Wal-mart, Australian workplace reform and a great new documentary

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This movie has just been released in the US. It does not have a release date here in Australia yet. I bought my copy through amazon.com.

I didn’t know what to expect when I started watching this film. I was wary of some recent movies in this big corporation attack genre recently which have occasionally allowed emotion to get in the way of facts. Documentaries attacking any business cannot afford to get a single fact wrong for doing so taints the whole project.

While I have yet to see any response from Wal-mart, this film presents its information through the voices of ‘witnesses’ in such a way that the likelihood of truth is very high. And that’s what makes this film so depressing. Wal-mart is not good for many of its employees, the consumers it sells to and the overseas areas where its low paid manufacturing work force is sourced. It’s health, security and tax track records seem to be appalling – against the backdrop of stellar profits.

The film finishes on a bright note documenting the success of many communities fighting plans by Wal-mart to enter their town. It reminded of the protests recently at Maleny against Big W coming to town and the protests by pharmacists trying to stop Woolworths getting pharmacies in their supermarkets.

I’d suggest that watching WAL*MART the high cost of low price is essential for anyone who owns or works in an independent retailer or any small business for that matter. Despite the depressing data presented, the film is a call to action to individuals and communities across the country to be socially responsible and stop the pursuit of size and profits at all costs. It gave me hope.

Watching this film should be mandatory for all federal parliamentarians as they consider the workplace reform changes. They have to decide whether they want Wal-mart work practices here.

Besides the giant Coles and Woolworths corporations, in Australia there is another corporation acting in some ways in a Wal-mart like manner is the government owned Australia Post. They are sourcing more product in China and at what cost to employees there? They have a retail development strategy which hurts independently owned retailers. They enter a space already well catered for and take business under the umbrella of their government protected brand – leveraging an unfair advantage.

Relationships more important than margin

We’ve been partnering with some of our suppliers for more than ten years. In the IT marketplace that’s several lifetimes since margin is usually put well ahead of loyalty. While we know we can buy better elsewhere, we value the consistency of long term relationships and the non financial benefits like faster supply or extended trading terms.

This is on my mind because we have been stalked by a national supplier keen to get some of our hardware business. They have been smart enough to do some comparative pricing and they claim to be able to save between 10% and 15% off our current buy price. The moment they pitched their structure I lost interest. Who wants to deal with an account manager reporting to a state manager reporting to a national channel manager when you can go straight to the top in a smaller supplier company? Not me.

As a small business owner I take comfort from dealing with small businesses where young employees are given a start and where the relationship is respected as if it is the most valuable the company has. I didn’t get a sense of that in the pitch from the national supplier.

Workplace reform disadvantages small business

The workplace reforms which seem likely to pass through the Australian Parliament this week disadvantage small business because small business owners are, in my view, more prone to decisions of the heart whereas big business managers can only be driven by shareholder return.

Small business owners take many factors into consideration in making decisions including their own return. However, other factors such as the impact on the community, impact on employees, lifestyle etc all play a role in day to day decisions. Across at big business it’s more black and white and this is why the workplace reform legislation disadvantages small business.

Sure there will be some small business owners who use the legislative changes to cut labour costs. Many will not as they consider fair pay to be pat of the contract they have with the community at large. Big business is not, in my view, as socially responsible and will therefore achieve more of a labour cut and this will help them price compete more effectively against small business.

Okay so it’s another big business versus small business rant. Be that as it may, the logic of my argument is sound.

Finding good employees

We’re about to start looking for someone to join our help desk to fill a vacancy created as a result of a promotion (always a good thing). I’ve started playing with the text for an ad and it struck me how frustrating it has become. I bet that within 7 days of placing the ad online I’ll have more then 200 applications. Most will be lazy applications – a resume sent by an applicant direct via Seek. No cover letter, no effort checking the detail of the ad to make sure they are a good fit.

I reckon we’re ready to move beyond resumes and into vacancy ad responses that use some of the rich tools people have easy access to. Anything to make the short listing process more certain. So I’m toying with establishing some rules and refusing all resumes.

