Only half of new New Zealand businesses survive longer than ten years and even then, only 5 per cent of those ever reach a turnover of $1 million. That is bad news.
The good news is that of the 5 per cent of businesses that reach $1 million turnover, one in four grow to $10 million turnover.
As a start-up, finding the right strategies, tactics and culture to grow profitably and sustainably will put you into an elite group of businesses – the long term winners. Below is some advice to help you get started and survive.
A bird in hand is worth two in the bush
How many times have you heard stories about companies offering special pricing and better products to win new customers, yet they continue to overcharge loyal customers for older products and services? It costs five times as much to win a new client as it does to keep an existing one.
Value your staff
Keeping good people is about respect and values. A friend recently recounted a tale of a boss who took him for granted. One day this boss asked, on a whim, for him to change then redo a job that he had spent weeks working on. This is what the worker had to say: “That was the day I mentally left that company. It was a year before I found the right job to go to, but the decision had been taken twelve months before. They offered me better money and benefits to stay but it was way too late for that.”
Avoid profitless prosperity
Just because a deal is big it doesn’t make it worth doing. It’s okay to walk away from any bad business. Handing these kinds of duds over to your competitor can be good for your business. It frees you up to provide awesome, profitable products and services to clients who value them.
Don’t be a bank
A quarter of all debts that go past ninety days overdue are never paid. This rises to over half at 120 days overdue. Look at this another way. an unpaid debt of $1 means you will need to generate $10 in new revenues just to make up for it if your net profit is 10%.
If you have tried all reasonable ways to collect debts to no avail, then send a final warning in writing. If this fails, then using a reputable debt collection agency is a perfectly valid option. If this seems drastic, then remember it is your money and your company. Only you get to choose who keeps both.
Get good advice
Developing the skills and contacts to ensure you can reach out to the right expert at the right time is an essential craft in helping your business succeed. Getting good advice may seem expensive on occasions but can save you a world of pain in the long run. EMA offers fantastic advice to members in several key areas, at very reasonable or even no charges.
Plan for the Future
Many great businesses end up on the market having reached the stage where age or ill health have forced the owner to sell. Having a mix of ages, skills and personalities within the leadership of your company is a must. The energy, enthusiasm and contemporary relevance of youth is a potent partnership when combined with the hard-won experience of age.
My business partner Richard and I look forward to when we get to sit in the balcony seats of Total Utilities, cantankerously muttering and critiquing our new generation of leaders just as Statler and Waldorf do on the Muppet Show. The trouble is, of course, that no one will be listening.
All the best for 2020. May you live long and prosper.
Why cloud is crucial for a sustainable business, and how to choose the best option.
The Covid-19 outbreak has reinforced two lessons for businesses – the importance of cloud-based services and the need to ensure their model is sustainable. Cloud platforms have really come into their own, providing accessibility for remote workers and customers, while providing the ultimate scalability for businesses facing an uncertain future. But in a world where both the economy and environment are facing unprecedented challenges, it is more vital than ever for business owners and CFOs to make informed business decisions.
Choosing the right cloud option can be daunting, and a truly sustainable business needs a clear understanding of the financial and business case drivers to help make the right decisions.
Review the business model
Changes are happening at a rapid pace in today’s business environment, with many companies looking at downsizing and improving their remote working capabilities. Even beyond the extremes of a pandemic, acquisitions, new ventures, upturns and downturns all provide daily challenges for senior managers.
Nothing illustrates how quickly the business environment can change as the infographic below.
The infographic shows the vast drop in consumption of electricity since Covid-19 hit New Zealand. Many businesses were unable to operate from their normal offices and stores. While most have adapted to working from home, the shutdown had a huge impact on commercial electricity consumption.
While major industry consumes a third of all our energy, the wider commercial sectors consume a further quarter of New Zealand’s electricity demand. It is this quarter that we can reasonably assume to have almost completely evaporated when the lights went off.
Although the future is opening up and consumption is starting to rebound, businesses are now focused on new ways of consuming energy or delivering services.
Many CFOs and CIOs are trying to figure out this new way of working and how it affects their own businesses. The days of the road warrior salesperson may be coming to an end. How we engage with, incentivise and add value to our clients will look very different, as some may prefer a call from the office or a virtual meeting to a corporate lunch. Customers too will be feeling the impact, with online engagement becoming the predominant form of communication, and Microsoft Teams, Zoom, and Hangouts becoming an integrated part of working culture.
