May 2022
Unfortunately, the development of our new website has been held up again by factors beyond my control. Hopefully, the new website will be available by mid-June, fingers crossed.
The attachments with this newsletter include an update from the Australian Small Business and Family Enterprise Ombudsman plus a flyer from Skip Schiphorst about researching the Chinese Corporate world.
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.
“States are built with hardware, but nations are built on software.”
Simon Schama, “Putin should have taken a leaf out of Tolstoy’s book.” Financial Times 7/3/2022
Note: Software in Tolstoy’s time did not refer to computers, rather to the human brain’s ability of human logic and computational capabilities. Wetware is a relatively modern term to try and compare a human brain’s capabilities compared to a computer’s software.
The relevance of this month’s quote, which must never be forgotten is that your business is at war with survival as the first objective. Once you know your business can survive, you then seek to win the war by being profitable.
As has been articulated over the centuries, in war you need the best hardware and processes and the best generals and soldiers to manage the software side of army to win the war. It is no different when your business fights in the war for survival and to win profits. In a business sense your business is in a war against competitors, fraudulent and slow paying customers, bad suppliers, plus governments and bureaucratic interference as shown in the COVID period. In addition, there are societal demands by many who will never buy from your business yet demand you obey their wishes for all sort of non-business issues.
Winning the software (wetware) side of the business war, as any marketing professional will tell you, is all about making your business stand out from its competition. The objective is to win the hearts and minds of your existing and potential customers to encourage them to buy from your business and not your competitors.
The wetware side of the business is therefore the input by owners, managers and employees who understand the nuances of doing business. In other words, a business needs to offer the communication methodologies, buying and payment options, type(s) of products and other processes which encourages all customers to buy its good and services.
Too often today we see this lack of understanding in our banks and larger businesses. In these institutions, we see the customer is forced by various means to work within the dictates of these businesses, irrespective of whether the customer wants to or not.
The result is that when customers go these larger businesses, they mainly buy from the businesses which offer the least problems, or use a service they don’t really want, or start looking to other businesses to supply their needs.
As a side issue, and as demonstrated today, too many banks and larger businesses are at the mercy of their smaller competitors which are trying to take their customers. This occurs when the customer finally realises that these larger businesses will never respect or listen to their feedback about what they need. The smaller businesses by listening to customer feedback, see a business opportunity and look to supply the needs identified by disgruntled customers.
In conclusion, “Businesses are built on hardware, software plus wetware.” The realities of the business world which must never be forgotten, is that your business is at war with survival as the first objective and then to win the war by being profitable.
In any war, you need the best hardware and processes and the best people to manage the wetware side of the business. After all, a war is not just won with hardware and its software, you need to create the wetware side of your business which wins the heart and soul of your customers.
There is no such thing as cheap debt. All debt comes with the responsibility to pay it back in the future. This ability to repay debt will be compromised by many factors including profits, customer buying habits and financial capacity, plus availability of product.
There is so much working against a business and its shareholders in a world where debt is deemed good and savings bad, or lazy. As a consequence, all businesses will be affected by their stakeholders without the capital to survive any disruptions such as those experienced in the last two years where floods, bushfires and COVID were major negative factors.
Following the negative consequences of these factors, we are all now exposed to equally negative ramifications of inflation, higher interest rates and supply chain shortages.
In the coming years, in view of the above, yesterday’s and today’s cheap debt, may not look so cheap.
When a business employed a professional credit manager in the past, if the credit manager insisted that a director's guarantee was required to support a B2B credit facility, they made sure that:
After all, if the guarantee was not prepared or completed properly, or the director had no assets, the guarantee was useless if relied upon to clear the customer’s debt.
Today however, further work is now required. With many directors and their businesses having been seduced into taking on “cheap” debt, this means the net asset value of the director(s) may now be compromised. As a result of taking on too much cheap debt, this factor may also make the value of a directors guarantee valueless.
When businesses are searching desperately for more sales, particularly in a restricted market, they may be inclined to take shortcuts and make few effective enquiries about the net worth of directors. The customer’s director(s) on the other hand, may be reluctant to provide the information, especially as they know many suppliers will be desperate for sales.
The fact of the matter is that whatever decision is made by the buyer and seller when B2B credit is required, both parties will at some stage need each other. If the supplier requires a directors guarantee and the customer has little or no security, the problem is whether it is worth taking a guarantee at all.
Perhaps it is in these situations, a business would be wise about not taking a guarantee at all, and focus on other sales strategies.
In the modern world, the curse of all businesspeople, both innocent and guilty, are the litigious parties who believe they have the right to sue businesspeople because they are aggrieved by something, or are directed to do so.
These litigious parties are able to take such action because they
It is always difficult to survive intact when litigious parties act as above, however with foresight, a willingness to fight back in a positive fashion and with support, it can be done. You just have to be strong, resilient and believe in your cause.
Updates courtesy of www.asic.gov.au
27 April 2022
22-100MR Infringement notices issued to Maritime Super for member fee statements
Maritime Super Pty Ltd has paid $26,640 to comply with two infringement notices issued by ASIC. The notices concerned alleged misleading statements made to members about Maritime’s investment partnership with Host-Plus Pty Ltd (Hostplus).
