I’m Not Always Right

Two things in life I know for absolute certainty; not everyone will agree with everything I say and I often change my opinion on things.  These are both very important things to understand about yourself and the key to finding solutions to simple problems with complex issues.  The stated objective of the Small Business Foundation is to eradicate global poverty; a perfect example of this conundrum.

Red one hundred percent

I attract people with enquiring minds to the foundation, those amongst society who have fixed dogma are fairly quickly found wanting as their opinions are based on emotive confrontative styles of leadership.  It’s fairly easy for an informed mind to see the lack of substance in emotive arguments and point out the flaws, a big person will reconsider their position and change their mind.  To often than not though, self-interest agendas or personal ego will see them move on.  That’s great because no amount of insight will open a closed mind and we need thinkers to solve the big problems of the world.

The first half of the truisms about myself I pointed out was that it’s impossible no matter how informed you are and how persuasive you are that 100% of the people will agree with 100% of your ideas.  This is a more important principle to understand than having an open mind to change your opinion when you find out more information or perspective; the reason for saying this is that the solution to our problems lies in the fact that we are all individuals.  An approach of centralised control by governments to implement services or solutions does nor work because at our core, everyone is different.  Economics are simple but economies are complex and when one hat fits all is implemented the different people involved at the delivery end of the equation become dissatisfied.

We are all the same in that no-one will agree with us all the time, even our strongest supporters will not so why do we persist with accepting the same old problems from our politicians and not demand a different approach.  Yesterday I was talking about how privatisation of health services would produce a better outcome, again not everyone will agree with that approach but the key is that we need to become informed and have intelligent not emotive conversations.  Because we are all different, a one hat fits all solution implemented by State governments does not work; another alternative is to get local government to run hospitals.  Local politicians know far better the individuality of the people they represent and are far better informed about local problems than their State or Federal counterparts.  And another solution is to get local community leaders run their hospitals, again because they understand local issues.

The key point here is that decision making is made by individuals, not by a centralised thought policeman who tells us how to feel, think, act; we know that’s true and thats what’s important in business.  We have to determine how to explain the value of what we are selling to consumers in a way that they understand and with a desire to pay the price we ask.  Solving our problems is exactly the same, it’s an individual transaction to appreciate and understand the value being provided so why do we persist with having a bureaucracy detached from the transaction as the panacea of how we deliver government services…

Collective will  cannot solve our problems, collective intelligence, hard work and a desire to benefit others as well as yourself is the way to go in my humble opinion.  Are you of a similar mind, do you want to be part of the solution, do you think that starting conversations in the wider community based on sensible understanding of whats really going on is the way to creating a healthier, wealthier and happier society?

If you do, then you are an individual that needs to contribute, find out more about the Small Business Foundation and ask me how to get involved…

 

Trevor Dixon

Chairman Small Business Foundation

For more on “Enterprise” – The Art of Freedom, visit:

www.smallbusinessfoundation.org

 

Is Government a Business

Small businesses have an imperative unlike any other sector of society, it’s called cashflow and it is this very vulnerability that makes us in my view, the most important part of the economy. We hear often about the losses that QANTAS have been making in past years and the projected return to profitable trading. Debt and deficit at all levels of Government is in the news almost every day, the distinction between debt ie level of borrowed money and deficit which is a shortfall in the cashflow of government is important.

Doctor - No Face

Too many in society don’t understand how to manage cashflow and the term budget is anathema to most. Perhaps the biggest barrier is it’s something we have very little knowledge around the basics and as a consequence it’s viewed as something too difficult. Members of the foundation have free access to the “essentials pack” and one of the modules – Financials, Budgets and Cashlow”.

The reason small business is so important to our economy is that they must react immediately to external influences otherwise they go broke. Government and big business can ride out cashflow crisis, sometimes for years. Small business won’t last a month if they don’t adapt, change, innovate; they don’t have any other option other than to be profitable or disappear. That’s very healthy, in fact critical to ensure that our economy doesn’t stagnate. I’m not anti-big business just for the record, but it’s important to understand why I focus on small business as my main interest.

So the question is should government be in business, well the reality is they are! The delivery health and education for example are services, and private enterprise or government can deliver them. I often get into discussions about the concept of universal or “free” services and why that’s better a system than paying a private company that have to make a profit.

To start with government does not deliver these services for free, they collect taxes and pay the costs on behalf of us. Like cashflow, delivery of universal health is also not well understood and looking at better ways to deliver services is a sensitive topic. I was chatting with an elderly couple recently and they were comparing the contrasting very different experiences they each had had in the public health system.

At one hospital the service was extraordinary, at the other it was very different. Arriving by ambulance transport service, he was taken in a wheel chair up to his appointment by a hospital wardsmen. Taking his patient to the head of the line, he was told by the receptionist that he would have to go to the back of the line and wait. Now the wardsmen already had a call to pick up another patient, which he told the receptionist who promptly ignored him. Leaving the patients documents on the counter he responded by saying to call him when the patient was ready to be taken back to his transport.