In addition, Covid-19 has caused a large shift in the global economy and supply chain. Secure production and supply are increasingly of greater importance than the cheapest or most efficient options, which has led to a greater focus on in-house production, multiple suppliers or regional stockpiling.
The result of all this is we can no longer trust the stability of the surrounding environment. While we may see some return to the old ways of working, some business processes will never be the same again. Business managers therefore need to be prepared to constantly review business models and consider whether their technology needs are still being met by their current system. This will help ensure their business remains sustainable in a world that can change drastically in what seems like a second.
Plan for the rebound
Kiwifruit producer Zespri is a classic example of how to approach this kind of situation. In 2010, it was dealing with the PSA Virus, which caused entire crops of kiwifruit to fail. The popular gold kiwifruit was the most affected variety, spurring Zespri scientists to research a resistant strain.
They knew the situation could have gone either way – with the opportunity to double production if the new strain was successful or ultimately halve if the research failed. Zespri was concerned about having enough computing power to cover existing demand while preparing for both the best- and worst-case scenarios.
With support from Total Utilities to assess its existing IT costs and consumption, Zespri was given a list of options that projected the business outcomes and costs for each. It could either continue managing and maintaining its own data centre, outsource its data to another local vendor, or switch to the public cloud so it could replicate the same platforms around the world. Zespri chose the latter, moving its infrastructure and associated platforms onto the Microsoft Azure Cloud.
This decision helped Zespri cover a multitude of potential problems by removing the financial risk of investing in its own tech infrastructure, allowing rapid expansion of a global supply chain and delivering detailed cost control mechanisms. Providing Zespri with financial operations toolsets allowed it to efficiently manage costs and consumption, which was repaid as Zespri’s research gamble paid off and the business grew in scale. Measures such as “cost per tray of kiwifruit shipped” have become an important way of tracking success. Zespri has used subscription cloud services as an effective way to manage, analyse and contain its costs ever since.
Not only does that mean Zespri is able to adapt its model to any scenario, not having a data centre on site reduces both energy consumption and space. The business is therefore more sustainable in every sense of the word – something consumers around the world increasingly expect. Microsoft itself has committed to removing all carbon it has ever emitted directly or by energy consumption from the environment by 2050, reinforced by its pledge to support New Zealand’s sustainability goals through its new datacentre investment. As every organisation on the planet is challenged to review its impact on the environment, choosing greener IT options is a great way to minimise your footprint.
As the adage goes, the only certainty in life is change. While an upfront investment during downturns can be daunting, the best way for any business to safeguard its sustainability long-term is to invest in an IT system that doesn’t become obsolete, that meets modern expectations around environmental impacts and which allows workers the greatest accessibility in an era when many of us are now working remotely. And that means embracing the cloud.
Ensure resilience
A resilient network and good technical support are essential to every modern business. There is an expectation for email, purchasing or sales automation to be working around the clock. Software updates, testing or hardware failures are no longer an excuse for disrupted services, which can instantly see customers go elsewhere.
Just five years ago, businesses were put off moving their platforms and operations to the cloud because they weren’t sure about achieving the level of compliance and technical competence they needed to operate the systems. Every business we consulted felt the skills to manage cloud migration were a barrier to digitising their operations, and that only in-house experts could provide the support needed. That figure is now just 40 per cent. Trust in the cloud and cloud providers to manage their businesses and tailor their services to their needs has skyrocketed.
Likewise, secure and reliable connections are more available than ever. While some thought the demand put on the internet during this period of working from home wouldn’t hold up, the Covid-19 lockdown has proven how resilient the internet can be. It is a credit to our network providers, whether fibre, copper or mobile data-based, that these services have remained largely in place as millions of people have suddenly put tremendous demand on capacity.
This shows that network availability is no longer a constraint holding back businesses from placing their operations and services in the cloud. Those organisations using public cloud services are also better placed to combat the predatory players who sought to take advantage of the situation via scams and cyber-attacks, with regular security upgrades not available to those using an outdated server in the back office.
No longer can you place your trust in simply ‘doing it yourself’. Instead, managed cloud-based services can prove more secure and reliable. Security and connectivity is complex to establish and even more challenging to maintain, especially when scarce, skilled resources are in high demand.
