COUNCIL of Small Business of Australia (COSBOA) CEO Peter Strong may not have been able to personally attend the recent Vodafone National Small Business Summit – on doctor’s orders, coping with a fever – but his video address to the event raised the event’s temperature.

Mr Strong got straight to the point about where politicians, union leaders and big business ‘oligopolies’ were going wrong in relation to Australia’s business environment.

Impossible to keep him away completely, Mr Strong said he addressed the Summit by video as a demonstration of how vital technology is to how businesses operate today – a prime theme during the two-day event. 

Mr Strong said COSBOA was “disappointed with the Australian Labor Party’s approach to small business” in two key areas.

“We believe if the Labor Party had have embraced small business, for example, supported the Effects Test and increased the threshold to $10 million to define a small business; there’s a good chance they would have been in power, because we would have supported them and not condemned them,” Mr Strong said.

Mr Strong also pledged that he and COSBOA would continue to fight penalty rates, “as the only people that suffer from this is small business people, as the unions have all struck deals, so big business does not have to pay”.

These views may have challenged the official opening address of Queensland Minister for Innovation, Science and the Digital Economy – and Minister for Small Business – Leeanne Enoch, but as she said Queensland was a small business-friendly state and understood the challenges the sector faced. 

Ms Enoch said how crucial small business is to the state’s economy and as an employer – for investing in small business meant more jobs.

“The Queensland Government wants to help small business start, grow and employ to ensure we secure the next generation of leaders and small business owners,” Ms Enoch said.

The Minister expressed to business leaders the importance of collaboration in supporting small businesses, driving them to “fulfil their passion and drive a new generation of leaders and ideas that will put Queensland on the map”.

A keynote session entitled Critical Business Infrastructure featured Energy Australia head of marketing segments and planning, Renee Garner, and Vodafone Australia chief strategy officer and corporate affairs director, Dan Lloyd.

Ms Garner said she knew from direct experience that small business people were spirited and the lines between family and business were always blurred. Her parents and family ran their own business as she was growing up.

During the session, Ms Garner outlined how small business people were so busy with running and building their businesses that they did not always consider energy savings. However, she said, in order for a business to operate successfully both reliability and sustainability in energy should be thought of as intricately linked.

When she asked the room if small businesses would be willing to pay three times more for sustainable energy, about 99 percent of people said no. Ms. Garner responded by saying the control that technology gives us, means we will in the future have on-and-off ability, wherever we are, leading to significant cost reductions.

Similar challenges and advantages faced small business in the telecommunications area, Vodafone’s Dan Lloyd said. 

Mr Lloyd presented an overview of Vodafone’s infrastructure and how the business had overcome challenges, mainly the lack of competition in the market, which drives costs up.

“Australia had one of the least competitive telecommunications industries in the world,”  Mr Loyd said, before challengers like Vodafone came into the market.

Importantly, Mr Lloyd discussed The Effects Test and pressed the urgent need to continue the work to enact Section 46.  

Elizabeth Skirving from Rural Business Tasmania also addressed the session, highlighting how small businesses were often compromised by disruption to transport, supply distribution and telecommunications.

Ms Skirving stressed because these three elements were vital to business operation, small business needed to take steps to protect themselves and have a crisis plan in place.

“For example, what does a coffee shop do if the water supply is obstructed?” Ms Skirving asked.

She urged businesses to identify the local critical business structure and that way they would be “one step closer to protecting themselves should something happen”. Unfortunately, she lamented, too many businesses do not do this until a situation had played out.

The Australian Competition and Consumer Commission’s (ACCC) Michael Schaper and Australian Small Business and Family Enterprise Ombudsman, Kate Carnell, also addressed the summit.

Mr Schaper provided a regulator update to help small businesses understand the ACCC’s position and its activities. Ms Carnell explained in detail how the Ombudsman would support small business.

