Grow Your Business October 2008

Dear Business Leaders,

Welcome to the October edition of the Xenex Group Newsletter. 

You have been sent this as a client or associate of Xenex Group. We regularly provided an interesting mix of articles on management, leadership and business process, for senior executives and business owners to better manage their people and resources.  We hope you find these articles sufficiently stimulating for you to make a commitment to positive change within your business.

Best regards, 

Daniel O'Connor.
Consultant Principal.

Registration for last year's export grant funding closes at the end of this month. If you are a first-time claimant, you need to get in touch with us to get your pre-qualification finalised. This will give us until November to finalise you grant, which can incorporate expenses for the past two financial years. There are changes to the EMDG grant for 2008 and those who have made their seventh claim can now be eligible for another year. Call Daniel to organise a discussion on export expenses and your entitlements.

There have been many changes to the States selection criteria for prospective sponsorships, since September 2008. This is expected to change even more with the economic downturn and the Federal Government suggesting they will be reducing Migrant numbers across the board in the coming weeks.

Applicants for NSW sponsorship for these visas now must make one or more research visits to NSW in the 12 months before applying to prepare their business plan. Applicants were previously advised that a research visit was strongly recommended. This is now a compulsory requirement.

If an applicant’s spouse will subsequently be the primary applicant for a NSW Sponsored Business Owner (Residence) visa sub class 892 their resume must be submitted as part of the application for NSW sponsorship for the provisional visa. A meeting with the NSW Department of State and Regional Development to outline the applicant’s business proposal at the end of their research visits is recommended.

There are many other changes for other States. At this stage, only Western Australia is encouraging Subclass 132 applicants. If you would like a pre-acceptance assessment on an applicant, please call Daniel on +61 89335 7724 or email daniel@xenex.com.au.

Turning website visitors into customers is more likely if they can get a feel for what your product looks like and offers.  Recorded demos are a way of providing attention grabbing product display and demonstration 24/7 without you needing to leave the office.

New development software makes it possible to create DIY product demos relatively easily and inexpensively. These days most of the challenge lies in deciding the storyline, creating interesting graphics and developing navigation links through the demo so as to make it an easy-to-operate and enjoyable experience for the prospect. For the business that doesn’t want to go it alone, an agency can be hired to design and create a recorded product demo.

Recorded product demos can be produced using a variety of software technologies ranging from the humble PPT presentation through to complete video+voice productions. Real estate firms make considerable use of the ‘roving camera’ technique to create virtual walk-throughs of their properties. DEWALT, a manufacturer of power tools, kept production costs down by using existing marketing copy and photos. In conjunction with Flash animations and the use of callouts to point out the exterior and interior features of their products, they developed simple yet informative and attractive recorded demos of 160 of their products. They also allow end-users to interact with the product via 360-degree rotation and zoom capabilities. Destination Lighting displays their range of residential lighting fixtures and home accessories by allowing visitors to take a virtual tour of a home online. Moving through the different rooms in their Open House you can visualise how different types of lighting fixtures provide light and atmosphere and check out their full product range.

Five tips for creating a compelling recorded product demonstration

1.       Keep your audience and purpose in mind: don’t make the mistake of confusing a demo with a training session. Each recorded product demo should be created with one particular purpose and audience in mind. If the intent is to market to customers, then the message will be about how the product works and how it will meet their need. If you serve a diverse range of customers, each of which might be looking for particular features and benefits that would suit them, then create a demo for each by adding customised information to a generic version.

2.       Keep the design flexible: if sufficient thought is put into the development of the script it may be possible to re-purpose the demo for different audiences with only slight modifications to the text or graphics. In this way the basic customer oriented presentation could easily and cheaply be re-purposed to suit sales training, reseller information or a trade show display.

3.       Keep it useable: be aware of the demands your demo is going to make on the technology employed by your target audience. Shockwave and other browser plug-ins can produce powerful multimedia effects, but computer novices are hesitant about downloading and configuring them. Some media are so bandwidth hungry they put hi-tech demos out of reach of Net users with older computers. New browsers or browser versions may not support an older downloadable demo, so it's critical to check how your demos behave by testing them across versions and as upgrades are introduced.

4.       Capture prospect information: people who have taken the time to watch a recorded product demo presumably are in the market for the product. Don’t let the opportunity slip away with the end of the demo. In the demo include an option for them to request further details, have you call them personally, or put them on your mailing list.  If they take up any of these offers you have a hot prospect.

5.       Don’t demand too much of the prospect’s time: regardless of how intrinsically interesting a product is or how engaging the demo, there is a definite limit to the demand on a prospect’s time it should make. The demo sets the stage for a purchase — other information that might be of interest can be made available elsewhere on the site as fact sheets, white papers and case studies. For a generic product a presentation of 3 minutes or so is about right. If the product is complex or high cost, 10-15 minutes could be justified so as to adequately explain the product and build confidence in the prospect.

Engaging prospects with rich media and video pays off. Virtual product demos have been successful in improving conversion rates on those sites that use them.

