Tower Blog

A blog about smart POS software for independent small businesses.

Category: Small business (page 12 of 12)

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.

The Apple iTunes / Coles deal still rankles

Big businesses move in circles many in small business cannot comprehend. Deals are interlocked favors which build layer upon layer and in a way which cuts out all other players.

National and global corporation relationships are such that small business has no hope in achieving a level playing field.

I’m not writing this to be critical of big business but to acknowledge the reality of the game. On the iTunes deal announced last week, Apple wants to sell more iPods, Coles has the retail network so it is logical that they enter into a mutually beneficial deal. Small businesses, like newsagents, never had a hope because Apple wouldn’t seem them on the radar as relevant. While newsagents have more stores than Coles, they lack the one think which Coles leverages exceptionally well our of their head office – market power.

The only way small businesses and, specifically, newsagents, will be able to leverage in a way similar to Coles will be for them to create and or control products and services exclusive to their channel. It may be that the focus is on premium service, for example – service so good that customers rave about it. If newsagents can deliver that and have customers talking up the line that they prefer to deal with newsagents then suppliers will want to tap into the goodwill built through such service.

I appreciate that this is less tangible than an exclusive product as such. However, it is something which newsagents and, indeed, all small businesses, can own today. But it’s a chicken and egg situation. You need great traffic to be able to serve enough well so they rave about you and you only get the traffic if you have good current product and right now you’re only getting this if you’re a big business mate and doing a reciprocal deal.

Hmmm…

Apple has tainted its image by doing a deal with Coles Myer and hopefully consumers will see it that way and not purchase recharge at Coles stores.

In the meantime it would be good if our politicians researched deals like this from a policy perspective and assessed whether they are in the best interests of the consumer. The last time parliament research anything like this was in the late 1990s. Small business is not on their radar it seems.

Coles Myer, Apple and the social responsibility of cutting out small business

Coles Myer and Apple have done a deal giving Coles group stores exclusive access to selling a prepaid card consumers will use for purchases at the new Australian iTunes store. They are using technology provided by Bill Express to manage the transactions.

Newsagents have 50% more Bill Express prepaid outlets than Coles yet they are not part of the equation. Okay, that’s business. Deals between companies are done every day so why is this one different?

Newsagents are a better fit with the typical iTunes consumer. Newsagents are better socially connected than Coles and this should sit well with Apple.

Just as businesses have an obligation to buy Australian, so too should there be an obligation to seek out small business partnerships. Otherwise the big will get bigger and the small will cease to exist.

I’m not proposing a free kick for newsagents from Apple. Rather, a commercial and more valuable arrangement than with Coles. Newsagents offer more outlets than Coles, equal compliance (through Bill Express) and a better consumer connect i this space.

Newsagents have committed to $25K in hardware infrastructure to support the Bill Express network and to lose a logical fit such as with Apple must make many wonder about the value of the investment.

I would like to see Government place an obligation on big business to somehow work with appropriate small business networks on deals like this in the future.

Australian government small business policy

Why is the government demanding that Telstra compete in an open marketplace while it protects the best stores in the Australia Post retail network from open competition?

Why has the government allowed Australia Post to aggressively pursue product lines sold by small business newsagents?

Why has the government demanded that newsagents deregulate (in 1999) yet refused to open the sale of postage stamps to the same retail competition?

Is the government prepared to compete with all small business sectors or will it restrict its enterprises to competing with newsagents?

How does the government feel when its employees visit small business newsagencies, note retail prices for items and return to their PostShop and adjust sales prices?

Does the government have a small business policy which is pro small business?

Why will the government not set a policy of selling off the PostShop retail businesses to local small business people?

Footnote: This is a repeat of what I have posted at my newsagency blog. I have posted them here because they relate to the small business issues I cover here. The two faced approach of the government on small business needs an explanation.

The government operates 863 PostShop retail businesses. These businesses are increasingly competing with newsagents for general stationery, greeting card and related business. The old post office has become a retail chain and it is trading off exclusive postal products to grab sales which would otherwise have gone to small business.

The Wal-Mart you don’t know

This Fast Company article from December 2003 documents some of the practices of Wal-Mart and its negotiations with suppliers.

Small business often focuses on how a major competitor like Wal-Mart in the US or Woolworths, Coles, Harvey Norman or Bunnings etc in Australia might have on their business. As the Fast Company article outlines, the impact can be felt way down deep in the supply chain. Small businesses are not as tough in negotiations in part because they are not as powerful. Therefore they carry themselves the financial pain inflicted by big competitors on suppliers.

Maybe this is why newsagents get 5% commission for selling Vodafone recharge compared to the 16% paid to a major supermarket chain. Who knows? The greed of some of these giant companies inflicts a pain which is felt not only by suppliers and the sooner the broader community understands that their discounts are not as beneficial as the TV commercials make out.

A challenge for Google moving forward

The moves by Google over the last year have been astounding. Their profit announcement this week is proof that they are serving their customers well and that will please their shareholders. The challenge for Google is their size. Rather, the challenge for the rest of us is the size of Google. They are the Microsoft of our time. Even more so. Their size makes it challenging for competitors on a range of fronts. However, it is difficult to work out who is a competitor, for Google is playing in so many spaces and on a variety of scales. Sure Yahoo is a competitor. But from stories published over the last few weeks so are book publishers and newspaper publishers among others. The internet has been a leveler, allowing small and independent businesses to establish electronic real-estate almost as easily as much larger competitors. That opportunity is less today than a few years ago thanks, in part, to the Internet becoming big business in itself and thanks to the clever Google advertising tools which only larger businesses can afford. Google’s success attracts more businesses online and with them come more of the bricks and mortar world practices and independent businesses risk being drowned out again.