I want to hear and see candidates talk. I want to see their answers to some questions. How they communicate and their interest in some topics is of more value to me at this stage than anything a resume can tell me.

Then tonight in a fast food drive thru line I realised that I really should do is poach someone. You know, see the perfect candidate and see if they’d be interested. In the type of role we have attitude, communication and focus are key. Knowledge used in undertaking the work can le learnt whereas the other three skills cannot. So, in this drive thru line I encountered the ideal candidate. Multi tasking, happy, customer focused and he left me with the feeling that he meant what he said – none of the usual drop as they step through the corporate 10 point sales dance. The trouble is that I was out of the line and on the way home when I realised I’d missed an opportunity to ask if he was looking for a career change.

Major suppliers thwart cost reduction in small business

My company serves over 2,000 small businesses and through our software they process data from over 80 suppliers. Electronic invoices and statements are crucial to cutting costs out of the back room of small businesses yet major suppliers refuse to provide data in a form which enables this.

That these big business suppliers get away with such shoddy treatment of small business is appalling. They do get away with it though. Why? because many in small business don’t know any better.

We’re lobbying on behalf of our customers and while there are some wins, too many major suppliers refuse to actively engage with small business on the IT front. It seems they prefer ignorance as a strategy for ensuring small business customers don’t have the data to enable better decisions.

Okay I accept it sounds like a conspiracy theory. But why else would a major supplier stick with an IT strategy which costs each small business customer more than 8 man hours a month when adopting ome simple changes would cut that to less than one man hour a month. The seven man hour saving may not be much but once you multiply that across, say, 2,000 stores you have a saving of at least $250,000 a month.

Big business can help small business cut operational costs by providing better IT links.

I’m not about to name names here – I’ll leave that for one on one lobbying. The companies involved, however, are high profile names in several marketplaces.

Do you really have to spend $2,000 to get 10 cents of a litre of fuel from Coles?

Maybe my calculations are wrong but based on my experience with the Coles FlyBys loyalty program, I reckon that, on regular items, one would have to spend over $2,000 to achieve the 1000 points needed to obtain the 10c a litre off voucher being touted in their new advertising blitz. Sure there are bonus points available on some items – I’d say ten items out of thousands in store.

I would then need to spend $30 or more to achieve the 4c a litre off voucher.

This campaign by Coles is an effort to create a perception of savings at their retail and fuel outlets. It’s smoke and mirrors in my view and should be exposed by consumer watchdogs as such.

State governments need to regulate to ensure that consumers are properly informed about such campaigns.

Coles starts fuel price war. Is it worth it?

14 cents off a litre of fuel the posters claim. It looks fantastic. But then you have to buy this and that and redeem these points and then you get the 14 cents off. The details are here.

This campaign is a perfect example of why the various state governments should introduce regulations requiring disclosure of the real value of each point accrued at the time of purchase so the consumer can know how much their business is valued. My earlier blog post on this is here.

The Coles campaign is enticing but the fine print confusing. How much am I really saving? For example I have to convert 1,000 FlyBys points to get 10 cents off but how much do I have to spend to get the 1,000 FlyBys points? Okay there are some special deals around right now which offer good FlyBys points. But in the main you have to spend plenty to get to 1,000 points. Coles has an obligation to be more transparent with consumers about their campaign.

Small business owners can make ground here with their own campaign about real rewards for real loyalty. Coffee shops, newsagencies, pharmacies – many have in store loyalty campaigns which deliver substantially better value than the Coles deal. But consumers can’t tell because of poor government regulation and because small business owners don’t tell their customers how good their deals are compared to the Coles deal.

I have a great loyalty program in two retail shops I own. I’m planning a better than Coles promotion to underscore the difference between what I offer and the massively promoted Coles offer.

On the software front, we’re going to tweak our loyalty tools to help small business owners better communicate with customers about the real value of each point.

How do you engage small business owners to be business owners?

At Tower Systems create software for independent retailers. We’ve been doing this for almost 25 years. We serve over 2,000 clients across Australia and New Zealand.

