Tower Blog

A blog about smart POS software for independent small businesses.

Category: Small business (page 10 of 13)

Another day another theft in retail

The call from a client starts off as an enquiry but a few knowing questions later you know you’re dealing with another likely employee theft problem in a retail store. The story is the same. A trusted employee. The owner had had suspicions for many months but was in denial. They don’t want to involve the police but they will have to because the financial impact on the business will require an insurance claim. As I see all too often, this theft could have been avoided had the owner managed the record keeping of the business as if the business records were an asset. They were sloppy with their IT systems and the data they stored. This showed the employee how they could help themselves to some cash. It’s why the problem reached the six figure cost. Completely unnecessary.

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June 30 count down

June is like a month of full moons for small business software companies. All sorts of weird issues and questions come out of the woodwork. Customers and prospects want to rush business through before the end of the financial year. Customers take parts of the software such as stock take on a once a year spin. Customers want copies of invoices they have lost. Others want us to invoice in advance for services to be provided next year. While most of it is good it can be frustrating handling the weird requests while plenty of regular business transacts around it. It is the out of the blue rushed sales calls which are odd – from someone you have never had contact with and they want to make a $25K decision within 24 hours over the phone and without knowing anyone else who uses your system. We have a structured process and resist speeding it up. We’d rather guide a prospect to and informed decision than have them make a spur of the moment decision and regret it later.

These last minute June decisions are in my mind today because of two calls from new prospects. Both do not like their current system. Both purchased in June a couple of years back and at the last minute to get a deduction (base don how it was invoiced). The result was not the right choice for either and no they want to change. At least this time we have a few weeks to ensure we understand their needs.

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The unadventurous Venture Capitalists

We’re deep into a launching a start up and wanted to consider sharing the financial risk so I arranged meetings with a couple of potential investors. Armed with a business plan, forecasts and a product 99% ready for market, the need for cash was more about marketing dollars than anything else. Their excitement for the proposition was exposed as fake when their only interests were exist strategy and security for their investment. They wanted security outside the startup so that there would be no risk at all. While that’s their right, where’s the risk? Why bring on a partner in a new venture if they are not prepared to share the risk? A bank would require less security than the VCs I spoke with.

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Sleeping with the fax machine

I received a call this morning from a small business owner complaining that their fax machine had sprung to life at 3am because of a fax we had sent. I thought the comment was a joke but it turns out that they do not have a fax machine in their business. Instead their home phone is also a fax machine and it’s on the nightstand in their bedroom. Our automated fax software was working through a list of 5,000 numbers and it happened to be 3am when it got to theirs. Ten, maybe fifteen, years ago I got calls like this – when fax machines were less prevalent. But today? I’m stunned.

Given the low cost of fax machines and their value to any business it never occurred to us that a machine we were calling in the current campaign would be in a bedroom. Okay, lesson learned.

This experience has highlighted to me the divide between businesses which do have a fax machine at the shop as well as broadband and all manner of other business assistance tools compared to those with a fax machine at home and probably no broadband and other tools. My initial reaction after the call this morning was to judge the business harshly for not keeping up. Now, I wonder how many others are living in a communication backwater and what impact this will have on their businesses. Business today is a speed game and without access to current technology and high speed connections it is only natural that you will get left behind. Getting that message to people with fax machines in their bedrooms without offending is a challenge.

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Banks make it hard for small business

We’ve been with the ANZ Bank for 25 years. They keep telling us how much they appreciate our business. Yet now we want to open an eGate facility for accepting payment online for a new business they want all manner of documents including a copy of our business plan. The questions suggest that the 25 years of trading, including several well performing property loans, is not enough. No, the ANZ want us to jump through so many hoops that we’re thinking it is time to shop around. It’s not like we’re asking them for money. The eGate facility enables our prospective clients to pay us by whichever method they choose. Why a Business Plan is needed is beyond me. We’re a known quantity to them. Banks annoy the hell out of me sometimes.

