Each new year brings a chance to make changes for the better, but with a federal election just months away, this year is one of the more unpredictable. One thing is certain: SMEs will play a key role in the development of the major parties’ business policy, and for the resulting direction of the economy.
With an early budget, the election will probably be held in May, and at this stage it’s not likely to be a tight race. A December Newspoll found 55 per cent believe Labor will win, while just 24 per cent back the government for re-election. But even strong polling guarantees nothing, so both parties will be desperate for support, and every coherent group of voters will be up for grabs. SMEs are high on the list, representing everything from Mum and Dad operations to industry leading firms.
That’s a mixed blessing. While both parties courting the sector should lead to progressive policies that benefit both business and the economy, the promise of wholesale change can increase uncertainty. A closer than expected election could also result in political uncertainty, which would cause additional anxiety for the economy as a whole. That could have a pronounced impact on SMEs, especially if the availability of capital is affected.
For SMEs to enjoy smooth sailing after the election, both major parties need to be clear on what their policies are, and why they believe in them. The parties must prove they’re serious about supporting Australian business, with the intent to follow through on their promises regardless of the political landscape post-election. A promise not kept does more harm than good.
More importantly, policies that support SMEs and the overall economy must be sold to the public. That’s the job of politicians and the business community.
SMEs are the lifeblood of the Australian economy, and what’s good for SMEs tends to be good for everyone, especially during a domestic housing downturn and an unpredictable global political climate.
By helping the Australian public understand the importance of strong SMEs, the political and policy incentives of politicians become aligned. With everyone paddling in the same direction, it’s much more likely we’ll find a path around those dangerous waters.
Watch Marketlend’s Founder and CEO, Leo Tyndall, talk about Marketlend’s loss reserve, a important feature that protects investors. The text of his comments appears below if you prefer to read.
So a loss reserve for us in Marketlend is actually built on the basis of protecting against the possibility that we have someone who falls in default and therefore there is a differential or shortfall between say, in an insured position, the amount of insurance that’s paid and the amount that’s actually, essentially owed or in the case of an uninsured it’ll be that the assets themselves don’t sufficiently cover the shortfall to the amount that’s been advanced to the borrower himself, or the account holder. What we do with the loss reserve is, is that we essentially collect that loss reserve and if the actual borrower has paid on time at all times, they’ll get their loss reserve deducted off their balance when they owe the money.However, what we do do is, we actually hold that in a separate trust account and we enable that loss reserve to be assisting investors to actually protect against that additional risk they have that the insurance may have a shortfall. Not significant but, or that the actual underlying assets and the guarantor guarantee situation isn’t sufficient to cover that. As well as, possibly the fact that it takes a lot longer to actually collect the debt so therefore there is a need to cover that cost during that time.
Watch Marketlend’s Chief Investment Officer, Jane Lehmann, talk about what Marketlend looks for in its investors. The text of her comments appears below if you prefer to read.
Marketlend has a very specific requirement in regards to its investors. Under the Corporations Act, we are required to only engage experienced, sophisticated, wholesale, official investors. So for an experienced investor, that really is someone who can demonstrate that they have, as the name suggests, experience in lending in these types of financial instruments, and truly understand the risks that they’re undertaking when they engage in the platform. Sophisticated is actually a means test related defining feature that you need assets of a 2.5 million. I think the inference there is they also are a more sophisticated and experienced investor.
The institutional investors have a different profile that they tend to be funds. Many of them are offshore. And for them they often have a specific risk profile that they’re interested in and we can customise that for them. We have a pool of loans that we have onboarded and we can work with them to understand what their risk tolerance is where there are risk sectors they’re not comfortable with, where they have an appetite and craft a portfolio for them.
The experienced and sophisticated investors have the opportunity to go on to the platform and make their own assessments. They can look at each loan that is presented and make their own assessment and take a view on whether that is something that appeals to them as an investment opportunity. And that is obviously why you need experienced investors, because they are making a financial decision.
This past week, Marketlend ran an investor townhall. Transparency is integral to how Marketlend operates. Our investors expect it and we are committed to delivering on this promise. The investor townhall offered a chance to roll up our sleeves and explore issues that matter to the investor community.
We dug down into the mechanics of how we return principal in the event of a problem loan and the integrity of the Marketlend platform generally. There was ample room for Marketlend’s Founder and CEO to field questions and the result was a really engaging and hopefully enlightening look inside the how and why of this aspect of the Marketlend platform. Click above to have a listen.
