Woolworths in the coffee game

My local BWS (Beer Wine Spirits) bottle shop is now open early in the morning serving commuters coffee through their drive thru. I noticed because of the traffic impact of the line waiting to purchase lattes, cappucinos and espressos. In the right location and a half decent coffee this will help Woolworths suck revenue from the independent coffee outlets.

Beware of support fees

One of our competitors list a client yesterday because their free software upgrade offer of a year ago did not disclose that the new version of software was free because they now charged an annual licence fee. Their former client switched to us because of the unexpected and high annual licence fee they were hit with. For a small business turning over under $600,000 a year a $3,000 licence/support fee is too high. Switching to us they can pay for a while new system and be ahead in three years. Their annual support fee is just on $1,000.

Given the nature of support and other annual fees I would like to see the software companies forced to disclose life of system ownership costs.

We need to compete with ourselves

Independent and small retailers often complain about their big business competitors and the barrier they present to expansion when, in fact, the biggest barrier can be found within. This is why I recommend that small businesses spend more time competing with themselves. In my own retail business I have a single report I focus on most of the time. It is a following year to date and month to date comparison by department and category this year against the last. I compare unit sales and revenue. This one report drives most business decisions. So, instead of spending too much time worrying about the national chain store down the road is doing, I am competing, this year, with what I did last year.

Our Point of Sale software provides more than 70 reports but it is this one report which guides the business. It’s easy to follow, like any good report, and quick to get a grasp of.

The report lets me look at my business as a prospective purchaser would – purely based on numbers. Is there growth, if so, how to achieve more. Is there a fall away, if so, where and why.

Running a retail business is pretty straightforward if you have access to up to date accurate data and that is what this report provides.

Can business software be sexy or erotic?

We sell software to hair salons. It’s a good marketplace for us. We enjoy working with salon owners and their people. They know about good customer service – they have to it’s such a personal business. We have been talking with some of our hair salon clients and they think we need to use sex to sell our software. What we have today is a great computer program for hair salons but it looks like a computer program. They want it sexed up so it looks like a fashion item. This, we are told, will make the computer system more useful. We have accepted the challenge and are off to the cosmetic surgeon to turn our software into something beautiful and, maybe, even erotic. Erotic hair salon software … now that’s an idea.

Loyalty software

We try and educate our small business customers that a good loyalty program is much more than giving fake discounts off petrol or points which are hard to access. A good loyalty program is one which delivers genuine value to the consumer and which rewards the business with a measurable increase in sales. Smart small business operators, particularly those in regular traffic businesses like newsagents, chemists, card shops, gift shops and supermarkets can build a program which stays wholly within the business.

In our own retail shop, where we experiment with everything we put into our point of sale software, we run a loyalty program which resets every eight weeks. Customers get the card and have eight weeks to achieve the goal and the prize. I’d venture to say that this program is among the most successful loyalty programs in Australia.

Our software is built around similar principles – providing users the ability to drive sales in the store rather than pushing them outside to get some cents off inflated petrol prices. We use points and other rewards to help business owners to reward customers. So prefer to send a cheque – we can handle that too.

Like anything, a good loyalty program takes work. Good software is the first step. The business benefits from tight management and active promotion in all interactions with the customers.

Smart small businesses can compare their offering to Coles’ FlyBys and those from other big businesses and clearly demonstrate to customers that small is not only beautiful – it is also more valuable.

Replacing generic POS software

We are finding that we take on considerable baggage when we replace a generic (non industry specific) POS system with ours in the newsagency, bike retailer, hair salon or jeweller market. We specialise in these four markets and know that a generic system is unlikely to suit long term yet local computer shops (especially) grab any sale they can without understanding industry specific needs. A year or two down the track, after losing too much time trying to bend the software to industry specific needs, the small business gives up. The challenge for us is to get them to believe that as a specialist software company in their market we understand their needs, that they can trust us. Often they think that all software companies are as bad as their last experience. Had they come to us or one our expert competitors first it is less likely there would be baggage. Instead, we are effectively on trial as they expect our software to fail just as the generic POS package did. While it will never happen, I wish that those selling generic POS software could be made to pay for their bad advice.

Is the customer always right

We use email for customer newsletters and other important communication. It’s cost effective, efficient and green. While we occasionally send a snail mail newsletter, this is rare. This week one client complained that he was not aware he had to do a certain thing because he had not received an email. He uses email for personal matters but not business. Business communication should be in writing he said. I was taken aback. He demanded that we post him copies of all emails we send. When I reminded him that we had not increased our support fees in four years and that to do this we would need to revisit this he was not happy.

One way we have been able to maintain our software support fees at 2002 cost to our clients is by use of email and our website as a key means of communication. By establishing these operational rules we have been able to maintain good service levels without increasing our operational costs.

When he asked in the customer is always right I said than in this instance no – especially if the customer enjoys not being hit with annual cost increases.

Yipee, we finally found the ideal candidate

The search for another person to join our Sydney office in an IT training and support role is over. The position has been accepted and our latest employee starts in a few weeks. This has been a very tough position to fill in part because we have been very specific in what we have looked for and in part because of the flood of wannabee candidates being pumped out of our universities. We ended uop interviewing 15 candidates and it was only on the last day when we found our person, or they found us.

Of the 100+ candidates who applied, more than half did not read the ad and did not follow application guidelines and were discarded. We asked for a personal cover letter more than a slick resume. More than half provided the résumé only. There was no sense that they had researched my company and what we were interested in. Their inability to follow a simple request i the ad meant we had to knock them out. Most of these candidates were recent IT graduates who have spent three years getting a degree in basic IT skills and looking for a company to teach them what they really need to know.

I appreciate that sounds harsh. The reality is that only a few IT degrees in this country prepare people for practical IT work right away.

Anyway, the search is over for now and we’re looking forward to having additional resources – we need then in NSW as sales are very strong. We’ll repeat this process next month with another candidate search in our next growth hot spot.

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.

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.

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.

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.

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.

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’.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.