Poor decision by Qantas impacts small business

We rely on access to air travel to deliver the services we offer our customers, especially new customers where we visit to deliver on site training.  The decision by Qantas yesterday to ground all their aircraft has hit the travel plans of some of our employees.  We are doing what we can to work around this blockade by Qantas management and will contact any of our customers who may be directly affected.

In the meantime we record here our disgust that Qantas would make such a selfish and ill-considered decision which will have a considerable knock-on costs for businesses and individuals.  This is not what we expect from a company which claims to be the airline of choice for Australians.

Desperation reflected in the POS hardware and software package price

An important factor in considering purchasing a Point of Sale system is price.  Sometimes the cheapest priced system is the one you want to avoid.  Especially if their price is barely what it would cost to purchase at wholesale the hardware in their quote.

Cheap hardware could be poorer standard.  It could also not come with the level of support to make it useful.  It may not be new.  Corners might be cut elsewhere to enable the company to sell so cheap.

We saw this recently when a competitor offered a system at such a price that they would not make money off the deal – regardless of any claim they make about the Australian dollar and the like.  What was not in writing was their software pricing model.  They factored in that the customer would use the software for several years and would have to pay each year thousands of dollars just to access their own business data.  So, what looked like a cheap deal was not when you took a total cost of ownership view over, say, four years.

Our pricing is public, on our website.  What you see is what you get.  Our transparency on price, commitment to quality hardware and approach to professional and timely support are what win us good business.  We can compete with cheap competitors by focusing on what a sales prospect really wants.

Cheap today is of no value tomorrow without reliable hardware and access to quality support services.

We offer professional Point of Sale software backed by on time, helpful and knowledgable advice.  The value of these things is far greater to a business than saving a few bucks on cheap hardware of questionable quality.

Helping independent retailers fight an EFTPOS fee hike

We have been working with Tyro and others to help fight the expected move by the big banks plus Coles and Woolworths to increase EFTPOS fees from October 1.  EPAL, the body which governs EFTPOS fees has already announced fee changes.  While we don’t know if the big banks will increase fees to retailers, recent moves indicate that this may be on the cards.  Hence the importance of work to help protect the interests of our community of small and independent retailer.

We are working on this by making representations to politicians as well as media outlets. We have attended several meetings interstate in pursuit of fairness not only for our customers but all small and independent retailers.

Tyro has committed to not increasing its fees except for a minority of premium cards which it has no choice but to move slightly.

Pushing back against higher fees by big banks is important work.  We are glad to be in a position to help.  We see our work as part of our commitment to social responsibility.

You can read the latest press release from Tyro on this important issue here.

Retailers – Make Honest Use of Your POS Software

Retailers are well advised to make careful and honest use of their Point of Sale software following reports of Tax Office interest in how some software packages could be used to commit fraud against the commonwealth.

We do not support, encourage or help retailers using our software to act illegally.

Any software company, retailers or other party engaged in tax fraud using software will ultimately be found out.  The work being done by a variety of government agencies in this area is considerable.

So, we share here today a warning: make honest use of your POS software.  Use intended to defraud the government will hurt the business.

In the 1990s we were asked for advice by several agencies of the federal government which were investigating the use of retail software from another company.  We saw from that investigation that they take using software as a tool of fraud seriously.

The other aspect of this which is important for retailers to understand is that how you use your software will be a lesson to your employees.  Use your software to defraud the government and expect your employees to do the same to you.

Pressure building on EFTPOS fees

Tyro, our preferred broadband EFTPOS partner and the EFTPOS partner small business and independent retailers love, is fighting hard against the looming EFTPOS fee hike which is being driven by the major Australian banks.  Click here to see the latest Tyro press release on the EFTPOS fee situation.

While some sections of the media are getting all worked up over the carbon tax, others are remaining silent on what is effective a new EFTPOS Tax being imposed by the banks and facilitates by the federal government.

The impact of the higher EFTPOS fees could be more significant on small businesses, especially those which cannot easily pass on or mitigate against the higher costs of doing EFTPOS transactions.  Coles and Woolworths are exempt.  They sit on the board which decided the price rise which is set to cause the EFTPOS fee hike.

With EFTPOS an important method of payment in retail today, retailers have little choice but to offer this service.  This positions them at the mercy of the major banks who control EPAL which sets pricing for services which effects EFTPOS processing fees.

We are supporting the campaign against higher EFTPOS fees in a number of ways including focusing on the topic at this blog and in direct communication with our customers.

