Small businesses like cafes, restaurants, bookkeepers, accountants, lawyers, conveyancers as well tradies like plumbers, electricians, carpenters, builders, tilers etc are all startups when they first begin. The term startup has been linked mainly to new technology, digital, online and applications for mobile devices and although these are busienss startups the term actually applies to all businesses and we aim for our course to help all of these business startups with some fundamental business skills to ensure they last a long time and grow and employ more people.
Airtasker is an Australian success story in the Gig-economy for individuals who want their own micro business doing odd jobs for other people. Just like Uber, Ebay and other online marketplaces they leverage their digital marketing and brand to help individuals find clients and customers – for a fee.
Airtasker and marketplaces are a great place for people who want to start their own business but these systems fail when a better alternative comes along.
Setting goals is not just about earning more money but at this time of year many people spend their time thinking about how much they want to earn and what type of work they want to do.
Although earning money seems like a goal the real goals you should be setting are more practical and relate to what’s currently going on in your life. We’ve been working on some new initiatives and I hope you take advantage of them to have an extra source of income. Continue reading FREE Digital Marketing Seminar Presentation
EMPLOYEES IN GERMANY have the world’s shortest work week, according to SME Magazine. Their work week averages just 26 hours due to strict workplace relations laws that promote a healthy work-life balance.
Sweden is also known to have implemented a 6-hour workday, or 30-hour work week, following research which has found that countries with shorter working hours generally have higher disposable incomes, greater productivity, and a stronger economy as a result. How can you do this in Australia?
These factors combined produced a bottleneck effect in the job market, which made it difficult for certain workers to advance their careers, while others, typically young graduates, struggled to gain a foothold in the job market at all.
ONLINE INDUCTIONS ARE WIDELY used for contractors who visit building sites or any other site where they perform work that can be risky, like plumbing, electrical, HVAC, roofing, security etc.
Many inductions are delivered manually by a qualified staff member (usually in the WH&S department). Usually any person in the organisation or business who hasn’t yet been inducted will be notified about the forthcoming induction and urged to attend.
THE TRADITIONAL REAL ESTATE agent model is being challenged by disruptor sites like BuyMyPlace and Purplebricks. These sites are offering homeowners low-cost way to sell their homes and agents are increasingly having to be open to different ways of operating.
I was looking for a roofer to do some work for me recently. The first roofer I spoke to said he could solve my problem for a flat $1200; estimating the work could take between one and two days. Another roofer I spoke to, and ultimately ended up hiring, said he would charge me his $600 a day “day rate” until it was fixed; it only ended up taking one day.
How much time do agents spend selling your home?
Like Rome, a home isn’t sold in a day. Depending on the property and its location it could take anywhere between four and six weeks; quite likely less, but sometimes more.
But an agent doesn’t spend every one of those days working on your property. They spend portions out of their day working on it. An agent will often have three or four listings at the same time so they’ll split their time among those listings, while also chasing down leads for new listings.
Consider the Purplebricks method
Purplebicks has determined that it will cost between $4,500 and $6,000 to appoint one of their “property experts” to sell your property. Although they’re licensed real estate agents, they don’t call them that, because the service is different. (Buyers arrange inspections and make offers through the Purplebricks “property portal,” which homeowners also use to make appointments with buyers and accept offers.)
The Purplebricks fee, which is payable regardless of whether the property is sold or not, covers the cost of an agent-appraisal, all the marketing and advertising costs, as well as conveyancing. But the homeowner does the rest via the Purplebricks property portal software.
Find an agent that’s willing
If you’re prepared to pay an agent for the time they spend working on the sale of your home, regardless of whether it’s sold, you might find one that’s willing to alter how they’re paid. More real estate agents are trying to be as transparent about the process as possible, and this is just one more way that they can be.
Sweeten the pot by breaking the process down into phases (a four-week campaign may have two; a six-week campaign three) and pay them once each phase has been reached, like you would a builder. You can even add another sweetener: a bonus if the agent sells your home over a certain threshold.
For the agent, the upshot is getting regular money (which is good for their cash flow), rather than waiting until the property is settled.