Small business owners are starting to feel the effects of the credit drought. Many may already have experienced disappointment with a loan application. Meanwhile unexpected needs for a cash injection keep coming up such as a delivery vehicle breakdown or an opportunity to pick up some normally expensive office equipment or machinery at a good price.

With credit getting tighter and credit card charges going up, who can a cash strapped owner turn to for a loan? Increasingly these days, the answer is – to a stranger. A peer-to-peer (P2P) loan (also known as ‘person to person lending’ and ‘social lending’) is a loan mediated directly with another person without using a bank or financial institution. Would-be lenders compete with each other on the basis of the interest rate they apply. The lender willing to provide the lowest interest rate ‘wins’ the borrower's loan. The majority of these deals bring together a borrower and lender not previously known to each other. For a flat fee, P2P lenders may also perform a ‘family and friend’ transaction helping a borrower and lender who  do already know each other (family members or business associates) to sort out the terms of a loan arrangement and then formalise it in writing.

The process has become popular because it is mediated by the social networking capabilities of the internet. Popular P2P lender organisations, such as iGrin, LendingHub, Prosper, Zopa and Virgin Money, have become the eBay equivalent of the personal loan market putting borrowers in direct contact with lenders for loans up to around $25,000. The allure of peer-to-peer lending goes beyond finding a willing lender charging a reasonable rate of interest. The process is not known as ‘social lending’ without reason. One unique aspect of P2P lending is that it gives borrowers the chance to tell their story, so applying for a loan can be as much about winning hearts and minds through mentioning shared hobbies or interests as about a compelling business plan. At LendingClub, lenders pick borrowers based not only on their credit profile, but also on their affiliations; at Prosper, users can create groups that, based on members' repayment history, receive star ratings and can help member borrowers get lower rates.

It may be easy money but is it smart money?

The fact that money may be just a few clicks away makes P2P borrowing a very tempting proposition.  But that doesn't automatically make it a smart choice. The P2P option can be used intelligently to deal with a short term cash requirement or to trade a high rate credit card debt for a lower rate P2P loan – their lower interest loans can be used to pay off a high interest credit card balance. However, as with all financial deals, you need to understand the rules of the road if you don’t want to crash. Generally, the basic principle of lending - that the lower your credit score, the lower your chance of getting financed - applies just as much in P2P deals as it does with traditional lending institutions.

P2P lender sites usually grade borrowers' credit worthiness in some way, based mainly on their credit score. Money borrowed through a P2P lender is reported to the credit bureaus as a personal loan. Paying off $10,000 in credit card debt still leaves your credit report showing a $10,000 debt – only now it will represent your personal loan. You haven't gained any ground in reducing your overall debt but you have lowered the interest rate you pay on the debt. That may be a good result in itself, but it doesn’t improve your credit score in any way. Loans taken out to fund business activity can even reduce your credit rating. Regardless of the purpose the borrower has in mind to use the money for, it really amounts to, and is treated by credit companies as, just another personal loan. By adding this new loan to your debt, your credit score may go down.

That can affect your longer term ability to get a loan from the conventional sources or even credit from vendors or suppliers. The new P2P lending sites, as with credit cards before them, may be making it a little too easy for a business owner to get their hands on money. P2P lending obviously addresses a gap in the credit market, but such loans can hurt personal credit scores and potentially draw business owners in over their heads Before seeking money from a P2P site a prudent business owner should sit down and take a really hard look at their financials and do a cash flow projection to make sure they can pay back the loan. Otherwise they could be making a bad situation even worse.

Identity theft is the fastest growing crime in the world and it doesn’t happen to only private individuals, businesses can have their identity hijacked as well. One of the common tactics used by identity theft fraudsters is phishing.

Phishing occurs when a fraudster sends a fake email purporting to come from a legitimate business (banks, credit card companies, government departments, PayPal, and eBay are popular choices) that includes a request for personal identity details.  The explanation will sound very plausible, such as to verify your identity with the organisation. It usually includes a threat to prompt you to take action – “We will have no choice but to suspend your account” or similar. When you follow the link it takes you to a site that looks like the genuine one, but is in fact a copy created by the fraudster. As you put your details in it logs them and allows the fraudster to use them to access your account on the genuine site or use your details for fraudulent transactions elsewhere.

Business owners, or their employees, who fall for one of these scams and supply business related identity data (a business registration number or business credit card details, etc) have supplied the fraudster with valuable information. The phisher has, in effect, stolen their identity.

For a business, that can be very bad news. Fraudsters can use this information to open bogus accounts in the name of the business or even, in extreme cases, set up a clone of the company and run up debts in its name. Business identity theft often damages or destroys the victim's credit rating and, in the process, the business itself. Not only does it face problems with creditors and vendors, it could also find itself unable to fill orders and conduct business normally, potentially losing customers along the way. If the business has allowed customer information to be stolen then they must be notified and that admission won’t make for good publicity or do anything for customer loyalty.