A long story short, the patient waited patiently and after three or four attempts to find out where his appointment was at, decided to leave after 4 hours without seeing his doctor as it was apparent his paperworkj was not going to be processed only to find that his transportation paperwork had been shredded by the receptionist. The biggest difference in this story contrast in standard between two hospitals in the same town and significantly that in a universal free system, the patient cannot chose to go to the other hospital.

This highlights for me the difference between small business and particularly government. While there are many dedicated professionals in the health services, there is no imperative to deliver great service. The wages next week will still be paid, the government may change but the headlines stay the same.

If we had a system where all health was delivered by private enterprise, but had a system that saw reduced taxes so that the majority become responsible for taking out their own insurances and choose where they go. Bad service means that a bad hospital will become unprofitable as customers vote with their feet. The improvement from the imperative to perform in both courtesy and quality of medical treatment will see great hospitals become the norm.

And those who cannot afford to be part of this system, well they ARE a part of it as the cost is still met by government, just that the patient has the choice where to go and use the credits provided to the vulnerable. No different to health being universal but the outcomes are demanded by the patients at the point of delivery, not by complaint at the ballot box which changes little.

The really sad part for me in writing today’s post is that conversations like this are not yet a normal part of our society, there may be better solutions than mine but we need to explore them. We seem to be more focused on taking less responsibility for ourselves and for my mind this delivers a lower standard outcome.

 

Trevor Dixon

Chairman Small Business Foundation

For more on “Enterprise” – The Art of Freedom, visit:

www.smallbusinessfoundation.org

 

 

 

 

 

 

 

 

 

 

 

 

 

Poisoned Chalice or Sweet Fruit

David Gillespies bestselling book Sweet Poison on the danger of a high sugar diet in todays modern world demonstrates one of the negative outcomes from economic advantage and is a salient warning that with increased wealth there are also risks that we need to be conscious of.  It’s not all bad news though, today we have the ability to control one of the worst consequences of a high sugar diet, that of diabetes.  On the 27th July 1921, Canadian biochemist Frederick Banting and associates announced the discovery of the hormone insulin.  Today modern medicine allows us to manage the lifestyle of diabetics and avoid the necessity of low calorie, low carbohydrate diets which was the only treatment available before this discovery.

Fat man watching TV

As mankind particularly Western economies have developed, we have increased our consumption of both high quality protein in the form of cattle and other commercially produced livestock or mass harvests of seafood.  We have also greatly increased our intake of processed sugars and corn syrups to satisfy the craving or pleasure sensation felt when our brain receives a ‘sugar’ hit.  The quality protein improves our attentive capabilities  and muscular development but sugar has only been detrimental to our health.  Along with diabetes comes heart disease, obesity, joint stress and fatigue from too much load bearing  to name a few of the problems from developed diets.

China is now starting to also experience these problems as it develops, there are now more obese people in China than in the West, and while we may be capable of developing drugs such as insulin and statins to manage the consequences of this problem, we really need to look at the much bigger picture of prevention rather than cure.  Obesity is not a potential problem, it is an epidemic now.

I’m no different, it’s much easier to enjoy the fruits of our labour and wait for the problems later in life.  The challenge is not how do we inform society, it is more about how do we activate a desire to do something about this epidemic.  One solution would be to get back to an agrarian lifestyle, have a much simpler economic model upon which society is based where sedentary workplaces are replaced with a production model where we all contribute.

In a socialist utopia we would all be healthier; or would we!

No, the reality if we transformed our economies that way is that we would slow down the advancement in modern medical breakthroughs.  As enterprise slows, the availability of cash would be a limiting factor in the ability of society to invest in our health and wellbeing, we would actually be regressing to the lifestyle and health outcomes of ages past if we switched our economies to that model.  Our future wellbeing is dependent on continued economic prosperity and the incentive being on the individual to take responsibility for preventing obesity.

Changing the idleness of individuals is not a responsibility of government, government does however currently have a responsibly to manage the health outcomes of the people and they are struggling to fund it.  I don’t have an answer to put on the table today, but the question is how does government create the conditions for enterprise to flourish and at the same time establish the framework where society finds it desirous to train harder or eat less to avoid being a burden on the medical system…

 

Trevor Dixon

Chairman Small Business Foundation

For more on “Enterprise” – The Art of Freedom, visit:

www.smallbusinessfoundation.org

 

 

Society needs to Unplug

I often get asked how I manage to fit everything in that I do and my default position is to jokingly reply that there are 36 hours in every day.  Coming from a military background, the concept of overtime is something that has never meant much to me personally and in my younger days as a manufacturing manager while not common every day I have done a number of round the clock shifts and one marathon at 32 hours.  Getting ahead is not a matter of luck, its about hard work and managing your time.