Ms Carnell’s Ombudsman role, which she commenced in March 2016, is set be an independent advocate for small business. Ms Carnell promised to make life easier for small business people by addressing important issues such as cutting red tape, making payment times shorter and providing support, which helps owners to  their businesses better.

Ms Carnell then took part in panel sessions on how to work with small business, with the ATO and Institute of Certificate of Bookkeepers, and “how not to deal with small business” alongside the Australian Livestock and Rural Transporters Association (ALRTA). The session used ALRTA’s experience with the road safety remuneration issue as a case study.

www.cosboa.org.au

ends

Branding and design can sometimes seem to draw more from necromancy than neuroscience. To Jack Perlinski, who has been both researching and professionally advising on branding and design for more than 27 years, it comes naturally – with a bit of help from both necromancy and neuroscience. The true value of branding – both personal and in business – he warns, is largely still misunderstood and often greatly overlooked. He is on a mission to change that, through his business DAIS and his personal branding satellite, BrandMe. Jack Perlinski is doing so, cleverly, by showing business leaders how their bottom line and balance sheet growth is empowered by their branding.

By Mike Sullivan >>

JACK PERLINSKI knows how to shock business leaders into thinking in brand new ways. He does so by demonstrating how the business brands they are building – and their personal brand that they may be overlooking – directly impact their fiscal and physical performance.

He shocks them with the prospect that brands can – and do – go either way. Brands live. He asks uncomfortable questions, like, is your brand working for or against you? And, are you working for or against your brand?

And he asks possibly the most uncomfortable question of all: What is your brand and what does it stand for? What do you stand for? 

Branding – once-upon-a-time tucked away comfortably under the protection of marketing departments and refreshed with a new and well-explained design occasionally – is compromised unless it is top-of-mind for everyone in an organisation today, Mr Perlinski believes.

His experience not only bears this out – the brand strategy and design company he founded in 1989, DAIS, not only has the case studies to prove it (and DAIS actually insists its clients record the financial gains from their brand development) – Mr Perlinski can demonstrate the science behind successful organisations being empowered by great strategic branding.

He insists that the first major hurdle to achieving such results is to help business leaders understand what brand strategy really is – and what power it delivers to organisations that understand and cultivate a unique brand promise. He also helps business leaders to understand the emotion behind building great brands.

An initial client conversation with DAIS can be broken into four parts –social, informative, exploratory and education – and it can be challenging.

“Brands present themselves to us and express a passion that meets our desire,” Mr Perlinski said. “When Virgin came into the Australian marketplace, it did not create the desire for cheap air travel, or cost-effective air travel. It existed.

“All they did was found an economic and a marketing strategy and a voice to express a passion, as Virgin Blue, to actually meet that desire. So their brand promise, when they came in, their positioning concept, was: To Keep the Air Fair.

“Compass didn’t do it, Ansett didn’t do it, and Qantas definitely wasn’t doing it. Everyone went, ‘Wow, they are giving us what we want’.”

Mr Perlinski said ‘desire’ is a valuable and important part of branding. To understand this, he related the process to a combination of ‘left and right brain’ thinking.

“Every now and then you get this amazing surprise when you meet someone who has a balanced blend of both: ‘I am a left brain thinker and a right brain thinker and I can do amazing things. I can switch between them.’

“In branding it is the same. Without stimulants (he laughed). But perhaps with motivation.

“So, there is desire. And we all understand brand as desire.

“The problem is most people see a brand as the things they emotionally respond to and like,” he said. “So when you start branding an organisation and when you are building a brand for an organisation, people look at this first hemisphere and they go, okay, let’s define who we are. We will design a logo and we will apply and align that definition to all our tools in the way we look.

“We’ve just built a brand. Congratulations,” he grinned.

“The problem is that it is an imbalanced strategy and it is only decorative. It is the realm of the decorator, not the strategist.

“Because it is all about I like this colour, I don’t like that colour. It’s emotive. But, it’s an important part of the chemistry.”