In a Significant Event Notification and a newsletter sent to members between March and June 2021, Maritime stated that its investment partnership with Hostplus would result in reduced overall investment management fees for its members.
ASIC was concerned that these statements were misleading because Maritime’s investment partnership resulted in increased investment costs for 77 per cent of Maritime members and higher investment fees for six of Maritime’s 11 investment options.
06 May 2022
Two former directors of Rent 2 Own Cars Australia Pty Ltd (Rent 2 Own Cars) have been ordered to pay a combined penalty of $228,000, after an earlier finding that they were involved in illegally providing high-cost credit to buyers of used cars.
The Federal Court ordered that Paul Green and Timothy Roberts pay $138,000 and $90,000 respectively, and imposed injunctions restraining them each from engaging in credit activity for three years.
ASIC Deputy Chair Sarah Court said, ‘As directors of Rent 2 Own Cars, Mr Green and Mr Roberts were involved in their company misleading consumers about the true cost of the credit they were receiving, with some consumers being charged interest rates significantly higher than the 48% per annum statutory maximum.
‘This conduct continued even after Mr Green was put on notice, by ASIC, of concerns about the conduct. As today’s outcome demonstrates, directors of credit providers who turn a blind eye to the risks of their company’s credit contracts misleading consumers as to the true cost of credit can face significant penalties.’
11 May 2022
ASIC has disqualified Robert John Walker of Rosetta, Tasmania, from managing companies for five years for his involvement in four failed companies.
Between 2014 and 2018, Mr Walker was a director of:
Tazzy Tyres Wholesale Pty Ltd (ACN 614 938 939)
Tazzy Tyres Accessories Pty Ltd (ACN 142 192 032)
Tazzy Tyres Retail Pty Ltd (ACN 614 939 614)
Tazzy Tyres Pty Ltd (ACN 157 851 833)
The companies provided retail sales of and services related to tyres.
ASIC found that Mr Walker:
breached his directors duties as a result of his involvement in phoenix activity over several years when he transferred the assets of indebted companies to other companies for no consideration, namely Tazzy Tyres Accessories and Tazzy Tyres; and
failed to maintain proper financial records for all four companies.
At the time of ASIC’s decision, the four companies owed unsecured creditors $1,944,418 including $855,121 owed to the Australian Taxation Office.
19 May 2022
Warning: Scammers offering fake green bonds
ASIC is alerting investors of the existence of a number of fake green bonds.
In Australia, green bonds are not directly available to the general public or retail investors. Any website or entity claiming otherwise is a scam.
Scammers may represent themselves as well-known financial services firms and invite people to invest in fictitious environmentally sustainable green bonds.
ASIC is aware of the existence of a number of fake green bonds. Green bonds are bonds that are used to finance new and existing projects that offer climate change and environmental benefits. They can be purchased by superannuation funds, fund managers, insurance companies and other wholesale entities, but are not directly available to the public.
What to look out for
Offers of green bonds. Like other wholesale product offerings, green bonds may be available to purchase in a registered managed investment fund. However, they are not directly available to the general public or retail investors. Details on how to invest in a managed investment scheme, or MIS, can be found on Moneysmart.
People claiming to be from well-known companies who offer green bonds.
People or companies that invite you to invest in ‘environmentally sustainable green bonds’ via social media or websites.
Fake investment materials and disclosure documents.
28 April 2022
Concerning issues for consumers and sellers on online marketplaces
An ACCC report examining general online retail marketplaces, such as Amazon Australia, Catch, eBay Australia and Kogan, has highlighted a range of concerns about how they operate as well as the significant benefits they provide to consumers and sellers.
Online marketplaces provide a low-cost way for sellers to enter the market and give consumers a greater choice of goods.
Concerns include the use of algorithms to decide how products are ranked and displayed (including some marketplaces giving preference to their own products), the collection and use of consumer data, inadequate dispute resolution processes and a need for more consumer protections.
The ACCC’s fourth report in its Digital Platform Services Inquiry examined whether online marketplaces are promoting fair and competitive markets for consumers and sellers. It found that online marketplaces have a high level of control and involvement in transactions between consumers and sellers on their platforms.
13 May 2022
Clothing retailer Tiger Mist pays penalties for allegedly misleading consumers about return rights
nline clothing label and retailer A&S Labels Pty Ltd (trading as Tiger Mist) has paid penalties of $26,640 after the ACCC issued it with two infringement notices for allegedly misleading consumers about their right to return faulty items.
Tiger Mist made statements on its website between at least November 2021 and February 2022 that consumers could only return a faulty item by contacting Tiger Mist within 30 days of receiving their order and that the product must be returned in its original packaging. The two infringement notices were issued in relation to statements made on the Returns page of the Tiger Mist website on 21 February 2022.
“Under the Australian Consumer Law, a consumer’s right to a remedy for a faulty product is not limited to a specific time period, and consumers do not need to return the faulty product in its original packaging to obtain a refund, replacement or repair,” ACCC Commissioner Liza Carver said.
Tiger Mist typically markets to younger consumers through social media posts.
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