The biggest single challenge we have on a day to day basis getting our clients to use our business management software beyond the most basic cash register replacement type functions.

While many of our clients engage with the software and push it to its design and capacity boundaries, many do not and remain oblivious to what’s actually happening in their businesses. It’s like they enjoy owning the business but don’t want to understand. Some expect the software to understand for them. Others, well I don’t know.

Every day in our business we talk about how we can improve engagement with the technology for the benefit of client businesses. It’s somewhat of a holy grail. We care about it because of our long history in the marketplace. We also care about it because of our affinity with the small business space. We believe in small business and will champion it at every opportunity.

To deepen engagement we have tried free training sessions; newsletters; online forums; trade shows; business performance analysis and face to face visits.

What we have found works best is face to face contact. It’s only through this that we can see whether they are good users or bad and whether they are serious about their business and are prepared to put in the necessary effort. Face to face we can measure how our pro bono effort will be received and valued and this will guide our investment. Of course the option is to ignore all this and just stick with making and shipping software. They may work for Microsoft. In the small business sector it’s all about engagement and that only happens when you are directly in front of the customer.

So, we champion face to face one on one contact. This is where we shine and our customers learn the most. More often than not, through these face to face discussions we see people evolve and become more engaged in using the technology as a partner to drive the business.

Software companies serving small businesses should consider face to face contact as a key part of their customer interface strategy. It pays for itself through referral business without any effort whatsoever. It’s also a point of difference as most software companies won’t have the drive or commitment to make it work. In our case I’d say more than half the growth we’re achieving is as a result of this effort at a better and more personal client relationship.

Barnaby Joyce on small business

Trawling through Hansard I came across this speech to the Senate on October 11, 2005 by Senator Barnaby Joyce. In the speech Senator Joyce sets out his reasons for his position on the Trade Practices Legislation Amendment Bill (No. 1). It’s a speech which would warm the hearts of any small business owner and it has not been well covered by the press. Too often in these cases the media gets caught up in the politics of the vote and loses sight of the words of people like Barnaby Joyce. He makes sense. He gets the role of business and, in particular, small business.

This passage from the speech is particularly stirring:

The purpose of the economy is not to produce the lowest priced product for the end consumer. That may be a consequence of a good economy but it is not the purpose of the economy. The purpose of the economy is to create the greater nexus between the wealth of the nation and its people, and it generally does that through small business. Our job in this parliament is to maintain the management of that, to make sure that small business prevails and gets a fair go, to make sure that small business can start from the ground up, that a person can start from the ground up and attain their goal and that freedom that they get from small business.

We have had so many instances where it has looked like that might be slipping away. Newsagents, some of the horticultural producers, pharmacies and a lot of small retail shops in regional towns or in suburbs feel that they are over a barrel. They feel threatened and do not feel that they have the ability to go on in the manner in which their parents or grandparents probably went on before them. Our job in this parliament is not only to say we support that but also to publicly show we support that and to do it in such a forum as this, the elected body in this Senate chamber they have sent us to. Why do we believe in this freedom to go into business? The freedom to go into business is a mechanism that gives us our own personal freedom. In politics, we have to allow the greatest freedom for the individual that does not impose upon the freedom of others. That is the aspiration within politics.

One of the key freedoms you can have is the freedom to start your own business, build it up, see it progress and hand it on as a legacy to your children. That is a key aspiration we hold. Some people talk about their future within a company. Some people like to have their own future managing their own affairs, their own future that they determine. I side with those people and I want to support them. I believe the birth of a new business gives birth to an aspiration that you can pursue. It also allows the development of new products, new ideas and new managerial techniques. It gives the whole economy a greater breadth, a breadth to go forward. On the conservative side of politics—and, I suppose, even on the Labor side of politics—it is a fundamental good that we try to encourage.