RESEARCH & COMMITMENT

The starting point for any brand strategy development has to be research, according to Jack Perlinski. He is still astonished by how little research most companies do before embarking on a new brand strategy or re-branding.

“In my experience, I think 90 percent don’t do it,” he lamented. “They are completely intoxicated with the ideal of what branding is and they see it as a visual experience. They see it as decorative. They see it as something that makes them simply ‘like’ it.

“The other hemisphere, which is critical – and after 27 years of building many, many, many brands corporate, product, start-up, established, national, international, one-man bands to multi-million dollar organisations – I know that what builds brands is commitment.

“So, on one side you have desire, on the other side you have commitment. This is where you actually have to engage in implementation. Implementing the strategy and the definition into a behaviour.”

BRAND ELEVATION

The enlightening thing most business leaders discover with Mr Perlinski and DAIS staff is that even though what is necessarily discussed can be esoteric and emotional, the process for implementing brand strategy is clear, somewhat formulaic and accessible. DAIS provides a strategic roadmap to elevate brands.

“What they don’t understand is what you need to do to make it happen, to make it realise, and that there is actually a mechanism, a pathway, a formula that guarantees you can do it,” Mr Perlinski said. “Once they realise what that is, and we can fill the blanks, the gap spots for them, with the things that are meaningful to their brand – it is their brand, not ours – then they step up into a completely different paradigm.

“We, on a daily basis, have people leave here and go, ‘I am thinking about this in a completely different way’.”

Mr Perlinski said by the time business leaders have gone through that process of discovery, they are starting to understand the potential for elevating their brand.

“Our brand promise is elevating brands,” Mr Perlinski said. “I will elevate the brands of others. I will take them from where they are today and give them the spirit, the knowledge, the information structure they need to elevate. And I am talking about growth on a P&L.”

He does insist on full commitment from an organisation to achieve this. There is work to do and it requires sound commitment, he said.

“In this implementation sector of commitment, if you follow proven processes that are confirmed to create a difference in conversion, in referral, in relationships, and you can bottle those and capture them, aligning them to your desired strategy, and you as a team zealously commit to implementing those processes and those tools, to that rhythm for 12 months – like it is a religion – then your business should expect a greater than 25 percent growth,” Mr Perlinksi said firmly.

But there is also a sting in the tail.

“Here’s the challenge: you have to pick the KPI (key performance indicator),” he said.

“You have to tell me where it is you want to grow. Is it existing clients? Is it new markets? Virgin market growth? Or, getting old clients, that once were, back? That’s what I’m talking about.

“Once you understand where your growth strategy is, you create behavioural systems in the first instance that create a commitment to delivering and succeeding that is tethered and linked to who you are being. That is the desire part.”

It is multi-faceted and challenging, for everyone, including DAIS, Mr Perlinski said.

“You have a masthead, you have a logo, you have a brand promise, it’s on your business card … well how do you tie that feeling into your website, into your social media strategy? How do you use Linkedin, how do you use Facebook?

“There are a whole lot of ways that, once you unlock this, it allows you to create a whole lot of tools that empower your behaviour. Every process here actually delivers a need to use a tool.

“So, how (do you ensure) you are only making and investing in the things you tactically need? You are not spending money on stuff that you don’t even know whether it creates a return.

“The desire phase is all about defining the brand and creating the tools. The commitment phase is about implementing and sustaining the brand. How do I actually measure this investment is working for me? … Because I have a clear KPI to meet. 

“And, more importantly, create a culture of innovation. How well did we do? How could we do more? What could we do more?”

SMARTIE CULTURE

Nobody leaves the DAIS office or a meeting with DAIS staff without a box of Smarties. It is a symbolic gesture that leaves a sweet taste in everyone’s mouth. DAIS may be Smarties’ best customer – but Smarties help DAIS to find their best customers.

“We have a Smartie culture,” Mr Perlinski said. “No-one ever leaves DAIS without a box of Smarties. I give out, sometimes, 3500 boxes of Smarties a quarter. In an intense period.