So your launch was a success, and your new business is now at cruising altitude. Celebrate, by all means. But keep an eye out for tendrils of smoke in the vents.
That’s because some problems in a growing business are like a smouldering fire: you’re often unaware until it’s too late. If you know their early warning signs, though, and have plans in place to counteract them, you shouldn’t be taken by surprise. Here are some of those signs and the best countermeasures:
1. You’re starting to pay your bills late
If you’re starting to having trouble paying creditors and employees on time, you might be developing major cash-flow woes. Cash is everything to your small business, and you need to figure out where the problem lies right away.
Ask yourself: Are you billing your clients quickly enough, with timely invoices? Are you checking the credit histories of your big customers instead of just giving them the benefit of the doubt? What about collections procedures for the deadbeats? Do you have those in place?
Cut costs wherever you can. The little expenses add up. Barter with other businesses for services; buy your equipment gently used; install a ‘smart’ thermostat; get a solar water heater; make staff turn off computers at night; employ freelancers for suitable tasks. You can even borrow items from a tool library so you don’t have to buy them.
Check your financial statements religiously. Identify any possible opportunities to boost your income, but don’t even think about trying to grow right now. If you’re having cash flow problems, now’s not the time.
You should be able to pay your bills, your employees, and even yourself–on time.
2. You’re always reacting to emergencies
If you’re starting to respond to business emergencies day in, day out, something’s not right.Things should be running smoothly enough to let you plan and think strategically much of the time, and focus on building your business.
Perhaps you’re trying to have the business do too many things at once; or maybe you’re bad at setting priorities and managing time.
The Eisenhower Matrix
Have you heard of the Eisenhower Matrix? It’s a formula developed by Dwight Eisenhower, the American World War II general, more than 60 years ago that has stood the test of time. Basically, Eisenhower split his workload into urgent tasks (returning a phone call from Winston Churchill, say) ) and important tasks (such as planning for D-Day)). He made sure to schedule time for his important tasks and to delegate the unimportant ones. What he accomplished with this approach is none too shabby: he vanquished Hitler, became president of the U.S. and developed its highway system, among other things. And his formula is still alive today.
Eisenhower didn’t even have the benefit of project management apps, but you do. These can help you and your staff work together efficiently. Eisenhower also knew that having too many meetings in one’s schedule is a bad idea — they suck up lots of time.
Be realistic about your own weaknesses, and consider hiring someone to help set priorities and establish your office systems.
3. The staff you just hired is leaving
Once you’ve invested in training good people, you want them to stick around. If
they’re leaving sooner than you’d like, schedule exit interviews with them to ask why. Then ask yourself what you can do to improve staff retention.
And take a look in the mirror. A good boss fosters enthusiasm, sets clear expectations, gives timely feedback and conveys a sense of mission. Then he or she gives the employees room to get the job done. If they do their jobs well, don’t micromanage.
Let your employees know you value their efforts (or at least, let the good ones know); pay them a decent wage; express an interest in them. They’ll reward you with loyalty.
If these strengths aren’t yours, consider hiring someone else to manage your staff. Outside consultants can also help identify why employees keep heading for the door.
Turnover rates vary by industry, so you might want to call your industry’s trade association, if there is one, to see how your rate compares.
4. You experience a sudden drop in sales
A sudden drop in sales could be just a hiccup, but it could also be a sign of bigger problems, so investigate immediately. Have your competitors beat you to the punch in some way? Is your product or your way of selling it outdated? Do you need to adjust your pricing or your marketing? If you have sales staff, are they hitting their quotas?
Are you targeting the right customers? Is technology revolutionising your industry in some way and changing your customers’ buying habits or methods?
Put yourself in your customer’s shoes and try searching for your product and business online. If you sell online, make sure everything on your website functions smoothly, from landing to checkout.
Check in with your industry’s trade association, if you have one, to find out if the drop you’re experiencing is part of a bigger trend, or perhaps customary at this time of year for reasons you might not have thought of.
Now you have it — four situations, each of which could be a wisp of smoke telling you your engine’s on fire. Ignore them at your peril.
Branding, where does it fit? Determining which job functions to prioritise in an SME is one of the most critical resource decisions you’ll make as a founder. The need to focus foremost on services and product development is obvious, but business experts often debate the merits of investing in strong branding.
It’s not necessarily a key factor in whether an investor may choose to fund your business, but it’s important to make a good impression. So how much money should you actually spend and who should you work with to build a reasonable branding plan? Consider some of the following factors to help you decide what’s best for your business.