Some jobs are small and straightforward, while others are blow out and become time consuming and fiddly; some work is complex and requires fine detail, while some work is basic and low level.
Managing ones’ time and figuring out how to price for different kinds of work is always a challenge in the successful running of any business.
Our EzyStartUp Course teaches you how to use digital and social media marketing to attract enquiries, how much to charge, and how to clearly define the work to be done. We explore productivity tools like Google Gmail and Calendar to help manage time, improve sales and customer service, and how to manage the change in your charge-out rate depending on what clients are willing to pay in the market.
Will your business be able to stand up without an earnings guarantee?
WHEN YOU START A NEW franchise business, you may be offered what’s called an “earnings guarantee” or “income guarantee” for a period of time after you first start the business. It usually lasts the first six months but it could possibly last as long as a year.
Earnings guarantees are designed to help people transition from having a salary to being self-employed, by providing them with a top-up payment each month if their sales fall short; peace of mind for those would-be business owners, concerned about all the “what if’s” that come with starting a new business.
Most franchisors offer some kind of an income or earnings guarantee, though the amounts and thresholds for when they kick in can differ business-to-business. It’s important to note than an income guarantee is merely a promise of sales revenue for a particular period of time, based on the average amount other franchisees earned in the past. And it in no way reflects what your business will earn in the area you’re looking — you may well earn more, but you may also earn less — nor is it a customer guarantee, as some franchisees may be required to carry out promotional work or make-good work for other franchisees in the event there are no leads available.
Consider the following earnings guarantees at these businesses:
Reliance Roof Restoration: A roof restoration, replacement, painting and guttering services business based in Brisbane, and became a franchise in 2011 after nine years operating throughout Queensland. It offers new franchisees a $75,000 (net) income guarantee for the first 12 months.
In other words, if you only earn $45,000 in the first year, they’ll kick in the additional $30,000. It’s not clear how frequently payments are made to franchisees — whether they’re fortnightly, monthly, quarterly, or annually — though the director of the Franchise Advisory Centre Jason Gehrke told Franchise Business that “profit guarantees tend to be assessed at the end of 12 months or at the end of the financial year.”
Cafe2U: The mobile cafe business developed a “Cafe2U Acceleration Package”, which provides new franchisees with a two-week income guarantee of $500 a day (or $2,500 a week). It’s paid to franchisees at the end of the two week period, but the business claims hardly any of their franchisees ever end up claiming it because their daily sales always exceed the $500.
Hire-A-Hubby: Australia’s largest handyman business, Hire-A-Hubby implemented an earnings guarantee for certain franchise packages it offer — there’s gold, silver and bronze packages available. The business offers new franchisees a $125,000 per annum gross earnings guarantee for the first 12 months.
To receive the earnings guarantee, the franchisee must work a minimum of 45 hours per week (a minimum of 8 hours a day), and must accept whatever leads are provided via head office. If no leads are available, the franchisee must perform whatever marketing or promotional activities that are assigned to them by the Hire-A-Hubby head office; franchisees may be asked to perform “rectification work” to other franchisee clients. The income guarantee is paid each fortnight. The business also offers a “buyback” guarantee to franchisees whose businesses are never profitable, despite following the franchise agreement to the letter.
After the income guarantee ends
Jason Gehrke from the Franchise Advisory Centre cautions potential franchisees against selecting a business based on the income or earning guarantee provided, which he says can provide a false sense of security.
“If franchisees are conditioned to receive top-up payment from the franchisor when sales are low,” he told Franchise Business, “they might not understand just how financially self-reliant they need to become.”
“A person who is used to clearing $1,000 per week may not realise that the promised sales turnover of $1,000 a week will not have the same spending power … Business expenses such as taxes could leave them with less cash for their mortgage repayments and other fixed living costs than they were expecting.”
A franchisee consistently claiming their top up payments each fortnight for the duration of the income guarantee indicates a couple of things: a) they underestimated how much work is involved in generating new business and sustaining it; or b) the territory they operate in isn’t going to generate enough leads to be profitable.