Establish good financial governance
Whichever cloud service you use, make sure to choose a partner or platform that can provide real-time analysis and reporting so you can see exactly how it’s working for your business and change your plan if you need to.
Governance, cost control and resource efficiency have always been top priorities for businesses. Now more than ever, businesses are focused on getting the best value for money from their technological solutions while growing a sustainable business. One thing cloud-based platforms do very well, thanks to their sheer accessibility and ease of use, is enable workers to use a huge range of resources and implement their own changes and updates. However, if unconstrained, this can result in wastage and bill-shock.
While governance and budget setting have provided the framework for cost control and planning for decades, moving to the cloud requires a new level of collaboration between Finance and IT. Ensuring these two teams remain communicative through the cloud integration process is vital to ensuring it runs smoothly and efficiently, that the right functionality is baked in from the beginning and there are no budget surprises.
As well as close co-operation, the key to ensuring total visibility and that cloud services are providing the best value, is using a monitoring service to provide real-time data on how cloud is being consumed across the business. The best services can illustrate exactly how resources are being used – either energy or data – and enable CFOs and other decision-makers to rapidly change to new plans that are better for the environment and the bottom line. Clear and regular reporting is essential and takes a great deal of time and effort out of maintaining good governance.
Cloud is the future of many businesses and in a time of so much change and uncertainty, it is important to know your business has a model it can rely on to save costs and make governance far less onerous. To know that your business is making most of out your cloud service, make sure you have reporting in place so you can accurately reflect usage in real time, limit your expenses and energy consumption and create a business model that’s truly sustainable for many years to come.
Create a sustainable energy strategy, and build a competitive advantage with powerful energy insights that provide complete visibility of your energy footprint.
Now more than ever businesses globally are looking for wastage and holding utility costs to account by requiring detailed operational reports.
As the owner of your energy strategy, it is imperative that you have end-to-end visibility of your energy footprint. Obtaining this level of visibility will provide you with energy intelligence around consumption and performance of on-site assets. These energy insights will give your business the ability to:
Understand how energy is being used across your entire footprint
Identify processes and specific devices where energy is being wasted
Manage risks and opportunities in real-time to ensure performance of assets
Manage all your data in a single energy management system
Having a centralised view of your entire energy footprint and device-level data eliminates the time and complexity involved with managing energy data in multiple platforms. A single platform that integrates with other systems creates a holistic view of your energy infrastructure that can be used to inform a single, full report.
In addition, using a single platform to manage your energy data means you always know that you’re looking at real-time, accurate intelligence. This can help you make data-driven decisions about your energy strategy that are based on the most up-to-date energy data displayed in the energy management platform.
The granular level of intelligence provided by device-level data will provide you with a deeper understanding of your energy use and help to accurately form your energy strategy. This information can be used to identify ways to future-proof your strategy to:
Improve operational efficiency
Uncover growth opportunities
Unlock new revenue streams
Identify new energy technologies
Use Energy Insights data to improve operational efficiency
Data can help your business analyse capital equipment to identify inefficiencies and determine when equipment should be replaced or requires maintenance. By keeping equipment working efficiently and performing at its optimum level, you can avoid costly downtime and reduce business risk.
Use data to uncover growth opportunities
Better energy insights can free up resources to support growth initiatives, turning energy from a commodity cost to a value-adding resource. Growth opportunities can also be achieved when your strategy successfully lowers the costs associated with energy.
Use data to unlock new revenue streams
The information gathered through end-to-end visibility can help your business leverage its energy use, flexibility and existing assets. This opportunity unlocks new revenue streams for your business by allowing you to curtail energy use or sell surplus energy back to the grid through Demand Response (DR), demand management and asset optimisation.
Use data to identify new energy technologies
End-to-end visibility of your energy footprint can help to inform decisions on using new technologies such as solar and battery storage, back-up power generation, or cogeneration (also known as Combined Heat and Power or CHP) to help drive energy optimisation and improve resilience.
The visibility of your energy footprint will grow as you adopt new technologies, but by using a centralised system to holistically monitor and manage your data, this should not add any extra complexity. In fact, your energy management system can provide you with the data you need to justify your investments in on-site energy generation.
