Category: business advice

Tech and tax write offs

Last week’s expansion of depreciation allowances for Aussie businesses is an opportunity to refresh your company’s tech

In last week’s Federal budget the biggest news for business was the expansion of the accelerated depreciation limits where items up to $20,000 can be immediately claimed as a tax deduction.

While this was a reversal of the previous budget that slashed the previous allowance, it was welcome news for businesses looking at replacing older tools and equipment or investing in new technology.

One of the notable things about business technology is companies have a habit of holding onto older equipment long beyond what should have been its use by date.

The consequences of using old technology are real, the older equipment is often not as fast as the newer kit which affects productivity and unpatched software is often the way malware finds its way into a business.

Point of sale risks

Earlier this week computer security vendor Trend Micro held their Cybercrime 2015 breakfast in Sydney where the director of the company’s TrendLabs Research division, Myla Pilao, described some of the threats facing businesses.
One of the top risks were Point Of Sale systems (POS) where Trend Micro’s research had found over a third of US retailers had malware on their cash registers, in Australia it was six percent.

Most of those infected POS terminals would be older units with many of them being software running on out of date versions of Windows that haven’t been patched or upgraded since they were bought a decade ago.

Similar problems exist with older workstations, internet routers and even photocopiers where the technology has moved on and security holes discovered. Basically old equipment holds businesses back and exposes them to risks.
Now the carrot of an immediate tax deduction gives Australian businesses an opportunity to refresh their technology. So what is the technology, smart company managers and owners should be spending their money on?

Kick out your desktops

“If it ain’t broke, don’t fix it” is the mantra for most business IT and desktop computers are the best example of this. In most companies as long as the word processing software or accounting package works the PCs continue to be used.

With the withdrawal of support for the decade old Windows XP operating system last year, many older computers started being a liability in a business so now is the time to replace them.

Consider tablets

It may not be necessary to replace the old desktop computer with new ones, for many job roles a tablet computer is often a better choice. With cloud technologies increasingly being adopted there’s less of a need for a grunty PC sitting on each staff member’s desk.

Upgrade the router

One of the areas where businesses often compromise is with their internet access. Having an old, cheap router designed for home use is just not good enough for companies who rely upon being connected.

A new business grade router will improve office internet access along with resolving most of the security issues older equipment is notorious for.

Going mobile

If you’re struggling on old mobile phones, now might be the time to upgrade to the latest smartphone. Amongst other things this will improve your office productivity, particularly if you combine the investment with some of the cloud services that make working on the road a lot easier.

Cloud services are not part of the depreciation rules as they are usually subscription models and this shows the weakness in the Federal government’s thinking.

Indeed for those vulnerable Point of Sale systems, a cloud based service running on tablet computers is probably a better solution than most server and PC based packages.

A lack of vision

The ‘ladies and tradies’ theme of the budget shows the Federal government is stuck in with the vision that Australian businesses are mainly mom and pop service operations in the traditional trades and professions.

While the depreciation changes are welcome they do little to help startups or companies in emerging industries and for the economy in general will provide not much more than a GDP ‘sugar hit’ for retailers’ cash registers as we buy imported equipment for our businesses.

For the Australian economy in general, the move really only benefits Gerry Harvey who can buy a few more racehorses from his stores’ and his rich mates who can afford some more expensive wine fuelled brawls in Sydney waterside restaurants.

Australian businesses owners need to be demanding better thought out policies from a government that claims to be friendly to industry. The economy is changing and 1970s style tax benefit is not the way to prepare for a changing world.

In the meantime, enjoy your tax write offs.

 

The not so smooth rise of 3D printing

MakerBot’s story shows the development of new industries is never smooth

Vice’s Motherboard details the remaking of MakerBot, the rescue of an early leader of 3D printing industry.

The story is great long read for any business owner or want to be startup founder and a reminder that the development of new industries is never smooth sailing.

Adventures in Startupland – the brutal truth of starting a business

Zendesk CEO Mikkel Svane’s book Startupland describes the challenges faced by most business founders and business owners.

Startupland is a magical, mythical place where the unicorns roam free and much of the advice dished out to nascent entrepreneurs has more in common with a romantic fantasy novel than the hard work of building a business.

Mikkel Svane’s Startupland is not one of those books. Svane, the co-founder and CEO of cloud based customer business Zendesk, is instead a tough description of the challenges and personal costs of venturing into business for yourself and the harsh, demanding realities of the Silicon Valley statup model.

“No-one tells you how little you get paid,” warns Svane as he charts his own journey from developing and selling through Stockholm’s computer shops of the mid 1990s a basic program that created 3D optical illusions through to floating Zendesk on the NASDAQ in 2014.