“You know what it is? It’s about hospitality. I want people to feel welcome at DAIS. I don’t want you to leave here with less than you arrived. Everyone here is geared that way. That is the ‘inspire me’ mentality.

“How can we say thank you for coming to DAIS? We have a little box of Smarties and we say here’s your Smartie road pack and thank you. If you came to my home, I’d do exactly the same thing. That’s our way.”

Like everything DAIS does, Jack Perlinski measures the value of that Smartie culture.

“I also know the impact that my Smartie culture and behavioural system has on my conversion ratio. I know that if we follow that process we get a better result. We get a consistent result,” he said.

“We stop that behaviour or we erode that behaviour, or sometimes we change that behaviour a little bit, it affects that number. It is part of our cultural behaviour. It’s who we are.

“But I can always innovate with that.”

An example was Christmas several years ago when the DAIS team made a Christmas tree out of 10,000 Smarties – and recorded it and broadcast it.

“That was our multimedia piece,” Mr Perlinski said. “A couple of years after that we did Smartie faces, a mosaic in a studio. And we filmed it. It is a cultural bond, internally, but it also engages our clients.”

And it is a daily demonstration that DAIS practises what it preaches when it comes to its brand culture. ‘Inspire me’ is a sensory experience.

DAIS demonstrates, daily, that building a brand is about commitment.

“It is actually about commitment,” Mr Perlinski said. “How you apply that in a tactical behavioural cultural connection sense, and how you commit to sustaining, measuring and innovating it. It is also why my business is called DAIS. That process is how you build a brand.”

“When I show people physically how that actually looks and operates, what I am showing them is a GPS – a growth performance system for their brand, for their business.”

Brand stewardship starts at board level. It is passed on through staff.

“Inducting people into brand is not about job descriptions and duty statements. That is the technical aspect of a brand,” Mr Perlinski said.

“When you induct someone into a brand, you induct them into your story and you share every aspect of what’s here, why it’s here, how it connects to who we are and you weave it together.

“It starts with what the expectation is. Joining my team is optional, but sharing our passion is not.

“You step into this world … this is what we’re about. We can articulate it. I can show you how, at every touch point … my grandfather and his work. There is a frame of his tools from his craft (Jack Perlinski’s grandfather was a humble shoe smith in his native Poland). That is a cornerstone to why I do what I do and what I am trying to build here,” Mr Perlinski said.

“I want everybody that I work with to be able to share that with others. So I have got to share it with them. That’s what an induction is: the processes and the behaviours of your business that make you unique. That make you special, that build retention of your brand and how you create a culture.

“At which point I go: and here are all the legal documents and agreement that you need to sign to join us. Code of ethics, credo, confidentiality agreements … would you like to come to DAIS?

“Your brand is on show when you least know it is. If you live it, if you believe it, if you are passionate about it, and it is actually commuting to every touch of why you do what you do, you have nothing to fear. It becomes magnetic,” Mr Perlinski said.

“It is very much a science for us.”

BRAND SCIENCE

Jack Perlinski’s academic background is in the area of design. As his career progressed, Mr Perlinski began to realise that successful branding was a more scientific art than he at first appreciated.

There were artistic, business, and even social consequences for getting that design to properly articulate a brand’s intentions and promise.

“My interest is all around taking responsibility for design. I design things with responsibility,” he said. “It is not just about making something look pretty. It is about … how is this going to create the desired outcome through strategy? That’s why I’m a brand strategist. Not a graphic designer.”

As Mr Perlinski built his own company DAIS – with the implications about elevating brands and providing a strategic platform for brand growth that the name implies – he began to seek out the organisations that respected, as he did, their brands as a true P&L asset.

The DAIS approach to introducing a new client organisation to what is possible for their brand is educative – and experiential.

Mr Perlinski said there were two stages: desire, followed by commitment.