Why businesses need to choose the right platform and provider
It is imperative that businesses partner with a provider that has the right energy insight tools and a platform that collects and centralises granular, device-level data.
Working with Total Utilities, businesses can be sure that they’ll benefit from experience and expertise. We are the New Zealand providers of Centrica’s Energy Insight solution and integrated energy management platform, PowerRadar®. These tools are generating new opportunities across all types of industry, giving organisations the ability to manage real-time, device-level energy intelligence in a single, holistic view.
Contact our experts to find out how we can help you obtain real-time visibility of your energy performance and develop a strategy that turns your energy into a competitive asset.
I recently spent some time with a group of business leaders who all had concerns about the increasing demands for money and resources that were being made right across their enterprises.
Whether it was investments in new plant and machinery, wage increases, new government regulations or the price of electricity and waste services, they all felt pressure on the bottom line.
Why spend money on social media?!
One area that came up in discussion was justifying our Social Media spend. For many people that I talk to, it feels like a bottomless pit where they pour cash in, only to be told that their search engine optimisation is inadequate, their branding is fluffy and their budget is not in line with industry trends.
My Masters Thesis was on exactly this topic. Finally, an audience after all that work!
My approach had been to interview twenty-five senior executives and business owners. This group included local success story Trade Me and huge global advertising firm Saatchi & Saatchi, as well as local retail outlets, businesses and for an expert perspective Justin Flitter, one of New Zealand’s leading Social Media and Emerging Technology commentators.
What are these?!
Last week my eleven-year-old grandson was introduced to a programme on free to air television.
“What are these?” he asked when the ads came on.
Is it any wonder television and print media are on a seemingly terminal decline? When kids do not even recognise a paid TV advertisement, the future is bleak for that industry and of concern to those of us still using their services.
Where in the past many of us saw newspapers, radio and television as our first port of call for our promotional activity, high cost, lack of reach and focus make today’s digital platforms a far more effective use of limited funds.
But how is this value derived? There are five value creators businesses can focus on when evaluating the effectiveness of their internet strategy. These are Commerce, Community, Communication, Connection and Content.
Commerce
You don’t need me to tell you about e-commerce. Anyone not living in a cave will know that online customer interaction is essential.
E-Commerce is not simply about trade though. If we are not doing so already, we should be collecting customer data and leveraging the huge value that this drives.
A simple but powerful example is Amazon. Yes, they will sell you anything from a book to an electric car, but next time you visit, pay attention to their “recommendations”. Their data collection has followed your journey to the site, noted what you buy and where you stop and look. You are their ‘customer of one’.
Algorithms are far more effective at knowing your preferences than the old school face to face service we expect from our local retailer.
We are not all retailers of course. My firm, Total Utilities, is interested in procurement contract expiries and value, leveraging energy and waste consumption trends, carbon footprints and greenhouse gas emissions. Sure, we collect this data ourselves, but often this information is provided by our clients who will willingly contribute this in exchange for superior value, speed and actionable insights.
Data has real, measurable shareholder value and when combined with commercial transactions, inquiries and insights makes your business worth more every day. Once it was the customer list that had value, today it is insights into customer preference.
Community
This year I joined three significant social media communities. One group shares information on growing organic food, another is a professional Financial Operations (FinOps) group specialising in managing the complexity of OPEX-based service contracts, and the third is a group that helps me learn Italian and Norwegian.
None are related and yet all have a key characteristic: they make me feel a part of something as a consumer and as a contributor.
In the past I would have joined an Italian Society or attended meetings of Financial experts or visited organic gardens. Today, if I have a question, I simply type it online and my answer will come from all over the world, or from just down the road. Either way it is instant, usually expert, and relevant to my needs.
What is important is that by participating in, and supporting a ‘Community of Practice’ as these groups are formally known, my knowledge increases, my reputation is enhanced, and the opportunity to communicate, and extract value is created in real time.
I have formed lasting relationships with people I have not met face to face. One data specialist in Tel Aviv has extended an open invitation for me to visit. Just as powerfully, I have received calls from prospective clients, noting my membership of the Fin Ops group and wanting to meet.
Communication and Connection
Most of us recognise Zoom, Skype and Teams and the vital role they played in keeping staff and customers in constant touch during lockdown. The ability to consume face to face meetings, document share and deliver powerful presentations was revealed to us all almost overnight. We took the opportunity with both hands and doing so business changed forever.