During Zendesk’s journey Svane and his business partners experienced the entire range of challenges that a business founder could face ranging from managing high growth, laying off staff in the face of a downturn, the inevitable pivots and, sadly, the passing of a valued employee.

“Startups are fragile” warns Svane and observes how he nearly fell for the trap all business owners have been tempted by in doing consulting work to provide cash for the business. Invariably the side job comes to dominate and the new venture withers due to lack of attention.

Working from home

For those starting out in business, whether it’s a tech startup or something a big more mundane, the observations and tips on working for home are worthwhile in themselves, if you find you’re one of the type that “sits at home and eats toasts and masturbates” then it’s probably best to find an office or coworking space.

Having had the opportunity to interview Svane a number of times, his own passion and character comes clearly out of the book including his view that seemingly boring things like customer support is sexy, citing how Marilyn Monroe fell for Arthur Miller (although that didn’t end well).

The ‘boring is sexy’ mantra is one Svane repeats throughout the book, and his contention is seemingly mudane areas like customer support are where the real business opportunities lie.

Business is about relationships

Ultimate Svane sees business as being about relationships; between customers, staff and investors. His view on accepting investor’s money is an important lesson from the book.

“Great investors have unique relationships with their founders, and they are dedicated to growing the company,” writes Svane. “Mediocre and bad investors work around founders, and the company ends in disaster.”

The brutal truth

In telling the brutal truth about starting a business Svane gives anyone considering the idea of ditching the cubicle a realistic view of the challenges ahead. That advice alone will save many families from the stresses and costs of self employment and startup land.

Those considering entering the world of startups, small business or self-employment should read Startupland. If you’ve already started that journey, then Svane’s story is worth reading to show you aren’t alone in your daily challenges.

 

Webinar: Future proofing your business using cloud computing, social media and other tools

Join us on April 29 to look at how business can grow in rapidly changing markets

On April 29 I’m helping Flying Solo with a webinar on how small and single operator businesses can future proof their businesses.

During the webinar we’ll be looking at how businesses can adapt and profit from a rapidly changing economy.

Some of the things we plan to discuss include the trends driving the changing marketplace, some of the tools businesses can be using to harness a rapidly evolving workforce and methods to attract mobile consumers.

We’ll also have a look at some of the ways canny business owners can use social media, cloud computing and other online services to make their businesses more profitable and flexible in a tougher business world.

The webinar itself is free and you can sign up at the Flying Solo website. Hope to see you there.

Building an accountable society

Transparency in government and honest in business have to be driven by citizens, voters and consumers

Making governments and businesses more accountable is ultimately the role for voters and consumers.

Suzanne Snively, Chair of Transparency International’s New Zealand arm and Mick Macauley of Victoria University laid out the objectives of the Open Government Partnership at the Open Source, Open Society conference in Wellington today.

The partnership, driven by the British government but endorsed by US President Obama, was launched in 2011 to make governments more open, accountable, and responsive to citizens.

Underlying the partnership are four principles; technology, accountability, open participation and transparency.

For governments the biggest challenge is probably in transparency in making information on government activities and decisions comprehensive, timely and freely available to the public.

Probably the biggest challenge is accountability, a topic which goes far beyond governments, including both politicians and public servants, into the business community and society in general.

“The role of civil society is absolutely crucial,” says Macauley while Snively adds “Democracy is going to have to start with the user.”

Ultimately democracy and the markets will decide how transparent societies become, it’s up to voters not to tolerate secretive government and consumers not to tolerate untrustworthy businesses.

Ethics and profitable business

Having a relatively clean society and ethical business cultures should be a massive advantage. It’s best not to squander it.

Does being an ethical business pay off? Transparency International found in 2014 that New Zealand come in only second to Denmark in being the least perceived corrupt country in the world, while Australia comes in as tenth out of 174 countries.

Suzanne Snively, chair of the New Zealand branch of Transparency International, believes this is an opportunity for both countries and their businesses as emerging nations deal with reforming their institutions and management cultures as she told me today at the Open Source, Open Society conference in Wellington.

“Companies do better when they are not corrupt,” Snidely states. “Energy can be used in much more productive way when you don’t have the overhead of corruption.”

Having a relatively clean society and ethical business cultures should be a massive advantage. It’s best not to squander it.

 

The engineer’s return – GE heads back to its roots

GE group’s aim to see engineering products make up almost all its earnings by 2018 shows a shift in the economy and business

In his mission to refocus GE on its engineering roots, CEO Jeff Immelt last week announced a restructuring plan that will see the company divest most of its real estate portfolio and shrink its finance arm faster than expected.

Bloomberg News reports the stock market took the announcement very well with the shares jumping 8.7% on the news.

