FIFO Capital

Leading provider of working capital and cashflow solutions by Single Invoice Finance giving businesses greater flexibility to grow quickly & effectively

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Packaging Company: Victoria, Australia

FIFO Capital easily met my short deadline and delivered exactly what he promised at a time when the growth of my businesses required our debtor funds to survive.

FIFO Capital's support allowed our business to grow at a rate that would not have been possible without this funding facility.

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Spending to help the economy pick up pace

2 December 2014

THE Australian economy is picking up a bit of pace as cheaper petrol and low interest rates encourage more spending.

THE economy is forecast to have grown by 0.7 per cent in the September quarter, and 3.1 per cent in the 12 months to September, according to an AAP survey of 15 economists.

In the June quarter, gross domestic product (GDP) grew at 0.5 per cent, for an annual rate of 3.1 per cent, seasonally adjusted.

The Australian Bureau of Statistics will release the latest National Accounts figures on Wednesday.

Commonwealth Bank senior economist Michael Workman said retail spending is boosting economic growth but added that weak growth in wages and salaries could threaten a continued rise in consumer spending.

"Household consumption growth is being supported by low interest rates, higher dwelling prices and cheaper petrol," he said.

Mr Workman said housing construction was also driving the economy and the extra supply of homes would put a lid on price rises.

"More residential construction and firmer consumer spending will help absorb job losses from the mining capital expenditure downturn," he said.

"Extra housing supply will flatten house price growth through 2015, raise affordability and, with the usual population growth, prolong the construction cycle."

A report from RP Data, released on Monday, showed that price rises are already slowing.

House prices across the eight capital cities fell by 0.3 per cent in November, and were up by 8.5 per cent over the past 12 months, the slowest growth in a year.

ANZ is forecasting 0.7 per cent growth in the September quarter but has downgraded its forecasts for 2015 and 2016.

Senior economist Felicity Emmett said prices for Australia's main exports - iron ore and coal - will continue to fall in the new year and weigh on the economy.

"Overall, growth remains below trend - where it is likely to stay for most of next year given the headwinds the economy is currently facing," she said.

"We now expect below-trend growth to continue well into 2016 as a result."

However, Ms Emmett said, the good news was that housing investment remained strong and would boost retail spending in the new year as people fit out their homes.

"Dwelling investment is forecast to have posted a 1.5 per cent fall in in the third quarter, after three quarters of solid gains," she said.

"Despite this, we continue to look for residential investment to grow solidly over the next year."

ECONOMY TO PICK UP PACE IN THE SEPT QUARTER

* Sept quarter growth forecasts range from 0.5 pct to 0.9 pct

* Median forecast is 0.7 pct

* Annual rate of growth is forecast to be 3.1 pct

(Source: AAP survey of 15 economists)

Article Source: http://bit.ly/1BuuVJ0 

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Your Business Angels Group

BUSINESS ANGELS

When we need a quick cash flow problem to be solved for a client we call FIFO.

Whether a client needs one invoice factored, or a short term solution to get CASH –we find a call to FIFO is always worth it –FIFO wants to do business, and usually a description of the clients business, the type of invoice and business (debtor) and what we are trying to achieve means that we have a positive response.

Then the FIFO team does the work. They contact our client and work though very quickly to solve problems, get the facility in place and answer all our clients’ queries.

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Sentiment outstrips results - Sales and profits moderate despite positive business outlook

2 December 2014

The recent performance of Australian businesses is failing to meet their own expectations as a continuation of below-trend growth in the economy begins to impact reported activity this year.

According to Dun & Bradstreet's Business Expectations Survey, sales and earnings in particular are falling further behind the three-month projections being made by businesses.

Compared to initial expectations, the number of businesses that achieved an increase in sales during the third quarter fell from 43 per cent to 38 per cent. At the same time, the proportion of businesses that reported reduced sales was 20 per cent; more than the 11 per cent that had initially forecast weaker activity. These responses have moved the actual sales index to 18.3 points for the September quarter, short of the expectations index of 32.5 points. Upbeat sales forecasts through to the first quarter of next year have lifted the index further, to 38.7 points.

