Today on Entrepreneur Zone we are talking with Amanda Gome, publisher and founder of SmartCompany and CEO of Private Media, for our annual wrap and look forward to the year ahead.
Amanda, we’re at the end of another up and down year for the Australian economy. What’s your sense of where things are at?
I think we’re going to look back on the second quarter of the financial year, the quarter we’re in, and be surprised at how bad some of the results were. It’s really patchy and I think that’s taken everybody a bit by surprise. We do know that coming out of any sort of big crisis, small and medium businesses are the last ones to really feel it. They go in saying “what are you guys in the media carrying on about, we’re not seeing anything” and then it sort of hits them in the middle of the crisis. But then at the end, when things are meant to be getting better, often that can be a really bad time for SMEs and I feel like we just keep bumping along the bottom at the moment. What do you think James?
I totally agree with that. I’ve spoken in the last month to two different businesses in the same sector, web services. One who said the phones haven’t stopped ringing since August and one who said the federal and state elections seem to have shut everything down. I think that shows that it’s not only patchy across the economy, it’s patchy within various sectors. So that makes it very difficult for entrepreneurs to plan and figure out where their growth’s coming from.
Yes, and I think this is also hampered by what’s happened with the banks. There are no real clear solutions there that will help businesses take in funding and grow to that next level.
What’s your sense of where the economy’s going to go into 2011?
I think it’s going remain patchy. I think there’s going to be good bits and then you might have some lukewarm moments.
The phrase economist Alan Oster from NAB used was “multi speed” but he also described a few sectors as being sick, which for an economist is pretty strong language.
Well of course we’re going to have the mining sector going full pelt and any service companies associated with mining doing well. I think New South Wales is still struggling despite all the “Oprah House” festivities.
But look, I think it’s going to be another year in which you really work hard to keep your sales staff, because there is still this awful skills shortage and people are going to come after anyone that can make them money. So a big focus on marketing and channels.
Amanda, you mentioned banking before. We’ve been crusading on this issue for what feels like an eternity but it’s the same old story. The banks keep telling us they are lending and we keep hearing stories, particularly from our many accountant friends, that it’s just not happening.
Let’s just take it for granted that it’s just not happening, or if it is happening, it is too expensive. There’s a really good point now being made out there at last, which is: Why when you put your house up as security for your business, does it still cost more? Why is that?
But I think the real issue is the fact that in the banking reform announced by the Federal Government is that money is still going to cost these second-tier lenders more, and therefore there is still no level playing field between the four banks and anyone else.
And we still haven’t seen anything innovative, like a government-backed bank for SMEs like they’ve got in Canada and parts of Europe.
If you look at what’s happened around the world in response to this, governments have really come up with some good schemes and of course Canada is one of the stand out countries. They’ve had for decades a small business bank and despite all the carry-on by anyone here when you mention that - like Graeme Samuel - it has worked in Canada, it hasn’t brought down governments, it has a good success rate. In other countries we have seen banks given guarantees to lend to small business which has really helped get the funds flowing.
So this is a pretty weak set of reforms by the Federal Government. In fact, we of course know we saw the four big banks’ share prices rise quite nicely when the reforms were announced, which was a good signal that the market was pleased for the four banks.
Indeed. Looking forward to 2011 now, as our entrepreneurs go on their summer breaks and notionally relax (which we know they never do), what would you tell them to be thinking about?
Well, you’ve got to relax between Christmas Eve and January 3. That’s my order to you all. Have a week where you do not think of work and you can turn your phone off, and after that you can think about strategy.
Because times are tough, there is very much an inducement to stay in the same spot just to keep working hard, head down, focus on what you’re doing. But the Christmas break is a fantastic time to put your head up and think right, what am I going to do this calendar year? What am I going to put in place when I get back? How am I going to reinvigorate my board so that I get new skills on and they’re going to drive growth further? What people do I need to bring in? Who isn’t making the cut and might need to move on? Where are the new opportunities for products and services? How can I launch new things that are going to be profitable pretty quickly but are low risk if I have to absorb them? Strategy, strategy, strategy is what you’ve got to do this year.
And always keep looking over in your shoulder. We know in times likes these, especially with new technology, there are competitors coming after you.
Absolutely right. I think my big lesson from this year is around culture. I think all the good companies that we study take culture really seriously, and they do things like setting out their company values and they do things like pouring money into training to get their staff all on the same page.
I think we saw with the Mark McInnes scandal, which was probably one of the big stories of the year, how much you can be damaged when your culture breaks down. Fast growing SMEs never seem to have those problems because they pay a lot of attention to that area.
And I think there is another reason for that and it’s because they’re good leaders and have really good communication skills. They naturally understand how to build a culture, they’re often quite humble about the skills that they lack and how wonderful the skills of the people around them are. It’s something we should celebrate this Christmas, our wonderful, wonderful staff.
Here, here. Amanda as always we like to say thank you to our loyal readers who have increased in number greatly.
Oh yes, what are our latest readers? Get ready to be surprised.
In November we had over 280,000 unique visitors to our website and we have more than 33,000 people on our daily email list.
Well done to the SmartCompany team and have a happy Christmas!