If it’s the latter, that’s often the franchisee’s tough luck. Many franchisees who bought Dominoes and 7Eleven businesses found that the franchise model would never be profitable enough to pay them a living wage, never mind cover the costs of employing staff. That resulted in one of the Australia’s biggest and most systemic instances of worker exploitation, which led to a Senate inquiry that subsequently found the company was liable to pay workers a total of $4.3 million in underpaid wages.
Do your due diligence!
At the end of the day, earnings guarantee or not, you’re still buying a business. Prospective franchisees should look around at two or three franchise models and do their due diligence — research the market, test how much demand for the business there may be. Just because a business says there are franchise opportunities in a particular area doesn’t mean the business will be viable there.
And look beyond the earnings guarantee to what the rest of the franchise agreement offers. Remember that an income guarantee is usually built into the upfront franchise fee, so a business that doesn’t offer an income guarantee but has lower entry costs might be a better option.
“I call [income guarantees] a ‘capitalised form of working capital’ and you might be better off keeping the money and controlling it yourself,” Gehrke said. “My recommendation is to make an assessment of any income guarantee as part of the overall decision-making process, but not the deciding factor.”
There’s never been a better time to start your own business!
DID YOU KNOW research shows that by taking just one short course on small business management, the chance a business will fail is reduced by as much as 50 percent.
This is because business mismanagement is the primary reason businesses fail; the other most common reason is because owner/s fail to implement appropriate credit management processes. In both cases, this failure has come about because the owners, directors, partners or managers lacked the appropriate management skills to make it a success.
Learn the basics in business
The Christmas holidays is a perfect time for taking the steps needed to start your small business. While everyone else has gone on holidays, you’ll be ready to take on your first client or customer by the time business really starts kicking off again at the end of January.
So let’s get to it: there’s work to be done. And this work generally requires some rudimentary knowledge of Australian tax law, copyright law, trademarks and patents.
You should also have knowledge of particular software applications, and digital marketing.
Other key areas of business you need to know
The key areas business owners should understand before starting a business include:
Ordinarily, to become skilled in each of those areas, a person would have to take, at least, five different training courses. But few people are ever likely to do this. Instead, they’d be more likely to cherry pick the areas they’re least familiar with, and fly blind with the others. Needless to say, that’s where people run into problems.
Take Advantage of our Christmas Savings!
We don’t want you to wing it or fly blind — our goal is to help small businesses succeed which is what we’ve been doing for nearly 20 years.
We cover what you need to set up a small business in our EzyStartUp Business Course, priced at just $297. This course covers each of the key areas mentioned above that a small business owner needs to be familiar with, in addition to the following:
Our Last Dasher Sale is also on now with special Christmas discounts on our online training courses in social media, and cloud accounting software (MYOB, Xero) and Excel, Word and WordPress.
Don’t Wait — Become the Head Honcho Today
Use your time off from work this summer to begin working on your new small business. All of our training courses are delivered online, and can be completed at your own pace, so you can complete them while you’re actually on holidays, or relaxing at home or at a cafe.
And since one of the best ways to start a new business is by operating it as a side project to your other job, if you get all the start up stuff out of the way while you’re on holidays, it’ll be ready to go by the time you back to work.
When I asked Mark why he chose such a low day rate, he said it was because no other painter could possibly compete with him. Sure that’s probably true, but obviously, for good reason!
What Mark really should have done was to research the market to determine precisely what other painters are charging, and for which services.
Determine the industry average
A good starting point is to determine the average price for your industry. Be diligent and look at as many businesses in your local and surrounding areas to ensure you’re getting a clear picture of what people are charging.
It’s really hard to justify charging much below the industry average, even if you’re trying to get new business.
Rather than reducing your rates to get new business, try to give customers savings elsewhere. You can do this by providing something your competitors aren’t, which is why researching the market thoroughly is a crucial part of your business strategy.
If you determine that your competitors charge a call out fee or a fee to prepare walls, this is a good place to start reducing or eliminating those charges in order to make yourself more competitive.
How are people finding you?
If potential customers are finding you via your website, it’s important to have a good call to action that contains reasons for people to make contact with you. Then make sure you highlight the reasons to call.
Competitors copy so keep changing your offers
Believe it or not, one of the most challenging aspects of your market research and the OFFER you make to potential customers is that your competitors will also be researching what you are doing and if they feel it is a good offer they may copy it — so you may want to have a couple different offers and discounts and change them regularly to stay unique.