Close up of remote in hand with shallow depth of field during television watching

Now while there may not be more than 24 hours in a day you can accomplish far more than others around you by doing more with the time you have.  Small business owners do this from necessity, there is always an imperative to improve cashflow whether its from growth, slow seasonality, competition, there is always something putting pressure on business owners to do more hours at work.  Getting that balance right at home is even harder in this situation; conversely if you are an employee that simply wants to get ahead in life, you too can make more use of your time, be it to undertake studies or start an online business from home for example.

For my mind one of the biggest obstacles that challenges us for time is a problem of our own doing.  The box that sits in the lounge room might provide escapism and seem like leisure time but before we know it, 5 or 6 hours at night, a couple of hours in the morning and all of our available time can disappear.  Even if you don’t want to get ahead, the time spend with the family is a much better life work balance than sitting in front of a screen 24/7 and that includes mobile devices like smartphones.  My advice is simple based on when I find my most productive time – turn off the TV!

At home we spend the evening at the dinner table, chatting about things like why we there are rules not just enforcing them as parents.  The kids rarely watch TV during the week, spending their time in between family, music and sports and in my daughters case, ballet.  The art of conversation is essential if you want to get into business for yourself, small business especially is all about people, people and people.  If you can converse easily, break down trust barriers and establish a relationship it is much easier to communicate value to your customers, work smoothly with your employees and get great deals from suppliers.

During the financial crisis that hit world in 2008, one stimulus package in 2009 released $12.7 billion in cash payments, anecdotally that money was spent on flat screen TV’s.  That may not be far off the truth as the single biggest beneficiary, writing down $1 bn of corporate debts within one month of the stimulus release was Harvey Norman.  Over 90% of all stimulus money was used to reduce debts within a very window after being released, this is a very strong argument to suggest that it didn’t stimulate the economy at all…

The art of conversation starts at home, you can do far worse for your family than practising it from an early age and making it a habit they will appreciate when it comes time for them to make their own way in the world.  Conversations about bigger issues such as how to set the conditions for our economy to prosper above and beyond the tired old approaches taken by governments to date may also be possible in the wider community…

 

Trevor Dixon

Chairman Small Business Foundation

For more on “Enterprise” – The Art of Freedom, visit:

www.smallbusinessfoundation.org

Bureaucracy gone Mad

Have you ever dealt with a government owned enterprise (GOE) let alone a government agency and been frustrated to tears by the level of bureaucracy encountered…   You don’t have to be in business for yourself to answer yes to this, but the impact is certainly greater and ultimately impacts everyone in society as it slows down our economy.

Bureaucracy

Now I have to start off with saying I understand why the level of paperwork and compliance is so much higher in government entities, they are dealing after all with what is seem as “our” money.  A similar situation also arises in large corporations and what happens is the “system” is developed to ensure that every dollar is accounted for.  A whole level of activity, some call it employment arises with a layer of people busily checking the forms, approving payments and sending the documentation off to another Department to raise and send the cheque.

It is only two years ago that the fake prince, Joel Morehu-Barlow was sentenced to 14 years for theft of $16m from Queensland Health and the outcome from the public outcry would have been more checks and balances to ensure that it doesn’t happen again.  The downside in that sorry saga is that more people would have been added to the system and the net cost would have been significantly higher to prevent a fraud that the cost of the fraud to begin with.

Governments are notorious for the efficiency drives to try and balance their budgets, we even have a  Productivity Commission are the national level.  I find it an interesting conundrum that in the interest of efficiency we institute more institutions and bureaucracy that in and of itself slows down and makes transactions more costly.

I was chatting with a business owner who recently re-signed a maintenance service contract with a GOE, it was a 2+2+2 contract and they have been delivering an excellent standard over the previous 12 years that the customer is very happy with.  Cashflow is paramount to any small business and because of the bureaucracy in the system, this business raises invoices in the first week of the month.  What that means is that customers receive an invoice in the middle of the month, when half of the service has been delivered and they have the second half of the month to confirm that they are happy with the service.  That’s fair as the small business has outlaid almost all of the cashflow necessary to deliver the service by the end of the month ie wages cannot be paid “on terms” to employees.  The customer in this example processes the cheque payment at end of month and the business receives their payment towards the middle or end of the next month.

So, where is the problem!

Well, a new contracts manager picked up that you cannot invoice in advance for services, giving the business a three day window at end of month to not only raise and deliver an invoice, but to also produce a Statutory Declaration which has to accompany every invoice. A supplier that sinks or swims on its cashflow now has to wait another 30 days on top of the 60 days the system already creates as it is just not practical in a small business to have the internal bureaucracy to deal with this demand.

What message does it send to suppliers that we are want you to continue delivering the excellent service we have received for over a decade but the rules are the rules and we can’t pay you in a reasonable time now…

A little bit of understanding that Rules are for the Guidance of the Wise and the Blind obedience of Fools would however serve us all well.