What is your branding IQ?
If your idea of branding means paying a random designer $10 on Fiverr to create your logo, you might be underestimating some things. (That’s not to say this approach doesn’t magically work out well sometimes! Best of luck to you.) Get real with yourself about how much of a priority branding needs to be in your business. Plan to invest some time. In fact, let’s pause for a moment. Complete outsourcing is not really possible when it comes to branding. This business is your passion and even the best consultant will need you to set aside a few hours a week to collaborate and extract authentic representations of your work from you. The absolute worst thing you could do is throw money at someone and expect a brand to materialize without nurturing on your end.
How much can you expect out of your branding consultant?
At a bare minimum, a decent branding plan should involve 10-15 hours of work with a trusted professional who will create a roadmap for success. Advanced branding should be an integrated component of your overall marketing strategy. In the social media era, this usually includes a supplemental content strategy for which you would create assets like written blog content, graphics, photos, podcasts or videos. You’d also want to create a system for deploying this branded content to firmly-defined key audiences. A top-notch branding consultant should be able to help you conceptualize your aesthetic, your content and deployment strategy, and connect these efforts back to your sales funnel.
Where can you find them?
As you begin your search, consider the merits of working with an agency versus a freelance individual. Intangibles, such as personal compatibility and working styles, are also important. Agencies offer more brain power and hands on deck; the access to a broader infrastructure can lead to increased operational smoothness and responsiveness.They are also more expensive than individuals, who often leave agencies to enjoy the benefits of self-employment. Be open-minded. Branding consultants are usually creatives who embrace flexibility. Just be wary of anyone who presents themselves as a one-stop shop of expertise. Ask an individual who else they plan to work with on design and production, and find out if there are hidden or unanticipated costs for ancillary things like social media advertising budget on top of their fees.
The best bet is to ask colleagues for recommendations. You can also try LinkedIn searches. Sites like CloudPeeps, Dribbble, Carbonmade, and Thumbtack can also be a good bet. You may also want to research private Facebook groups for freelance creative professionals and see if you can post your job description.
How much should you invest?
Your budget will be a major factor in how things go with your branding consultant.
There are awesome, enterprising young people who are building up their portfolios willing to work for as low as $25-50/hour. A mid-career professional can run about $75/hour. Heavy-hitters will ask for $150+ hourly rates. Any of these folks might be willing to negotiate a flat rate deal with you as well. Agencies typically charge a monthly retainer from $2,500 to $10,000. Be willing to suggest a startup discount, services trade, or payment installment plan if it would allow you to work with someone you’re excited about. They might say yes!
How long should you work together?
The duration of your agreement is heavily dependent on your initial goals. A top-level evaluation from a major strategist could take a week. A first iteration and basic roadmap could be completed in 4-6 weeks. A more advanced engagement could last 3-6 months. Whatever you decide in coordination with your branding consultant, be sure to build a mid-point check in to ensure you’re on track to hit your agreed upon deliverables.
Let’s say you’ve come up with a cure for baldness. You’ve patented your formula, written a business plan, lined up investors, hired staff and set up production. Ready for liftoff, right? Nope. Your startup would crash for want of marketing.
You can’t sell something, even the cure for baldness, unless people know it exists. Lots of people. Marketing is how you let them know your product exists, and also how you make it appealing. Product design, consumer research and advertising all come under marketing’s umbrella. Pricing strategy–or at least, the case you make to the consumer that the price is right–comes under marketing, too.
The elements are many, and your business needs an approach that incorporates some or all of them. The best strategy for any given business usually includes a mix. For example, logo development, media outreach, paid advertising and trade shows. Here are tips for deciding what marketing strategies might work for your startup and ways to get started.
Fine-tune your marketing plan
Ideally, your business plan addressed marketing to some degree, but you’ll want to flesh this out in a plan exclusively focused on marketing before you go live. You’ll want it to start with an explanation of why your product is better than your competitors’ and accurately describe your niche.This is called the “situational analysis.”
Add on a short description of your ideal prospective customer and their earnings, gender, age, family composition and consumer habits. Also Include the type of media this hypothetical person likes to consume–internet, newspapers, television, radio, podcasts, etc.. A person over 65, for example, is less likely to use Instagram than a person in their early 20s. This section will require you to do a bit of research, but it will bear fruit.
Next, list some very specific, measurable goals you want to reach, such as a 10 percent increase in sales in your second year of operations. You want your goals to be measurable so you’ll know if you reached them.