GE now expects “high-value industrials” such as jet engines, oilfield equipment and diesel locomotives to generate more than 90 percent of earnings by 2018, up from just over half in 2014.

That the company’s announcement has been taken so well by the market shows how the US economy is slowly shifting from financial engineering and debt driven spending to building real products.

For the rest of the world there’s a clear message – the 1980s era of Gordon Gekko is coming to a close. It’s time to start figuring out where the real growth is going to come from rather than just goosing household spending with easy credit.

Where companies like GE are going today is where governments will be looking in five to ten years time. Some will find they are further behind than others when the shift becomes apparent.

Could a robot put you out of business?

Automation, robots and artificial intelligence are threatening the future of many jobs and businesses

Transaction based businesses are in the firing line as robots and algorithms are taking over the tasks that are the mainstay of many service businesses.

In How To Know if a Robot Will Take Your Marketing Job, Gartner consultant Martin Kihn identifies two factors that indicate roles at risk of being overtaken by technology.

“The two dimensions relate to the things computers do best: (1) repetitive tasks, and (2) structured data,” states Kihn. “If you’re a knowledge worker, your biggest enemy is routine. To the extent your work is predictable, it’s codable . . . and you’re a target.”

Kihn describes a curve where repetitive, structured jobs are at risk of automation while at the other end are more abstract analytic roles which are relatively safe from the algorithms and robots.

will-a-robot-take-your-job

While Kihn is focusing on marketing jobs, his message is clear for all occupations and businesses – if your company makes most of its revenue from low skill, easily automated tasks then it is ripe for being overtaken by algorithms or robotics.

Even for businesses that are higher up the value chain, there are roles that can be replaced within the enterprise; a good example are the mining companies replacing high paid drivers with automated pit trucks.

There are even many management jobs that may be affected as artificial intelligence advances. Approving spending or hiring requests for example can be largely dealt with by algorithms with only the rare exceptional case requiring a manager to intervene.

So the executive suite may well be just as vulnerable as the lower status roles in an organisation.

MIT professor Andrew McAfee who Kinh quotes has been clear that we’re on the cusp of massive change in the workplace as robots, algorithms and artificial intelligence progress. It may well be there are far more jobs and businesses at risk than we think.

Beating Facebook envy

Being behind the cutting edge could be a benefit for a business or nation suggests one software executive

Do economies and businesses need to be at the cutting edge of tech or is staying behind the early adopters the key to get the most out of technology?

“Everybody has Facebook envy,” says Oracle’s Neil Mendelson, the company’s Vice President for Big Data, about business life in Silicon Valley.

Mendelson was talking about how the Silicon Valley business environment is a high pressure bubble where the focus on shipping products is different from the needs of users outside the tech sector.

“The farther out you go from Silicon Valley the more people fundamentally understand the value is in getting something out of it,” says Mendelson who was speaking at an executive lunch in Sydney earlier today.

“Being a late follower has an advantage because companies aren’t going to get fired up about this Facebook envy trying to assemble a solution but rather they can get something out of the cloud that will deliver value.”

The Minitel problem

An example of being too far ahead could be Minitel, a text based network operating across France between 1982 and 2012.

Minitel was a visionary project intended to deliver services similar to the Internet through a dedicated terminal, however the open nature of the net made the French service less than attractive and eventually France Telecom wound the service up in 2012 as user interest evaporated.

How much the French bet on Minitel held the nation’s digital economy back is open to question, the World Economic Forum lists France as 25th in the world in its 2014 Networked Readiness Index however the gap between most of the top nations is quite close.

Falling off the bleeding edge

The idea that the best return on a tech investment is by being behind the ‘bleeding edge’ isn’t new, for years the advice from serious computer experts was to never buy a Microsoft product until version three came out however there is a risk that the early adopters might get an early advantage over the slow movers.

Another risk is missing out altogether; as Oracle’s Australian manager Tim Endrick told the room, “our experience is organisations are doing two things; they are either managing disruption and/or they are leveraging their structures to innovate. Those who are sitting on the back step doing nothing are in serious trouble.”

So while there are risks with being too an early an adopter of new technology, it’s important to be aware of the trends and tools that are changing business.

With the pace of change in both technology and industry accelerating, it may be that staying too far behind the cutting edge risk falling off altogether. Maybe it’s worth being envious of Facebook.

Are brands doomed?

Are brands dying in the face of informed consumers and emerging market indifference?

A few days ago we covered the Great Transition research paper by Colonial First State Funds Management’s James White and Stephen Halmarick and followed up with a piece in Business Spectator looking at the ramifications for the Australian economy.

One of Halmarick and White’s assertions is that brands are dead as consumers in emerging economies don’t care about corporate names and in developed nations people have better information about local businesses.