 

Trevor Dixon

Chairman Small Business Foundation

For more on “Enterprise” – The Art of Freedom, visit:

www.smallbusinessfoundation.org

 

Protectionism Doesn’t Protect Jobs

In 1860 at Lambing Flat, NSW miners collectively banded together, rioting in protest of Chinese work practices on the goldfields.  Chinese mining methods used more water than European methods, and such practices were not appreciated in a country known for its heat and droughts. Furthermore, few of them traded their gold in the towns, preferring to store it up and return to China with their wealth.  It seems that 150 years later very little has changed in the way that some people view the world and their place in it.  The riots at what we now know as the town of Young resulted in around 30 Chinese being murdered and many more being scalped.

Opportunity Missed and Taken Green Road Sign Over Dramatic Blue Sky and Clouds.

The ChAFTA or China-Australia Free Trade Agreement is currently going through the ratification process in parliament, at the same time the TPP or Trans-Pacific Partnership is also on the table between 25 nations in the Pacific area including the United States and Australia.  I personally d0n’t like Free Trade Agreements, but not for the reason being argued at the moment around job protections; FTAs exclude developing nations from an equal opportunity to trade their way to prosperity.  In a perfect world there would be free trade between all nations, at the moment though tariffs and protectionism exists so FTAs are a step in the right direction, just not far enough!

So why is the protectionism argument false, well firstly lies and innuendo are being spread in the name of self interest.  If Unions are not seen to be protecting the interests of their workers then they have no relevance, unfortunately sometimes creative licence can get in the way of objectivity.  The Dept of Foreign Affairs and Trade (DFAT) has taken the unprecedented step of issuing a paper debunking these misleading claims, you can read it here.

Henry Ford is widely attributed as saying “If I asked my customers what they wanted I’d have built a faster horse.”   Now while that is an urban myth, the message behind it is that the world changes and jobs such as farriers and blacksmiths passed into antiquity in the general market and new jobs and opportunities arose as we moved away from animals into the combustion engine era.  I can understand the simplistic approach of unions and people who don’t consider the benefits of an agreement like the ChAFTA.  However, a shift in the type of jobs that Australians will be able to be employed in is the worst case scenario.

There may be less electricians for example as a consequence of the FTA, unlikely but possible, but the real benefit is that our economy get access to the largest economy in the world.  If we cannot grow our economy and create jobs in other industries as a consequence then like the White Australia policy of times past we can put our heads in a bucket and pretend that our future is secure if we just look after ourselves.  If we want to be a Cuba or East Germany in economic terms then thats fine, but for my mind I’m backing the enterprise of Aussies to create prosperity from this opportunity.

 

Trevor Dixon

Chairman Small Business Foundation

For more on “Enterprise” – The Art of Freedom, visit:

www.smallbusinessfoundation.org

 

 

Science Sets the West Apart

We have not lived longer, healthier or wealthier lives than at any other time in the history of mankind than we currently enjoy in Western society.  We are however at a tipping point with the first time potentially about to hit us where the next generation may actually have a shorter life expectancy than their parents as a consequence of  the obesity epidemic.   This to me illustrates that the greatest threat to our way of life is not external, it is indeed our own ignorance, idleness and apathy.

armstrong_on_the_moon1

Prosperity while not equally shared in society has seen a massive improvement for all of society compared to generations past.  We live our lives here and now however and it’s easy to forget that our generation didn’t start out in life with microwaves, colour TV, automatic washing machines and iPhones.  That takeaway food was an exception and eating at a restaurant was a luxury…  Everything in life is relative but a little perspective and contemplation serves us well.

There is no doubt in my mind that while we have further to go and can do much better, we have come a long, long way to improving the lifestyle of mankind through the wonders of science and this has been possible through the economic rise of the West , the ability to share knowledge and ideas and have the latitude in a prosperous society to devote time and energy to scientific discovery.  Today is the anniversary of the day Neil Armstrong and Buzz Aldrin walked on the  moon.  It was the 20th of July in the United States and the 21st here in Australia.

This week just gone, Australia received the first HD images from Pluto, the radio telescope at Parkes transmitted the first pictures of the Apollo 11 moon walk in 1969.

Parkes, in central western New South Wales, was the site of the first radio telescope to be built in Australia. Its completion in 1961 was the result of ten years of of negotiation between CSIRO Radiophysics Laboratory staff, the Australian Government and significant American Scientific institutions, Carnegie Corporation and the Rockefeller Foundation. Affectionately dubbed “The Dish”, the telescope comprised a disc some 210 feet (64 m) in diameter, constructed of mesh woven from high-tensile strength steel designed to withstand a range of pressures. The total cost of construction was 800,000 Australian pounds.

 

Whether it is from investment by private corporations or tax payers dollars, the money has to come from the endeavours of enterprise.  No better example demonstrating this exists than the old USSR and today in Greece; centralised regulated economies run out of money.  Until the USSR passed the tipping point, it put the first man in space and everyone thought they were in the race to the moon.  You cannot continue to invest in science unless the conditions are set to allow enterprises to flourish, from wealth comes prosperity and the opportunity to either invest or be altruistic, either way knowledge and capability blossoms.