Currently, with 77 per cent of the retail market controlled by two organisations, we would have to say that freedom is slipping away somewhat. The ‘national champion’ argument pays little regard to the ‘freedom of Australians to be in business’ argument. Mergers and acquisitions are the stepping stones by participants in the market to a position of centralisation that inhibits this freedom. As such, Senator Boswell was instrumental in including the provision that you cannot have a merger that is likely to have the effect of lessening competition in the market. The ACCC works under this auspice. As such, it is something that should be maintained in its current form. Currently the ACCC approves 98 per cent of mergers. The other two per cent do not pass, and they do not pass for a very good reason.

I especially like his comments about aspirations. It is important that we encourage entrepreneurship. For this to happen we need economic circumstances which respect small business owners. As Joyce suggests, the circumstances are slipping away.

It may sound somewhat twee but I found his speech encouraging.

Once burned twice shy

I think that’s how the saying goes, once burned twice shy. A significant chunk of our business this year has come from small businesses switching from other computer systems to us and while we’re thrilled to win these customers, there are challenges involved. The most complex challenge is how they feel about computer companies in general after a bad experience elsewhere. If you do not navigate it well they shift some of their feelings for their old computer supplier to your company even before they have put the new system in. This can be frustrating when it happens which is, thankfully, not all the time. Now that we are aware that some customers can have this syndrome – caused by consistent bad service/experiences – we anticipate and help eliminate it before we start. This approach is working well and we get a good clean slate to deal with.

There are some poor quality IT companies out there serving small businesses and they are damaging the reputations of rest of us through their dealings.

It’s hard to let go of impressions burned through pain so we try for a completely different experience from the outset so comparisons are hard.

Self help group for new small business owners

We get pretty involved with our clients, especially those new to business. Often they find themselves in difficulties they never imagined in the afterglow of deciding to become self employed. Too many major suppliers to these small businesses bully the new business owners to gain preferential payment treatment. This de-motivates the owners and speeds up problems for the business. Not enough of the larger suppliers I observe step back and genuinely work with a small business in trouble – and often these larger suppliers have caused cash flow and other problems through accounting mistakes and over/under supply.

One solution I see is a self help group of new owners with experienced peer support and this is what we are establishing for our new owner clients. We are connecting new owners with some more experienced operators to check in with each other twice a week until the peer support person as certain that the new owner has a good grasp of all the pitfalls. We’ll support the group with free business analysis and regular phone and in person check ups to ensure that the business is in good hands.

The four business owners already in the self help group are going well, two have turned the corner and have new energy for their businesses.

Workchoices: is this type of industrial relations reform necessary?

I have owned my small business for 25 years. Across I employ over 50 people. Most full time and some casual. I see no reason for workplace reform of their extent bring brought in and am concerned that the changes will force me to act in ways I am not comfortable with.

I would have liked the government to consult more with small business as I know I am not alone in thinking these changes are bad for the community and bad for small business. This is not socially responsible legislation.

Experimentation

We’re a few weeks away from releasing a new software update while will ship to well over 1,000 small businesses. We’re been running various versions of this update in our two retail outlets and finessing it based on the learnings. Even though we’ve been doing this for almost ten years, the experience always amazes me as there are significant enhancements we make as a result of using the software ourselves. In the small business marketplace this level of hands on experience is essential if you want to lead in a market niche.

Loyalty marketing

I’ve got the rules on my desk for ten difference loyalty schemes from major retailers and all are poor at best in terms of rewards. I’ve compared these ten schemes with ten from local small businesses and the small business loyalty programs are better by far. It is like comparing chalk with cheese. The small business schemes are simple to use and quick to reward. The national chain schemes require you to complete details and always use their plastic card with your purchase. (Of course this so they can find out your purchasing patterns.) The small business schemes like the newsagency magazine club card, the coffee shop card, the card shop card and the bakery buy 5 and get the 6th free are all about genuine reward.

I would like to see the state governments introduce regulations requiring disclosure of the real value of each point accrued at the time of purchase so the consumer can know how much their business is valued.

I know that if I spend $100 at one major department store I will accrue around 50 cents value in points for the sale. I know that if I spend the same amount on coffee I’ll get $15.00 worth of free coffees. If I spend $100 on magazines at my own retail business I’ll get to choose two magazines to the value of $10.00 each – that’s $20.00 value from a $100 spend.