“In the desire part of it, there’s often a lot of resistance, because you get a group of people and they come to the table and we show them a solution – a strategy – and they simply go … ‘but it’s so far out of my comfort zone’ …” Mr Perlinski said. That is when the arguments are backed up by the science and the research.

“The body of work we present is extremely detailed,” he said, indicating a typical presentation may be about as thick as a textbook.

“That ream of paper represents a presentation to a client for a brand strategy. Every one of those pieces of paper in that ream is actually a component of that strategy. So there is no question about the volume of thinking that occurs.

“But at the end of the day, after it is all delivered, we normally get this reaction … “ohhhhh … I didn’t expect that … that’s really different. Can’t we just make it, you know … easy? And simple?” he grinned.

“The truth is that then, the way we counter that kind of fear and resistance … my job, our job, is to take people beyond their comfort – responsibly. Not radically – responsibly.”

Most clients soon came to the realisation that the DAIS team had more than done its homework – and they had both protected the existing brand equity while also offering an evolution. Occasionally, DAIS teams have presented unexpected business possibilities as part of that brand evolution.

“Everything we present, though, and everything that is resolved, is underpinned by governance, financial and HR (human resources) strategy that is ratified and ready to go to market in a proven form,” Mr Perlinski said.

INTERNATIONAL LEADERS

A good example of how DAIS often presents business growth possibilities that organisations may not yet have considered was the case of re-branding Queensland Leaders, the renowned business mentoring organisation founded in Brisbane in 2006. The brand positioning became A State of Leadership, stylish state logos were created, but DAIS surprised the organisation’s founder, James Paulsen, by engineering more under the hood. 

In exploring the possibilities for the brand and the organisation – which had successfully guided and encouraged many of Queensland’s most innovative companies to go national and international – DAIS realised the organisation had to pave a brand space for its own national and international prospects.

“We could see that brand. That is where responsibility again comes into it. We could see that brand far beyond brief, because we knew it was the responsible thing to do.”

Mr Perlinski said that even an organisation as progressive as Queensland Leaders had been taken aback by the DAIS suggestion that it would soon have national and international prospects. The re-branding and re-design seemed to almost immediately create opportunities for that growth and the organisation expanded rapidly
to Victoria and New South Wales, through licensing, followed last year by New Zealand.

Now there are discussions in several Asian capitals for International Leaders licensees and South Australia and Western Australia Leaders groups also start this year.

Mr Perlinski grinned that it was a great example of how DAIS can research a sector and help pave the way for unanticipated business growth. DAIS does all the governance on setting up those brands to operate in new markets, national and international.

“We get legal sign-off, we get accounting sign-offs and we get HR structures in play and trademark structures in play,” he said. “So we can put it on the table and it’s bullet proof.”

BRAND YOU

For Jack Perlinski, the link between organisational brand and personal brand is becoming more pronounced. A lot of his work is increasingly built around assisting business leaders and their teams to develop their personal brands as an integral part of how they can drive innovation within their organisations – and their own careers.

In fact, he has just written a book about this phenomenon (see panel story), Discover the Why in You, and developed the personal branding platform BrandMe.

“There is no difference between what I do personally here – my personal brand – and deliver that and manifest that through my corporate brand,” Mr Perlinski said. “The thing that I have that allows me to do that is clarity.”
It is a clarity that flows through to the bottom line.

“It is about how do I turn my brand into a behaviour that creates and gives a result to others? Because if I can do that, others recognise those qualities in that brand.

“That’s the difference. We are not talking about the theory, we are talking about the practice of personal branding, because in that practice comes personal advantage and financial results. Impact, momentum, success.”

Mr Perlinski said the results were showing through as they trained clients in personal branding worldwide. And that required BrandMe to innovate its training online.

“What we do every day is to teach people how to understand that, and how to put it into play. I am an educator first. We teach, we lead, we inspire. They’re my brand ethics.