Our next challenge is both developing the knowledge to tackle obesity medically but more importantly, intellectually so that we beat it ourselves without clinical intervention.

 

Trevor Dixon

Chairman Small Business Foundation

For more on “Enterprise” – The Art of Freedom, visit:

www.smallbusinessfoundation.org

 

You’ve Got to do the Yards

It usually takes about 25 years to become an overnight success, and while we might see a plethora of reality TV shows launching the careers of singers and chefs along with the famous for being famous brigade of Big Brother et al the truth is that most of them do not go on to become true stars.  There are of course exceptions, Kelly Clarkson, Guy Sebastian, & One Direction come to mind as well as home cook Julie Goodwin and some of her compatriots who seem to spring up now and again.

Young businesswoman opening stage curtain to another reality

The banal reality TV stars though are most certainly 15 min of fame wonders with only one I can think of who has had a modicum of success as a radio host.  The true reality is that to be successful you have to do your apprenticeship, you need to acquire knowledge, apply it very well and become respected for what you do.  Once you develop expertise in your chosen field of endeavour you have an opportunity to become known for what you do; at this point if you harness it well you can command your market and demand a premium price for what you do.

A real success and terrific personality that is felt through the medium of TV is Maggie Beer.  She has not had any formal training as a chef, yet has an amazing career spanning almost five decades.  Her only paid cooking job was at a Scottish sailing school during a European trip in her early twenties.  The IPO of her company Maggie Beer Products is expected to raise $30 million, a considerable sum but one she has entirely earned from a lifetime of work and commitment.  Not everyone will make that sort of money from their profession, but it is up to you to learn, do the work and gain from what you deliver for others in life.

Maggie Beer says the greatest mistake she ever made was to give her company her name.

“Because, as such, we can never sell it. I couldn’t bear to sell the whole business. Over the last five to seven years we have had a lot of approaches to be bought and I have never entertained them,’’ she tells The Weekend Australian in an exclusive interview.

“I have spent all my life making sure there are no shortcuts. So the things that matter to me matter so much that no matter how attractive offers were, I said no.’’

Over the past 20 years Maggie Beer Products has grown to be one of the largest employers in South Australia’s Barossa Valley, producing more than 200 gourmet food products for local and export markets.  (1)
Very few people are lucky enough to put their hand into the proverbial bucket of compost and pull out a diamond ring, if you are however lucky enough to crack becoming expert at something very quickly that’s fantastic.  For the rest of us, it’s a matter of time not timing and continuing to put in the work.

 

Trevor Dixon

Chairman Small Business Foundation

For more on “Enterprise” – The Art of Freedom, visit:

www.smallbusinessfoundation.org

 

References

1. Damon Kitney, Victorian Business Editor,  The Australian: Full article here

The Benefits of Enterprise

An increased level of prosperity realised from the efforts of enterprise brings with it access to both modern medicines and the capacity to implement the social compact for the benefit of everyone.  Throughout the ages plagues and epidemics have killed millions of people up to 60% of the population in Europe in one case.  Today we worry about new diseases that we do not yet have cures for such as ebola and cancer but no longer fear things like the Bubonic Plague.

kill insects,professional sprayer, target,

Greater prosperity creates the means for businesses to invest in research to find cures and for governments to have the resources and authority to impose necessary imposts on society in order to control the environment and eliminate the means for disease to flourish.  An awareness of the benefits that come to everyone from the success of enterprises increasing prosperity in society is more important than any perceived inequity in an unequal sharing of the returns in business.

The 17th of July in 1900 was a Tuesday, and it was on that day that Sydney completed its Bubonic Plague cleansing operations following  a severe outbreak in the early part of the 20th century.  It began in January 1900 when 33-year-old Arthur Payne showed symptoms of Bubonic plague as a result of coming into contact with the disease at Central Wharf where he worked as a carter. Within eight months, 303 people had contracted the plague, and 103 of them had died.

Cleansing operations began in Sydney on 24 March. Extensive washing, liming, disinfecting and burning of property was undertaken, while buildings classified as slums were demolished in an attempt to rid the city of the rats spreading the disease. More than 44 000 rats were burned by rat-catchers. Wharves and docks were also cleared of silt, debris and sewerage.

The Cleansing Operations finished on 17 July 1900. However, ships continued to bring the disease to Australia, and between 1900 and 1925, there were twelve major outbreaks of Bubonic plague, with Sydney bearing the brunt of the disease. In all, 1371 cases were reported, along with 535 deaths – certainly far fewer than the deaths reported in some countries.

Bubonic plague is a zoonotic disease, circulating mainly in fleas on small rodents, and is one of three types of bacterial infections caused by Yersinia pestis (formerly known as Pasteurella pestis), that belongs to the family Enterobacteriaceae. Without treatment, the bubonic plague kills about two thirds of infected humans within four days.