A similar trend has developed in the profits performance of businesses this year. D&B's survey has found that, while 35 per cent of businesses had expected higher earnings in the September quarter, only 27 per cent delivered. Additionally, 19 per cent of firms experienced a decline in their profits compared to the 15 per cent that had initially forecast a drop in earnings. The Q1 2015 outlook for profits is 25.6 points, marginally higher than the 25.0 points forecast at the same time last year.

According to Gareth Jones, CEO of Dun & Bradstreet-Australia & New Zealand, despite a recent divergence between expectations and actual results, businesses are gradually improving their performance and optimism remains an important factor in future growth.

"Despite a backdrop of soft external conditions and macro-economic forces, business activity this year has been steady; with our survey revealing that most indicators are up on last year's levels," he said.

"Optimism also remains strong, with 74 per cent of businesses reporting they are more optimistic about growth in the next 12 months compared to the last.

"The recent separation in expected and actual business performance, however, suggests that the business environment is, in reality, still weak.

"If this trend continues, and given the persistent weakness in consumer confidence, there is a risk that this optimism will fade, and with it a willingness for businesses to invest, employ and drive more significant growth," Mr Jones added.

D&B's Business Expectations Survey reveals a further improvement in the three-month outlook from businesses, with expectations for capital investment, employment, selling prices and sales in the first quarter of 2015 moving ahead of last year's levels, although profits expectations are flat year-on-year.

At 27.5 points the expected selling prices index for Q1 2015 has jumped to its highest level since 2009. Thirty-one per cent of firms indicate they will lift their prices at the start of the New Year, while just three per cent intend to discount and the remainder will leave their prices unchanged.

Employment expectations have edged up marginally to 14.8 points, with 23 per cent of businesses planning to take on more staff while eight per cent will cut numbers. Actual employment activity remained weak in the past quarter, with 21 per cent reporting to have hired staff while 15 per cent reduced their numbers.

Similarly, capital investment expectations have lifted slightly as 21 per cent of survey respondents indicate they will spend money on their operations in Q1 2015 compared to the six per cent which will reduce expenditure. This response has taken the index to 15.7 points, up from 7.2 points expected at the same time last year.

Finance does not appear to be an obstacle for investment plans, with only seven per cent of businesses reporting access to credit as an issue for their operations. The most commonly listed issue is cash flow (24 per cent) and the current level of the Australian Dollar (25 per cent); with wholesalers and manufacturers in particular identifying the currency's value as most likely to influence their operations.   "The optimistic outlook from the business sector remains in place, with expectations components of the survey continuing to trend higher," said Stephen Koukoulas, Economics Advisor to Dun & Bradstreet.

"What is a little concerning for the real economy is that the 'actual' results for sales, profits, employment and capital expenditure have fallen short of the upbeat outlook.

"The biggest gap between expectations and actual results are in the two most important components of the survey - sales and profits.

"The reality of a soft economic growth, very low inflation and global weakness appears to be dashing the optimism of the Australian business sector," Mr Koukoulas noted.

"It is hoped that the currently low interest rates, and more recently the lower Australian dollar, will translate into actual activity picking up over the coming quarters."

   Source: http://dnb.com.au/Header/News/Business_Expectations_Survey_Sentiment_outstrips_results/indexdl_11088.aspx 

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Recovery or boom? The growth in Sydney house prices has become a national talking point. And now the Reserve Bank of Australia (RBA) has put its oar in the water with the governor, Glenn Stevens, saying that low interest rates aimed at boosting business investment and employment are in danger of creating a housing bubble. The RBA is especially concerned about the rise in loans to investors, which now account for about 40% of all home loans, and has foreshadowed new regulations to curb some of the investor froth before the end of the year.

But a number of respected real estate analysts say the recent price rises in Sydney are little more than a recovery from a long period of weakness. Louis Christopher, of SQM Research, says Sydney house prices have risen only 3.5% a year for the past 10 years. Hardly a bubble waiting to burst! Veteran property expert and LJ Hooker chairman Greg Paramour agrees with SQM’s figure of 3.5% growth a year for the past decade. He says there are indications, such as less property coming onto the market, that the heat is already evaporating and he fears any artificial tampering with the market could put a dampener on first-home buyers, as happened in New Zealand when valuation ratios (the percentage of the value borrowed) were restricted.