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Give it to me or I’m gonna tell on you

It was usually the last line of defence used by the bratty kid in class when they wanted something from you and threatened to ‘tell on you’ unless you gave them what they wanted. We copped this from a soon to be former client yesterday. They have sold their business and wanted a copy of our software to use at home for a year or so. It’s a request we have only had once or twice before. We explained that they could access the software without cost for 30 days and that beyond 30 days there would be a fee. Their reaction was unexpected. If we did not give them a software licence for free they would tell the incoming owner that our software and service were crap. They went into an bullying tirade against one of our most senior support people.

If they are right then our service has been useless for the six years they have been a client. We responded by putting our offer in writing and re-stating the free access for 30 days and that beyond this there would be a one off $895.00 fee for what is effectively a new licence. We also let them know that in line with our usual practice the incoming owners of their business had access to a free day of training.

We’ll have to wait and see if they ‘told on us’.

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Another employee theft court case, another waste of time

We get very involved helping police as they prepare cases against employees caught stealing. Several people in our company trawl extensive databases tracking down usage patterns which form a key part of the evidence. We have been working on another case this week. More than $50,000 stolen and not discovered until the money has been spent. It’s time consuming work and all the more frustrating because our software has facilities which can block such behavior. While employees should not steal, employers have an obligation to make it hard to steal. This can be done by using the tools in the POS technology, increasing the chance of capture and through better people management.

Until now we have provided this service at no cost. Given the lack of appreciation for our efforts and the many man-hours involved we will now charge for our time. This latest case has cost one of our most senior people three man days and to gift that to a client without compensation is not good business – especially when our other clients who manage their businesses better could suffer because of the attention diversion.

We had a case last year which racked up twelve man-days of time. Again at no charge to the client, police or insurance company. The insurance company covered the client’s losses. No one covered our investment. Our feeling is that there has to be a limit as to how far we go on this.

We’ll continue to offer our tracking service for free but once we have found a problem, the effort in preparing a case for the police will be billable.

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Free POS software user training

We regularly run free training events for our clients in capital cities and regional centres. These are usually very well attended in all locations except Sydney. Even though we have more clients in Sydney than anywhere else, they don’t seem to want to leave there businesses (or wherever they may be) to attend free training. From Cairns to Perth and Darwin to Hobart we get good numbers to the training events and calls for more yet in Sydney we regularly have to reschedule as we try and top up numbers to make the event worthwhile. If we go 50 kilometers out of the city we get plenty attending. It’s the suburban area which is the problem. We know from surveys and support renewal that our Sydney clients are happy. Maybe they are just a shy bunch.

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Beware of a software support fee rip off

I got a call the other day from a newsagent who had just received their software support invoice from a competitor of ours. He was still in shock and telling me that the software support bill was for over $3,000 for software support – a service which he considered mediocre at best. I did a quick check and confirmed that our support for equivalent software for his newsagency would be $1,590 a year. Half that he was paying. This chap is one of a growing group of software users angry at heft support fees. Our support fees have not increased in over four years and while that pressures our margin, my decision of maintaining fees at our 2002 level is out of fairness to the 1,300+ clients we serve. While I am happy to win another client, I would prefer that the reputation of software companies generally was not besmirched by unreasonable support fee hikes.

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Trademarking our support point of difference

We’re a small step away from giving a trademarked name to our point of difference. We call it the Tower Advantage – software, support, motivation and training designed to give our client businesses a competitive advantage. We decided to put a name to our offering to better focus our attention on our point of difference. What’s our point of difference? It’s the Tower Advantage. And what’s that? It is the package of tools which Tower delivers to my business which boosts what I make and how I feel about my business.

By packaging what we see as our point of difference in this way we’re building our own pride and tightening our focus. The label itself demands that we deliver an advantage. It keeps us true. While others provide computer support we provide the Tower Advantage. No one else can have that. No one.

