January 2025
Welcome to our January newsletter. The focus this month is on the factors affecting growing or changing your business, and the new processes and objectives which are then required.This month’s quote and blog focuses the importance of noise or lack of it when in business.
The conundrum this month focuses on whether to grow your business or to stay within a specific size or market.
Our inconvenient truth is that the cost of outsourcing is rarely calculated properly. It really depends on whether you only look at the short term or the long term.
The Special Topic is based on article titled “Myer’s Premier deal no out-of-jail-free card” as it covers many of the issues raised in this newsletter.
Kim is available to help with your questions and concerns if you need any assistance, and as always, the first chat is always free of charge or obligation.
“A seed grows with no sound but a tree falls with huge noise. Destructions has noise, but creation is quiet. This is the power of silence … GROW SILENTLY” by Confucius.
Many years ago, a football coach loudly proclaimed via the press that they would win the game against their next opponents because the opponent’s players were not up to the standard required to win the game. Guess what? The opponents used that information to inspire their players and won the game.
This state of affairs is not unusual in sport. It is also applicable in the business world. One of the best ways to be successful is to stay under the business radar of entrepreneurs and your competition, whilst quietly looking after your business.
As part of your business strategy, your salespeople should be visiting your potential and existing customers with eyes wide open and reporting what they see and hear. Attending trade fairs either with a stand or in person as a casual attendee is another excellent source of information, as are networking events. The proviso when talking about your own business should be kept to a minimum and without talking too much about your own success and projects.
In addition, all managers and employees should be keeping attuned for media stories about your competitors, suppliers and customers.
The reasons for the above strategies will to gain intelligence about your competitors and suppliers, as many of them will only too willing to advertise their achievements unwittingly as they try to achieve sales leads. After all, some businesses and their people just cannot help themselves when they new projects in development or love to talk about their successes.
Based on the information which is obtained above from the above sources, it should be all reviewed and acted upon as required.
The problem with advertising successes, new directions, or bragging about how good your business is, when things don’t work out as advertised is that when there are failures, this is not a good look for your business.
As we all know unfortunately when things don’t go as advertised, there is plenty of noise spread by the media and other parties detailing your failures. Worse still, headlines to these stories usually start with a sensationalised or inflammatory title designed to draw the eyes and ears of interested parties and encourage them to find out more about the subject. A story highlighting your failings therefore is the last thing you want these days, especially when we know the media loves a disaster or wrong doing story, compared to good news stories of success.
Broadcasting your successes may be a valid marketing tool, however, if done badly or the subject is a failure, usually additional problems eventuate. It is always best therefore to let others broadcast any success such as your customers or the industry professionals as they are usually happy do this for you, and often for free.
At the end of the day, it is often more productive to quietly go about your business and concentrate on what you best. Broadcasting what you are about to do, will always cause unforeseen problem if you don’t achieve a positive outcome as declared.
Many businesspeople and their managers, go into or operate their business with the view of the need to constantly expand and grow their business(s). This idea of growth is often based on enthusiasm, naivety, jealously or is espoused by marketing people and consultants.
The problem however, is that many businesses expand into areas they shouldn’t, or the work is done poorly, which creates negative outcomes. The answer, in order to reduce the chances of failure is to always complete your research on any expansion properly and move forward based on facts, and not just on emotions.
In other words, you need to complete proper due diligence on the following.
After all, every marketplace, competitor and customer will have their own way of doing business, which may be entirely different from your previous business experiences.
Irrespective of your decision to expand by buying another business, grow the business organically, or remain as you are, will all have ramifications. The main factor to consider in any of these situations is to complete proper due diligence and make sure you have all the resources to complete the project, plus additional resources for contingences which will always occur.
When it is thought about outsourcing a department, great care is required that you don’t damage the business’s future, financial position or marketing opportunities and sales operations. For instance, it may be acceptable, and less costly to outsource your delivery service/transport operations, providing. Of course, if completed, the third party must not affect your product’s viability or the quality and efficiency of that service required by your customers.
In regard to finance and administration, accounts payable, or the accounts receivable operations, whether to outsource these operations needs a great deal of thought. The reason why it may not be practical in regards to these operations, is it can be extremely costly if the outsourcing leads to negative outcomes.
When you outsource these operations, you are handing the financial future, or access to your customers and selling strategies to a third party. One of the core reasons not to outsource these operations is because the employee dealing with your finances and customers, owes their first level of loyalty and good behaviour to their immediate boss, not to your business.
In addition, if you retrench or let go your current employees, further damages are likely to result from these employees. Once they have been let go, these employees may end up at your competitor(s) or start up their own business and disrupt your business operations with new and innovative ideas. After all, they already know your customers, the products and/or the services they buy, plus the prices the customers paid. Furthermore, many businesses are now finding competent and loyal employees are increasingly hard to find.
In my experience, the only time when a business should outsource any of the above operations, is when a small business owner cannot complete these tasks properly due to size of their business, a lack of time, or a lack of professional experience.
In the above situation, the outsourced operations should be to an owner of another small business, such as a bookkeeper, sales agency, accounts person, marketer, etc. These owners should always be operating under a corporate structure, have other customers, and at most, have only one or two long term and trusted employees.
Outsourcing of your business operations can be completed successfully if it is completed properly and in the right situation. When it is done badly for purposes purely based on price, and without thought of what is involved, then the resultant negative outcomes can be very costly.
Accordingly, I suggest Chanticlear’s article “Myer’s Premier deal no out-of-jail-free card” in the AFR on the 14th of January 2025 is worth a read.
There are many standout comments in this article which state the reason for concern clearly and should not be ignored.
You can also find the article at https://www.afr.com/chanticleer/why-myer-s-big-deal-with-premier-is-not-a-get-out-of-jail-free-card-20250113-p5l3s3
Credit Matters is a financial risk management resource centre for the Australian business community. If you are in business, Credit Matters is your ideal source of financial risk management solutions.
Credit Matters is continuing to grow and provide marketing and knowledge about financial risks to the Australia business community.
Futhermore, we invite marketing and knowledge ideas from our readers and contributors on how we can assist our respective firms grow. If you have any ideas, please contact me at info@creditmatters.com.au.
If you are interested in finding new ways to reach your marketplace, why not try Credit Matters. Our prices for advertising are very reasonable and advertising packages are on offer to make any cost, even more affordable. So if you are interested in reaching your customers at the right price, please contact Kim at info@creditmatters.com.au for options.