Analysts such as Christopher say the recovery is far from over. He expects Sydney prices to rise between 8% and 12% in the year to June 2015 if interest rates remain unchanged, the economy remains steady and the Aussie dollar continues to be above US85 cents. Of course, RBA action to curb investor buying may also affect this prediction. Other cities can expect slower growth, predicts Christopher, with Melbourne coming in second at 5%-9%, Brisbane and Adelaide next at 5%-8%, followed by Hobart (3%-6%), Perth (1%-4%), Canberra (-2% to 3%) and Darwin (-3% to 1%).

Certainly investors should tread carefully in Sydney and, to a lesser extent Melbourne, ahead of any RBA action. And while the RBA assures it’s not about killing the investor market, it plans to address the imbalances with “carefully targeted tools”, assistant governor Malcolm Edey told a Senate committee in early October. What these will be is shrouded in secrecy. Perhaps the RBA is hoping its threat of regulation will help solve the problem.

Another obstacle that investors may have to face comes from increased calls for the government to end negative gearing for new investors. Saul Eslake, chief economist of Bank of America Merrill Lynch, says that negative gearing should be stopped to new investors because it was contributing to the growth of property prices. The Grattan Institute says it costs the government $2.4 billion a year and leads investors to bid up prices, locking out first-home buyers. Money’s Paul Clitheroe is also calling for the removal or weakening of the over-generous tax breaks that real estate investors receive.

The RBA’s Edey conceded that negative gearing might be contributing to the problem but he said this had been in place for a long time and was not something that had triggered the recent bout of activity.

Given all the threats investors are facing, now might be the best time for those looking for a loan to jump into the market. But, of course, this would push up prices, meaning if the RBA’s strategy is to talk down the market it will fail.

By Pam Walkley Money magazine, November edition

#australia #property #finance #fifocapital

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The top 5 common financial mistakes startups make and tips to avoid them while starting and growing your business

When you're an entrepreneur, you're busy working every day to find your way, build your product or services, grow your company and achieve your goals. Unless you're a financial whiz, it's not always easy to also work out your financial plan and pin down precise numbers; sometimes important financial details can fall by the wayside. Even if you are a financial whiz, creating a financial plan and managing your finances can be challenging. But it is essential that you understand the importance of accurate financials — both for your own stability and ability to plan, and to convince and assure potential investors of the validity of your business. As an entrepreneur, you can make many financial mistakes. However, once you know the potential missteps, you can take simple steps to avoid them. Here are the top five financial mistakes startups make and how to steer clear: 1. Miscalculating (or not calculating) you cash burn Your burn rate is the amount of capital you go through every month to keep your business running. If you don't have a good understanding of your burn rate, you are seriously hindering your ability to achieve your milestones before your money runs out. According to Hiscox's survey of new business owners, approximately one-third underestimated monthly expenses. Along the same lines, almost 20 percent of new business owners realized that they didn't have enough financing. It's all too easy to miscalculate your operational costs, so initial financial assumptions are often off. Keeping track of all of your startup expenses will minimize these miscalculations. The first step in managing for cash flow is to create a bottom-up projection, using real-world variables. (see my previous article on bottom-up vs top-down forecasting). Top-down forecasting can lead entrepreneurs to be overly optimistic about the sales they'll close and the revenue they'll earn. Bottom-up forecasting will give you a more realistic (albeit a less inspirational) gauge of how much money you'll need to get going — and keep going. Re-forecasting is also key. You need to account for both fixed and variable costs and continually make projections that accurately reflect the real state of your business. (For more information about managing your burn rate, see my previous article on how to reduce your startup business burn rate.) 2. Not completely understanding your marketplace If you don't properly understand your market, you may be guilty of pricing your products/services incorrectly. Don't merely add your costs and calculate in the margin you'd like to make. Consider your market position and the value of your offering; start with price and work backwards. In your calculations, keep coming back to the marketplace: Who is your customer? What need does your product/service fulfill? What do you have to offer? Who is your competition? And what trends may affect your market, and how? 3. Hiring and expanding too quickly One of the greatest expenses of any company is its people. To keep your costs low, you need to consider ways to save money on staffing. A big mistake many startups make is hiring too quickly. Having too many employees is a huge drain on your funds. In addition to the recruitment and salary costs, there are additional physical costs such as a necessarily larger office space, equipment and supplies. There's also the psychological cost: What will happen to these people if your company doesn't grow and you need to lay them off? And don't forget the all-important reputation cost as well. How will it look to investors and others if you have to disassemble your team? Instead, hire slowly as you go. 4. Making bad hires Another key to saving on staffing costs is hiring for potential as opposed to experience. Don't waste money hiring experience just for the sake of experience. And, whenever possible, outsource non-core competencies. For example, outsourcing your financial support frees up your time to focus on other aspects of your business. The company you hire will be responsible for making sure that you stay on track and take care of your financial obligations. 5. Doing your own finances (when you have no training) If you've closed a seed round of funding, have a lot of expenses, and/or are earning real revenue, you need a CFO to help you manage your finances on a strategic level. If you don't yet have a lot of financial activity, you may not be in need of CFO services. But, at the very least, you still need some financial support with your day-to-day accounting and bookkeeping. Honestly, it will cost you more in the long run to do your own finances rather than hiring a professional from the get-go. Note that there is no need to bring a full-time accountant and CFO on staff. If your company is still small, it makes more sense to outsource these functions, getting support on an as-needed basis while simultaneously reducing your cost structure. Just don't do it yourself! #australiabusiness #smallbusiness #fifocapital #finance

