Articles by Dr. Warren Harmer

Without specialised skills and departments in marketing, financials, HR and many other functions, the business owner just has to deal with each one, juggling a constant barrage of decisions coming at them. Small business owners are the ultimate jugglers. With too many business functions to manage, too few hours in the day and usually not enough expertise in the business, small businesses rarely operate with the effectiveness and efficiency of a corporate. Without specialised skills and departments in marketing, financials, HR and many other functions, the business owner just has to deal with each one, juggling a constant barrage of decisions coming at them. To add further challenge, the business environment is always changing, so new challenges can be quietly creeping in, and can become painful issues if the owner isn’t paying attention. In this article we have highlighted five of the biggest challenges we see with our clients, that are catching them off guard, causing headaches and (quite often) financial loss. Disruption - The business world is always changing, but the pace of change is undoubtedly getting faster, to the point it’s making many business owners dizzy. Technology is driving massive changes to consumer habits, marketing is changing at head-spinning pace and becoming ever more complex. Standing still can see small businesses lose market share very easily, so extra vigilance is needed to keep up. Whole industries have been hollowed out before our eyes, including such small businesses as bookshops, travel agents and the taxi industry. Cyber security - Whilst we all enjoy more and more convenience that comes with connectivity, it’s also getting much easier for nefarious actors to find their way into your business. Cyber-crime, identity theft and hacking are just a few of the never-ending stream of attempts by criminals to relieve us of our money. Not only are they increasing in frequency, but also in sophistication, requiring businesses to be every more vigilant. Small businesses are mostly unprepared, with poor security and practices that make them easy targets. Don’t’ assume it won’t happen to you: it can and probably will.Risk management - This season’s fires and now virus has shaken many industries, with daily news stories of small businesses under enormous pressure from sudden, unexpected events. What is unusual about this season is the large number of businesses affected by the same events, and the number of businesses affected at the same time. What is not unusual is that sudden events affect small business, sometimes significantly. Risk is always present, but almost no small businesses ever do even basic risk management. Just a 2-hour risk management exercise with an action plan can save a lot of pain. The unexpected should never happen because you have already planned for it. Expectations and skills - More and more is being expected of business owners all the time. All of the challenges highlighted here are just a few of the many demands faced on a daily basis, but there are more being thrown at them all the time. New laws in HR, wages and awards, tax, changes to superannuation, trade disputes and technology are just a few. With most small business owners being control freaks, letting go can be challenging, but it is not reasonable to expect one person to do all of them well.  Maintaining profit levels: costs and margins - Costs and prices are always in flux and profit margins cannot be assumed. In recent years, energy prices, rental and food costs have been particularly in focus, but are only part of this never-ending cycle. These can be ameliorated by good financial management skills, systems and regular reporting and the business owner really understanding how the business finances work. Unfortunately this is not common in small businesses, whose accounts are often outdated and basic concepts like gross profit not used. This leave the business very exposed and unable to act responsively. The common theme for all of these issues facing small business is increasing complexity and demand. Most aspects of business ownership need ever greater skills, knowledge and expertise, from online marketing, to cost management, employment law and cyber security. Juggling a bit faster will help most of the time, but it’s important to know the limit. Don’t be afraid to get expertise in when you need it: building an expert team around you and doing continual planning and review is one of the key skills of successful business owners. For more information contact Dr. Warren Harmer Chief Business Planner Email [email protected] or visit http://businessplancompany.com.au

Starting a business can be a daunting proposition, with the aspiring business owner facing a myriad of tasks, decisions and challenges. Many business functions suddenly become the responsibility of the owner, whether they are skilled in them or not. That’s not to forget the financial risks, which can be life changing in either direction – boom or bust Starting a business can be a daunting proposition, with the aspiring business owner facing a myriad of tasks, decisions and challenges. Many business functions suddenly become the responsibility of the owner, whether they are skilled in them or not. That’s not to forget the financial risks, which can be life changing in either direction – boom or bust. The more risk averse entrepreneurs may see franchises as a great option, with some safety in a known brand, training, systems and processes, infrastructure and support; the best of both worlds (in theory). But, with the horror stories of franchising splashed across the media, it’s natural to question the promise against the reality. Is it better to just start a business on your own, save the extra fees and invest that into your own business? There is no simple answer, as every situation is as different as every new business owner. Let’s look at the pros and cons of each. Buying a franchise There are lots of franchises out there, varying in size from just a few, to national icons with thousands of franchisees. Even though the sector is highly regulated, the way that each business is run varies a lot. In franchises, the franchisee mostly follows the business formula of the company, doing things the standard way that fit in with the company brand. That can be as varied as making muffins,  mowing lawns or running fitness classes. The upside of being part of the franchise is that you get to benefit from the brand identity, the business that comes with that, marketing systems and support. The idea of immediate cash flow is tantalising for a new business and can be quite appealing. The reality of how much support you get, how good the brand is and how much business you actually get varies a lot from franchise to franchise - sometimes good, sometimes not. One crucial factor for being in a franchise is that you can have less control over many aspects of the business. Ideally you should believe in the product and the company, which can be a challenge for some headstrong entrepreneurs. If you like doing things your own way, you may feel constrained by being in a franchise. Another factor is the location and how many other franchisees there are (and will be). Franchisors that want to grow sometimes do so at the expense of the franchisees. In my own experiences, I bought into a network being told there would be 18 in the state, which changed to 30 within 6 months. Some previous franchise clients of ours had their business cannibalised by a neighbouring franchise. Of course you pay the support, brand, marketing and systems, which means fees and charges up front and ongoing. Starting your own business Starting a business on your own is a lot less restricted than a franchise, so everything you will need to do yourself. There’s no built in support, processes and policies to follow, no brand, not traffic already looking for you. Because of that, you have an opportunity to do things completely your own way, to build completely your own empire, your own brand. With less restriction, you can control the set up costs more, but it will be up to you to build up the business. But that has its own risks. As with franchises, there are stories of success and failure. Without doubt, you will totally believe in the company since it’s yours. How to decide For any potential investment, especially a business, due diligence is crucial. Build your team of experts and consider all of the opinions in your decision making. In the most successful franchises that I have worked with, the franchisor has the best interest of the franchisees at heart, and doesn’t kill the relationship through punishing conditions or profit-at-all-costs attitude; they are there to support when times are harder. Know the conditions of your agreement inside out and get great legal advice.  As there are so many franchises out there, do your homework and talk to some existing franchisees. Really ask yourself if you want to do that activity in the company way, every day? For the start-ups, take the time to build a solid business plan with external expertise to know what you are getting into. The ultimate decision rests a lot on the right opportunity but also on who you are as a person. Even though both are forms of business ownership, the experiences can be quite different. Knowing what is important to you as a business owner will act as a framework to make your decision. Take your time and look at lots of options; for the right choice, an exciting and rewarding experience lies ahead. For more information contact Dr. Warren Harmer Chief Business Planner Email [email protected] or visit http://businessplancompany.com.au