Grant, you are the Group General Manager of the Edmund Barton Centre. Can you please tell us a little bit about what the Edmund Barton Centre does?
Jane first let me say that I don’t use the title Group General Manager – I felt guilty when they handed it to me. Like all our mentors, I am a volunteer, so no one is more important than the other. The Edmond Barton Centre has been providing mentoring to business in our region for 10 years; during this time we have assisted over 500 clients, the majority of which were start-ups.
Can you both give us a brief outline of your career backgrounds?
Grant: I have been fortunate to have experienced a range of careers in my lifetime. The first was as a Radio Electrical Engineer in the Navy. On leaving, I worked in the same field for a number of years before switching to senior sales and marketing roles in the technology sector, my last being a National Sales and Customer Service Manager for Telstra. Then my wife and I bought multi-award winning Chiltern Lodge Country Retreat in the Manning Valley. I then came back into the corporate world as Director International and Commercial for North Coast TAFE here in Port. I realised the vital need for assistance to start-up business and founded the Edmund Barton Centre.
John: After I qualified as a Chartered Accountant in South Africa, I went overseas to gain further experience. On my return, I joined an industrial bank, whose mission it was to grow industry in South Africa through lending and investment. It was a stimulating experience for a 25 year old to be working with some of the best business minds in South Africa. I then went into the corporate sector as financial director, eventually ending up as CEO of industrial companies in steel and engineering businesses. I was then involved in a number of start-ups, some of which were successful, others not. I moved to Cape Town, where I worked for the tax office in South Africa, before emigrating to Australia. I worked for a firm in public practice in Kempsey as audit manager, before moving out into my own small accounting and audit practice in Port Macquarie.
Grant, according to data registry and analytics business Illion, 86.9% of small businesses (20 employees and under) failed in the FY2017/2018. In your opinion, what are the biggest reasons that small businesses fail?
It is our observation that there are two main reasons for this very high failure rate. They are, first, that the business did not have a chance to succeed from day one; unfortunately, most people don’t know how to evaluate the chances of success for their business. Often, it’s their love of the product/service, and then believing that everyone else must want the same.
The second reason is that they don’t have the skills to run the business; you don’t know what you don’t know. Edmund Barton Centre mentors assist the business owner to work through both of these reasons, with the view to them understanding the viability of their business.
John, what key factors do start-up businesses need to focus on to not only survive their first year in business, but to build a thriving and sustainable business for the future?
Firstly, businesses need to focus on their customers or clients. Who are they and why do they buy my product or service and specifically, what is the value of my product or service to them? Secondly, understanding how the decisions made by the business owner impact on cash flow and how that needs to be well managed. Thirdly, getting good people around you to support and maintain the growth, profitability and cash flow of the business.
John, how important do you think it is for small business owners to have a basic knowledge of their business numbers? What are some of the key numbers that you recommend that business owners track regularly?
It is vitally important to know your numbers and to realise their impact on your business. Key ones are sales, gross margins, overheads, and profits. Benchmarking these against your expectations and/or your budget (often there is no budget) is important. Of course, keeping close track of cash balances, debtors and creditors is critical. Forecasting the inflow and outflow of cash, even if informally done, keeps the business financially sound.
Grant, can you share your opinion on the importance of the sales and customer service functions in a small business?
Many say the key to increasing sales is good targeted marketing. I agree, but if the customer and sales services don’t match the marketing message, then the result is not that the marketing is wrong, although it could be. The problem is more likely to be the standard of customer service. I don’t believe that money should be spent on marketing until your customer service/sales skills are the best. I have seen too often the sale does not occur because of the service customers receive.
What is the most rewarding part about your role as a business mentor with the Edmund Barton Centre?
John: The most rewarding aspects of my role are in helping aspiring business owners to think through their ideas and how these will fulfil their expectations for themselves. Often people come to us with little or no knowledge of how business works. It is very satisfying to see them learn and grow in confidence when they have a viable business idea. Even when the numbers don’t stack up and the would-be entrepreneur walks away, we regard it as a win, because a loss-making business chews cash – be it the owner’s own money, or that of banks, friends and family; because loans have to be paid back. Using my expertise to guide and assist others is most enjoyable, and I look forward to my mentoring sessions with clients.
Grant: I agree with John!
And finally, if you could invite two business people each to lunch, who would they be and why would you invite them?
John: I would invite Warren Buffett for his incredible business knowledge and expertise, and Janine Allis of Boost Juice and Shark Tank fame to hear her view on what it takes to make Australian business start-ups successful.
Grant: I would invite both the PM and the Federal Minister for Education and try to convince them of the need to include basic business skills to every level of education. I too often hear of businesses failing because of a lack of basic skills.
Thanks for your time, Grant and John.