The key to preventing deaths from this disease is treatment with antibiotics and eradication of rat infestations that carry the fleas which transmit the plague.  Today we understand the importance of rat proofing buildings, preventing access to food and shelter by rodents through appropriate storage and disposal of food, garbage and refuse; and the importance of avoiding flea bites by use of insecticides and repellents.  Rat suppression by poisoning is carried out  when necessary to augment basic environmental sanitation measures along with measures to control fleas.   We control rats on ships and docks and in warehouses by rat proofing or periodic fumigation, combined when necessary with destruction of rats and their fleas in vessels and in cargoes, especially containerised cargoes, before shipment and on arrival from plague endemic locations.

In 2013 there was about 750 documented cases of plague which resulted in 126 deaths a far cry from the 24 million in the 14th century, all possible because of our access to modern medicine and knowledge.

 

Just another Carbon Copy

Competition is pretty much a given in the cut and thrust of politics but how does competitive behaviour in the world of enterprise affect you and the success of your business…

Anxiety

Yesterday’s headline was all about the leaking of confidential documents from the shadow cabinet and the Abbott government analysis that it reveals a “catastrophic” rift in the Labor party’s upper ranks, demonstrating a plot to destabilise leader Bill Shorten. It would seem that Labor is a bit shaken by the leak of this confidential climate paper, with Shorten and senior Labor MPs playing down the consequences and rejecting suggestions that the plan amounted to a “carbon tax”.

The leak denied Labor the chance to craft the public message on one of its most politically sensitive policy areas, and this is probably the most relevant point in relation to business. It is easiest to create competitive advantage when you are on the front foot.

If you are a carbon copy or a “me too” of your competitors you may think that you have very little to differentiate yourself with in the marketplace. A common default that is seen all too often is to create an impression that your service is better than your competitions. You will turn up on time, you will always return phone calls, you clean up after yourself or don’t wear work boots indoors. Now while that all may be true it should be a starting point not an exception that good customer service is given and is should not be the way you market yourself.

As in politics, it does happen from time to time that our competition deliberately sets out to white-ant our reputation and set themselves apart in the market. This is not the norm and if your focus is on how you establish a competitive advantage it is less likely that they will be able to do that anyway.   Politics is a dirty game they say and in the broader area of the economy – the real world, we are more focused on running our own business than someone else’s.

So what is the key to being successful if your product or service is at face value “the same as everyone else’s”.   The first thing is to embrace competition, while it is true that supply and demand can create high prices, it is also true that competition raises the profile of a product or service as consumers become more conscious of them and buyer resistance becomes reduced. The starting point of great customer service becomes the norm from this competition and again sets the benchmark for satisfaction in your sector. Competition is not a bad thing, it is the key for delivery of value to consumers and if you understand that you can win in this environment.

Two good examples are my local RSL and the plumber that I use; in the last couple of years the State branch of the RSL has started selling merchandise for ANZAC Day throughout newsagents as has Woolworths on behalf of Legacy. The campaign by Woolworths ending up hurting them after intervention from the Department of Veterans Affairs and that was unfortunate. But what was the impact of this competition on a little Sub-Branch who relies on badge selling each year as their only source of income…

Well the immediate reaction was disappointment until I pointed out that competition is beneficial to a market and that if we improved our offer then we would actually benefit not be hurt by it. Our merchandising officer shared this sentiment and she bought a much wider range and our sales increased and have stayed up about 30% year on year.

The plumber that I use has established a competitive advantage for himself in what to many of us appears to be a carbon copy tradesmen industry. He only services the local area and only does emergency and repair work. He is not a jack-of-all-trades doing whatever work is offered to him, he doesn’t do builder installations or renovations, he only does repairs, he is always close by. Every customer knows that if he gets a call where an immediate response is required he will leave your job and attend to it. We all know that if we are in that emergency we can rely on him and that if he leaves a job he will be back shortly to complete it. The peace of mind knowing you have someone to depend on is his competitive advantage that we all appreciate.

There are many ways to create an advantage for yourself in the marketplace, great customer service is the starting point.

An Honest Conversation

I have consistently been saying that the Greek economy was showing signs of recovery until the election of Alexis Tsipras’ Syriza party and how this was a repeat of the same type of irresponsible policies implemented under the New Deal in 1933 to deal with the Great Depression.

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This is an OECD chart showing the steady rise in Greek GDP post the crisis of 2008 with a recovery resulting from starting to sort out their previous mismanagement. There is an instant return to crisis once the same old policies were re-introduced 5 months ago.

For me, this demonstrates the importance of the underlying strength in getting the conditions right in an economy. Similar weakness has been exposed in the Nordic countries for example, they appear fine when it’s business as usual but as soon as an external pressure starts to influence their cosy bubble the high levels of Government expenditures are exposed. Greece was exacerbated on top of that due to the low level of tax revenues they were collecting.

