly higher rate than the national growth rate.

It’s also one that industry pundits believe can hold its own through economic down cycles.

During times of uncertainty, a more structured business model has its advantages, notes Westpac’s National Franchise Manager, Daniel Cloete:

“At the moment retail in New Zealand is quite tight so people like to have proven models – they like to understand the figures and make performance comparisons. With franchises, you normally have a good idea of what the success factor is both for the business model and the product. Additionally, knowing what the rent should be – along with wages and gross profit – that’s really important in the current market.”

People from a corporate background find it a good environment to work in because, while they want their own business, they also want strong management information systems and a successful business model to back them up.

The fact that sales levels are challenging was highlighted in the recent (July 2010) Franchising Confidence Index. It also found substantial decreases in the sentiment associated with general business conditions, like availability of suitable staff, sales levels and franchisee operating costs.

But in a down cycle, well supported systems can do better than independents and that makes franchising look more attractive, says Cloete.

Westpac was the first bank to get involved in the franchising market 20 years ago and has retained market leadership both in terms of franchisees and franchise systems.

Its support of the sector hasn’t faltered during the recession, says Cloete. “There has been some concern around funding for business and franchises in particular. It’s true banks have tightened up on house lending policies because houses are not increasing in value at the same rate – but as far as the business figures are concerned, we haven’t changed our policies. If the business model is good with solid figures we’re more than happy to fund. We’ve proved that through the past 18 months. We’ve been open for business right through the recession.”

Got any questions or would like to know more?

Our Franchise team will be happy to help. Just visit www.westpac.co.nz/franchise or call 0800 177 007.

Chip cards are now widely used around the globe. So if you haven’t upgraded your EFTPOS terminals to accept them yet, all the overseas tourists expected to arrive on our shores for the Rugby World Cup should make for a pretty good incentive.

Aside from the World Cup, your terminals need to be compatible with the latest card technology.

Having the right terminal helps keep payments more secure, reduces the likelihood of credit card fraud, and provides your customers with a reliable payment solution.

What you’ll get with an upgrade

When you upgrade you’ll get full support of all chipped cards and electronic offline voucher capability – getting rid of the need for manual vouchers.

You’ll also get enhanced transaction security for you and your customers, giving you a professional edge.

Basically, you’ll be ensuring that you’re compliant with the latest mandate from Visa and MasterCard. All of which, lets you provide full service to chip customers.

And let’s face it, customers who aren’t yet using chip cards, soon will be. The expected outcome from the Rugby World Cup An extra 71,000 people are expected from all over the world to flood into New Zealand in the lead up to, and during, the Rugby World Cup*.

That’s going to bring with it a lot of extra spend. Not just in the places hosting games either.

Many rugby fans will also travel around other parts of New Zealand while they’re here, so the spend will be spread far and wide.

In fact, the event is predicted to bring an extra $1.25 billion NZD*. That’s a very big reason to make sure you can process all domestic and international transactions, regardless of card type!

So what next?

Upgrading your terminals is easy. All you have to do is get in touch with your service provider and quote your business’s terminal numbers.

If you’d like to know a bit more, you can head to www.areyouready.co.nz or our site, www.westpac.co.nz/eftposupgrade

Alternatively, the Westpac Merchant Assist team are geared up to help you with your queries. Just call 0800 888 066.

* Previous RWC economic impact studies: Deloitte Analysis.

Tom was most recently a relationship director with Barclays Bank in London where he managed an exclusive portfolio of mid market clients and was a stand out performer of their team.

Prior to this Tom spent several years working as a relationship manager in corporate and commercial banking in NZ, requiring both a high degree of commercial acumen and personal customer service.

Tom prides himself on his holistic approach to relationship management, and combines a thorough knowledge of personal banking solutions as well as strong commercial experience in business planning, risk management, and debt structuring.

Tom is committed to delivering a gold standard of service for all his Health sector clients.

Please feel free to contact Tom: 
DDI: 09 348 0979
Mobile: 027 269 5179
Email: tom_webber@westpac.co.nz 

Contact details for the rest of the Health Specialist team: 
Chris Barton
09 367 3626
027 673 5732  

Nicholas Temm
09 336 9819
027 293 2378