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Small business and the environment

If you believe representatives from Planet Ark and other organisations you would think that big business does more to care for the environment than small business. On the use of plastic bags especially. I heard an interview recently where the Planet Ark person said they he wished he could get small business engaged on the use of plastic bags. This frustrates me because I know that in my own retail shop and many small businesses I visit that I am asked about paper or plastic whereas at my local Coles and Safeway I’m not asked – they push plastic automatically. Indeed, I have to tell them I don’t want a bag for the two or three items they want to put into plastic for me.

It seems to me that Planet Ark and others could make themselves better informed on small business and acknowledge the efforts of many to reduce the use of plastic. Their support for Australia Post, Harvey Norman and other national retailers is offensive. The cynic in me suggests that the majors are only involved because there are sales in it for them.

Small business retailers are getting a raw deal on environmental matters.

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How to cut employee theft in your shop

I’ve put together some tips for cutting employee theft in a retail business. These tips are based on several years helping clients address the problem when it has been discovered by our software. My sense is that employee theft costs many small businesses upward of 60% of all theft in the business. Yet, employee theft is the easiest theft to manage. I had to take a hit in one retail business I owned before I realised how much I was helping people steal. It was a $22,000 lesson and well worth it.

Here are my suggestions for reducing / managing employee theft:

1. Background check every new hire. Get their permission and use an agency to check with the police and other sources. Make sure you know the person you’re hiring! Often just asking their permission to submit to a background check will turn away those you don’t want.

2. Pay above award wages. The quality of your employees is up to you. If you’re doing your job you have good employees. Value them. Pay above award – by up to 10%. This will reduce theft.

3. Engage and show respect. Ask for their honest comments about the business. The more they feel, genuinely feel, valued, the less likely they are to steal from you.

4. No employee bags at the counter.

5. Tight refund policy. Theft is less in business with tight and enforced policies.

6. Offer fair discounts to employees. Let employees buy products for a fair discount and demonstrate respect for their involvement.

7. Don’t take cash out yourself. If employees see you take money out for questionable items like a coffee or your lunch they will feel invited to do the same.

8. Roster mix up. Change your roster regularly. It is common that a roster change will show you a theft problem you never thought was there.

9. Tight internal systems. Setup good systems with little room for error. Demonstrate through your actions that employees will be caught if they steal from you. Experts advise that people likely to steal choose employers who they assess to be soft targets.

10. Roster rules. Don’t have friends working with friends if they are the only ones rostered on.

11. Speed humps. Have a day where you turn on receipts for ALL customers. Then a day where you require that everything is scanned (as opposed to using hot keys and the like). These changes will keep employees and customers off guard and make it easier for you to spot problems. It will also keep you on your guard and that’s good for the business.

12. Spend more time up front. The further you are from the action in your business the greater the opportunity for you to be ripped off. Spend time where the action is – unexpectedly.

13. Balance the register during the day. Do this every so often. Again to keep people on their toes. It is also good practice.

14. Don’t let employees ring their own purchases up.

15. Don’t let employees sell to family and friends.

16. Your local council. Many local councils offer theft prevention training and help as do some local police. (Local U.S. police stations are considerably more active in this area.)

17. Beware of popularity. There is anecdotal evidence that the more popular the employee the more likely they are the one stealing from you.

18. Tell employees you suspect you have a theft problem. This might uncover comments. It might also scare them to stop.

19. Install a camera system and use it. Too often retailers have the technology and don’t use it.

To do nothing is to invite trouble. These suggestions are easy and most involve no or only a low cost.

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Indy cafes offer better indy music (and coffee)

Great to see independent cafes in Australia competing with the (safe) corporate music CDs in Starbucks and other production line coffee outlets with their soundslikecafe CDs. Soundslikecafe volume #4 is the CD I heard first this week at Gattica in Balaclava. A check of their website shows they have just released volume #10. So, rather than the bland Starbucks music offering check out Soundslikecafe music. This is how independent businesses can compete – by supporting each other and embracing the independent point of difference.