Compare these tools to phone systems, emails, letters and faxes and the performance, cost and benefit equation is clear to us all. Consider that video calling services for many of us were delivered at zero or near zero cost to the user. Also consider the ease with which even the most non-technical user engaged with these tools and the internet’s transformational capability within business is brought to light.
Content
If it is normal for us to search the web for our every need it is also quite reasonable to expect that our clients and potential clients are doing the same thing.
Creation and dissemination of web content is proving to be the key to differentiating our products, companies and brands. Where once a website with a logo, a photo of our offices, our contact details and a quick summary of our services was enough, we are now seeing emerging players and current competitors reaching higher by delivering quality, timely insights right to the devices of those who need it.
Content no longer just relies on visitors coming to our websites. Digital content marketing is a powerful tool that directs your carefully crafted content to a specific group of people in a specific geography. For example, I produced some information recently on how cloud computing could be used as a tool to help businesses coming out of the lockdown quickly move into recovery and growth mode.
With the help of a specialist digital content marketer we were able to direct that content to over 20,000 senior managers whose specific interest was marketing and finance. This was achieved using a methodology called “boosting”.
Not only was this content directed to the right people, we were able to measure the level of interest, deal with feedback and react in near real time to requests for more information.
The Simple Things in Life are Often the Most Valuable
When billions of people across the world suddenly started video-calling friends, family and colleagues, the web handled it. When millions of students went online for their school lessons the web handled it. When we all started playing computer games and watching Netflix at once, the web remained working.
The internet is a network of machines designed to transfer information at speed, reliably and efficiently via the shortest available path. It has the capacity to serve five times as much demand as a worst-case scenario produces and is self-healing in almost any event. Secure, scalable and astonishingly cheap to use, we took it for granted until COVID-19.
May I suggest the next time you walk past that IT person crouched under a desk you stop to thank them. These people help keep your computer running and we have all witnessed how essential that is. Without IT departments, the world would have been a much darker place during lockdown.
In the meantime, consider this question. How many people do you know who have found love on the internet? If you are thirty years old or less the answer will likely be “most of my friends at one point or another”.
If you want clients to love your brand understanding the five C’s is a great place to start.
The team at Total Utilities are very excited to have Quinton Fisher join us as our Auckland Regional Sales Manager.
Quinton has recently moved to New Zealand from South Africa with his wife and two daughters. When looking at countries to immigrate to, New Zealand, Canada and the U.K made his shortlist.
We’re thrilled that New Zealand was their first choice, and we hope that it won’t take long for his family to feel at home here. Total Utilities will do all we can to make the transition smooth for the Fisher family.
A real people person
Quinton brings with him a wealth of experience in utilities and a passion for sales. A real people person, Quinton is all about building and maintaining meaningful long-term relationships with both his clients and his colleagues which makes him the ideal candidate for heading Auckland regional sales.
2020 marks Quinton’s twelfth year in utilities
Quinton owned and has now sold a successful business in South Africa, Thinktility, a company who has helped large brands, like Kellogg’s company of South Africa, experience the benefits of reduced tariffs, smart metering and energy-efficient solutions.
Drawn to Total Utilities culture and vision
For Quinton, the culture and vision of Total Utilities was a perfect fit. He especially appreciates the feel of camaraderie and togetherness and that it is a place where ideas and knowledge are shared freely. He notes that it doesn’t matter where the suggestion comes from, whether it’s an employee’s idea or a director’s, if the initiative has merit then the team at Total Utilities will do their best to explore its feasibility and implement it.
Sustainability and renewable energy are important
Total Utilities cares about future-proofing New Zealand businesses, by helping them think about how their utility choices not only impact their bottom line but people and the planet too.
Quinton’s passions align with our vision, as he cares about sustainability, identifying and using alternative energy sources, and providing smart and efficient energy solutions backed by clever, cutting edge analysis and insights.
A skilled negotiator with a strong financial and operations background
Quinton loves helping people, building relationships and understanding how businesses operate. His skills lie in sales, marketing, negotiating favourable contracts with preferred suppliers, and he brings with him a financial, analytical and technical background.