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Singles Day: Alibaba’s online shopping festival makes $10.7 billion in 24 hours

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From drones to diaries – what’s hot for Christmas stockings in 2014

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The 12 top global retail trends for 2015

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Advocates call for an increase in urban green space by 2020

A coalition of urban designers, landscape architects and other organisations are calling for a 20 per cent increase in urban green space by 2020.

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Business activity to lift in 2015

4 November 2014

This year's gradually improving business outlook looks set to continue into 2015, with the latest survey of Australian firms revealing that an increasing number expect to lift their sales and profits, sell their goods and services at higher prices, and invest more in their operations during the first quarter of the New Year.

Businesses are particularly upbeat about sales, with Dun & Bradstreet's Business Expectations Survey revealing that 53.2 per cent expect increased sales in Q1 2015 compared to last year, while just 7.5 per cent forecast a decline. This response has lifted D&B's sales expectations index to 45.8 points, up from 27.5 points last year and to its highest level since Q2 2000.

After diverging during the year, as expectations outpaced actual activity, reported sales have also increased, moving to 16.9 points for Q3 2014, up from 11.6 points in the previous quarter and 7.5 points at the same time last year.

The increase in sales expectations beyond the boost expected in the Christmas period underscores the resilience in the business sector. D&B's survey has also found that 71 per cent of businesses are more optimistic about growth in the next 12 months compared to the previous year; the strongest response recorded in 2014.

According to Gareth Jones, CEO of Dun & Bradstreet-Australia and New Zealand, the more positive business outlook for next year follows signs of gradual improvement in the local economy.

"After a 2013 during which businesses were motivated by risk minimisation, this year has been one of slowly-building optimism, while these latest figures suggest that 2015 will see more businesses capable of growth," Mr Jones said.

"Although still below trend, D&B is forecasting a lift in Australia's GDP growth from 2.2 per cent to 2.5 per cent in 2015, while a more accommodating currency level and a stronger United States economy will support business optimism.

"Consumer confidence, however, appears to be the missing piece in the recovery puzzle and one with the potential to derail the business sector's capacity to grow and drive a new phase in the economy's development," Mr Jones added.

Following two flat quarters, expectations for higher earnings have lifted to a 10-year high as 41.9 per cent of businesses anticipate improved profits during the first three months of 2015, while 11 per cent expect a decline and 47.1 per cent an unchanged result.