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Rural businesses appreciate face to face contact

We’ve had key people from our sales and support teams on the road for a few weeks visiting clients and prospects offering anything from a quick “g’day” to a couple of hours free assistance. The feedback from our people has been that rural people enjoy face to face contact more than their city colleagues. We learn more from rural clients as well – they are more open with suggestions. Our goal in making the visits is to improve our connect with clients. A bonus is the sales we have been given by several either to them or their mates. Again this business came more from rural businesses than in the city. While we like our city clients, there is (generally speaking) more enjoyment in dealing with rural clients.

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Woolworths, Maleny and local communities

The battle continues in beautiful Maleny in Queensland between the Woolworths corporation, independent retailers and many in the community who do not want Woolworths in their part of the world. The Maple Street Co-op news has a front page story about some of the tactics Woolworths has reportedly been using to track who visits their new store. As recent reports in the UK have shown, local communities can have their opinions count when it comes to companies the size of Woolworths. The key to is ensure that everyone in the community is fully informed about the economic and social cost of large corporations compared to small businesses and that an equal or higher over the counter price for an item may, in fact, be more economically valuable than a lower price at a major store.

The Maleny battle is far from over according to the co-op news and what I read at the Maleny Voice website. All of us involved in independent retail need to support the Maleny action in any way we can. Otherwise, the big two will get bigger and too many of our number will disappear in their wake.

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Catching employee theft

We offer our clients a free theft check service which involved us analysing data gathered using our Point of Sale system in search of usage patterns which suggest theft. We’ve just caught another employee stealing from the business. The story is the same each time. Denial by the owners as to the magnitude. This is following by a pit of the stomach sick feeling. Then comes anger and, usually, a call to the police. The cost to the business goes way beyond the financial loss. Despite every one of our systems having tools to enable the owners to track and even stop much of the employee theft, too often these are not used. Employers in small business are more likely to trust their employees and the crooks know this. I’ve seen instances where poorly run small businesses are sought out because of the opportunity. Justice takes too long to be achieved if indeed the goal is reached. I know of once instance where a case was been dropped because the cost in terms of public funds – this is despite the insurance company paying out and weeks of time spent by many including us gathering the necessary evidence.

My biggest frustration in all this is that the small business owners who need to use the tools they have at their disposal are those who ignore them. Maybe they get what they deserve.

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Newsagent software at the core of what we do

We’ve been in business 25 years now and what began back in 1981 as an idea on a kitchen table has developed into a solid national business service Australia’s 4,600 newsagents. Our software has been re-written from scratch five times. We started with a newspaper home delivery package and quickly moved into the point of sale (POS) space. Today we serve in excess of 1,300 newsagent users. In addition to our core newsagency software we also have magazine sorting software (for the Network Services Delivery program – NSDP) and school booklist magazine software. Both of these have been made available to the industry at no cost. While the business of newsagents has changed and ill continue to change, our business is strong as is theirs. Newsagents are evolving. We know because we own a newsagency ourselves and we have a considerable shareholding in a newsagency franchise group – newsXpress.

We’re about to launch several new products through our software for newsagents. These include a betting recharge product which will take newsagents into a service area new to them. By adding value to the POS without any capital outlay, we able to boost the return newsagents achieve from an investment in or technology. This extends our reach and enhances their business.

By getting involved in newsagency businesses in this way we’re strengthening our connect. Being exclusive with these products further boosts our sales.

So, while many aspects of the newsagent marketplace are challenged, entrepreneurial newsagents and suppliers are working hard to build a strong future.

While we enjoy working with jewellers, bike retailers and hair salons – and invest in software development for their businesses – it’s our newsagent connection which sits at the core of Tower Systems.