“For DAIS, and everybody on staff follows this: We create. We are fresh. We will inspire.

“For me, personally, that’s what mobilises me every day.”

www.dais.com.au

DAIS

Mr Perlinski outlined how the acronym, DAIS, is formed by that roadmap, in a recent interview with the Adobe online magazine, CMO.com. He summarised the key words as:

DEFINITION of your brand.

ALIGNMENT of the tools, mechanisms and resources you need to deliver the message from your definition.

(IMPLEMENTATION and) COMMITMENT to building your brand. You need to implement processes of organisational behaviour that are valued, replicable, scalable and teachable to ensure your brand can consistently deliver on its promise.

SUSTAINING your brand, setting up ways to measure effect and to define the right next innovation.

ends

By Mike Sullivan >> 

JAMES PAULSEN has no illusions about how tough the Australian business market is right now.

“I think the business environment in South East Queensland is probably the most depressed I have seen in 16-18 years. It’s very segmented.” 

The founder and executive director of International Leaders – the collaborative business development organisation that has grown state-by-state and now country-by-county out of Queensland Leaders – gets his information straight from the business coal face. He is in contact, daily, with the most energetic and innovative business leaders in Australia across most industry sectors and company sizes.

“I think for existing businesses that have been around for a long time, a lot of them are tired,” Mr Paulsen said. “This GFC, in one form or another, has been going on for almost eight years so it is taking a toll.

“However, the excess has been taken out of the market, so we are starting to see an equilibrium come in with supply and demand. And I think for a lot of business owners, they always say it is darkest before the dawn, there might be another glitch or two, but fundamentally I am hoping we are near the bottom.

“From that perspective, if you can build a business in this market, then when the times are good it will be exceptional.”

Mr Paulsen said reports in recent months had been encouraging.

“Sydney is emerging and I think that is being driven by a bit more of a stable government in recent times, but moreso increased population,” Mr Paulsen mused. “Melbourne has this unexplainable confidence about it, considering that about 15 years ago it was the basket case of Australia.

“One of the biggest problems we are facing here in South East Queensland and perhaps more broadly across Queensland is an absolute lack of confidence. I would say Queensland has lost its mojo.”

The reasons are many and varied, but the challenge, he said, was to get that mojo back as quickly as possible. Jobs are primarily going to come from early stage, fast growth companies.

“The quickest way to employ people is about empowering those next stage companies,” Mr Paulsen said. “You don’t need to have a company, say, like Youi on the Sunshine Coast all of a sudden employing 2000 people – those sorts of things come across once in a while, like Virgin (establishing its headquarters in Brisbane).

“Governments make the mistake, I think, of buying in big employers and the net cost may or may not work. We have seen them buy call centres before and within three or four years they are shut down – they shed jobs.

“It annoys the local industry who are saying, why are you supporting someone else who has shown no interest here?

“The big opportunity I see is if these one or two people businesses just employ another person.” 

Mr Paulsen said apart from an imperative to sell the brighter picture – in Queensland’s case the onset of the liquefied natural gas export boom and the rebound of tourism – government was largely irrelevant in turning the business environment around.

“Now I think business owners are quite sceptical of what government says. I think the time of having a PR flack pushing out good news stories is gone.” He advocated some practical assessment by government, rather than fairytale telling.

“There should be some factual analysis … embrace that … then it will filter down to the start-up stage and hopefully rebuild the state,” Mr Paulsen said. He noted that some of the best performing growth companies in the Leaders networks were those that were driven by passionate entrepreneurs.

“We’ve got companies like Nimble in the tech space and Corporate Travel Management and they are not hanging around a certain sector – the success behind those companies are the individuals (that run them),” he said. “They have a fire in the belly and they have got a focus on what they want to achieve.

“What such companies are looking for is access to the expertise and resources around them to achieve their goal.” That, of course, is where the Leaders network and support systems come in.