Part of our mission here at Tower Systems is to help our retail partners cut the cost of doing business. While our software is terrific at helping retailers do this, we rely on fairness from providers such as the banks and their EFTPOS processing services. Our lobbying on the EFTPOS fee hike issue is central to our mission.  We will gladly go into bat for our customers to help them maintain a fair cost structure.

Tower Systems proudly serves over 2,500 small and independent retailers across Australia.

Wash up from the News International Scandal: a Case For Smaller Businesses

The phone hacking scandal which has engulfed News International in the UK over the last two weeks is a reminder of a key difference between big businesses and small businesses.

The CEO of a small business is less able and less likely to rely on a defence of I didn’t know what my employees were doing.

In small business we are closer to each other, more aware of what is being said and done in the name of the company and more accountable for these words and actions.  We cannot rely on the defence of size making ignorance acceptable.

It was a shock to see Rupert Murdoch effectively use the defence of we have 52,000 people and I don’t know what they say or do and therefore should not be held accountable.  His responses to the House of Commons Inquiry earlier this week make a strong case for fewer big businesses.  Commentary is certain to turn to this in the coming weeks, looking at business size and wondering if big really is better.

Of course, from a shareholder value perspective, size probably will always matter.  There is more to this discussion than shareholder value however.  We must consider the role business plays in society and in that consideration is the question of ultimate accountability.

A world of many more smaller businesses would be far more economically valuable, socially responsible and ethically accountable than a smaller collection of massive corporations .

While we continue to grow we have a long way to go before we could be called big.  Even after thirty years in business and more than 2,000 customers, we remain a small company serving small businesses. We like that, we feel comfortable with our size and the size of our customers.

Tyro Helps Small Business Retailers Combat High EFTPOS Fees

We have been working closely and personally with Tyro CEO Jost Stollmann on the challenge of increased interchange fees which will come into effect in a few months.

The potential impact of these higher fees on small business retailers is considerable as they make all retailers except Coles and Woolworths ten cents per EFTPOS transaction worse off.

In our work on behalf of our retail community we have lobbied politicians (including government ministers), in writing and in person, and brought to public attention the issues.  We will continue with this project, to seek a fair EFTPOS regime not only for our customers but for small business retailers more widely.

While not directly the responsibility of a software company, we are well positioned to engage because we see the volume of EFTPOS traffic and the potential impact of a fee rise on small business retailers.

We feel passionately about the treatment of small business retailers and they way they are treated sometimes by government, regulators and those in authority, such as the board which made the decision to increase EFTPOS fees and banks.

In 2010, banks increased their fees on business by 13% to $6.9 billion. In 2011, banks decided to increase the interchange fee for EFTPOS transactions by 10 cents, except for Coles and Woolworths. Now, small and medium business customers of the big banks are the least satisfied of all business customers.

Why has EFTPOS Payments Australia Limited (EPAL), which represents the banks and big retailers and processes 2 billion transactions per year, announced an increase of the interchange fee? Why raise the cost of EFTPOS transactions by 10 cents for all acquirers and merchants except Woolworths and Coles?

In August 2009, the Reserve bank of Australia refrained from regulatory removal, judging that the banking industry had not yet reached the point where they exerted significant competitive pressure on interchange fees. What is the conclusion now?

Unless they ‘BREAK UP’ – genuinely and not like the NAB and their recent faux break up, banks will lose the chance to act responsibly. A strong EFTPOS system requires investment by acquirers and merchants. It does not need banks to stop paying and start charging by levying a new tax on EFTPOS access. This is an unjust and untimely burden on Australia’s merchants and consumers!

Tyro is a friend to small business … delivering quality broadband based EFTPOS integrated with our Point of Sale software.  We support their campaign and share their commitment to small business retailers in Australia.

Fairness in Software Support Fees

We have recently seen more evidence of unfair support fees in the Point of Sale software space.  One retailer showed us an invoice for more than $3,000 for a year of software support coverage.  A nearby retailer showed us an invoice from the same company for the same service to a similar sized business with a charge of under $2,000.

The retailer paying the lower fee is used by the software company tin their marketing.  Only those who know that this retailer gets a substantial discount on support fees would wonder if this is compensation for endorsing the software.

Here at Tower Systems, our support fees are published on our website.  The only exception is where a business case is made and accepted for short term relief in terms of the support fee payable.  We will happily help those in need of financial assistance.