While the laws of economics meant that such growth and the attendant commercial power was inevitable, Google and other companies managing the freeways used to access online businesses have an obligation to keep it affordable.

My fear is that Google and any competitor their size will be like the giant shopping mall landlords who have priced their real-estate such that independent retailers give anything from 12% to 20% of their sales to pay rent. With shopping mall rent it’s a supply and demand situation based on finite space available. Google does not have similar physical world constraints and so ought not be under similar pressure on its pricing model.

I’m not a Google basher. Indeed I use their AdWords service and appreciate the sales the Google generated traffic brings. My hope is that it remains cost effective for small businesses like mine to get online and access the traffic Google and others control on their freeways.

We need a healthy small and independant business community online.

chasing a deeper customer experience

It’s a constant battle this software company caper. At McDonalds or Subway, you make the food, the customer pays and you’re on to the next one. You rely on Head Office to do the marketing and get the menu right. Your only focus is customer service.

Here we design the software, make it, deliver it, train people how to use it and even use it ourselves in our own business.

I’m not complaining, I love this business. Some days, though, it is daunting. We genuinely want to deliver a unique and valuable customer experience: in every call; in every software update; and, at unexpected times. This is where it gets challenging – finding ways to engage with customers which are genuinely valuable and unexpected.

We’re working on a new type of user meeting, one where we get a small group of users together to expose their businesses to each other warts and all. Kind of an adult version of show and tell but with a please help call at the end. The show part is a reports from our software. We’re inviting them to come along with a specific set of reports – all the same for the businesses attending and for the same period.

We’re billing this as a self help group but with our people moderating, keeping things moving and providing insight into some of gems hidden in the reports.

The challenge, if our trial of this format works, is to package it so that we can get to our 2,000+ customers. Each session will include 5 or 6 businesses and run for 3 to 5 hours. There will be follow up and further training.

We’re not charging for participation as we see this event as another way we can dedifferentiate ourselves from others in our space. It’s not something Microsoft or MYOB would do for small business. It’s the difference between the local burger shop and McDonalds. Yes it’s hard work but it’s also an opportunity for joy when an attendee calls a few months later to say thanks.

Software companies have an obligation beyond the sale to make sure that the rewards we promise are achieved, particularly in the small business area. The software itself is not the solution, the day to day assistance, encouragement and advice is what the end user is really paying for.

Our first round table session is next week so maybe I’ll report back here how it went.

Help for struggling small towns in England

The Retail Enterprise Network is using a grant from European Social Fund’s Equal programme to improve the social, environmental and economic ‘health’ of selected retail districts and communities within England. The initiative is helping communities including independent small businesses to revilatise town centres. More at the retail Enterprise Network website.

Less technology better in retail

Technology is getting in the way of customer service. Yeah that may seem odd for me to say given that I own a technology company. So be it. I was at the supermarket a couple of days ago and asked the checkout person a question, they tapped something on their keyboard but said nothing. I asked the question again. They then pointed to the LCD screen facing me. The information I wanted was there. I went through the rest of the transaction assuming they could not speak for some reason. At the end of the sale when they handed me the receipt they drones “have a nice day” and moved to the next customer.

While this one experience may not reflect what happens at all supermarket checkouts, it certainly made me wonder about all this technology being put at the counter, especially the customer side technology. It’s like a defence wall being built to protect the retailers from their customers. I hate it as much as I hate these self service checkouts.

While some customers from my company have asked for LCD displays and other intrusive devices (beyond the usual slim customer display) for the customer side of their counter, thankfully most have not, preferring to provide human based customer service.

Friendly knowledgeable customer service is the point of difference small business can win – if it embraces the opportunity wholeheartedly. Sure use the technology but keep it low profile, focus on human to human contact as much as possible. Customers love it and will remember the experience. Especially if bigger business competitors in your space are more focused on technology solutions.

The more technology you have at the counter the greater the opportunity for customer phobic sales staff to hide behind it and not interact and that’s not good for any retail business.

Me too loyalty schemes are lazy

With both supermarket chains pushing their fuel discounts heavily many small business retailers are joining similar schemes connected to independent fuel outlets. It seems to me that these small businesses are copying the giants because they fear it is the only they can compete – by offering the same.

This is nuts.

Fuel rebates are so common that I don’t trust them. There is no point of difference any more. I don’t trust that it is a discount off an already fair price for fuel. I don’t trust that there is any element of reward in the offering. Okay I am probably in the minority – a space for cynics. However, the reality is that Australia now has 6 or 7 fuel discount offers.

The other aspect of the fuel offer which does not make sense to me from a small business perspective is that I say thanks to a customer for shopping with me and reward them by saying, hey, go buy some fuel and there’s your reward. Why can’t I offer a reward from my own product offerings? It seems to me that I have more control and more to gain by offering reward from in house.

In house rewards allow me to be more flexible, they can be used to encourage a higher spend from the customer and they make me work smarter within my business.

Fuel discount programs being offered (pushed) on small businesses have a cost and drive traffic elsewhere and that’s where I have big problems. They are the easy way out. In the case of newsagents, offering fuel discounts as part of a loyalty strategy drives consumer traffic to retail outlets which compete with newsagents. Surely there is more to gain by rewarding newsagent customers by offering discounts on newsagent product?

Coles and Woolworths control the fuel outlets they are driving consumers to. They have purchased and established these outlets in response to consumer research. Small business does not have the same needs to move traffic cooperatively between their businesses and fuel.

Small businesses are better off rewarding from within and with a view to generating incremental business within. The win is better in your pocket.

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