Profits looks set to be supported by an increase in the number of businesses planning to raise their prices in Q1 2015. While the majority of businesses expect to leave prices unchanged, 31.2 per cent intend to increase selling prices while just 4.2 per cent will discount. This has taken D&B's selling prices index to 26.9 points, up from 19.5 at the same time last year.

The slow crawl in planned business spending has continued into the New Year, with D&B measuring slight increases in expectations for capital investment and employment. 

With one-in-four businesses expecting to hire staff during Q1 2015, the employment index has lifted year-on-year from 8.8 points to 16.6 points. Similarly, the capital investment index has moved from 7.2 points to 16.8 points.

  The sales outlook is strongest in the wholesale and retail sectors, where 59.6 per cent and 60.1 per cent of businesses respectively are expecting increased trade, while the finance, insurance and real estate sector is anticipating the biggest jump in profits.

Construction sector businesses have the most active plans for employment, with one-in-three intending to take on new staff during the first quarter of next year.

"The view from the business sector is very positive, with the data on sales and profits suggesting a period of stronger economic growth into the New Year," said Stephen Koukoulas, Economic Advisor to Dun & Bradstreet.

"While the news on expected sales is very strong, there is some concern that actual figures for reported sales have fallen short of expectations - it would be disappointing if this most recent surge in optimism failed to materialise.

"The slow but steady rise in expected employment and capital expenditure readings is encouraging; these are the components of the Business Expectations Survey that need to keep moving higher if we are to be confident that the economy is moving onto a stronger path," Mr Koukoulas noted.

Source: http://bit.ly/dnb_fifonews4Nov2014 

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Importer/Wholesaler, Richmond, Victoria Australia

Situation & Funding Need

Importer of electronic goods is about to go through a seasonal high and needs funding to pay for a shipment of electronic goods. Supply a single key distributor ie one major customer, meant, that although their monthly turnover figure of approx. $500k would qualify them for a full ledger factoring facility, as they only have one customer Fifo Capital is their only option.

They plan to use Fifo for 6 months or so whilst they look to distribute direct to the retailer.

Funding need

$400k

Solution

Fifo agreed to fund the single debtor.

How Fifo Capital helped

Where a full turnover factoring company couldn’t assist due to a debtor concentration issue, Fifo was able to step in due to its debtor insurance policy which mitigated this ‘risk’.

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Use your customers to fund your business growth: debtor financing explained

28 October 2014

One of the reasons businesses run out of cash – and generally go broke – is that they grow too fast.

What a paradox – the business is growing too quickly and is therefore too successful for its own good!

Not surprisingly, in situations like these you also find that the largest “creditor” of the business is the Australian Taxation Office, due to either unpaid GST, PAYG withholdings, employee super or all three. In other words, the business has used the ATO as a banker. The obvious question is – why?

The broader answer is very simple – lack of access to alternative funders.

Sources of funding for your business

A typical family-owned business usually only has two sources of funding – the owners or the bank – and the latter option is generally only available if the owners have “bricks and mortar” security (i.e. their home).

Where the business owner has little or no equity in their home and/or the funding needs of the business exceeds the amount they can borrow against their home, the options tend to be very limited. Banks may still lend something against the assets of the business (e.g. stock and debtors), but the size of this facility is often a fraction of the assets pledged as security and the facility may not increase as the cash flow needs of the business increase.

Children taking over a business from their parents may also lack the amount of capital (or property security) needed to grow the business.

Family-owned businesses are also reluctant to call in a “white knight” (a friend with cash) or venture capital provider. In any case, the latter are generally not attracted to smaller “mum and dad” family businesses. This therefore only leaves two sources of funding – business creditors and the ATO. Business creditors tend to get looked after as the business owner wants to ensure supply of raw materials to their business, which just leaves the ATO.

One often overlooked source of funding may be to “borrow” against the debtors of the business through a debtor finance arrangement (previously called factoring).

How debtor financing works

Traditionally thought of as a lender of last resort, debtor finance companies should not be overlooked as a source of funding for growing businesses, provided the business is profitable. The latter point is crucial, because it is no use accessing cash flow (from anywhere) if the business is not making money. The cash will soon run out and the business will go broke. This was also another reason provided in my previous article about why businesses don’t have cash – they don’t have a cash flow problem, they have a profitability problem. A lack of cash is the symptom, but a lack of profitability is the cause.