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The CRM search is getting too hard

Our search for an ideal CRM (Customer Relationship Management) solution has been going on, in earnest, for almost a year. In that time we have had three different favorites we expected to do business with. In each case, at the last minute, something got in the way – a new release from a competitor, an internal user complaining that a particular package failed their needs, a mysterious drop in price. We’ve been badgered by claims and counter claims by some sales people. Some are too ready to bag their competitors. The proposals are written in a way which makes comparison of price offering next to impossible. Just about every question is answered with a positive response until you want to see it in action then you’re often faced with smoke and mirrors. Too much is left to the implementation where you’re paying by the hour and where, in most cases, the true scope of the work is not documented until the meter starts running.

I understand that CRM companies are in business to make a profit. However, I come from a background of providing small business with software based on tangible outcomes. The needs of my company are not that unique. I’d suggest that any small to medium software company would share the needs we have. Yet too many of our requirements are greeted as unique and therefore requiring customisation. This is when I get suspicious.

I’m happy to take an off the shelf solution and modify business practices around it as long as it is in the playing field of our needs. This is proving to be a challenge for us to find.

We’re going to take a break and spend time talking with others who have implemented. It seems that there are many varied experiences with CRM out there and it might be that by talking with those who have gone before us we find the path we need to follow. The stories I have read in some forums about wasted investment in CRM are the reason for our pause.

In the meantime we’ll sell our own small business software to prospects on the basis of tangible outcomes experienced in more than 1,300 small businesses.

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Bank manager recommendation

Selling small business software is a challenge because you’re competing for cash in a tight marketplace. Our efforts have been helped unexpectedly recently by recommendations by two bank managers. Each has recommended our POS/theft management system to customers in an effort to cut the cost of theft and therefore significantly shortened the sales process. In 25 years with IT I’ve never experienced such support from a bank to a prospect as we’re seeing with out theft management product. Now I only the bank would let me quote their people in our marketing literature. The reality is that a $10,000 capital investment will return, on average, around $70,000 over tree years.

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Downer, Vaile, Leadership and double standards

The performances of Alexander Downer and Mark Vaile as revealed at the Cole Commission into the AWB scandal are appalling by any measure. Any employer would sack employees for less. Their performances in their jobs and as witnesses are appalling. We elected them to lead and they have failed us. The only honorable course of action is for them to resign. They have damaged the government, the business of wheat export and the reputation of this country. I wish businesses could count on the same level of protection against the tax office and other authorities that these two have been given by the government in this scandal. Sadly, there is one rule for the elected and another for the voters.

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Workchoices

It’s frustrating to give someone a break into an IT role and have them move on barely a year into their position. While I appreciate that some people want to move as quickly as possible, patience is a worthy character attribute especially in IT. For your first IT role, a year is not long enough to build an appropriate foundation to stand you in good stead for the future. I’m proud of the fact that some of the best team members in my company are those who have come back for a second, and even, third time. While we’re not at the cusp of technology innovation, there is more to working here than playing with new toys and techniques.

I write this because one of our team is leaving in pursuit of new challenges. While I don’t think they have mastered the opportunities here that’s not a factor in their thinking. They have to make their own choices. For our part we gave them a break and proved their employability in an IT company. We lose a hefty training and development investment.

Employees are free to make choices like this yet employers are not. While I do not agree with the Workchoices legislation and the unnecessarily greater wedge it has created between employee and employer, I can understand why some employers are happy to have more flexibility in whether to retain some employees. While the scenario described is unfair, I accept it an employee right. It will make me more careful when next hiring.

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Size does matter in software companies

We are down to the contract stage in evaluating CRM solutions for our business and it surprises me the difference between what the software providers propose in terms of a support relationship compared to what we provide for our small business customers.

For example, we charge a support fee based on the cost of providing the service. The CRM companies charge based on a percentage of software purchase cost.

Our support coverage is 24/7, theirs 8 hours Monday to Friday.

We take all manner of calls. They have a list of exclusions.

We allow people to make mistakes and to call for guidance. They will charge if we ask the same question more than 2 or 3 times.

We support any user in the client company. They support three people.

We advise the owner if any service is likely to be billed. They reserve the right to charge without warning.

We quote for changes and only bill if the work is done. They will bill us if we decide not to accept a quote.