We do not pay for people to say good words about us.  We want referrals to be genuine and for the greater good of the user community and not because there is a financial benefit.

We accept our ethical and social responsibilities for fair, honest and transparent treatment of all of our customers.

Software Ownership Never in Doubt

When we sell our Point of Sale software package we sell it offering perpetual use, with the title to the software resting with the business for which it was sold.

We don’t rent the software or price it is such a way that there is a compulsory support or licence fee to keep the software running year on year.

Sometime, our customers enter into funding arrangements which leave the funding provider in control of the assets at the end of the funding term.  This is a matter for the customer and the funder.  That said, this type of funding is one fo a variety available for the purchase of our system or any system.

Often, the funding is organised between our customer and their accountant.

How our systems are funded by customers and the status of software ownership is important because of reports that a competitor is saying that we rent out software and that people buying it do not own our software.  We do not rent our software.  Businesses wishing to purchase for total ownership can and do this with us.

Curiously, the competitor reportedly spreading these stories has a compulsory software licence fee which they charge customers each year.  We have seen invoices listing this as in excess of $3,000 per year.

Our advice to anyone facing a situation where a sales person speaks negatively about a competitor in order to get a sale – ask for proof of the claim being made.

Fighting the banks on higher EFTPOS fees

We are continuing to lobby federal politicians on the EFTPOS fee changes bring brought in by EPAL, the company owned by the banks plus Coles and Woolworths, later this year.

The changes which are set to come into effect later this year will impact small business retailers, like our customers, considerably.  They look set to provide Coles and Woolworths with a competitive advantage.

So, we are maintaining our email and letter campaign to Senators and Members of the House of Representatives to ensure that they are fully aware of the potential impact on small and independent retailers. We are doing this with the knowledge of how much the changes will affect businesses like those we serve.  It is considerable given the trigger points established b the recent EPAL decision.

We are working closely with Tyro as well as the Australian Newsagents’ Federation on this.

So far, we have responses from six politicians.  The each say they will raise it further within their respective parties.  With others lobbying on this issue too we can only hope that those who can impact on the decision which has been made will act.

This is a big business versus small business fight.  We are squarely in the corner of small business, small and independent retailers in particular.

Jeweller Code of Practice Important to Tower Systems

codeofpractice.JPGAs members of the JAA (Jewellers Association of Australia), we willingly commit to and adhere to their Code of Practice.  This commits us to observe the highest business and ethical standards set forth in this code.  By being part of an association which serves one of our retail channels and committing to their code of practice, we are further demonstrating our commitment to our customers and to the jeweller marketplace more widely.

Not all businesses offering software to jewellers are members of the JAA and are therefore not formally committed to the Code of Practice. This offers jewellers an important distinction.

Establishing a Code of Practice along the lines of that developed years ago by the JAA is something which we would like to see in other retail channels in which we serve.

Hundreds of jewellers in Australia, New Zealand and the broader Asia Pacific region use our jeweller software to manage their jewellery businesses … from the back room to the sales counter, in dealing with suppliers through to sophisticated business planning.  2011 is delivering good growth in sales of our jeweller software.

Why the Price of Point of Sale Software is not Important

What a retailer pays for Point of Sale software may not be as important as the cost of ownership over time.

Some Point of Sale systems are ‘sold’ with a one year licence.  Retailers buying such a system can be shocked when they receive an invoice charging a compulsory licence fee as it is not disclosed during the sales process.

Imagine how you would feel having to pay a fee to be able to access the data you have diligently accumulated using your Point of Sale software during the first year. Some retailers feel as if they have no choice but to pay what they consider to be an unexpected fee.

Tower Systems does not do this.  Our software is sold with a perpetual licence.  There is no licence fee, compulsory or otherwise.  Our customers are not blocked from accessing their business data.

We see companies charging a smaller purchase price in the first year and what is effectively another purchase price in year two, year three and so on.  The total cost of ownership for the small business retailer becomes, in our view, exorbitant.

It is important that retailers considering purchasing a Point of Sale system understand what they are purchasing and what the operating costs will be beyond the first year.  These ought to be documented in a form which protects the interests of the customer.

Retailers facing such compulsory fees could consider seeking advice on their legitimacy.  There is no harm in asking the question of Fair Trading or your legal advisor as to the validity of an unexpected compulsory licence fee.