Assuming the business is profitable and growing, debtor finance provides an opportunity to borrow against the debtor book, particularly where it is a high quality debtor book. Generally, debtor financing companies will advance a percentage of the debtor book (e.g. 75% or 80%) for those debtors who have been outstanding for less than 90 days.

So, why don’t more family-owned businesses take up debtor financing?

I suspect there are a number of reasons for this. One reason might be the perceived stigma. Often, debtor finance companies will require that the arrangement be disclosed to the customers of the business and collection of the outstanding debts is handled by the debtor finance company. Whilst this needs to be carefully managed, I do see a “good news story” in here for the business and that story should be “sold”. The business is growing! Every business owner understands that a growing business needs to fund cash. So should your customers.

Secondly, the business is “outsourcing” its debtor management, thereby enabling the owners to focus on doing what they do best – build the business. You may also find that your debtors are better managed (and more likely to pay on time) when there is greater focus applied.

Another reason may be because debtor finance is generally a more expensive form of funding than traditional bank finance secured by a property. This is not surprising – it’s more risky. If the business owner had property to put up as security then they wouldn’t need debtor finance. So it is important to understand what the cost of funds will be. Even if the effective cost of funds is (say) 15%, provided the business is making a return on capital employed (ROCE) of greater than this then they are in front. In other words, if the ROCE for the business is, say, 25% then the business owner is still in front by 10% once the financing cost has been paid. Would you rather make 10% of something or 100% of nothing?

I have certainly seen debtor financing used to beneficial effect by one second-generation family business client, where the children (who recently took over the business) had little or no “bricks and mortar” security.

Clearly, in a perfect world having access to an unlimited supply of cash is utopia. However, we don’t live in a perfect world and business owners frequently have to deal with imperfection. The challenge for business owners using any sort of funding, but particularly debtor financing is to know the key financial parameters of their business.

The big three financial ratios every business needs to know

Know your ROCE. If you don’t know this and the areas of your business that drive it, you’re driving blind.

Know your free cash flow (FCF). Work out your after-tax profit. Subtract from this the amount by which the capital employed in the business has grown during the year (or last year). If the answer is negative, you have negative FCF and this can’t be sustained forever.

Know your Working Capital Absorption Ratio. This is simply the amount of additional working capital your business will need to fund a given increase in sales. This can vary significantly from business to business. If you don’t know this and you have a growing business, you’re in risky territory, unless of course you have an endless supply of cash.   

Source: Grant Field is the chairman of MGI and has over 30 years providing accounting advice to businesses. http://www.smartcompany.com.au/finance/44371-use-your-customers-to-fund-your-business-growth-debtor-financing-explained.html?limitstart=0 

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My credit extension checklist: 10 rules to follow

Though there are a number of benefits to extending credit, small business owners need to be careful when doing so, especially when it comes to taking on new customers and managing payment.

To help with the process, below is a list to check-off before providing goods or services to a customer on credit.

I have:

Established a clear and easy to follow credit policy that includes any privacy statements.

Communicated my policy to employees and ensured they have understood it. If they have not, I plan to provide training sessions on the subject.

Identified the person(s) responsible for approving credit applications and for how much.

Communicated my policy to all customers and prospects.

Obtained trade references and banking information from customers-to-be.

Ordered a credit report on my customers-to-be, or existing customers applying for trade credit, to ensure that they are creditworthy and not engaged in fraud.

Set a limit on the amount I'm able to extend to customers - not too low as to restrict the quantity a customer can buy, but not too high to incur any serious cash flow problems.

Notified customers of payment terms (e.g. 30 days to pay off the account) to ensure I receive my money when I expect it.

Set up a process to continuously monitor customer accounts once the customer is on board so that you can identify a problem before it gets out of hand.

Contingency measures in place in the case customers pay late or default on payments. This can range from discussing different payment options with my customer to outsourcing debt collection.

