Strategy

The ‘Illawarra Factor’ – Our secret unfair advantage

The ‘Illawarra Factor’ – Our secret unfair advantage 1022 682 emily
To those of us who live and work in the Illawarra region, it’s home. A place built on a rich history of steel and mining. A place where we all know the peaks and troughs of Australian industry and the resilience it takes to run a business. A place built buy hard working men and women who spend their day to day labouring somewhere between the mountains and the sea. Of course, as an eclectic group of realists, it’s easy to be consumed by the negatives. The down sizing of BlueScope, the knock-on effect this has had on dependent companies, infrastructure that needs upgrading and THAT Rabbitohs field goal back in September. Sure, we have our challenges but let’s take a look at a report recently released by global advisory firm Deloitte. Their report analyses our city and makes many interesting observations about our location, resources, investment, proximity, infrastructure and access to skilled talent through the initiative of the University Of Wollongong. Their report provides some very interesting numbers. According to Deloitte:
  • The costs of commercial rent in the Illawarra is up to 50% less than Sydney
  • The cost of Labour is approximately 85% of the cost of labour in Sydney.
  • Retention of employees is high with a comparatively low employee churn rate of 5% compared to Sydney’s 25%.
This all sounds impressive but what does it mean? Being nerdy numbers people, we decided to look at how this would impact a real-life business operating right now. We took the Profit and Loss Statement of one of our clients with a manufacturing business in Western Sydney. We removed names, rounded amounts to the nearest thousand for simplicity, and it looked like this: As we can see, this is a well-run business, achieving sound margins and a healthy profit. Next, we began adjusting the numbers to take into account the ‘Illawarra factor’. First, we reduced labour by 15% then we reduced rent. We could have reduced rent by anything up to 50% but we took a conservative estimate for the comparison and reduced rent by 30%. To be completely fair we then looked at additional expenses that may increase due to this particular business being based in the Illawarra and not in Western Sydney. We raised Freight by 40%, Motor Vehicle Expenses by 50% and Travel costs by 100%. The latter assumed that the personnel within the business would have to travel to further to service a comparative market size. That said, this business has less than 10% of it’s market in Sydney and is servicing customers all over the country so maybe we were getting a little paranoid. As can be seen by the revised Profit & Loss Statement below, the result is VERY different. In summary, the Gross Profit margin increases by 4%, the Net Profit Margin increases by 5%, and the tangible Net Profit increases from $778K to $1,147K (47%)! Now let’s be realistic, this Sydney Manufacturer probably can’t and won’t relocate to Wollongong any time soon. However, I would like to challenge every business owner in the Illawarra, are you capitalising on this opportunity? The advantages don’t stop with the profit margins.
  • We have a large pool of skilled talent constantly graduating from the University of Wollongong. Let’s reduce the 20,000 plus people commuting their talent out of town every day.
  • A lot of our talent relocates to Sydney or interstate to larger cities. Even if salaries in Wollongong are 10% – 15% lower than Sydney, the cost of real estate is typically 35-40% lower in the Illawarra. The great Australian dream gets closer.
  • We have a great public transport system and logistics networks to get our people, services and products to the rest of Australia.
  • Residents of the Illawarra enjoy a great coastal lifestyle, world class healthcare and modern shopping, hospitality and entertainment facilities.
How are you using the unfair advantage we have being right here in the Illawarra? Maybe it’s time to check our doorstep for growth opportunities? With over 40 years’ experience working with Wollongong businesses, we’re ready to help you step up and build another great local legacy. Credit: Advantage Wollongong & Deloitte

How to protect the goodwill in your business

How to protect the goodwill in your business 5911 3941 emily
It takes time, energy, and continuous effort to build a brand that attracts loyal customers and is rewarded by word of mouth referrals. Without a doubt, the good name you worked so hard to earn is one of your most valuable business assets; in addition to your solid customer base and positive employee relations, it is what is known in business as “goodwill.” If you’re like many small business owners, you realize your company’s goodwill is vitally important, but you may not know how to protect it. After all, how people feel about your brand isn’t a tangible asset you can insure, like a building or machinery. There are steps you can take to safeguard your goodwill in the marketplace. This article will show you how. Register a tradename or trademark Registering a tradename – also known as your legal corporate name or business name – can protect your company’s goodwill in two ways: 1. It will help build greater brand recognition. 2. It will prohibit anyone else from registering a business under the same name or a similar one, deliberately or unintentionally “poaching” the goodwill you’ve developed. Likewise, registering a trademark – that is, a word, phrase, symbol, logo, or design used to identify your company’s goods or services – can protect your business’s goodwill under the auspices of your country’s intellectual property laws. In addition to safeguarding your company’s goodwill, a tradename/trademark may become assets included in the sale of your business – thereby increasing your company’s overall value. Legal agreements When partners part ways or employees end their contracts, they leave a company with valuable insider knowledge. It’s crucial to ensure your trade secrets and customer data won’t be used by a former insider to their own advantage – or shared with a competitor. You can prevent your customer relationships (and therefore, goodwill) from being stolen with a non-compete agreement. Take care that any non-compete agreement is signed at the time you make an offer of employment or begin a partnership; otherwise, you may not be able to enforce it. Having a legal agreement in place is wise for several reasons. In addition to protecting the relationship you’ve nurtured with your customers, just like a trade name or trademark, a non-compete will increase your company’s value in the eyes of a future buyer. Final thoughts Because goodwill is largely intangible, it can be hard to measure. Ultimately it is determined by how much above book value a buyer is willing to pay for your business. You can monitor how your customers feel about your business in the meantime by keeping tabs on markers like increased interaction on social media, conversion rates, and profit growth. When it comes to legal protection, the sooner you register your tradename, trademarks, and have legal agreements in place, the better. Of course, the best thing you can do to continually increase the goodwill of your company – and its value – is simple: take pains to consistently provide the best service you can to every single customer who chooses your business over the competition. Quantum Advisory is a business accounting and advisory firm that empowers family businesses to step up, scale up and sell up. Visit www.qagroup.com.au or call 1300 700 711 and start the journey.

A Guide to Profiling Your Customers

A Guide to Profiling Your Customers 1000 667 emily
Easily the most important first step in establishing any type of business is to define your customers so that you have the information you need to attract the right audience and generate valuable traffic to your website. Understanding your customers and what makes them tick is the key to any successful business, particularly if you are paying out large amounts of money to drive relevant traffic. read more