Having complete documentation of a transaction to purchase Point of Sale software and knowing for certain what it will cost for four or five years is essential. Sure, it can slow the sale. However, it can also uncover challenges which may save you money in the long term.

Caveat emptor.

The Risk of Buying Point of Sale Software on Price

We are helping a retailer who purchased Point of Sale software from another company almost a year ago for $2,500.  Our quote at the time was $6,500.  Our offer was for a perpetual licence, software which did not have a limited life.  While we explained the difference between our approach and the ‘licence’ approach of the competitor, we were not successful at winning the business.

Now that the retailer has an invoice for the second year of their ‘licence’ they have realised that they should have more carefully considered the total cost of ownership as we suggested at the time.

In their situation, purchasing from Tower Systems would have saved the retailer thousands of dollars over just a few years.

As is so often the case in business an AMAZING DEAL which is DRAMATICALLY CHEAPER than a high-profile competitor of probably not that amazing. 

We hope to have the customer switched soon.  Based on the current numbers they will still save money.

Caveat Emptor.

Retailers – Ensure That You Get What You Pay For

We are replacing a competitor’s POS software with our software and needed to reconfigure the computers.  The retailer says they were not given original CDs with the computers.  While we cannot verify if this is true, it serves as a reminder to all retailers to ensure that you receive original new packaging for all hardware and software supplied with each system you purchase.  Not having access to the original CDs presents a challenge for this retailer as they have never been supplied what they actually purchased.

Steep Discounting of POS Software is a Reason to Beware

Retailers have every right to be suspicious of POS Software companies which discount heavily through a sales process. 

A company which is not making money from each installation will be challenged to properly fund support and development in the future.

A company which has the capacity to go from $28,000 to $20,000 to $15,000 to $12,000, for example, was either trying to charge way too much to start with or is worryingly desperate to get your business.  We have seen this several times over the last few months from one company.  They discover we are quoting and drop their price several times.  In one case we saw them offer their software for free just to keep a customer.

These are not structured published offers.  No, they are in response to a competitive situation.  Sometimes hardware and software, sometimes just software.  There appears to be no pattern to the discounting except, in our view, an air of desperation.

Our advice to retailers is – be suspicious of chunky discounts.  A cheap POS System today may not be so cheap tomorrow.  

Retail is tough and some POS Software companies are finding this tough to deal with.  Using price as your differentiator is not sound business.

Here at Tower Systems we have a structured and transparent approach to discounts based on our package deals.   We reward loyalty, as all good businesses do.

First mover advantage on Gotch magazine adjustments

As the first newsagent software company to deliver an integrated direct to Gordon and Gotch supply change request, we are enjoying first mover advantage on this and related innovation.  Yesterday, we won a sale by proving that we had a facility which one of our competitors did not have and claimed we did not have.

Here at Tower Systems we take our sales and marketing claims seriously.  If we say we have a facility, we have the facility.  It makes a competitor look dumb when they say we do not have something which we have advertised and the sales prospect contacts us to find out who is telling the truth – ourselves or our competitor.

This particular competitor has form in saying things about us which are not true.

As we proved yesterday, we were telling the truth … and another newsagent joins the Tower Systems user community.  Karma.

We will not help retailers avoid tax

Around ten years ago we lost some sales because we would not help retailers avoid tax by maintaining two sets of financial records – one for the business and one for the tax man.

We reported the situation to the ATO and they brought in the Federal Police and several federal and state government agencies. We told them everything we had been told by others.  Whoever was doing this to win business must have stopped because we stopped being asked to provide software which facilitates tax fraud.

Over the last few weeks, however, we have been asked again.

Given the benchmarking project by the ATO, any business would be foolish to hide income because it will soon be discovered.

Our Point of Sale software does not offer two sets of accounting records and we will never develop such software.

Newsagents should beware of high software support fees

Some newsagents have reported being ripped off in what at first glance looks somewhat like a scam around software support fees.  The concerned newsagents have discovered that they are paying more than $3,000 a year for the same service from the same company that a nearby newsagent is paying under $2,000 for.  Yesterday, we saw a written quote from the same software company offering annual software support for the full suite of software for $600.

Newsagents should compare software support invoices among themselves.  Discovering that a neighbour is paying close to 20% of what they pay will anger some newsagents.  It may also explain why the same people always talk up software.

Tower Systems charges the same to all newsagents based on the software installed.  Our support prices have been published for all to see for many years.  We’d be happy for a comparison of our support invoices.  Such transparency is an important part of the mutual trust between our company and our customers.