And of course, you need to list your tactics for spreading the word about your product so that it reaches prospective customers. Take into account the different stage of the sales cycle and determine how you plan to reach cold prospects and how you want to reach existing customers, whether its through radio advertising or loyalty programs. Options are many, from banner ads online to banners pulled by planes; from chatty blogs to the sparse wording on a billboard.
Set your marketing budget
Be prepared: marketing can be costly. Most startups decide on a marketing budget that’s a percentage of their projected revenue. But the recommended ratio varies by industry, so it would be wise to seek advice from your industry’s trade association.
Some companies spend up to half of their sales revenue on marketing in their first year and 30 percent of that revenue thereafter. One school of thought holds that companies in their first five years of business should allocate 12 to 20 percent of their gross or projected revenue for marketing every year while older companies should allocate up to 10 percent. One tool that might be helpful is the National Australia Bank’s marketing budget forecast template.
Measure your results
Unless you measure the results of your marketing efforts, it’s hardly worth drawing up a plan in the first place. Measurement helps you fine-tune your tactics so they’re better at reaching your intended audience. It lets you know when an approach isn’t working so you can regroup and try something else. Your metrics will hinge on your tactics. Print advertising could direct people to a designated phone number or internet domain and you could count how many calls or views it gets. Online promotions and clicks can be measured using internet analytics. If you use billboard advertising, the billboard company will have a way to measure the number of cars and pedestrians who walk past every day.
Planning backed up by careful research; budgeting that’s realistic; and measuring that tracks results are cornerstones of effective marketing. If you market your product well, potential customers will recognize your brand, distinguish it from your competitors and favor it.
What do you know about the gig economy? How an employer manages their growing small business has changed immensely in the last 10 years, with both employees and employers alike now relying on the flexible and cost effective nature the gig economy presents.
The gig economy refers to the segment of the workforce that relies on freelance and independently contracted jobs. The rise of the gig economy isn’t something necessarily new, but with the growing incentives of flexibility and entrepreneurship, it has seen a steady implementation into the workforce, and now even small businesses.
With the gig economy becoming a growing trend globally, its important to understand why it can be a benefit for your small business. Here are five reasons to utilize the gig economy for your small business, unlocking your businesses potential:
Creating A Collaborative And Healthy Environment
Would you believe people work more efficient and effective when they’re happy? Well statistics have shown that members of the gig economy are so happy with the results of this particular workforce, that 90% plan to continue their professional careers remotely via independently contracted work or freelancing.
Where independently contracted work or freelancing doesn’t necessarily give the traditional comfort and security of a part-time or full-time job, it has empowered and enabled freelancers to create and negotiate their own flexible schedules, as well as crutch on the comfort of working from home. The ability for contracted workers to benefit from their environment at home, while being transparent and fulfilling their work with their employer, can lead to a partnership that is equally beneficial for your small business.
Short term solution without long term consequences financially
Your small business will benefit from using independently contracted or freelance workers for the simple reason that you’re not taking on a long term financial obligation. Having more space in your pocket will be important for your small business, and hiring part-time or full-time employees can bring on burdens of their own. With the flexibility gig economy work presents for your small business, it’s necessary to pinpoint early on when creating your small business what work can be done remotely, and what needs to be done in house.
The gig economy and technology are converging at a growing rate. With the outsourcing of technological work becoming one of the thriving workforces within the gig economy, it’s no secret why: With the always growing network of computing, communication and technology, it’s important to understand the technological resources you must utilize to protect and strengthen your small business.
From anti-hacking software to creating employee time-cards online, many aspects of keeping and protecting a growing small business refrain back to technological work, so utilizing independent contractors who can maintain and sustain the technological needs of your small business will be important.
Productive and Creative Work
One of the more basic elements of understanding the importance of the gig economy to independently contracted workers or freelancers is the very basic principle that it allows workers to be both productive and creative. With the support and transparent relationship you’ve built with your independently contracted worker or freelancer, you have shown your trust in them to fulfill and meet your businesses expectations, while giving them the comfort and stability of working remotely. From these expectations will come contracted devotion and mutual respect from your independently contracted worker, understanding the benefit and privilege of working from home.
When you hire through the gig economy, you ensure yourself less daily maintenance at your small business. With this in mind, it’s important to understand the benefit less maintenance has on you as the overseer of your business and it’s employees. Having work done from remote locations can create an environment in which you are able to maintain your workplace with a little more ease due to less visual obligations.