No democracy will willingly vote for increased taxes and reduced services unless there is real leadership and honest communication from their political leaders about why it is in their real interests…

My Customers Don’t Get It

Conceptual illustration of a silhouette man seated on a question mark icon in a thinker pose deep in thought. Could be concept for any questioning or psychology, poetry or philosophy.We seem to see  videos, anecdotes and caricatures that at face value confirm our own particular paradigm of a political or other stereotype that we view the world through.  The funny thing is more often than not, the same examples are used by people on the other end of the spectrum to confirm the way they see the world.  In the business world this can set a dangerous precedence where our opinions can mean we miss opportunities to provide value to our customers and don’t close a sale!

 

I’ve seen this so many times it’s not funny and this particular video is no exception, the reason I have reproduced it here is a desire to look at a higher level of understanding at what is really going on and apply the lessons learnt in our approach to the way we see customers.

It popped up on my Facebook feed and the obvious comments made by most people related in general to a characterisation of the suspected voting habits of the individuals propositioned and even more disparagingly that they must be the “dumbest”people on earth. While there may be an obvious message at face value about peoples mental capacity, I believe that as business owners or salespeople we need to consider a higher level of understanding than that.

Have you been approached by a charity on the street seeking donations to their “worthy” cause, received phone calls telemarketing you at home or even more general, how much do you enjoy the commercial breaks on free to air TV?  There is a feeling of imposition at being propositioned and on a broader level even a fear of cold calls, the possibility of scams that abound in society today are a part of this but really, we do not like being “sold to”.  We are uncomfortable and have a healthy level scepticism, we are wary and suspicious of salespeople.

This is something very real to be aware of; the responsibility must lie with the vendor to articulate their “value” to consumers.   It is not going to accomplish very much if your default position is to view customers through your paradigm and blame them when they don’t see the value that you perceive as obvious  in your offer.    Understanding the dynamics of establishing a relationship and being able to hold a conversation that articulates or demonstrates your value will move you beyond a discussion of what is your price and into the position of trust, a desire to buy from and ongoing repeat sales opportunities.

The old saying about letting the cat out of the bag stems from this fear of salespeople stitching you up and seems to me to be the underlying conversation that is seen in the video. People will trust what they know unless you explain the value of something different to them!

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The background to where I found this and other interesting videos;  

Mark Dice is a media analyst and author who has been featured on the History Channel’s Decoded, Ancient Aliens, and America’s Book of Secrets; Conspiracy Theory with Jesse Ventura, Secret Societies of Hollywood on E! Channel, America Declassified on the Travel Channel, and is a frequent guest on Coast to Coast AM, The Alex Jones Show, and more. His viral videos have received more than 100 million views. For business inquiries & requests for licensing Mark’s content, email him though the “E-mail Mark” link on MarkDice.com.

In an entertaining and educational way, Mark exposes our celebrity obsessed culture and the role the mainstream media plays in shaping our lives. He is the author of several bestselling books on secret societies and conspiracies, including Inside the Illuminati and The Bohemian Grove: Facts & Fiction. Order his books in paperback from Amazon.com, or download the e-books right now from Kindle, iBooks, Nook, or Google Play.

And finally;

Some good follow ups on the higher level conversation from some of my friends that you may find useful..

Context for sure and reference of a silver bar is rare. Now try it with a gold bar and see result. Too many people simply don’t understand the economics of their choices and struggle to reference value. It would have been interesting if they tried an even dumber 3rd option to see if it changes the result. Thanks for sharing.

A few thoughts. An offer without context is generally a disadvantage to the seller. When the customer doesn’t understand what’s in it for you, they generally respond with skepticism. Here’s an example. If the meter has run out and I’m desperately in need of a quarter because the meter maid is at the end of the block, I might be willing to exchange a $5 bill for .25 to save myself a $40 ticket. In this case, a quarter is worth five bucks to me. If I explain that clearly to a passerby, they are more likely to help me out and see it as a good deal for themselves because they also see why I might be placing a higher value on the transaction. However if I just walk up to a random person and offer them 5bucks for a quarter, they are more likely to respond with skepticism because they can’t see a benefit to me in the arrangement. It has to be both a good deal to the buyer AND they have to see what’s in it for the seller, otherwise it is too good to be true. In this case a free 99cent item is more believable than something of greater value without the context. My guess is that if the guy explained that he was conducting an experiment to see which free item people prefer, more people would select the silver because now they know the motivation of the “seller”.

 

 

How German Reparations compares to Greek Bailouts

A friend comparing all final claims on German reparations from WWII being absolved in the final 1990 international accord after reunification started this conversation:

I feel it somewhat ironic that Germany can insist that Greece pays back its debt. The country defaulted three times in paying its debt and war repatriations in 1932, 1938 and 1948. Furthermore in January 1923 France and Belgium invaded the Ruhr to demand that Germany find the funds to pay its war debt. Helped lead to the rise of a certain Adolf Hitler!

Close up of flags of Germany and Greece

Who is Right Germany or Greece?

I don’t think that the stalling on Germany providing more bailout funds is because Greece hasn’t made payments; the conversation is all about how will Greece stop the haemorrhaging in it’s overspending and under collection of taxation revenue, a two-fold problem of it’s own creation. The Germans quite rightly don’t want to give more money if there is no prospect of any change in the conditions, which created the current crisis.