What others charge for software support matters to us because sometimes software companies get blamed for the sins of their colleagues.

Legal threats from a competitor

I was surprised to hear that a competitior who has lost business to us has called at least one of their lost customers recently and threatened legal action for no justification.  This is an unfortunate turn of events.  If the software company had paid this much attention to the business when they were a customer they may not have lost them.

A nasty phone call with heavy-handed legal threats is not the way to build good word of mouth.

Beware of FREE POS Software

We are seeing more software companies selling software with an annual licence fee.  This is hidden in the fine print of an offer which proclaims FREE POS and Magazine Management Software.  The claim is misleading since the software is not free.  After the first year of installation there is an annual licence fee.  If you don’t pay the licence fee, the software stops working.  This is usually when we get to change the system over to us.

At Tower Systems we charge for software once, up front.  If our customers don;t want supportin the future they can continue using the software as long as they wish.  There are no additional mandatory fees.

We do not lock our customers out from accessing their data.

Beware of  the offer of FREE POS Software as it is probably not free.

Some sales people say anything to try and get a sale

We won a sale recently against the Director of a competitor who claimed to have been a priest in order to impress the prospect.  There was no mistaking the claim made during the pitch.  He was never a priest.  his credibility was shot.

Any small business owner buying POS or other software for their business should ask for all claims to be proven.  Honest representatives will gladly arrange this.  Dishonest representatives will present you with all sorts of excuses.

Most business owners have inbuilt BS meters which detect lies like the priest claim.  Unfortunately, some do not and these folk can end up with a bad decision.

Software should be bought because it is proven to be right for the job and not because of wild claims.

POS software blocks access by retailers

pos_solutions_newsagent_software.jpgTower Systems refuses to block users from accessing their software or business data should they choose to not continue with support coverage.  Not all software companies are the same.  Click on the image for a larger version of a photo of a screen which appeared on a computer in one newsagency earlier this year.  Contact with the company left them with no doubt that they would be blocked from accessing their software and their business data if they did not pay the support fee.

As I said at the start of this post, Tower Systems does not block access.  Our view is that once a business buys our computer software, they have a licence to use the software for as long as they like and without any requirement to pay annual support fees.

While the majority of our users do pay a support fee, it is their choice and not done as a result of blackmail to give them access to their own business data.

Can you trust the recommendation?

One of our Account Managers visited a prospect this week and before the meeting started, the prospect asked why our software could not scan a particular type of product.  The sales prospect had been told this a few days earlier by a newsagent who had heard we were visiting the prospect and was keen to stop us winning the business.

We can and do scan the type of product mentioned and have done since we first released point of sale software.

I was surprised to hear the story because it is easy to prove that the claim against the ability of our software is wrong.   Thinking about this later, it made me wonder whether there are others who would make a claim about our software which is wrong and is made solely to stop us winning business.  While I would expect this behavior from one or two competitors, I would not expect it from a retailer.

No matter what games people play, the truth is stronger than the lie.

We will gladly put our software up next to any other software and let sales prospects evaluate, function for function, for themselves.

How much should you pay for your point of sale sofwtare?

The price of point of sale software is set by market forces.  In our case, we publish our POS software, hardware and services prices here and rely on these as our offer.  We feel that by publishing our prices – individual item prices as well as package deals we run from time to time – we demonstrate transparency and consistency – crucial attributes in a software company.  We also demonstrate that we see all customers as equal.

While we are not the cheapest in the market, we offer a level of service and commitment to on-going training which delivers more value over the long term than a one-off discount.  This is why it is important to consider what you pay for POS software – what you pay today and for years to come.  Support can be expensive.  Lack of knowledge can also be expensive.

Our advice is to cost out a system over three to five years.  Doing this will show that a good deal today may not be a good deal after all.  It may also show that free software is not free at all.

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When not to hire

I was approached yesterday by someone working for a competitor to consider them for a role in my company.  Their pitch was that they were more valuable given the nature of their knowledge of the competitor system.  I said thanks but no thanks without hesitation.

This is a challenged marketplace – as evidenced by the number of unsolicited I and other employers receive.  While people need to take steps to ensure their personal situation, there is a question of ethics around this behaviour of effectively offering access to what they consider is secret information.

We have considered employees of competitors before but they had left their last company.

In a business like ours we need to be especially careful.  We expect security over our intellectual property and look for this in everyone we consider for employment.