Some things you can do to prevent phishers landing you:

Don’t fall for a phishing email

Even if you think a request for information may be legitimate, don't click the links in the email to visit a website in case it leads to a phishing site. Instead, type the website's address by hand to ensure that you go to the organisation's real site. If you do have an existing relationship with the supposed originator of the email then call the organisation to confirm that the email is legitimate before responding.

Create strong passwords

A strong password includes a combination of numbers, capitalised letters and symbols. It should NEVER include whole or partial pieces of identity data such as driver’s licence number, name or birth date. Having created strong passwords, get into the habit of changing them periodically.

Don’t use unsecured computers

The computers you find at Internet cafés, libraries, in hotel rooms and the like should automatically be assumed as unsafe for the transfer of identity data. Wi-Fi networks present even more opportunities for identity thieves. The easiest way to protect a Wi-Fi network at home is to not broadcast the Service Set Identifier. Sending identity data over a public Wi-Fi connection is simply a no-no.

 Guard your data

To be protected across the board a computer must have good anti-virus software, as well as anti-spyware and firewall protection. Keep them updated — scammers are constantly devising new attack methods and constant vigilance is necessary to stay safe.

Only transfer information over a secure server

Ensure that websites you transfer identity data to are utilising an encryption system. Look for the ‘lock’ icon on the status bar at the bottom of your browser window. In addition, check the beginning of the URL or web address — if it starts with ‘https://,’ rather than just ‘http://,’ you're on a secure server. Data is then encrypted as it is being transmitted so that, even if it is intercepted, it can’t be read.

Think you’ve been hooked? – here’s what to do

The best way to prevent identity theft is to stay active and aware. Review your bank accounts and credit card statements each month for any suspicious activity and immediately investigate anything that seems odd. If you believe you have been the victim of phishing then alert your local law enforcement officials, bank, and credit card agency immediately so they can investigate the incident. It’s important that the compromised accounts are watched or closed to prevent further fraudulent transactions using them.

Writing up an employee manual is usually way down the bottom of the to-do list for an SME owner — usually just above writing up their policies and procedures manual!

But in the long run you can save yourself a lot of time by getting your HR procedures down in print once, instead of having to explain them numberless times. There are other decisions, such as whether to offer severance pay or not, where you won’t want to be making off-the-cuff decisions each time someone terminates employment. That's the wrong time to make serious decisions like this and can lead to inconsistent, and possibly illegal, treatment of people. Employment procedures should be developed before you have to follow them so you don't have to make up policy in a situation of urgency. Finally, there are some employment issues about which the law absolutely requires you to provide information to your employees in writing, such as the rules on sexual harassment and equal opportunity.

All in all, time spent putting together a set of guidelines on core employment issues is time well spent to keep you in compliance with the law and protect you from the consequences of litigation by unhappy employees. Keep these tips in mind when developing your employment manual.

1.       Don't reinvent the wheel: there are plenty of employee handbook templates around that will provide an outline of what should be included. Some include written versions of policies that can be modified to suit your particular business and situation. If you decide to buy an off-the-shelf manual, check that the supplier guarantees it has been developed by HR professionals, complies with employment law and is up to date. If you have standard forms already for things like leave requests, then include a copy of each form with the relevant policy.

2.       Ensure employees know about it and use it: creating an employee handbook for yourself is a waste of time. If you are to get any payback on the time and effort you invested in creating it, you need to promote it. Let all employees know that it exists, where to find a copy, what is in it and how to use it.

3.       Cover yourself: include a disclaimer stating clearly that the manual is in no way a legal contract. Hold sessions with employees to explain how it works and request them to take time to read it by a certain date. Then ask each one for written confirmation saying they have read it.

4.       Keep it manageable: an employee handbook is not a safety manual, or a job description, or a procedures guide. There’s a place in a well-run business for each of those but they are separate to an employee manual. Restrict your employee manual to information about employment conditions, work rules and disciplinary procedures.

5.       Use it to train employees: the manual will prove a useful reference for employees, particularly new employees, to look up information for themselves rather than always having to interrupt you to enquire about how things work. It will help new employees understand expectations — ‘how we do things around here’ — and fit in faster.

Keep it current: out of date employment information is dangerous information. Failure to keep your information current on topics such as penalties for harassment and leave entitlement can be the basis for big payouts if a dispute with an employee ends up in litigation. Apart from adding new legislative information as it becomes available, review the whole document every couple of years to weed out anything that has become irrelevant.

The reason why worry kills more people than work is that more people worry than work  - Robert Frost

Be sure to read each article with the mindset "How could this apply to our business." Thinking of it that way will guarantee that you get value. Better yet, take notes as you read and commit to having the ideas implemented by the time the next edition arrives. Also, make copies for each team member. To really make sure something positive happens, work with your Xenex business development specialist to talk your team through the ideas and how to set a schedule for getting them implemented. We're here to help you get started.

While every effort has been made to provide valuable, useful information in this publication, Xenex Group and any related suppliers or associated companies accept no responsibility or any form of liability from reliance upon or use of its contents. Any suggestions should be considered carefully within your own particular circumstances, as they are intended as general information only.