“We always say to companies, ‘work on your business not in your business’ and sometimes that transition is very difficult because they might be a 2-3 person business and they spend 15 hours a day just trying to build revenue,” Mr Paulsen said.

“At what stage do you get the opportunity to start looking strategically? The conundrum there is that until the company can look strategic, they are never going to get out of the hole they are in.”

Mr Paulsen identified two areas of opportunity for Queensland business at the moment.

“We have to look at innovation, we just have to do things differently: embrace technology, better systems, better services … just to create a point of difference,” he said.

“The second point that I think most companies miss is collaboration. No one person has all the skills to build a highly successful company; it is the input of the stakeholders, the external people who guide and provide the feedback for these people to make better decisions.”

HOW LEADERS LEAD

In recent months, Queensland Leaders has collaborated with leading organisations such as CSIRO, to give members access to its Mega Trends analysis, and also over many years with lawyers, accountants and other experts leading their fields.

“It’s great to get peer understanding on a decision, but it is also great to get understanding from a lawyer or an accountant or an adviser who has done that transactions 58 times,” Mr Paulsen said. That is the power of the Leaders networks. 

“I say make a strategic decision, but the more advice you get and the better researched you are, the better that decision is going to be.”

This is the crux of the Leaders formula for helping businesses to generate success. It provides a new way for government to assist the development of the companies that are going to create new jobs.

“We try to bring in a lot of hook ups of Federal Government, Local Government and State Government,” Mr Paulsen said. “Each have different things to contribute to private growth companies. Then we support those private growth companies with peer engagement.

“So the software firm can talk with the advanced manufacturing firm about business models or client retention. But then surround them with the expertise … so you have got access to the lawyers and the accountants and experts.

“I always use the example of MYOB or Microsoft – probably not necessarily the best products in the market, but they are market leaders because they got all the other factors right.”

Mr Paulsen describes the Leaders’ Industry Experts groups as “a better mousetrap”.

“With their expertise they can find points of differentiation and competitive advantage that is outside (a business leader’s) own product. The collaboration point – looking at ways that product can go into a whole different industry or a whole different application that no-one in their organisation would have thought about.”

The final piece of the Leaders puzzle is the Industry Partners group.

“That’s the big public companies, like your TechnologyOnes and your Corporate Travel Managements and such,” Mr Paulsen said. “The lessons they can teach – sometimes it’s very high level – but at the end of the day I think it is some of the most sound information we have received.”

Where the Leaders groups have clearly differentiated themselves from other business support organisations is in the motivation behind those involved.

“It’s an interesting psychology. The people we choose in the network are organisations that I think are very philanthropic and dedicated to working with growth companies. I don’t think we have anyone there with that rape and pillage mentality – they wouldn’t last very long,” Mr Paulsen said.

“We don’t deal with the top four or the top five legal and accounting firms and that’s because this is not their bread and butter. We deal with those organisations that live and breathe SME companies. I think because of that they have got both the experience and compassion to work with these people.”

SME: TOUGH GIG

James Paulsen, whose background is private equity and investment banking, has worked with the SME market for almost 20 years “and it is a very tough market to operate in”.

“Money is thin on the ground, there are so many distractions and there are so many issues facing these businesses. And their ability to focus sometimes wavers,” he said. “You have got to be as dedicated as they are to build the relationship.

For many years Queensland Leaders developed its successful Executive Series, which settled in the range of companies with an average turnover of the $40-$50 million mark. Mr Paulsen said it became clear there was a need to work with earlier stage companies.

“In July last year we started our Future Leaders series, where the average turnover (of the 12 companies involved) is about $1.2 million and these are the next generational companies,” he said. “Fast movers, they are trying to establish a solid foundation and a sustainable business. So many early stage businesses are focused on driving the revenue or focused on all the factors that don’t drive long-term success.

“For most of us in this world, you learn by your mistakes and I guess with the Leaders’ model it is about learning through other people’s experience. They come to an environment that has all this information at their disposal. They go through a structured process where they understand everything from the IP protection, the marketing, the strategy, the brand, the technology development as well as the protection and legal matters.