While I appreciate our two businesses are quite different, I did not anticipate such expensive and onerous support provisions for CRM software. These extra costs for us put pressure on the prices we charge our small business clients. They also say something about the attitude of software companies playing in the big business space compared to the small business space.

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The start-up challenge for a mature business

It’s so easy to get comfortable in business. Each year that passes boosts confidence adds to your feeling of comfort. I am reminded of the comfort of being established as we are about to launch an entirely new business. It’s a scary time considering budgets and risk and how much of the years of success one must put on the line to give the start-up life. But what’s life if you don’t take the risk? In this case, the risk is huge as the start-up in a very competitive space which is dominated by huge corporations. That is a motivator in itself. It forces us to offer a better product with greater flexibility and with the ability of connecting in such a way as to enable it to be promoted virally.

Common sense tells me to leave start-ups to others going into business for the first time. My heart says take the risk, compete with the big corporations – this is what you’re in business for – the ride! Our investment is substantial. While we have considered financial partners we have not pursued this because those we talked with early on asked more about their exit opportunities than the business itself. Like any start-up, this will need nurture for some time and it was too premature to even contemplate exit.

The balance of investing in the start-up while growing the core business is trisky. We’re coping and the drain on cash and resources is considerable. Again, one has to weigh up the risk and benefits.

So, we’re riding. We’re late to market but the offering improves with every day. The two years of work will start to surface in a consumer sense in the next few months and a month or so after that we will know if we have wasted our time and money or not.

What’s the point of this post? By talking about this start-up, even in oblique terms, makes it more real and that of itself is a motivator. You know so we have to see this through.

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Employee theft hits independent retailers hard

We spend a fair bit of time helping independent retailers gather evidence on employee theft problems. Too often the alarm is raised too late, when the losses are already close to six figures. The only reason employees get away with theft is lazy management. It’s a choice the owner has made to be lazy. And then when the theft is discovered and the bank and other creditors knocking at the door demanding action, the owner is busy pointing fingers. The most common way employees steal is by not ringing up items customers pay for or by canceling a sale prior to its completion. The customers are none the wiser and the cash balances at the end of the day. Once theft is discovered the business owners complain that they don’t have time to watch the security monitor the whole time etc etc.

We’ve created a way around the problem. We have deeply linked our software with a security system such that it respects time poor business owners. It tracks the likely theft events and provides a highlights package from the day – so the owner only need see the footage from the counter which many be an issue. Taking care of counter operations in this way leaves the owner and or manager with more time for monitoring the body of the shop.

In creating the link we talked with police, lawyers and security experts to ensure that the evidence we gather is useful in pursuing a conviction.

The retailers association tells us that theft is costing between 3% and 5% of turnover. If we can cut that by even 10% then the solution we have created pays for itself.

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3M fails to deliver reasonable customer service

We’ve been an active support of the 3M touch screens for a couple of years. They are regarded by many as the ‘Rolls Royce’ of touch screens. Then they started dying. 3M said all was okay with production. But they continued to die. Despite several efforts at resolving their poor failure rate with 3M they continued to blow us off. We could make no progress. We carried spare gear so our customers did not suffer. We also carried the freight cost even though we provided the gear on a return to base warranty basis. 3M continued to ignore us.

Earlier this month I wrote about the problem here. Last week 3M made contact with me but it was too late. We’ve taken their gear off our lsit of recommended hardware. Their touch screens are too unreliable and are certainly not worth the hefty price difference. We’ve replaced 3M with another premium brand and continue to offer the LG touch screens as our entry level model. The LG screens, I should note, have been excellent.

I can accept that problems will occur with new hardware from time to time. It was 3M utter denial about these problems which frustrated by small business and our clients. 3M appeared not to care about us and certainly did not actively engage with us in resolving the problems.

3M can tell us that they have learnt their lesson all they like, that learning has come too late for us. They had an obligation to address the problems in their touch screen manufacturing a year ago.

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