Source: http://bit.ly/dnbcreditlistfifo

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Australia ranked second best place to be a female entrepreneur

Australia is the second best place in the world to be a female entrepreneur, according to international rankings released this week.

The Gender-Global Entrepreneur and Development Index, which was released at the Dell Women’s Entrepreneur Network conference in the US this week, places Australia just behind the US as countries which encourage and foster female entrepreneurship, and ahead of Germany, France, Mexico and the UK.

The rankings are calculated based on three factors: the entrepreneurial environment in a country; the entrepreneurial ecosystem; and entrepreneurial aspirations.

Emma Isaacs, chief executive of Business Chicks, told SmartCompany the rankings don’t surprise her at all.

“The corporate landscape in Australia is forcing women out in droves [and] this is creating a really strong community of women who are starting their own businesses, simply because they want to create work that works for their situation,” says Isaacs.

“There is a really exciting startup culture in Australia at the moment,” says Isaacs. “Women have access to great networks and great role models who have already paved the way, and the strong economy is of course also helpful – for any startup to be successful there needs to be strong financial support.”

Orsi Parkanyi, director and founder of Women as Entrepreneurs, also toldSmartCompany she is not surprised by the rankings as she has seen similar research ranking Australia among the top countries for female entrepreneurship.

“But if we are so good and there are such favourable conditions, why is the number of female entrepreneurs in Australia so low?” asked Parkanyi.

Parkanyi says previous research has found that just 5% of technology entrepreneurs in Australia are female, although in her experience there are plenty of women starting their own companies but they “are not putting their hands up”.

She says there are many factors contributing to the apparent low numbers of female entrepreneurs across the country, including cultural factors such as women not being involved in business for as long as men.

There is also a lack of access to funding and investment for female entrepreneurs, says Parkanyi, and an absence of female role models.

Isaacs says “unconscious bias works against women in all aspects of work” and although “we might be seeing more women than ever starting businesses… a really small percentage are growing them into medium and big businesses”.

“Many women start businesses with the goal to run a small business, but I wish more was done to encourage and facilitate women to want to create fast-growing businesses that create employment opportunities for others and great lifestyle for them,” says Isaacs.

But Parkanyi says “things are changing”, and the high number of applicants she receives for Women as Entrepreneurs pitching events suggests female entrepreneurs “will put their hand up” when they feel invited to and involved in networking events.

Isaacs also believes sharing more stories of successful female entrepreneurs will go a long way to encourage others.

“And I think importantly, we need to do something about creating shared responsibility between women and men in the home,” says Isaacs. “Each of us can contribute to that by stopping the dialogue about women managing the hom – we need to stop asking women ‘how they manage it all’ and open that question to men too.”

Parkanyi believes the business community in Australia has a “high level of responsibility” when it comes to encouraging female entrepreneurship.

“We live in a country with a high level of freedom,” says Parkanyi. “If we can’t close this gap, how are we going to inspire women in countries such as India to start their own companies?”

Source: http://www.smartcompany.com.au/leadership/strategy/42238-australia-ranked-second-best-place-to-be-a-female-entrepreneur.html#

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Older, wiser entrepreneurs are a great new market

2 June 2014

Guess who is the fastest growing age group running small businesses? No, it’s not geeky 25 year olds who are right at home in Silicon Valley. Nor is it women. 

It is people over 50. According to Roy Morgan’s State of the Nation report, almost half of all owners of small businesses in Australia (less than 19 staff) are baby boomers, up from 38.8 per cent in 2002. Australian Bureau of Statistics figures backs this up: 58 per cent of small business owners are aged over 45 years old.

Proportion of business operators, by age - 2012

Source: Australian Bureau of Statistics.

Entrepreneurs over 50 have many advantages. They are smart: more of them are tertiary educated with half (49.1 per cent) holding a degree or diploma, up from 33 per cent in 2002 and much higher than the total population at 38 per cent. 

They have decades of experience, deep networks, are highly skilled and have access to finance including superannuation and equity in their homes.

That is an extraordinary shift. And I was reminded of this last week when I turned up at an entrepreneur function in Melbourne run by a group with the delightful name: “School of Hard Knocks” and found the audience neatly divided between those who were north and south of 50.