The former argument seems flawed from the beginning; Apple for example is making huge inroads in China while local manufacturers like Lenovo, Huawei, Great Wall and Haier are all working hard to establish their names in international markets.

In developed markets, White and Halmarick’s views have more basis with brand names not having the cachet they once did now consumers have a global platform to voice complaints and find alternatives.

A good example of brands that are struggling are companies like Microsoft and McDonalds, although in the case of both companies this could be more because of a shift in the marketplace rather than better informed consumers.

However brands are surviving as they lift their game and adapt to changed marketplaces, in fact its possible to argue that today’s consumers are more responsive to brand names than ever in the past.

A good example of this is again Apple which has more fans than ever before. Apple are also a good example of how big corporations can invest huge amounts into new technologies and products to give them an advantage over upstarts.

We should also remember that brands as we currently know them are largely a Twentieth Century phenomenon born out of the development of mass media communications and many of today’s household names came into the culture thanks to television in the 1950s and 60s.

So as creatures of last century’s media it’s not surprising that brands are having to evolve to a changed world, some of them will thrive and grow while others will shrivel away.

It’s safe to say though that the concept of brands isn’t dead, although many of the names we know today may not exist by the end of the decade.

Business in a time of falling technology costs

The fall in computer prices shows no business or manager can assume their markets are safe

Personal Computers cost one thousandth of what they did in 1980 reports Aki Ito in Bloomberg Business.

For the computer industry that’s been both a blessing and curse; cheap systems have allowed computers to become pervasive but at the same time the collapsing prices have destroyed the business models of those who built their companies upon the industry economics on 1980 or 2000.

Software has fallen a similar amount with computer programs now costing 7/1000ths of what they did 35 years ago. Again this has dramatically changed the structure of the industry with Google and Amazon taking over from Microsoft and Adobe.

While the computer industry is the starkest example of the collapse in prices due to technological change, it’s not the only sector being affected – almost every industry is under similar pressures as margins get stripped away.

Anywhere where middlemen are exploiting market inefficiencies are opportunities for new technologies to destroy the existing business models, Uber are a good example of this with the taxi industry.

With technological change accelerating in all industries, no business or its managers can assume they are safe from shifting marketplaces or new, unexpected competitors.

 

Building trust in an age of suspicion

How can businesses regain public confidence in a time of declining trust?

The world’s trust in business, government and innovation is falling reports global PR giant Edelman in its 2015 Trust Barometer.

Surveying 27,000 participants around the world, Edelman follows up with questions to what they call ‘informed publics’; 6,000 college-educated followers of business and news media with a household income in their country’s and age group’s top 25%.

Across the board trust in institutions have fallen with nearly 60% of countries falling into the ‘distruster’ category and the news isn’t good for businesses and governments.

That decline in trust is a striking result given the ‘informed publics’ cohort are their country’s middle class and it shows the stresses being felt in affluent groups.

“There has been a startling decrease in trust across all institutions driven by the unpredictable and unimaginable events of 2014,” the company’s release quotes CEO Richard Edelman. “The spread of Ebola in West Africa; the disappearance of Malaysian Airlines Flight 370, plus two subsequent air disasters; the arrests of top Chinese Government officials; the foreign exchange rate rigging by six global banks; and numerous data breaches, most recently at Sony Pictures by a sovereign nation, have shaken confidence.”

Whether the events of 2014 are responsible for the erosion in trust as Edelman claims is up for debate, the decline of trust in innovation indicates the general atmosphere of mistrust is a much bigger issue.

Trusting innovation

Particularly notable is the Australian result where over half the respondents believe innovation is happening too quickly and that it is being driven by greed. Only some, a piddling 14 percent, see innovation as making the world a better place.

Those results are a concern for a country looking at dealing with a high cost economy. At this stage of Australia’s development it’s necessary for industry and society to be implementing new ways of doing business, not looking back to the past.

One shift that marks a change in society is that online search engines are now more trusted than the media outlets that provide the news, that  the population trusts algorithms more than journalists is something that should concentrate the minds of newspaper and magazine proprietors.

Regaining trust

Towards the end of the survey Edelman suggests ways businesses and governments can regain the trust of their communities through ethical business behaviour, taking responsibility to address issues, along with having transparent and open business practices

Other opportunities for building trust include listening to customer needs and feedback, treating employees well, placing customers ahead of profit and communicating frequently on the state of the business.

Clearly building trust is the task of all staff but it starts with an organisation’s leaders to ensure ethics and openness are rewarded. In that light it’s not surprising that trust is declining given the way unethical financiers and opaque politicians have been the main beneficiaries of the post crisis economy.

While a time of declining trust means our institutions are under great stress, it also means there are great opportunities as well for smart businesses and leaders. The challenge is to show the ethics and openness that the public is calling for.