What’s more, he also thrives on exceeding client’s expectations, helping them solve complex issues and achieve meaningful outcomes.
His why? Reducing costs for businesses, empowering them to understand the financial impact of their utilities’ usage, and what level of power they are consuming, with the aim to make their business more streamlined, save money, and increase profitability and sustainability.
Making the most of New Zealand’s outdoor lifestyle
Quinton visited New Zealand in September 2019 to see if it could be a country where his family could lay down roots. The tranquillity and natural beauty remind him of the town where he grew up. Since moving to West Auckland, Quinton has found the transition relatively painless, and now he has time to make the most of our outdoor lifestyle. In his free time, he enjoys swimming in the ocean, mountain biking, fishing, golfing and hiking.
A dynamic addition to our team
We respect Quinton’s ambition and initiative. When he decided that New Zealand was a place he’d happily immigrate to, he arranged to have a meeting with our managing director, Richard Gardiner and the rest as they say is history.
Serving the Supercity
Quinton will be helping new clients around the supercity discover better, more efficient and sustainable ways to manage their energy consumption.
Total Utilities warmly welcomes Quinton to our team. We know that he will take care of you, our clients, and provide you with excellent, insightful service.
Making solar part of your business’s energy mix has never been more appealing. But risk and opportunity balances between an optimised design and types of PPAs.
While there’s heat in the market, there are incentives – but don’t unthinkingly sign away your business for a free set of steak knives! Or solar panels, for that matter.
According to the Electricity Authority, New Zealand’s solar energy generation capacity increased to just under 115MW in 2019.
Putting this into perspective, 115MW of installed capacity is similar to one of Contact or Mercury’s Geothermal stations. As a percentage, this equates to around 1.2% of total operating generation capacity in New Zealand.
Source: Electricity Authority
Lowering costs for installed solar
The installed cost of solar has dropped by around 75% since 2009 to an average of around $2.20 per watt. With large commercial energy rates continuing to rise, the return on investment starts to become more realistic for business customers considering solar.
Location is more important than just sunshine hours and roof direction
With 29 distribution networks in NZ, there are a variety of charging structures for time of use electricity customers. Some networks prefer to charge more for demand and capacity than on the total volume of energy consumed. Understanding how these charges are calculated is an important consideration for the ROI of solar. For example, a network price structure that favours variable charges will potentially have a far greater ROI than a price structure that favours peak demand.
Depending on the distribution network, peak demand charges can equate to a significant portion of your total electricity costs. Installing solar alone does not necessarily impact peak demands to any large degree. However as battery storage becomes more economic, this will assist customers smooth their load and reduce demand based charges.
For no money down, you too could have a solar array. Just be sure to check the fine print. And pick up your steak knives!
Power Purchase Agreements are a great way for solar companies to sell solar arrays to customers as they don’t require a customer to come up with the CAPEX costs associated with the array. There are typically two forms of PPA’s that are common in NZ.
One involves the solar company installing a meter on the array that is installed and then billing you for the energy you consume from the array at an agreed price. You can still engage with the market and import energy from a standard retailer as required. An agreement would need to be struck with your retailer for any exported energy, depending on the solar PPA, the solar company may get all the financial benefit from exported energy.
The other type is where the solar company becomes your retailer as well and manages both the import and export of power.
Sometimes the solar arrays are oversized so that the solar company can charge you for what you consume from the array and then make money selling additional energy back to the market.
This can all be used to pay off the cost of the array and there can be lease to own options or buy-out clauses after a minimum term.
In both cases, there are minimum terms from anywhere between 7 to over 20 years. Where the length of contract, maintenance and replacement clauses become important as inverters can need replacing after 10-15 years and panels at 20-25 years.
Is Solar right for my enterprise?
The first question I would be asking is:
What is the comparison between owning the array outright and the associated financing costs with benefits from the array going directly to OPEX costs from day 1 versus the costs and risks associated with a power purchase agreement?
Total Utilities has recently completed three large scale viability studies of 42kW, 96kW, 146kW, 286kW and 350kW solar arrays for commercial facilities and can assist you in determining the best solution that meets your specific requirements.
Solar companies are often constrained by the supplier of their solar products for what and how they deliver an array. Getting an independent solar viability review by Total Utilities can increase the efficiency and output of an array to ensure full value for money if you make solar part of your energy mix.