“For them it’s a practical MBA – I don’t like using that term – but it does take them through a logical purpose and a process that enables them to implement. They cannot just do everything at once because then they take their eye off the ball.”

In July Queensland Leaders launched the second Future Leaders series in alliance Brisbane Angels – and this series is focused on companies looking to acquire capital in the short term.

“Once you start to bring external investors into a business the dynamics change extraordinarily,” Mr Paulsen said. “For a lot of those businesses it is about them understanding how the game is played and what they need to do – and the expectations.”

Feedback had been that knowing how to raise capital and deal with investors as been transformative for the Future Leaders companies.

“I think a lot of companies who have raised funds, probably in hindsight, wouldn’t have done it,” Mr Paulsen said of outcomes he had seen over 25 years in the field. “Part of our process enables them to get that understanding. There are also a lot of companies who haven’t raised funds but if they understood the process probably would. Education plays a strong part.”

A crucial role Queensland Leaders is playing is in matching the various parties.

“The Brisbane Angels tell me there is no lack of capital out there,” he said. “The State Government who runs the Mentoring for Growth program tells me there is no lack of companies out there.

“We can see both sides and we see that they are really not communicating with each other.”

 The experience of Queensland Leaders has borne this out.

“When we looked at expanding, we thought we’d have to go and raise capital,” Mr Paulsen said. “It was actually some of the lawyers through Leaders that came to us and helped us to restructure our licensing model that we didn’t have to go and raise funds. The funding required to set up different interstate models was actually sourced from the licensee and repaid back through licensee refunds.

“So there are a million and one ways to skin a cat and what a lot of businesses do is get a strategy in their minds but they don’t have the network around them to explore that strategy and have quite fruitful conversations about other ways of achieving that ultimate goal … without having to raise funds.

“One thing I’d say to other companies is seek as much feedback and advice and case studies as you can, because there are different ways to achieve things. Only so many transactions need capital, external equity. They are the ones where there is a strong reliance on intellectual property or technology development or brand or market development – and that money can multiply quite quickly with the value proposition. If you are just seeking funds to pay yourself next year and to develop a new product, then it is not going to work – you need to bail.”

He was particularly critical of the Silicon Valley-style capital raising hype that is so prevalent in the technology space.

“If you counted up all the businesses that had gone the Silicon Valley way against all the businesses who had tried to replicate that path, it is like winning the Lotto,” Mr Paulsen said.

“Certain people in industry try to create a hype around it. What it does is create a cloud for the entrepreneur and a false expectation for what is going to happen. The scary thing is, how many great technologies have been lost because so many people went down a particular path where the chances of success were minimal or nil anyway? How many of those have been lost instead of asking, well, if we don’t raise capital how can we get this product or service to the market, using working capital or other forms of capital?”

One area the Federal Government could modify for positive impact, given the changing nature of work and companies, Mr Paulsen said, was to add flexibility to the taxation system.

“I think the government needs to have a real strong look at successful models overseas. If every small business just employed another person this year, our unemployment rate would go down,” Mr Paulsen said.

“But what’s the incentive? What they are doing (SMEs) is they are working harder. That means they are not focusing on the strategy they are focusing on the operations. If they employed that person and started focusing on the business, they could actually probably create a good multiplier with the freedom they have to look at the bigger picture.”

In spite of all the barriers and challenges, Mr Paulsen remains an optimist about the capacity of Australians to create great businesses – he just stresses that entrepreneurs need to focus on the basics, such as reaching profitability early, the business’s cashflow dynamics and longer term sustainability, and not heading down alleyways that can prove to be dead ends “such as seeking government grants”.

“You always have a lot of energy coming through with new business owners and there’s that naivety that goes with it, I think, that is a bit of a foundation of success in Australia – that entrepreneurial get up and go.”

www.queenslandleaders.com.au

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