Ten years ago at a similar function there would have been a smattering of people over 50 and I would have been pitching my speech at a youngish audience of entrepreneurs, aged between 25 to 45. Now 60 year old entrepreneurs are asking about international expansion.   

What’s changed? For a start, the idea of retiring at 50 is going out the window.

Continual messages coming from government urging people to work as long as possible to avoid a huge dive in productivity due to lower birth rates and rising pension and health costs are having an impact. Ten years ago in Australia no government would have dared discuss moving the retirement age to 70.

And it’s not all falling on deaf ears. Many well-educated baby boomers have hit their 50s and 60s in rude health and expect to live well into their 80s and 90s. ABS data shows that only 13 per cent of the Australian workforce plans to retire by 60. Patricia Edger, ambassador for National Ageing Research Institute, pointed out recently that those who say they will never retire have gone from 384,000 to 575,000. And it’s not just about a poor financial outlook. “Able-bodied people don’t want to sit around for what is shaping up to be the longest stage of their life without contributing,” she says.

Women in particular who have taken time out to raise families suddenly find a new lease of life at 50 as their kids require less focus. With technology at their fingertips and in the cloud, working from their spacious homes or inner city serviced offices, they embark on a third career.

Many of the 50 plus entrepreneurs are not just starting new businesses; they have been running successful businesses for years and either don’t want to sell, can’t find a buyer and would rather stay  at the helm than shut the doors.

And it’s not that the over 50s lack inspiration. Rich lists around the world are now made up of entrepreneurs in their 70s and 80s still playing a very active role in their businesses which wasn’t the case several decades ago.   

But many marketers, financiers and service providers ignore the older entrepreneur, who can face the same discrimination as older workers who are hit with the aging stereotype.

Older entrepreneurs report being treated as if they lack ambition, can’t keep up, may fall sick and lack technological skills to understand the modern world.

Financiers can be reluctant to back them because of a perception they are not in business for the long haul. Yet a 52 year old could be successfully running a business for the next 20 or 30 years.

One entrepreneur says he was asked what his kids thought of him starting a business at 55 with the implication being that he was squandering their inheritance.

What is far more important than age is mindset. Roy Morgan research shows that if you look at the over 50s generally, they are disproportionally represented among the visible achievement and socially aware categories which in a nutshell sums up the entrepreneurial mindset.

What’s really interesting is that as people get older, they actually become more entrepreneurial, says psychologist Colin Benjamin, co-creator of the Morgan Values Segments and who has a doctorate in entrepreneurship from Melbourne-based Swinburne University. Over 50s have a growing willingness to take risk in return for reward.

It’s not because they are more confident – in fact confidence starts falling from age 35 onwards. Benjamin says it is because they have access to finance and the experience to make a business work. That can make the over 50s a very good prospects to back because they don’t take unnecessary risks due to over confidence and inflated egos, the undoing of many an entrepreneur.  

There is another crucial difference: older entrepreneurs are more likely to be opportunity entrepreneurs, starting a business because they see a niche rather than necessity entrepreneurs who are often creating a job for themselves. And as GEM research (GEM) research shows, opportunity entrepreneurs have much greater success rates than necessity entrepreneurs.

In fact we are likely to see more over 50s entrepreneurs running and starting businesses. Given the big structural shifts occurring in many industries, there will be impetus to drive the growth of both opportunistic and necessity entrepreneurs: the latter driven by industries retrenching and sacking their older workers who then face age discrimination when seeking further work. 

There is big opportunity for advisers, financiers, marketers and the service industry in general to focus on the older entrepreneur as a market worth their attention. The ambitious older entrepreneur is more likely to value external expertise, pay for advice and services in order to build scale. As success stories multiply, there will be more role models to encourage others to take the plunge. So anyone dealing with a 50 plus entrepreneur would be wise to look past the stereotypes and formulas to see the mindset and the prospect – just like you would anyone else. 

Source: https://bluenotes.anz.com/posts/2014/06/older-wiser-entrepreneurs-are-a-great-new-market/