Use WordPress, a Blog and Social Media posts to keep your business looking fresh online and as well as attract the attention of potential customers — we cover all of this in our Digital & Social Media Marketing Courses.
I RECENTLY MET A PAINTER during a residential renovation I was involved with in Newcastle (an extremely valuable experience that will help us add to our property investment courses.)
We got talking about how he wins new clients and he said:
I advertise on social media that I’m available for $150 a day because no one can compete with it.
The price he chose is insanely cheap, and he knew other painters wouldn’t be able to compete with this as a day rate. However, there are downsides to this. Such a cheap day rate also means that he’ll be stretched financially and that he won’t be able to hire anyone else to do the work. He’ll need to be paid daily and likely can’t afford to provide any sort of credit (like 7 day terms etc).
It made me wonder whether it was such a good idea because cheap prices is a volume game. Companies like Amazon and Kmart are willing to lower their profit margins to undercut other retailers if it means they make up for it in the volume of product their shift.
In other words, rather than make $20 profit on an item, and only selling 200, they’re willing to make $5 as long as they sell 100, minimum. Otherwise, it’s just a bad business strategy. You may want to read more about blue ocean versus red ocean strategies.
Is trades and services ever a volume game?
Mark, the painter I was talking about, received lots of enquiries. In that respect, his social media campaign had been a success! But Mark wasn’t a big company; he was a one man band. Now he spent most of his days driving around and quoting for jobs.
This meant that when he was working for clients, there were often days where he could only work a half day or had to break the day rate down into an hourly one. Some days, Mark only earned $100. This was simply because he wasn’t doing the number of jobs he needed to in order to make his low day rate a profitable strategy for his business.
Focus on your business strategy first
What Mark had inadvertently done was prioritise his marketing strategy over that of his business. He’d generated lot of interest in his business by advertising his services at such a low day rate, but by not setting any terms or conditions around that rate, it makes it really hard to Mark to increase his rates next time those clients ask him to work for them again.
Setting rates correctly is something we cover in our Business Start Up Online Training Course. In particular, we look at determining a business strategy for your business, before you start marketing your business and services.
The question of pricing and what we offer in our advertising is something we consider before ever going live when we help clients with their marketing strategies too. Hire a marketing manager to oversea all your digital and social media marketing for a low monthly fee.
You’re more likely to get the job or get paid on the spot or pretty soon after if you do and it helps you
prioritise your work schedule (ideally using something like Calendar in Google’s G Suite)
keeps your cash flow healthy, which is important if you’re a tradie who goes out purchasing materials before you start a job
Sends a message that you are efficient and would like to be paid promptly
If you don’t invoice quickly your clients could forget what the invoice was for, call and ask questions about it because it’s no longer fresh in their mind and even put it off “Until the next payment cycle”, which is sometimes just an excuse for “some time in the future”.
Late invoicing is a pain for clients
During a recent renovation in Newcastle, I encountered a handyman named Paul. I asked him at least three times to invoice for the work he’d done before he finally sent one through.
When the invoice did come through it was in Microsoft Word format so I understand why it took so long — he would have been better using Xero or QuickBooks Apps on his phone! On top of this, he then said to me, “Can you please pay me quickly because I’ve run out of money!”
I chased him for an invoice so I could pay him quickly, after all, I believe that if you charge a competitive price and do a good job for professional services that you should be paid quickly.
I prefer to pay quickly because I don’t have the debt over my head and I want people to work for me in the future — it’s a form of goodwill from a customers perspective but not all customers are like that. Some customers see you as just another “Creditor” and are accustomed to string their Creditors out as long as possible.
Chasing someone for payment or an invoice or even a quote takes time and management — you have to note it in your diary, calendar, todo list or a report from your software program, and it starts to bring in feelings of resentment, particularly if they’re not feeling the best one day. Make it easy for customers to pay you and get your invoices out quickly.
Don’t invoice using Microsoft Word
When Paul finally sent me his invoice as a Word document there were a few problems I recognised:
First, it takes a long time to update a Word template, and it’s easy to make mistakes — leave the customer name, invoice number, date or other details unchanged, for example, which messes with your bookkeeping come tax time.