Very different consideration when making repayments to someone who has kindly lent you money to defaulting on reparations to right a wrong but you’re working hard on repairing your economy so that you can recover and then make payments.

Germany fixed it’s economy, so much so that even at the end of WWII it’s economic output was at the same levels as the start of the war and has continued from strength to strength today. A good example of getting the conditions right and perhaps worth the while of the Greeks to listen!

Given the correct analysis from you, but is it possible to fix the economy while in the Euro? Iceland bankers went back to fishing after their default.

I personally think that Greece being out of the Euro is the best way to fix their economy as they take back control over monetary policy.

Still a lot of pains involved as assets are lost to their creditors as part of the debt absolving in that scenario. Many people think that a default means that the debt if absolved and the world is good… There will be state securities in place that the creditors will take over and the Drachma once reinstated will be very weak. A weak drachma will be excellent for exports and tourism but will be very bad for investment in all domestic enterprise until confidence in the Greek government and new Greek bonds recovers. A huge risk however is hyperinflation and the potential requirement for humanitarian aid.

Perhaps most important of all either way is that sensible conversations take place that allow the Greek people to start electing good representatives that implement conditions to create incentive and reward for effort in their economy instead of populist policies designed only for their personal reelection.

 

 

It’s Shakespearean Tragedy not Greek…

Firstly, I don’t agree with Government bailing out private enterprise regardless of how big they are, a market only works if bad businesses are allowed to fail.  I made that comment and the following explanation to a friend who had posted this image on Facebook outlining the massive funds injected into the Corporate world as a form of statement that Greece’s demands were reasonable and insignificant in comparison…

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That said, Governments will have entered into bailouts with the bankers outlined on the basis of providing cash and with an expectation of getting their money bank on a short term basis; to be fair I don’t know of the top of my head who and how much has been paid back yet. Lehman Brothers of course failed but they had a net trading profit when they went down so it wasn’t bad management it was cashflow ie a liquidity problem that broke them, they couldn’t get cash because the other banks had a run on their reserves…

I think people are missing the main problem in the Greece situation. Since the 2008 crisis, Greece has had bailouts provided on the basis that they undertake measures to get their economy back on track and despite all the discourse on austerity their economy was showing signs of recovery 5 months ago – that is until Syriza was elected and plunged them back into the depths of recession with their policies. This exact same scenario occurred in 1933 when Franklin Delano Roosevelt was elected on the back of the “New Deal” and plunged the US economy back into the Great Depression.

The point that is being missed is that Greece needs to take action to fix its economy, regardless of whether the current debt is forgiven or multiple generation repayment terms are offered etc; no-one in their right mind is going to give them money if they know nothing has been changed and that they will only have to give more money when the next tranche simply runs out.

So I went and did some research to find out how paying back the corporate bailouts had turned out…   It seems that 951 entities received bailout funds in the USA, to date the US Govt has recovered all the funds bar 9.38% including losses from companies that still failed in spite of the investment. The US Govt will also receive an ongoing dividend from the shares it acquired investing in these firms.

In the same time Greece has struggled to make their meagre repayment schedules and still require another bailout in the magnitude of $380 bn as has been suggested. They want more funds to pay the debt on the debt of the credit card without making structural change in their economy.  It’s massively different investing in someone who won’t help themselves and constantly asking for more money after their last lot went bad and you have no expectation of the next lot of good money being any different.

PrintI can’t see much light at the end of the tunnel for Greece; my personal opinion is that they are best exiting the Eurozone and re-floating the Drachma; they will have to do that or issue IOU’s in the next week if no bailout arrives as they have no liquidity left in their banks now! The consequences of that are likely to be hyperinflation and a need for humanitarian aid until such point as Greece gets control of their monetary policy and restore their economy. The only other alternative is massive injection of bailout, forgiveness of most of the debt (unlikely) and still have to restore their economy.

What is needed to restore their economy?

  1. Massive reduction of pensions and age of attaining a pension.
  2. A restructure of their progressive taxation system to start collecting revenue while maintaining an incentive for investment in enterprise.
  3. A broad based consumption tax to simplify direct taxes and collect revenue from everyone spending in the economy.
  4. Reduce Govt services and allow the private sector to deliver them ie a smaller public service.

The third element is essential because you cannot overtax individuals engaged in enterprise and eliminate the incentive to invest more. ie high taxation will drive expenditure to expense items and minimise taxation so Government still does not collect. You want someone to keep their money if investing in enterprise as that creates growth but if they take the fruit of their labour you want to capture revenue at point of sale. In short, the restructure needs to collect revenue, reduce Government expenditure and encourage growth.

NONE of these requirements are palatable as the Greek economy has sailed along on false pretences for so long it is difficult to accept the necessary change hence the OXI vote on the weekend, but whatever your politics, cold hard reality will ultimately dictate no other option for Greece.