The lack of regulation is allowing the bigger businesses to get away with what I’d call loyalty theft. Small business groups ought to consider campaigns around how much better value of their loyalty programs.

Customer lines

I was in an Australia Post shop yesterday and waited five minutes to purchase $10.00 worth of stationery. At lunch I waited 2 minutes to be served at Subway. At the bank I waited 5 minutes to do some banking. In the morning I watched the counter at my small retail business and checked to see the average wait time before customers were served. In each case it was one minute or less – for large and small transactions – and in two out of ten cases customers were grumpy for waiting that long.

I’m curious as to why people will wait in a post office for five minutes to put a pack of paperclips but get grumpy in my newsagents when waiting a minute for to purchase the same product.

I think a key difference is that at the Post Office they organise their line whereas at my shop and many small businesses we do not have a regulated line. I suspect that our lack of regulation makes people feel we are not taking the next customer and the next and so or whereas at the Post Office that always happens so there is some certainty.

It’s the same here at my software business with help desk calls. People want to know that they are being dealt with in a linear fashion. Hopefully our CRM solution will provide the transparency they want so they can see that we do take them in order of arrival and not just pick off favorites.

In some respects I wish the Post Office customer mentality was available for small business customers – where people accept delays and public service like service. But then I don’t want their behind the counter arrogance. Not at all.

Another crack at Jetstar

When I flew with them on Monday I arrived at the airport two hours before the flight. I was congratulated on being so early. Smiles all round. I was told I was in the blue boarding group, the second in line in the run for your life seat grab since they have no allocated seats. I asked why I was not in orange, the first group which gets the best seats and they said it was because that’s for anyone with children and those who pay a higher price for their tickets. So, families with kids can arrive just before cut off and they get the seats of their choice.

I’ve flown with Virgin Blue and while their model is different to Jetstar, they are both budget airlines. The Virgin Blue experience is delivered with some more panache and fun than that of Jetstar. At least with Virgin there is certainty about your seat allocation and for regular travelers this is important.

Jetstar and their fuel secret

I took my first Jetstar flights this week and have discovered how they can sell tickets for so little.

They encourage families with young noisy children onto their flights and somehow manage to channel the energy released from their long and loud screams through the flight to feed the engines. Sure saves on fuel. These kids are releasing pure energy in flight.

On each of my 2 hour 20 minute flights I was surrounded by these small monsters and they screamed from takeoff to landing.

Well done Jetstar for such a scientific breakthrough.

The sloppy hamburger eater

I was talking socially yesterday with someone who was a sales prospect in around 1992/93. (I hope he doesn’t mind me recounting the story.)

Over lunch I was told the story of a visit from one of my sales people in 1992/93 with this gentleman, seeking to interest him in our computer system. Our sales person turned up with the remnants of a hamburger on his shirt. This is what the story teller recounted yesterday, how the sales guy looked. He had one comment about the software but that was incidental. It was the burger on the shirt which was “the” story. It was the second time I heard this story from this person in the last six months.

Once I was over being annoyed that something small like food slops from thirteen years ago was worth recalling today, especially in front of other prospects, I realised how first impressions really matter and how some people will hang onto those and forever (almost) judge one’s business by those first impressions.

Sure, this chap should let go of the 13 year old memory and concentrate on what software from my company can do for his business compared to what his current software (chosen 13 years ago) does. But then he’d lose a good anecdote. It is timely that I am reminded about the importance of how we look – especially in this era of casual dress in business.

I am confident that I am not the only person this burger story has been recounted to (twice) and that in itself has a cost of my business. Running the business as if every contact today will be recounted in 13 years is a challenge. It means exceptional service every time. It means focusing as much on the look as substance. It means, too, finding a way to erase these thirteen year old memories so that we and our prospects can move on.

Starting today I’m banning burgers for sales people. In fact, all food during the work day. And drink. No point in taking the risk.

Woolworths / Safeway and their smile TV campaign

It’s interesting to see the latest Woolworths / Safeway supermarket campaign here in Australia. While there is a pitch about price, it’s really a feel good campaign about great service. Lots of smiling.