The gig economy is not perfect. From less security for employees to less stability for employers, it can have its negative effects if relationships and partnerships aren’t monitored and maintained properly.
Workplace dynamics have been historically unpleasing for employees, and the rise of the gig economy can be attributed in some instances to the perceived perils of the traditional workplace. There are many reasons to utilize the gig economy, from the environment it creates for you as an employer, to the flexibility it creates for your employees.
Insured loans can bring real peace of mind to investors because insuring a loan brings protection in the face of often unforseen events that prevent the repayment of that loan. How do insured loans work? First, insured loans need a pioneering platform to realise their potential, one that is built on best practice, transparency and flexibility.
Marketlend’s proven first-of-its-kind borrower and loan risk assessment systems are supported by carefully structured insurance (in certain circumstances) and loss protection policies.
What does insurance cover?
- Payment on insolvency
- Repayment of Principal Advanced.
- Collection Costs
- Legal Costs
You can learn more about the model here, and we will also be developing more insured loan material for Marketlend Academy in the days ahead. But we want to share a recent experience that drives home the value of insured loans. The experience is best recounted in the words of our founder and CEO, Leo Tyndall, in the following excerpted from a message to investors. His communication underscores how Marketlend’s robust model supports both investor interests and the health and vibrancy of SMEs.
“I think it is important to share the following with you as a member of our community of investors. In further confirmation of the strength of Marketlend’s unique model, all investors involved in a recent liquidation have now been repaid their principal as a result of the successful approval of the claim on the trade credit insurer. This positive outcome shows how trade credit insurance gives investors a proven safety net. It also shows the value of the innovative structures we have in place that make our pioneering platform robust, transparent and investor-friendly.
This outcome also underscores a critical aspect of all business lending that no investor should ever overlook: no matter how you may scrutinise the financials of an entity, ultimately the unforeseen can undermine an investment despite how seemingly sound it is.
Adding the additional layer of trade credit insurance not only supplies the safety net that worked so well in this instance, but also provides another independent level of scrutiny since the insurer itself is also involved in assessing the financial strength of the company.
— Leo Tyndal, CEO and Founder, Marketlend
Lending to SMEs to support sustainable growth is what Marketlend CEO and Founder Leo Tyndall is passionate about, and he wants his company to lead the way as a responsible organisation that treats lines of credit with care and delivers transparency. Click to video to here more or scroll down for a transcript of his latest chat.
So when you say giving them a line of credit, and pay them straight, no, we don’t, we pay their suppliers. So, we pay their suppliers, and we pay their suppliers based on invoice of the verified and checked, and those invoices are then presented to us, and then we pay that supplier, and then when they actually get the goods, they then sell them, and obviously then they pay us in the 90 days after that.
So, and even if our line of credit, uninsured which is a product, which is a little bit similar to like a loan, but it’s a limit, we pay the supplier. So, we allow them to pay suppliers, or services, and what we provide is a line of credit. It’s a little bit similar to an overdraft: we give them a line of credit, it’s renewable, and reviewable every 12 months, they pay it on time, investors are happy, now roll the facility over, and they can keep it going. And, the point being, is that they can then run their business knowing that if they get a big order, they’ve got this line of credit they can use, if they don’t have many orders, they can close the line down, or can reduce it, so there’s that flexibility there.
And that’s not what they’ve got when they go and get personal loans, or I call them personal loans, but S and E loans, ’cause they’re just pure loans.
Yeah, correct. yeah, and the other reason why we do that, is that we don’t really like the idea of giving people pure cash, because it could be used for alcoholism, gambling, and a few other, we’ve seen one before, where they present an invoice and we went to pay it, but before we paid the invoice, we looked at these bank statements and noticed that he was actually gambling. So, we said, “Look, we don’t think we’re gonna pay that.” Because, obviously, we look at their bank statements, and he was probably gonna use the cash that we paid for the goods, with his own income so he could do some gambling or whatever he was gonna do.
So, we look at their bank statements, so we have a number of steps, so, first thing we do is we actually look at their ability to repay the debt for debt servicing ratios, and they’re financials, after their financials we give their bank statements, we then review their bank statements and look at the entries on the bank statement. We have a team member whose only job is to look at those bank statements, and what he’ll do is, he’s a risk officer, and he’ll identify any unusual activity, but also the ability to repay, because the financials may not match the bank statement as well.
And then in this case, what we did was we saw that there was a number of gambling sites that were being paid, and even though we weren’t providing him the cash, we identified that that was a risk, and we didn’t want to lend to him.