It’s easy to accidentally delete or change details in a Word document. It’s even easier to delete or change details in a Word document on purpose.
Paul had to get onto his computer to create the invoice
He doesn’t have a system of keeping track of who owes him money
It’s more complicated to make a note of and keep track of which Word Document (um, I mean “Invoice” has been paid)
Most people recognise a Word document and don’t think you’re very organised.
You definitely shouldn’t send invoices or estimates to customers in an “editable” Word document. It becomes a game of “he said, she said” if something goes awry, and that just further impedes a quick payment from your customer.
Don’t invoice late, then ask for prompt payment
When Paul followed up with a call asking me to pay the invoice promptly (and after I asked him no fewer than three times to send it in the first place), I paid it promptly because I happened to be available and organise payment.
However, the practice of doing this causes so many negative effects that it’s something every business owner should avoid. Here are some problems with asking for prompt payment after sending a late invoice:
If the first call you’re making to a client or customer after working with them is to ask them to pay you quickly, your business processes are wrong. Your first call, after working with a customer, should be a customer service call not a credit management one.
It builds resentment in the customers mind because they haven’t done anything wrong.
It makes you look desperate and, even if you are, it’s not your customers concern.
It stays in your customers mind for the next time they want to use you or someone else who offers a similar service.
Use cloud-accounting software like Xero or QuickBooks so you can quote and invoice on the go quickly, securely and easily. For help setting up QuickBooks or Xero for your business, visit our website to learn more about our Xero or QuickBooks training courses.
I RECENTLY WROTE about a Tradie Charging Too Little. In this I covered the four tell-tale signs, as told to me by a tradesperson friend of mine, that your prices are too low. But there are other business mistakes that owners, particularly tradespeople, make that can wind up costing them thousands in lost revenue — and when I say revenue I don’t just mean from existing clients but also past clients and new prospects! Continue reading 3 Little Mistakes that Cost Thousands
Take, for example, a tradesperson I met recently. This tradesman is a painter and he’d been in business for a while before he realised his prices were set too low, and despite all the business he was getting as a result, it was actually costing him money. (We cover more detailed, real-life case studies like this in our micro courses.)
Small jobs are important because they keep the home fires burning, so to speak. But you need a good balance of small jobs and bigger projects, with the small jobs being completed around or in the middle of the larger ones.
If you’re only getting lots of small, one-off jobs that you spend more time to travelling to than it takes to complete the work, this is a good indication that your prices are too low. For jobs like these, either charge for travel time or a call-out fee.
For small jobs … charge for travel time or a call-out fee.
You’re too busy to plan ahead
If you find that, in order to make ends meat, you need to keep yourself so busy that you don’t have time to plan your working week, then your prices are too low. You should be able to plan out your weeks so customers know when to expect you, and so you can be as productive and efficient as possible — if you have two jobs in the same area, for instance, planning ahead will allow you to go to those jobs on the same day.
Use a tool like Google Calendar from G Suite to organise your days, and keep in touch with customers along the way so they know to expect you.
You can’t afford to pay for help
Setting your prices lower than your competitors may be one way to win jobs, but the downside is that you’re constrained to completing the work entirely yourself. The tradesman, a painter, whom I was speaking with, told me about a time he couldn’t afford to find another painter to help prepare walls or pitch in with the painting because his prices were too low.
If you’re not able to pass jobs onto other businesses in your industry — subcontracting — and still clip the ticket, or you’re not able to afford to use a portion of the money you’d earn to hire someone to complete part of the job, you’re charging too little.
You’re too busy to invoice promptly
Just as it’s important to plan your work weeks in advance, it’s equally important that you invoice customers for the work you’ve completed in a timely manner. If you find that you often don’t have the time to invoice customers until a week or a month has passed, there’s a deficiency in your business processes. Use accounting software like Xero so you can invoice on the go.
We cover setting prices the market — and your business — will bear in our EzyStartup Course. Visit our website for more information and to enrol.
Check out our Spring Specials!
We have a host of online training course specials for the spring season — take a look!