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Missing Your Marketing Bus

by Dr Greg Chapman, MBA

Ever have a marketing plan that seems a great idea at the time, only to see it fizzle and even backfire through circumstances beyond your control? A great example of that landed in my mailbox a day or two ago. (I have cut off the name of the business- which is a well known handy man franchise.)




The government cancelled the home insulation scheme over a month ago, and I still received this offer. When you receive such a flyer in your mail, what do you start to think about the provider of this service? “Are they one of the dodgy firms that caused it to be closed down?” Even if it was just poor timing, it is not a good look and reflects poorly on the business to be associated with such a disreputable scheme.

To be fair to the business, there would be timing issues here beyond their control. There is the printing lead time for a large number of flyers. There is also the distribution lead time. However, they would still have had time to withdraw this ad, even if there may have been significant cost penalties; but they proceeded with this promotion, presumably because of their financial commitment. Perhaps they figured it would still provide some brand recognition.

What they didn’t consider was possible brand damage. Now if you were a franchisee paying marketing fees to this franchisor, would you believe your money was being well spent?

Sometimes when the marketing bus pulls out and leaves you behind, you are just better off cutting your losses and choosing another route rather than trying to climb back on to a bus to nowhere.

May Your Business Be - As You Plan It.

Over to You. What do You Think? Post Your Comments Below.

Dr Greg Chapman is the Director of Empower Business Solutions and The Australian Business Coaching Club and is Australia's Leading Advisor on Emerging Businesses and provides Coaching and Consulting advice to Australian Small Business Owners in Marketing & Business Strategies Planning & Systems. He is also the author of The Five Pillars of Guaranteed Business Success.

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Australian Landscape Photography

Some Autumn Scenery for your enjoyment. Another Australian Landscape Photograph kindly provided by Pele Leung Photography.

Alfred Nicholas Gardens - Victoria

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Benchmarking Your Business Performance

by Dr Greg Chapman, MBA

How do you know how your business compares with others? You can ask your competitors, and they always say business is great. Why wouldn’t they, after all, when they ask you, you tell them the same thing!

Well there is a way to see how you are going against others. The Australian Tax Office have released performance benchmarks for 50 types of businesses. Their purpose, as you might expect is not totally altruistic. Their objective is to identify businesses outside the performance norms so they can target them for tax audits. However, you can use these benchmarks to see how you are doing against others.

For different types of business and turnover ranges, the ratios of cost of goods sold, labour and rent to turnover are presented. As a word of caution- the ATO excludes from the labour ratio the wages of owners. However, you can get an idea of the gross margins on which others are operating for different sizes of business.

To use these benchmarks, select your industry, the turnover range that applies to you and pick an average value of the ratios. For example, if you have a plumbing business turning over $200,000 per year, materials costs average 38% and labour costs (excluding the owners’ wages) are 15%. The ATO note that most plumbers do not report rent as presumably they run their businesses from home. Therefore, the gross margin before general overheads and owners’ wages is 47%.

There is, of course a range of gross margins for plumbing businesses of this size of 36%-58%. Well run businesses with good marketing will be at the top end of this range.

Where does your business fall within this range? This will give you an idea how well you are doing and provides a performance benchmark for your business.

If your business is at the bottom end of the range, you need to understand why. “The Five Pillars of Guaranteed Business Success” is a great resource to understand where the performance gaps are in your business.

Now you know where you stand, what are you going to do about it?

May Your Business Be - As You Plan It.

Over to You. What do You Think? Post Your Comments Below.

Dr Greg Chapman is the Director of Empower Business Solutions and The Australian Business Coaching Club and is Australia's Leading Advisor on Emerging Businesses and provides Coaching and Consulting advice to Australian Small Business Owners in Marketing & Business Strategies Planning & Systems. He is also the author of The Five Pillars of Guaranteed Business Success.

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Does the Australian Government Hate Small Business?

by Dr Greg Chapman, MBA

The government is currently considering a change in tax regulations that will bind small business in red tape that will make the GST look like a picnic. It is certain to cause people to close their businesses, particularly older business owners.

This change is driven by two things- the union’s hatred of independent contractors, and the government’s insatiable desire to increase taxes. An alignment of planets you might say.

Firstly the unions want to force independent contractors into a unionised workforce. However, the very existence of this sector is largely an arrangement of mutual convenience particularly in project based industries where workforce needs in any business may change dramatically. It offers the business the opportunity to bring in skills as a project demands without the additional cost commitments that placing people on staff has. This keeps project costs down.

For the contractor, it gives them the flexibility to work with businesses where the activity is, and decline work they don’t want but may have to take on if they were employees. This independence is highly valued by these contractors who contract with a variety of businesses in the course of a year. They bid for work like any other small business, putting in quotes, taking care of their own professional development and building their own reputation or brand.

Yes there is probably some rorting of the arrangements with some contractors really being employees, but the existing tax arrangements look through this to see how many clients a contractor may have in a year. If it is just one, they are taxed as an employee.

So how will it affect other businesses? Robert Gottliebsen gives some examples:

“Each plumber or computer consultant in Australia will need to differentiate between their income from capital (spanners, shovels and computers) and their income from labour (digging the ditches and writing software).

Under the Sherry (Nick Sherry- Deputy Treasurer) -blessed plan, part of the income derived from labour would be attributed to the person who supplied the labour and those people would be treated as employees – not business people. The income earned on capital could be returned to the owner(s) of the capital, which may differ from the person who provided the labour. Have you ever heard of anything more stupid? But the Sherry-blessed plan gets worse.

The plumber and computer person must make an annual report to the ATO so that the ATO can match data to see how many clients they have had in a year. If more than 80 per cent of the business income came from one group then whammo! You are an employee.
And once the plumber and computer consultant are deemed to be employees, all their business deductions will be looked at in a different light. Their customers may be required to deduct tax when they pay the invoice.

And, oh yes, every business must have two employees to be a business.”

So how will that work for your business? How much time and cost will it take you to get some kind of exemption if the rules don’t apply to you? I predict a paper nightmare. Gottliebsen predicts a 1 term Labor government.

This is now part of the governments top secret Henry Tax Review. (It was completed last year and the government refuses to say when they will release it.) We will know for sure come May when the budget is brought down or before the election later this year whether the Government really hates small business. If you would prefer that this does not become policy, contact the “advocate” and minister for small business in the government Dr Craig Emerson and let him know what you think of this proposal.

May Your Business Be - As You Plan It.

Over to You. What do You Think? Post Your Comments Below.

Dr Greg Chapman is the Director of Empower Business Solutions and The Australian Business Coaching Club and is Australia's Leading Advisor on Emerging Businesses and provides Coaching and Consulting advice to Australian Small Business Owners in Marketing & Business Strategies Planning & Systems. He is also the author of The Five Pillars of Guaranteed Business Success.

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