Enthusiasm alone is not enough to turn a profit
FOR a man who this week takes up the role of small business advocate to government and big business, Mark Brennan has some blunt advice. "You've got to get better at operating your small business," said Mr Brennan, the inaugural Australian small business commissioner.
"You see examples of people who are very enthusiastic when they go into business, who are prepared to work 100-plus hours a week, and they really throw themselves into it, but they haven't gone about their planning properly.
"Let's say it's retail. They've either chosen an area where the rent's going to be too high for them; they've chosen a market where they've already got plenty of competitors; they haven't 'boutiqued' themselves well enough; but they believe if they work 100-plus hours a week they'll do better than everyone else."
For bad business operators, working hard only means they get better at being bad, Mr Brennan said.
He certainly has the credentials to take on his new role. A lawyer by training, he has been the Victorian small business commissioner for the past nine years, has worked in the federal and Victorian bureaucracy, and has run his own small business, a legal consultancy.
"As MA Brennan & Associates, it was me, the bride, the starving children and the dog," he joked.
While an advocate of small business, Mr Brennan said he would also make sure they were aware of what governments were doing, and what sort of information and assistance was available - such as dispute-resolution services.
"Governments should make sure that there's information available that businesses can use to ensure that they comply with the laws that are there, and that they can educate themselves to be better at what they do," he said.
Mr Brennan will also bring "issues that affect businesses to the attention of government and make sure their concerns are properly represented".
He is responsible for ensuring small businesses are treated fairly and they have access to justice and dispute-resolution services, although he won't be providing these services himself.
Senior managers in government or large businesses are often unaware their organisation is in the midst of an intractable dispute with a small business. Mr Brennan plans to use the status of the small business commissioner to draw an organisation's attention to disputes it may be having with smaller businesses. "When you escalate it to the CEO, the CEO might look at the matter and say, 'That's not really us, that we're digging in our heels against a small business'," he said. "And they'll look at ways of resolving whatever the problem is."
A key issue for small businesses is cash flow, and it is one Mr Brennan thinks he can do something about: "They can't get people to pay them and then they're under pressure to pay someone else. What I'd really like to see is some leadership on the part of the government and big business in terms of paying accounts promptly."
The Commonwealth and Victorian governments, among others, have policies to pay small business invoices promptly, and failing this must pay interest on the outstanding balance. Mr Brennan said this was a "terrific policy" because it meant that government agencies paid on time.
But currently, small businesses have to ask to receive the penalty interest, and many are reluctant to do so because they don't want to be seen as troublemakers. Mr Brennan wants the policy to be adopted by all governments and for the penalty interest to be paid automatically.
He also wants large businesses to adopt the same policy when dealing with small-business invoices. "Any time I deal with big business I try to take it to CEO level and say, 'Have you considered these sorts of things? Does it represent the sort of principles of your business that other businesses are being disadvantaged?' "
He expects 2013 to be a "challenging year" for small business. In a tough economic climate, he said SMEs should concentrate on their core business. "It's highly risky to diversify your business when times are bad."
Looking the part is key to success
Credibility is key
Look professional. Get your business cards; have a business name; have a letterhead; get a website; show that you've got some substance about you.
In making the overtures to win business, have an attitude of understanding what a client might want instead of pushing yourself as a person that they should engage.
Take two different coloured highlighter pens when you go to see a lawyer about a lease and ask them to highlight all of your rights and obligations in one colour and all the landlord's in another. You come away with a colour-coded document, which a lot of small businesses find to be a practical thing, because they can look at it and they've had it explained to them.