It’s a great TV commercial. Breezy, upbeat. It sets high expectations which, if not met each time you visit one of their stores, invite harsh criticism.

I don’t think people choose a supermarket based on a TV commercial focusing on great customer service or smiling. Those features are best demonstrated in store as that’s where I’ll lock the experience away to encourage the repeat visits. If you have to advertise that you do what should be basic retailing service then something’s wrong.

Small businesses would do well to take this TV campaign as a reminder to focus on exceptional service. It’s true that exceptional service and a great shopping environment allows you flexibility on pricing.

On the trail of employee theft

We spend a lot of time gathering evidence of employee theft in client businesses. We’ve developed some processes and rules of thumb which police in several states have found useful. The post recent case is in Queensland. In fact, one of our senior employees is out of the office for the next two days giving evidence at a committal hearing.

What frustrates me about this case and so many like it is that our client had the tools available to see this happening and did nothing to mitigate his losses until they had mounted to a more noticeable level.

The end result is more money stolen and us spending considerably more time helping the police and, now, the prosecutor.

Frustration all round.

Advertising screen overload

The retail world has gone advertising screen crazy. They are everywhere and in all manner of shops. There was a time when they were confined to supermarket checkouts, now they are deep within the store. Some are just visual, others have sound. Each is a flashy bouncy ‘come on’ enticing you to spend.

I wonder whether retailers are going overboard. Small businesses are under pressure to bring more into their stores and that means that we as a software provider to small business are being asked to link into these screens and provide sales related visuals.

I’m all for intelligent use of IT to drive sales. However, I wonder is small business could differentiate by providing a calm environment. An oasis if you will from the usual noise of retail. If a small business is noticeably more calm than a competitor will customer stay longer and spend more? I am sure that the marketing experts will disagree, in part because they need to be pushing the next big thing to justify their existence and in part because light and colour is more interesting than stillness.

My point is that businesses contemplating these advertising screens need to consider what retail environment they really want to provide before copying the bug boys into the razzle dazzle.

Maybe there is room for calm.

Workplace reform frustration

I wonder how many other small business owners are frustrated with the Federal Government’s workplace reform changes. While I have not been able to escape the advertising blitz of the last month, I am yet to receive anything from the government, as a business owner and employer, which explains the changes.

I’d much rather the government focus its attention on the challenges of small business in competition with big business as this poses a greater risk to employment in this country.

Yeah I’m not happy with some aspects of our current industrial relations laws but there is no reason to strip away basic rights as these changes seem set to do.

Despair at small business and the lack of interest in business

I despair sometimes whether small business has any hope at all against big business competitors. Not only in terms of operational costs (lease, labour and cost of goods sold) but also in terms of advertising buying power and brand discipline.

The independence of small business, while admired by many, kills small businesses. The cost of reinventing the wheel in thousands of businesses even in the same sector daily makes of a debilitating overhead.

My biggest concern relates to decision-making. Whereas national and international companies centralise decision making and base it on accurate and timely data, small businesses rely more on gut feel and while this may win on some situations in many it does not.

I am concerned about this today because of another client on the phone and in trouble. While we will do everything possible to help them, the problem was evident six months ago in two or three crucial management reports available through our software. When asked by they don’t even look at such basic reports the response was “if I wanted to look at reports I would have stayed working for someone else”. I have looked at their data from six months ago as represented in these three reports and I can see falling traffic, the categories affected and even why the sales are falling.

Now it may be too late because they have let one thing pile on another to the extent that they are in default with several suppliers. This business is their only source of income and it is backed by all of their assets.

As I said, we will help them in every way possible. In the meantime, a question we have for ourselves is what could we do to have alerted them about the problem and if we had done whatever that is, would they have acted sooner? We have considered alters in the software and a range of other measures. However, it comes back to one key point – whether people using the software are businesspeople. Not even using some basic reporting tools is like driving a car while not looking at the road.

We figure the best next step to encourage engagement is to tell stories like this one to our clients – to encourage engagement.